Voluntary Disclosure Problem - SARS

DJ... said:
No, you clearly explain yourself like a tongue-twisted psych patient. You were referring to sole props in your post and the inference was clear to anyone who speaks English...
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Keep calm DJ. You will give yourself an infarction.
 
marco said:
Good article. My wife and I share the profits 50/50 and it is not excessive. We both work the same hours and do the same work. SARS did question it in the beginning but one email to them was all it took. We are totally above board.
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ToxicBunny said:
Until SARS change their minds..

Its not legal, period. You are currently flying under the radar, that is all.
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In the situation described by Marco above it appears to be 100% legal. There are situations where SARS could consider a partnership to be an income splitting scheme which could lead them to try and apportion all or the majority of the income to one spouse - however if both parties have a similar involvement in the business at a management level they will have a hard time disputing the terms of the partnership agreement irrespective the quantum of the income or profits earned by each party. Over the past 40 odd years I have handled numerous clients who run businesses in partnerships between spouses and have never had the income apportionment questioned.
 
But now as hubby is earning more, she can save her wages and buy in and become a Partner. She will have a "loan account" and be able to withdraw more wages.
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I think your problem is that you don't know how to explain these things because you don't quite understand what you are talking about. She doesn't have to save her wages to buy into the partnership and one doesn't deposit, nor withdraw wages from a loan account...
 
mikef said:
In the situation described by Marco above it appears to be 100% legal. There are situations where SARS could consider a partnership to be an income splitting scheme which could lead them to try and apportion all or the majority of the income to one spouse - however if both parties have a similar involvement in the business at a management level they will have a hard time disputing the terms of the partnership agreement irrespective the quantum of the income or profits earned by each party. Over the past 40 odd years I have handled numerous clients who run businesses in partnerships between spouses and have never had the income apportionment questioned.
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Fair enough, it does look like its 100% legal after digging some more.

marco is just monumentally pisspoor at explaining anything.
 
DJ... said:
I think your problem is that you don't know how to explain these things because you don't quite understand what you are talking about. She doesn't have to save her wages to buy into the partnership and one doesn't deposit, nor withdraw wages from a loan account...
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That money is shown in the books as a "Loan Account". She does not withdraw from it. She will be a legal Partner and Husband and Wife can share the profits 50/50 to lesson the tax burden..
Don't comment on stuff you know zilch about DJ.
 
marco said:
That money is shown in the books as a "Loan Account". She does not withdraw from it. She will be a legal Partner and Husband and Wife can share the profits 50/50 to lesson the tax burden..
Don't comment on stuff you know zilch about DJ.
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I'm well aware of what a loan account is, marco. I am also well aware that a loan account does not manage wages, which was your statement.

I can assure you that this is an area of business that I am well versed in. See this is another of these incidents where people have to correct you, and you go on the attack thereafter. Please stop trolling the business & finance forum now...
 
DJ... said:
I'm well aware of what a loan account is, marco. I am also well aware that a loan account does not manage wages, which was your statement.

I can assure you that this is an area of business that I am well versed in. See this is another of these incidents where people have to correct you, and you go on the attack thereafter. Please stop trolling the business & finance forum now...
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This is what I said.

She will have a "loan account" and be able to withdraw more wages.

I did not say that she can withdraw from the Loan Account. Makes me wonder who's trolling.
 
marco said:
This is what I said.

She will have a "loan account" and be able to withdraw more wages.
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Which is simple nonsense. The loan account has nothing to do with wages. How much simpler can one put this to you?!

marco said:
I did not say that she can withdraw from the Loan Account.
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But if you had, you'd have been right as there are various transactions against a loan account that one can account for, however wages is not one of them. But now you seem to be rather confused about this aspect as well. There are occasions, particularly when operating under a very tight cashflow, where a salary equivalent can be credited to a loan account, but in no way will you withdraw a wage from a loan account.

Each time you argue you go further down the rabbit-hole. I really don't understand why you insist on doing this...
 
On the bottom of my post I wrote: I stand to be corrected.

Now you calling me stupid and carry on like a clown. I said that for a reason.
How many more times must I tell you that I know that a loan account has nothing to do with wages. Do I have to draw you pictures?
Let me put it another way without using the words "loan account".

