Tax Compliance in 2025: Help is at Hand

TAX COMPLIANCE IN 2025: HELP IS AT HAND

Being tax compliant and ‘paying your fair share’ is not just good for you, but also contributes to the positive growth of our country’s economy which in turn benefits all South Africans.

SARS

SARS has warned that it will intensify and deepen its existing administrative efforts to drive taxpayer compliance, deploying more data science and AI, and imposing significant legal and administrative costs on non-compliant taxpayers. This means that in 2025, maintaining full tax compliance will be more crucial than ever. Your best shot at ensuring all the compliance requirement boxes are ticked continuously and efficiently is to rely on our friendly and professional expertise.

BEING TAX-COMPLIANT IS A LEGAL REQUIREMENT FOR ALL SOUTH AFRICANS

SARS says it will be unrelenting in driving voluntary compliance in pursuing the 2024/25 tax revenue target of R1,840.8 billion.
To expand the tax base, detect dishonest taxpayers, deal with tax avoidance, expand debt collection, and improve service levels, SARS will:

Deploy more data science and artificial intelligence (AI)
Broaden the tax base via third-party data sources (banks, medical schemes, fund administrators etc.
Use predictive modelling to ensure all taxpayers and traders are registered, filing returns and paying dues
Build detection capability using machine learning models and AI
Enforce Customs and Excise trade laws against the illicit economy
Focus on dispute prevention and resolution.

Importantly, SARS is ready to act against those who willfully and defiantly ignore their legal obligations by misrepresenting their true economic status.
SARS will impose significant legal and administrative costs on taxpayers and traders who deliberately fail to meet their obligations.

What does Tax Compliance look like?

Your company needs to:

Be registered with SARS for all the tax types applicable to your company
Have either merged or declared all registered tax reference numbers on eFiling
Timeously submit all tax returns and other documentation requested
Keep all registered particulars updated
Pay all tax debt on time, or timeously secure a payment arrangement or suspension of payment
Deregister the business if it is liquidated or closed.

Remember that your tax compliance status is not static: it changes according to your continued compliance with tax requirements month after month. Also remember that SARS can impose both monetary and criminal sanctions to enforce compliance. This is a significant business risk, because the burden of proof, should a taxpayer disagree with a decision taken by SARS, lies with the taxpayer. In the event that the taxpayer fails to argue their case successfully, they may find themselves in a position where penalties are suffered even if the error was unintentional or administrative in nature.

Benefit from the advantages of tax compliance

When you comply with your tax obligations, you give your business some compelling advantages.

Eliminate the costs of non-compliance, like penalties, interest, and additional accounting and admin fees.
Avoid the risk of criminal offences, which may result in a fine, imprisonment or both. Common offences include not registering for a tax type, or simply not submitting tax returns.
Proof of tax compliance is considered an indicator of good company management and legal good standing.
Good standing tax clearance certificates are often required for tender applications, bidding processes or prequalification as a supplier. They can also be needed to receive payment, or for foreign investment allowances.
Compliance enables companies to gain the confidence of clients, stakeholders and investors; take advantage of business opportunities; and prevent reputational damage.

Help is at hand

Now more than ever before, professional assistance is the best way to consistently meet all the tax compliance requirements across all the relevant tax types over the tax year, and in an always-changing tax landscape. SARS itself recommends “employing an accountant, tax practitioner, or other tax professional to complete returns, or from whom to obtain advice before completing a return with entries that are not understood or adopting a position with tax implications” to ensure you have taken “reasonable care” when it comes to your tax affairs. We are well-versed in the requirements and deadlines of the various tax types and we’re also on top of the latest rules and processes. In a nutshell: we have the tax expertise to ensure you remain tax compliant all through 2025.

3 Things you have to do to position your business for growth in 2025

3 THINGS YOU HAVE TO DO
TO POSITION YOUR BUSINESS FOR GROWTH IN 2025

There are no secrets to success. It is the result of preparation, hard work and learning from failure.

Colin Powell - US Secretary of State

In a world where market conditions and consumer preferences are constantly shifting, many business advisors tell leaders to be agile and adaptable if they want their businesses to succeed. While this can be effective, it’s even better for your business to already be positioned to take advantage of any changes that may occur. Whatever the size of your business, the right planning and structure can lead to growth. Here are three proactive things you can do that will pay off in the long run. Every business should conduct an extensive review of its business operations at least once a year. Doing a review allows you to track your company’s progress towards achieving its goals, to evaluate current strategies, practices and operations, and to determine what’s working and what isn’t.

