APRIL 2010

INTRODUCTION

The start of the filing season, at the beginning of April heralds the start of an extremely busy time for tax practitioners. Submission deadlines are imposed upon us in respect of tax returns and SARS rates us on our performance. If we do not meet the SARS targets, the submission periods imposed upon our clients for future years could be reduced. Therefore, it is of paramount importance that clients provide us with their documentation as soon as possible. Later in this issue, we supply a list of information that is commonly required for the preparation of individual tax returns.

TECHNOLOGY

Normally, to copy and paste, one either uses the icons or CTRL+C and CTRL+V options. However, in Excel, the enter key can be used instead of the paste command. Simply, select the cell that you wish to copy and use the copy command. Then, place the cursor on the destination cell and press enter.

Often, when adding a column of figures that includes calculations, the total may be out by a few cents. This is because the cells that contain calculations are returning an answer with an infinite number of decimal places. To avoid this, always use the ROUND function. Say, you wish to divide 100 by 3 and show the answer to the nearest two decimal places. Type =ROUND(100/3,2) the answer 33.33 will be shown.

TAXATION

Preparing for submission of tax returns –Individuals

The following is a list of documentation that we need to enable us to prepare your tax return. Whilst it is fairly comprehensive it is not exhaustive. 

Items in italics are required from business owners, company directors or members of Close Corporations.

• A monthly log sheet in respect of the vehicle that you use for business. This should reflect opening and closing odometer readings for each day and a column that splits the distances travelled between business and private. An explanation for each business trip should also be provided. (See our February issue for a specimen).

• Invoices in respect of any new assets acquired, any improvements made to existing assets and details of any assets sold with the sales price thereof

• Any new instalment sales agreements and statements in respect of those agreements and existing ones.

• Medical accounts that you have paid without claiming from your medical aid or for which the claim was rejected indicating the reason for the rejection

• All bank statements from overseas banks where interest is reflected  

• An IRP5 from your employer  

• An IRP5 from retirement funds in respect of any lump sum payouts together with a copy of the tax directive relative to the lump sum

• An IT3 certificate from each financial institution with which you have investments. In the case of unit trusts, this will include an IT3(C) that reflects Capital Gains Tax information.

• If you sold an asset, such as land and/or buildings, details of the purchase and sales price will be needed as well as documentation supporting relating to improvements carried out by you.

• A certificate of contributions and member’s share of expenses from your medical aid scheme.

• An interest certificate from your medical aid scheme in respect of interest earned on the savings portion of your contribution.

• Contributions certificates from assurance companies for contributions to retirement annuity funds and income continuation policies.

• If you changed your bank account since your last tax return was submitted, details of the new account must be provided (see below)

Change of bank account

SARS requires the following whenever your bank details change:

• Either an original blank cancelled cheque or a letter from your banker confirming the existence of the account. This should reflect the name and type of the account, the account number and branch code of the branch at which the account is held.

• A certified copy of your identity document.

If you visit a SARS office in person, the account details can be updated immediately. If the information is lodged by a tax practitioner, there will be a delay of approximately twenty-one working days. Therefore, taxpayers, who anticipate a refund, are advised to validate their banking details in person.

Payments to SARS

SARS is slowly but surely moving away from operating banking halls. It is only a matter of time before the only means of meeting your SARS commitments will be via direct deposits at commercial banks, EFT or EFiling. The latter alternative is possibly the best option as the payment may be made at the same time as the relative return is lodged.

DEADLINES

Promotion of Access to Information Act- 31 December 2011

Annual Duty – end of the month following incorporation date

Consumer Protection Act – October 2010

New Companies Act – no new CC registrations – approx. July 2010

Employers’ Tax Season – 1 April to 31 May 2010

ECONOMY

The strength of the rand, whilst weakening slightly in the last month, has made a significant contribution to the lowering of the consumer price index (CPI). It is for this reason that a further reduction in the interest rate is not anticipated in the short term. However, with the Escom hikes, and likely tariff increases from municipalities, educational bodies and the medical sector, amongst others, a rise in the CPI may be expected in the second half of the year. This may result in further drops in interest rates at that time. However, COSATU’s continued criticism of the SARB’s inflation targeting may see that institution succumbing to pressure and leaving interest rates alone.

Once the furore over the World Cup abates, a clearer picture of the likely course our economy may take will emerge. It is in all our interests to ensure that we do everything in our power to ensure the visitors see our country as a preferred tourism destination. By offering world-class service and good value for money, we may achieve this objective and, thereby, reduce the number of jobs that may be lost in the wake of the World Cup, when construction and sectors that geared up for increased business prior to and during the event, start to shed surplus staff.

CIPRO

A further problem that has come to light over the last month is that information, which previously had been lodged with CIPRO, no longer appears on the annual return form. This necessitates the re-submission of that data. To do so, a fresh CK2 form has to be lodged and a charge is levied by CIPRO for this submission. In addition, the form that is lodged must be an original document bearing the signature of all members. This is necessary in order to rectify shortcomings in CIPRO’s IT systems. Through one of our professional institutes, we have lodged a request for CIPRO to consider an alternative method of correcting these omissions.

BUSINESS

With the economy showing positive signs of recovery, it may be opportune for the prudent business person to prepare for growth. The drafting of a plan of action is an important aspect of that preparation. Some points to consider in that process are:

·         What contribution does your business make to the economy and is this sustainable?

·         What is the impact on the environment and the local community?

·         Have you a five-year plan in place that covers topics such as market share, turnover targets etc?

·         What are your targets for the next twelve months?

·         How will marketing and financing impact on those targets?

·         What plans or systems are in place to monitor and evaluate the performance of the business against those targets on a daily, weekly and monthly basis?

TAILPIECE

“Courage is the first of human qualities because it is the quality that guarantees all others.” – Winston Churchill