TAXATION (2011 tax year)

The next few months are likely to be hectic for practitioners and taxpayers alike.

Provisional taxes

The first provisional tax returns for the 2012 tax year are due on or before 31 August 2011. First time provisional taxpayers will need to provide us with reasonably accurate estimates of their income for that tax year. Existing provisional taxpayers are permitted to use the basic amount that is reflected on the returns that are issued by SARS. If they do so, they avoid the possibility of any penalties arising. However, if their income is likely to be substantially lower than the basic amount, they should consider the cash flow implications of providing an estimate. Those provisional taxpayers, whose income for the 2011 tax year, is likely to exceed the aggregate of the two provisional tax returns that have already been submitted for the year, have an opportunity to avoid incurring interest on the shortfall. To do this, they need to make a “top-up” payment by no later than 30 September.

First bi-annual PAYE reconciliation

Employers have from 1 September to 31 October to submit the reconciliation of PAYE payments for the six month ended 31 August.  It is possible that a revised version of e@syFile will be posted before those dates. Therefore, whilst it is advisable to start ensuring that your payroll records are complete and up to date, any data capture using that programme should be delayed until the submission period has commenced.

Company cars

You are reminded that, for the 2012 year, the fringe benefit for company cars is calculated by multiplying the deemed value of the vehicle by 3.5% or where the vehicle is subject to a maintenance plan by 3.25%. Employers will be required to include 80% of that amount in the employee’s taxable income and subject him/her to PAYE thereon. Provided that they have maintained a log book complying with SARS’ requirements, employees, when lodging their annual tax return, will be able to claim a deduction based on the extent of their business travel in a similar manner to those employees who obtain a travel allowance. Where the employee is able to prove that his/her business travel is equal or greater than 80% of the distance traveled, the employer is permitted to reduce the amount of the PAYE deducted. However, this is at the employer’s discretion. Employers are reminded that they need to account for VAT on the value of the company car fringe benefit. This is calculated based on a formula provided by SARS. You are welcome to contact us for guidance in these matters.

Voluntary disclosure

The deadline for these submissions is 31 October 2011. Further details are available at www.sars.gov.za/home.asp?pid=63327.

Transfer of Prime Residence from a Corporate Entity or Trust

Taxpayers, whose prime residence is held in an entity, have until 31 December 2012 to transfer these residences into their names. Subject to certain conditions, such transfer will be free of transfer duty and CGT implications. The process may take some time as it involves Deeds Office procedures. Therefore, we urge clients to start the process as soon as possible as attorneys and the Deeds Office is likely to be flooded with last minute applications. There will still be legal costs pertaining to the transfer and to canceling and raising bonds, if applicable.