As the husband cannot donate 50% of the business to the wife, she will have to buy into the business with her own money. She then becomes a partner and they share the profits happily ever after.
 
marco said:
As the husband cannot donate 50% of the business to the wife, she will have to buy into the business with her own money.
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Those two are not mutually exclusive, and one can simply amend the partnership agreement. No need for your wife to save wages to buy into your business...

marco said:
She then becomes a partner and they share the profits happily ever after.
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Sure, that's better. Referring to loan accounts and wages is stupid, it really and truly is. Once again, the incorrect advice that you're giving will lead people to believe that wages can be distributed through a loan account for some form of tax avoidance, which is nonsense. It has nothing to do with wages...
 
Geez. DJ. Are you so thick in your head that after trying to explain to you twice, you still don't understand that I KNOW that a loan account cannot be used for wages. If you withdraw it then you have to pay it back or pay tax on it. Now stop it with this loan account thing.

Amend the partnership agreement????? What a load of twat. That will be as good as donating 50% to your wife. SARS will not allow this.
Any money donated to a spous is tax free but any profits the spous derives from it will be taxed in the hands of the donor. The wife will have to buy the 50% with her own money to be a partner. Believe me. I tried it and SARS will not allow it.
 
marco said:
Geez. DJ. Are you so thick in your head that after trying to explain to you twice, you still don't understand that I KNOW that a loan account cannot be used for wages. If you withdraw it then you have to pay it back or pay tax on it. Now stop it with this loan account thing.
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Then stop making statements to that effect for fsck sakes. If you simply explained yourself properly and didn't use terms you know nothing about, people wouldn't have to constantly correct you...

marco said:
Amend the partnership agreement????? What a load of twat. That will be as good as donating 50% to your wife.
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Oh dear, marco. Only if you're selling your interests to your wife at a hefty discount will there be any sort of donations tax, and even then SARS will only care about this if you're talking a company valuation in excess of about R100k (in fact I think this is an official allowance but might be for donations tax only and not the profits on donations). You can simply issue more shares, or amend the rights/profit splits in the business and have a formal agreement that the new shares or rights are in lieu of services rendered. You can buy in to the business formally in lieu of skills or services rendered. This forms a payment in SARS' eyes and is no longer considered a donation but needs to be a formal agreement, not simply a shaking of hands. Or you can simply debit your new partner's loan account and issue a contribution to match it later down the line. You can "bed and breakfast" this with genuine transactions as well which has its benefits, for other business types mostly though. Taxation is calculated at that point based on profit split and disposal of assets, not the acquisition of assets by the new partner.

Best to go with a limited company in these cases though, not just because of the separate legal status but because of the formal shareholders' agreement. Makes life so much easier than a bloody partnership agreement and profit splits, rights etc imo. Which luckily the OP has already gone for. All of these steps are far easier in a limited company in terms of issuing dividends to match the overdrawn amount reflected in the loan account, valuation of share capital, issuing of different share classes for pref shares, discounted shares etc.

Nearly everything is far easier when the business is a legal entity in and of itself, particularly when it comes to tax, as SPs and partnerships are really just extensions of the owners...
 
Took you awhile DJ. I explained myself quite perfectly but it seems that you have a short memory as the crux of the threads seem to change very quickly and you don't follow the changes. Pity actually as the OP must by now be having a nervous breakdown. He has not been back. I don't blame him.

What led me to this is that my wife and I have a large diffs in our investments. She has 4 times more than I have.:(
I phoned my broker to transfer shares into my account from hers. This can be done, he told me. But the gains from this will be hers as per SARS.
 
What does "ffs" mean? Have you been drinking? Fsck. Now that"s a whopper.
You don't realize that www is applicable even in Portugal.
 
marco said:
Took you awhile DJ. I explained myself quite perfectly but it seems that you have a short memory as the crux of the threads seem to change very quickly and you don't follow the changes. Pity actually as the OP must by now be having a nervous breakdown. He has not been back. I don't blame him.

What led me to this is that my wife and I have a large diffs in our investments. She has 4 times more than I have.:(
I phoned my broker to transfer shares into my account from hers. This can be done, he told me. But the gains from this will be hers as per SARS.
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Anyone care to explain why my broker's statement is wrong?
 
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