OF COURSE YOU PLAN FOR YOUR BUSINESS TO GROW…

… but in an environment of constant change, it can be hard to know where to place your energy. These three focus areas will help you position your business for growth, regardless of the external circumstances.

Clean up your finances
A business that’s ready for growth is one that understands its finances. How much money can you afford to spend on advertising? What investments need to be made to maintain infrastructure or hire the right staff? And can you afford to keep going if there’s a disruption in your supply lines? Businesses with tidy finances are able to answer all of these questions and more. If you can’t answer every conceivable question about your finances, then you need to ask your accountant (that’s us) to help you get them in order. Here are a few pointers:

Separate business and personal finances
Business finances that are intermingled with personal ones create confusion and make it difficult to get a clear picture of just where the business is headed.
Introduce bookkeeping software
You may not have the time to stay on top of your finances when you’re running the business – but that’s okay. Using bookkeeping software can keep you one step ahead of the game, and it will definitely save your accountant time.
Regularly update your financial statements
Ask us to keep a set of financial statements up-to-date and on hand at all times. Financial statements can open doors, allowing you to get necessary funding, apply for awards or government incentive programs and/or build an accurate business strategy.

Optimise your client base
Improving company finances doesn’t have to mean introducing new products or expanding into new territories. It’s far simpler to maximise the benefit you’re getting from your current market. Do this by ensuring your sales and marketing teams are functioning at the best possible level, getting the right information to your clients, and then maximising the impact they have on those clients. Focus on building genuine relationships with your customers by engaging with them and their needs, providing top-level service and offering value beyond the sale. If you truly care for your customers they will care for you, and you will find yourself at the front of the queue when it comes to new market information and advice on how your product could be improved. Your sales team should also be encouraged to follow up with potential new clients to ensure opportunities aren’t being missed.

Analyse your existing offering
Growth can also be generated by making sure you’re offering the products your clients need at the right price. It’s no good pouring money into a product that’s not right, or which isn’t as good as its competitors. The first step to finding out if you’re on the right track is to ask yourself the question, “If we stopped operating today, would anyone miss us?” If the answer isn’t a resounding yes, then you need to immediately investigate what changes need to be made. Do you need to bring on new products to fill the missing gaps in your offering? Is there an essential thing that your product could be doing better? If you aren’t continually striving to deliver the best product in the perfect price range, then you’re probably falling behind.

The bottom line
A company is like the human body. It needs to be perfectly optimised to run at its best level. Making the changes to improve your business health today will pay off in the long run. If you need any help with the financial side of things, please speak to us.

Our exciting new partnership with Anchor Capital

Unlock the Benefits of an End-of-Year Company Review

UNLOCK THE BENEFITS OF AN END-OF-YEAR COMPANY REVIEW

In the business world, the rearview mirror is always clearer than the windshield.”

- Warren Buffett

An effective year-end business review can be a powerful tool for any firm. It identifies effective business processes and highlights areas for improvement, making it easier to formulate a solid plan for the upcoming year. With our friendly and professional assistance, even the busiest business owners can complete a comprehensive annual business review. We’ll collate all the info, and we’ll help you to understand the numbers, so you can make informed business decisions – setting your business up for greater success in 2025.

Every business should conduct an extensive review of its business operations at least once a year. Doing a review allows you to track your company’s progress towards achieving its goals, to evaluate current strategies, practices and operations, and to determine what’s working and what isn’t.

THINK OF IT LIKE GOING TO THE DOCTOR FOR AN ANNUAL CHECKUP

The benefits of a year-end review
A year-end review enables you to evaluate business performance across business functions and to identify trends and issues before these become serious problems. It requires checking progress on goals, objectives and key performance indicators (KPIs). This will reveal what is already working well (these processes can be enhanced and replicated), as well as what is not working – prompting you to realign the team or change tactics. All of this empowers you to chart a well-informed plan of action for the year ahead.

What should be included in an annual business review?
For a big-picture understanding of your business’ performance across the various business functions over the last year, a multitude of factors should be reviewed. Luckily, we can help with putting everything together.

