What does a new tax year mean?
Well, it can mean multiple things.
1. Are you an employer and responsible for employees tax deductions as a results of PAYE, UIF, SDL and other taxes?
– February is the end of individual tax year. The ITR12 tax periods range from March to February the following year. This sum up the 12 months individual tax contribution to the state. You must have all your monthly EMP201 declarations complete, as well as the employer reconciliation done i.e. EMP501
If you also contribute the employee UIF via SARS please ensure that all your employees are equally listed under the company at the UIF. The company must obtain the unique UIF reference number. As you pay both your PAYE and UIF via SARS, note that every 6 months SARS send the UIF monies to them. It is important that after obtaining the PAYE no. you get it linked to that of UIF. If these procedures are not followed accordingly you will have the declarations only reflecting on the SARS portal and not on the UIF, thus you will experience some difficulties with employees claims, etc.
Please make sure that you have paid all the funds to relevant institutions as well. You should not be deducting monies from the employees yet you are not paying them. If you make your payments late you will also be charged late submissions penalties and interests. These additional fees also accumulate monthly. It is important that you close off your month on time and accurately.
The individual tax season opening and closing dates are always announced by the receiver of revenue. As an employer please make sure that you have provided your employees with the Tax certificates, also known as IRP5s
2. Do you run a company and the business financial year end is February?
What is the Financial year end?
It is the last day of a company’s accounting period. The accounting period is the time frame used to complete a business’s accounting cycle.
In simple terms, it is the month that you would have chosen when you register your company that you will account for the company taxes to the receiver of revenue. Which means it can be any month period in the year, not only February even though many businesses have Feb as their year end. If you are still not sure about your company financial year end, please check your company registration certificate – CK.
– If you have an active / operating business you need to make sure that you have prepared your Annual Financial Statements and ready for the submission. In the case of tax submissions the Income Statement and Balance Sheet are the important reports to submit. Only after the submission of the AFS you will know how much tax is payable. Few factors plays an important role in determining the tax value the company must pay. Information such as the company size i.e. the revenue, nature of business, etc. SARS looks at the net profit and decide the figure from there. The Net profit is called the taxable income.
While some companies may have a different financial year end, the administration and procedures remains the same across all companies.
It is important to note that in a case where the business was not trading you are still required to submit the nil returns. This is to communicate with the commissioner that though your company is still a legal entity it did not have any economic activities. If you do not submit, the return will remain outstanding. Failure to submit will have payable penalties added on your company.
3. Are you a sole proprietor or employee receiving an additional Income?
– some individuals are full-time employed by company X but that does not stop them to earn an extra income. It could be by selling products, affiliation with network marketing companies, offering skills, rental income, etc. This is the beauty of our democracy. It might be important that you disclose these commercial activities to your employer’s. Check your company policy and regulations with regards to this.
Though it is not illegal to have an extra economical activities in your spare time, do remember to comply. Every income need to be declared with the receiver of revenue. Additional incomes are treated differently as you are not contributing towards your taxes on a monthly basis in a form of a PAYE. Additional calculations must take place. You need to capture all the earnings derived from additional activities, less your expenses. You clearly need to indicate the figure correctly. You might have made a profit or a loss, either way you still need to declare. That is the right thing to do. The calculation will be treated as your “secondary IRP5” the primary being that of your employer.
It is your responsibility as a citizen of the country to make sure you understand the state ‘s expectations and comply. Non compliance is an offence and “I did not know” is not a valid excuse.
Be in the know and cover your back!
Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.
Matsobanemetja Business Consulting (Pty) Ltd is your accounting partner that you can entrust with the bookkeping function, right up to financial reporting. We helps you keep accurate records of your business finances.
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The hardest thing in the world to understand is the income tax.
– Albert Einstein
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