Financial reports, including:
- Annual financial statements and management accounts
- Profit and loss (P&L) statement comparing total income to total expenses
- Cash flow statement to identify cash flow problems and inform budgeting and spending decisions
- Debtors’ reports enabling proactive management of current and overdue invoices for improved cash flow
- Budget vs actual spending report to identify areas over or under budget
- Balance sheet summarising total assets and liabilities, shareholders’ equity, investments and retained earnings
Company vision, mission and values
Business plan covering:
- Market conditions, industry changes and competition
- Client base, changing client needs and client satisfaction
- Goals, objectives and KPIs (Key Performance Indicators)
- Current and pipeline projects, new opportunities
Human resources, key roles and employee satisfaction
Customer acquisition cost and lifetime value
Products/services, value proposition, quality, prices and fees
Sales, advertising, marketing and branding
Costs and expenses, including tax liabilities
Internal systems and processes, equipment, and resources
Statutory documents, registrations, certifications and contracts

The smartest way to benefit from a year-end review
Collating all this information may seem overwhelming, but with our professional assistance it can be done quickly and efficiently. Our team will also assist you to understand the numbers and what the data says about your business. This insight will enable you to enhance or duplicate the processes that are already generating good results and to identify the changes necessary to obtain better results in other areas. It’s all about creating a solid plan for the upcoming year, so you can set your business up for greater success in 2025.

Can You Afford to Work Overseas? How Double Taxation Agreements Work

CAN YOU AFFORD TO WORK OVERSEAS? HOW DOUBLE TAXATION AGREEMENTS WORK.

The hardest thing in the world to understand is the income tax.

- Albert Einstein

If you live in one country and work in another, you may already be aware of the threat of double taxation. Your country of residence may want to claim tax for the services it provides, while the country you work in may want their income taxes too. It’s a tricky scenario that changes depending on the specific circumstances. To try and prevent this from happening, South Africa has entered into Double Taxation Agreements with 79 countries. But even when the law’s on your side, it can still be confusing. Read on for the lowdown…

With an increasing amount of business being conducted online, it’s perfectly possible to live in one country and earn an income in another. If you are conducting services for global corporations and earning foreign income in another country, you could get caught up in a world of tricky tax situations. Under these circumstances, you can find yourself being taxed twice, both in the country where the business is conducted and here at home in Mzansi. To prevent this scenario and encourage South African residents to bring valuable foreign income into the country, the government has enacted Double Taxation Agreements (DTAs) with 79 foreign powers. If applied correctly at tax time, a DTA should mean you don’t pay tax twice.

HOW DOES IT WORK AND WHAT ARE THE PITFALLS?

Check your residency status
Many people incorrectly believe that DTAs mean that income earned in a foreign country is taxable in that country. While the exact terms of each DTA are different, most DTAs actually give taxing rights on employment income to the residential country, unless the services are rendered elsewhere. This means that if you live in South Africa, you should pay all of your taxes in South Africa. On this basis, any taxes also paid to the government of the country in which the income was earned might qualify you for tax relief in South Africa.

Surprisingly though, in some cases, and depending on the domestic legislation in the particular country, an individual may find themselves tax resident in both South African and the other country, regardless of where you live. This can have enormous implications on your legal obligations and the taxes you end up paying. Luckily, all DTAs cater for such instances, with a set of rules to apply to determine which of the two countries you will ultimately be deemed tax resident in. That’s why it’s vital to ask your accountant to first examine the laws and determine just where you are officially resident and how the specific DTA applies in your case.

Do you need a tie-breaker?
Some South African residents working in foreign countries should normally be given tax residency certificates by the country where they make their income. But don’t fall into the trap of assuming this means you’re not a South African tax resident. More likely you now have dual residency for tax purposes and will be required to apply a tie-breaker test under the specific terms of the relevant DTA to determine just where and how you need to pay taxes. For something that was supposed to make things simpler and decrease the tax burden on residents earning money overseas, DTAs can actually be somewhat onerous.

Does the DTA even apply?
The fact that there’s a DTA between South Africa and the country of your income may fool you into thinking you’re automatically exempt from paying taxes in one of the two countries, but this is not so. DTA relief is something that must be proven in South Africa before it can be granted. SARS will want proof of your claims – only once they have satisfied themselves that the income is earned offshore will the DTA exemptions apply. The bad news is that if you do not have the relevant supporting documentation, SARS may choose to view the omission as a material non-disclosure. The good news is that your accountant can help you assess what documentation you need.

speak to us

If you’re earning foreign income but living in South Africa, please speak to us. We can help you to avoid paying more tax than necessary. Or, worse still, falling foul of the law.

What More Can We Do for You This International Accounting Day?

WHAT MORE CAN WE DO FOR YOU THIS INTERNATIONAL ACCOUNTING DAY?

Accounting is the bridge between financial chaos and structured prosperity..

- Amanda Green

International Accounting Day is the ideal opportunity to assess the value of robust accounting in your business. Now’s the time to ensure you’re enjoying all the benefits a professional accountant can unlock for you. Simply reach out to us, and we will gladly help you to identify areas where our expertise and experience can add further value to your business. Whether it be ensuring compliance, optimising tax or enabling strategic planning for future growth.

INTERNATIONAL ACCOUNTING DAY

International Accounting Day is celebrated on November 10 every year. The day is all about acknowledging the role of accountants in supporting businesses and the economy – at local, national and global levels.

ACCOUNTANTS SUPPORTING THE ECONOMY
Accountants are integral to any economy, as they:

Enable strong, sustainable, and inclusive global economic growth through quality financial reporting, auditing, and ethical behaviour.
A greater number of accountants correlates to better economic performance in each measure reviewed in IFAC research.
Accountants who are members of professional accountancy organisations (like SAICA), make an even more meaningful contribution, correlating to even stronger performance on the economic indicators.

Source: The International Federation of Accountants (IFAC)

ACCOUNTANTS SUPPORTING BUSINESSES
At the risk of tooting our own horns, now seems a good time to remind you of the many ways that we help businesses to not only survive but also thrive. We can do this by:

Translating companies’ financial data, so all stakeholders can “understand the numbers”, using accounting, aka the “language of business”.
Monitoring, recording and reporting business performance.
Keeping track of finances to help you manage cash flow.
Enabling accurate budgeting.
Ensuring compliance with laws and regulations to help you avoid penalties.
Managing payrolls.
Optimising your tax affairs.
Facilitating informed, data-driven decisions by providing understandable financial reports that help you to:
- identify the most profitable products or services
- optimise spending
- allocate resources to high-growth areas.
Enabling accurate forecasting of revenue and expenses, and informed financial planning.
Detecting and preventing fraud by identifying red flags and investigating suspicious transactions.

REAP ALL THE BENEFITS AVAILABLE

This International Accounting Day is a great opportunity to ensure that you and your business are reaping all the benefits of having a professional accountant in your corner. Simply reach out to us, and we will gladly identify areas where our expertise and experience could add further value to your business…Be it ensuring compliance, optimising tax or enabling strategic planning.

Global Corporate Tax Changes: Advice Is More Crucial Than Ever

GLOBAL CORPORATE TAX CHANGES

Over the next few years, we are also implementing a global minimum corporate tax to limit the negative effects of tax competition.

- Enoch Godongwana, Minister of Finance, Budget 2024

There have been significant shifts in the corporate income tax landscape of late – not only in South Africa, but across the globe. The global minimum tax is a pertinent example. And although its immediate impact is on large multinationals, the changes could well benefit local businesses in the long term. This and other pivotal changes in global and local company income tax (CIT) regimes underscore how important the right tax advice is for businesses of all sizes in today’s fast-changing business world.

There have been significant shifts in the corporate income tax landscape in South Africa and globally. Recent trends noted by the OECD and The Tax Foundation include:

Statutory corporate income tax rate changes in 13 countries in 2023
A reversal of a two-decade downward trend in corporate tax rates
An increase in the average global CIT rate from 20% to over 21% in the last year

Corporate tax rates have declined from the highs of an average 40% in 1980 and 28% in the early 2000s to around 21%. South Africa has also reduced its CIT rate over the years, from 30% in 2000 to 27% in 2022 – but it is still substantially above the international average.

A new global tax treaty
Dubbed “an historic step towards changing the financial landscape”, 110 UN Member States, including South Africa, recently voted in favour of the terms of reference for a new global tax treaty. The UN says that all 193 UN Member States could vote on a finalised UN global tax treaty as early as 2027. In the meantime, more than 140 countries have already agreed to this global minimum tax, and some have already implemented this tax reform, including South Africa. Finance Minister Enoch Godongwana announced in his 2024 Budget Speech that South Africa will be implementing the global minimum tax with effect from years of assessment commencing on or after 1 January 2024.

Why a minimum global tax?
Multinational companies use tax planning strategies, like moving profits to low-tax jurisdictions, to minimise their tax liabilities. A global minimum tax aims to ensure that these multinationals pay their fair share of taxes, regardless of where they operate. This limits the race to the bottom of effective corporate tax rates for large multinationals, with countries competing to attract income by offering low tax rates and tax incentives. On a social responsibility level, it goes without saying that companies should contribute fairly to the financial stability of the countries they operate in.

Who is affected?
A global minimum tax will ensure that any multinational enterprise group with annual revenue exceeding €750 million (+-R15 billion) will be subject to an effective tax rate of at least 15%, regardless of where its headquarters, operations, sales or profits are located.

Implementation in South Africa

Government plans to introduce two measures to effect this change for qualifying multinationals:

The income inclusion rule applies to multinational entities headquartered in South Africa and requires a tax top-up if the effective rate in the jurisdictions the multinational entity operates in is lower than 15%. This tax is payable to SARS as opposed to the relevant jurisdiction.

The domestic minimum top-up tax applies in situations where the multinational entity’s effective tax rate in respect of its South African profits is lower than 15%. In such circumstances, the South African constituent entities of the multinational entity are jointly and severally liable for the top-up tax.

What is the expected impact?
A global minimum tax will ensure that multinational corporations contribute their fair share of taxes in jurisdictions where they operate, curbing tax avoidance and safeguarding countries’ tax bases. It’s expected to generate significant additional tax revenues for many countries, especially those in the Global South.

In South Africa, National Treasury predicts that implementing the global minimum tax will bolster our corporate income tax base by approximately R8 billion in 2026/2027. Whether a global minimum corporate tax can deter corporate tax avoidance and evasion remains to be seen. Concerns have also been raised about the impact on companies’ competitiveness, likely increased compliance costs, and possible double taxation.

Will it affect SMEs?
In the long run, the changes should benefit smaller local companies. With a broadened tax base, there may be opportunities in South Africa to lower the personal income tax burden on individuals, or to consider more globally competitive corporate tax rates than the current 27%, which is well above the international average. The change may also create a more certain and predictable global tax environment, which is conducive to long-term planning and investment decisions.

WHAT NEEDS TO BE DONE?

Qualifying multinationals should assess their effective tax rates for the income inclusion rule and domestic minimum top‐up tax from 1 January 2024. Their local and global tax planning, and financial structuring, may need to be reviewed and updated.

While this probably doesn’t apply to your business (yet), companies of all sizes should note the significant shifts in international and local tax policy. This makes our up-to-date, expert tax assistance a must-have for every company navigating the changing tax landscape.

Business Owners: Have You Tried These Money-Saving Hacks

BUSINESS OWNERS: Have You Tried These Money-Saving Hacks?

Beware of little expenses; a small leak will sink a great ship.

- Benjamin Franklin

Times are tough, so it’s only natural to look for ways to scale back and save money. Retrenchments and cutting down on marketing are both popular solutions. But there are many more effective ways to save money, restructure cash flow and put your business on a healthier footing.

When a company is struggling with cashflow, or simply looking to improve profitability, the directors will often consider making grand sweeping changes like retrenching staff, slashing the marketing budget or even selling off resources. While this kind of kneejerk reaction can provide instant gratification, it may not be the solution to your long-term struggles. Cutting back on marketing might impact future sales, for example, and end up making things even worse. That’s why it’s often a good idea to eliminate small expenses and wasteful expenditures, when you’re looking to streamline cash flow. Here are five simple ways to save money that you may not have considered.

HERE ARE 5 HACKS YOU COULD IMPLEMENT RIGHT NOW

Beware bank charges
How did your company open its first bank account? Why did you choose that particular bank? If you haven’t thought about these things in a while, now’s a good time to start. The first step would be comparing bank charges – how much are you being charged to transact, and could you be paying less? Your accountant can help you to break down your company’s needs and find the best solution. Do you need to transact every day, or can you save money by paying off your creditors in scheduled payment runs? Would bundled services work better than transacting at will? How many credit cards do you need? Do you use overdraft facilities? The bottom line: stop paying for services you don’t need.
Trim the tech costs
Technology is essential for running a business, but do you need (or even use) everything you currently have? Costs such as software subscriptions, fibre lines and cell phone contracts should all be looked at closely. Do you need a 200Mb/s download or will a 50Mb/s work just as well? Which of your employees really uses their company phones to generate profit? Small businesses will even benefit from looking at their software licences. Many popular work solutions have free, open-source counterparts that work very well and don’t require a monthly payment. Even if you decide you do need to pay for licences, you might be able to cut down on the number of licences.
Exercise office efficiency
Monthly utilities may seem like something you can’t go without, but it might be wise to reconsider. Have a look at your work arrangement. Could you operate a shared desk situation for hybrid workers? Have you considered installing flow restriction nozzles on bathroom taps, and LED bulbs in the light fittings? Reducing the size of your office space and then maximising the savings attained on the utilities can save thousands each month – money that could be spent on attracting new clients.
Commit to your favourite vendors
In business, commitment can be a cost-saving. If you have regular suppliers you’re happy with, why not speak to them about longer-term arrangements for cheaper monthly charges? Small business owners are particularly guilty of accepting supplier prices without considering the various ways these can be negotiated. Some of your suppliers might place great value on a one-year contract as opposed to a month-by-month one. Or they may be prepared to throw in free services in exchange for your guaranteed monthly spend. Ask your accountant to take a look at your current supplier arrangements and suggest alternatives and/or ways to reduce costs. It could have a significant impact.
Adjust your payment and collection terms
Most big companies have their invoice payment and collection systems down to a fine art – but smaller businesses may not even think about them. Making sure that your creditors settle their invoices long before you need to make payments yourself allows you to benefit from the interest of having money in your account. It also ensures you never have to pay fines for missed payments or become overdrawn. As your accountants, we can help to streamline your payment and collection terms, and potentially achieve some significant savings.

THE BOTTOM LINE

Making cost savings doesn’t need to mean losing clients, products or expertise. And the hacks above are just the tip of the iceberg – there are loads of other small ways to save money.
Speak to us about taking the small steps to greater profitability.

Ready to Submit Your Interim EMP501 Reconciliation by 31 October

READY TO SUBMIT YOUR INTERIM EMP501 RECONCILIATION?

The interim reconciliation process has become an integral part of the employer reconciliation and assists employers…

- SARS

Yes, yet another EMP501 reconciliation is due! That’s because not one, but two recons are due in each tax year. By 31 October, the interim EMP501 reconciliation for the last six months must be submitted, accurately and on time. We can provide expert help to smooth the submission process and help you maintain your compliant tax status. We’re dedicated to helping you avoid financial penalties and interest, while unlocking the benefits of a process which serves to assist employers, according to SARS.

Employers are assisted by the interim EMP501 reconciliation, says SARS, because it makes it easier to:

make more accurate annual reconciliation submissions
maintain an up-to-date employee database
register employees for income tax purposes

Of course, there are other benefits, such as maintaining your compliant tax status, and avoiding wasting money on stiff penalties and interest. It goes without saying that you want to reap all these benefits for your business. Allow us to help you to understand what needs to be done. We will be able to assist in ensuring a smooth, hassle-free submission process – even with the next deadline right around the corner.

EMP501 RECONCILIATION FAST FACTS

All employers are required to submit an EMP501 Reconciliation
There are two deadlines in each tax year. For the 2025 tax year the deadlines are:
- 31 October 2024 – 2025 Interim Reconciliation (for the period 1 March 2024 – 31 August 2024)
- 31 May 2025 – 2025 Annual Reconciliation (for the period 1 September 2024 – 28 February 2025)

POTENTIAL PITFALLS

The EMP501 Reconciliation is an intricate process which creates many opportunities for errors:

Payroll information must be verified
Correct deduction of employees’ tax (PAYE), Skills Development Levy (SDL), and Unemployment Insurance Fund (UIF) contributions must be verified
Deductions must reconcile with IRP5 / IT3(a) tax certificates
Employment Tax Incentive (ETI) values claimed must be reconciled
EMP201 returns must be reconciled with actual payments made to SARS
EMP201 returns must be reconciled with EMP501 statements
Employee information needs to be updated on eFiling
Employees without tax numbers must be registered
Employer’s Reconciliation Declaration (EMP501) needs to be submitted via the eFiling website or the e@syFile application

This is an intricate and time-consuming process, and, as SARS puts it, “accuracy and timely filing are critical”.

CONSEQUENCES OF NON-COMPLIANCE

This is serious business. Inaccuracies or late submission can result in severe consequences.

Calculating PAYE liability incorrectly will result in the imposition of both penalties and interest. This includes corrections made on the EMP501 reconciliation, as any shortfall is attributed to the last month of the reconciliation period.
If an employer submits their EMP501 late, administrative penalties will be charged. The penalty will equal 1% of the year’s PAYE liability, increasing each month by 1% (up to a maximum of 10% of the year’s PAYE liability).
An employer who wilfully or negligently fails to submit an EMP201 or EMP501 return to SARS is guilty of an offence and could face a fine or imprisonment for a period of up to two years.

THE BOTTOM LINE

The penalties are stiff, and the submission process is fraught with opportunities for inaccuracies and errors.
We understand the importance of tax compliance to your business. And we have the expertise and experience to help ensure a smooth and stress-free submission for you.

How to survive Trust Tax Season 2024

HOW TO SURVIVE TRUST TAX SEASON 2024

A Trust is a ‘person’ for tax purposes and is therefore a taxpayer in its own right.

- SARS

Trustees take note! The 2024 Tax Season for trusts opens on 16 September this year and will close on 20 January 2025. During this time, all trusts – including dormant trusts – are required to submit income tax returns aligned with other SARS reporting requirements and accompanied by extensive supporting documents. With the delayed filing season opening date and the numerous changes that have recently been implemented, trustees should rely on our expertise to ensure all the compliance boxes are ticked and penalties are avoided.

ONEROUS REQUIREMENTS

With Tax Season 2024 for trusts opening on 16 September, there’s no better time to draw trustees’ attention to SARS’ continued emphasis that all trusts must register for income tax purposes, including dormant trusts. Once registered, trusts are obligated to submit income tax returns that are aligned with other trust reporting requirements from SARS and substantiated by extensive supporting documents and information.

Trustees are held responsible for non-registration of trusts for income tax, and they will not be able to evade enforcement actions by blaming third parties for failing to file returns. “But I didn’t know I was meant to,” is not a valid excuse. Trust tax returns can be filed from 16 September 2024 (much later than the usual June/July opening) until 20 January 2025. Along with the new filing season dates, trusts also face several onerous compliance requirements – and some stiff potential penalties.

SARS introduced changes to the Income Tax Return for Trusts (ITR12T) last year, with additional probing questions, and even more mandatory supporting documents.
The range of mandatory and supporting documents that must be submitted with the ITR12T depends on the trust type, and may include:
- - - - All certificates and documents relating to income and deductions
      - Trust Deed and Letters of Authority
      - Resolutions/minutes of trustee meetings
      - Details of the ‘Main’ Trustee (the SARS registered representative)
      - Financial statements and/or administration accounts
      - Particulars of assets and liabilities
      - Confirmation of banking details
      - Proof of payment of any tax credits
      - Supporting schedules

Detailed disclosure of the beneficial ownership, including the submission of identity documents of all beneficial owners. This information will be checked against the beneficial ownership register lodged with the Master of the High Court. Non-compliance could result in a trustee receiving a fine of up to R10 million, a prison sentence of up to 5 years – or both.
To provide SARS with a clearer understanding of the assets, income and activities within trust structures, trust returns now feature additional questions such as any local or foreign amounts vested in the trust as a beneficiary of another trust.
Information reported on the trust tax return must also align with the IT3(t) reporting of prescribed information by trusts, now also mandated by SARS. It includes trust distributions and their beneficiaries, trust and beneficiary demographic information, trust financial flows, and amounts vested in a beneficiary, including net income, capital gains and capital amounts. The first IT3(t) certificates are due to be submitted at the end of September 2024 for the 2023/24 tax year, and then on an annual basis.
Despite the above reporting deadline, SARS confirmed that trust beneficiary income tax returns will not be pre-populated with IT3(t) data for the 2024 year of assessment. This means trustees must also provide details of trust beneficiaries’ 2024 trust earnings timeously to the beneficiaries for inclusion in their personal income tax returns, for which the submission deadlines remain unchanged despite the change in the trust tax filing season.

WE CAN HELP YOU SURVIVE TAX SEASON 2024

Without professional assistance, surviving trust Tax Season 2024 would be a tough ask. The complexity of the processes and the new requirements exponentially increase the risk of errors. And that’s before you factor in the significant time required to manually upload the extensive list of supporting documents – especially in light of SARS’ increased efforts to improve tax compliance and the severe penalties for non-compliance.

Luckily, you can rely on our friendly, professional assistance to ensure all the compliance boxes are ticked and penalties are avoided this trust Tax Season.

News Category: Finance