SARS monitoring your bank account

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Government Gazette no. 35090 (the Gazette), issued on the February 29 2012, has fundamentally changed the access the South African Revenue Services (Sars) has to every person’s bank account information.

The Gazette gives notice that in terms of section 69 of the Income Tax Act all “reporting institutions” are required to submit bi-annual returns directly to Sars in respect of all monies “invested with, loaned to and deposited” with the reporting institution, and in respect of interest received by or accrued to any person from the “reporting institution”. The first returns, covering the period 1 March 2012 to 31 August 2012 are required to be submitted to Sars by 31 October 2012.

Accountholders may be lulled into a false sense of security in understanding this to mean that all banks will now simply submit information of all interest paid by the bank to an accountholder directly to Sars, instead of the accountholder being required to disclose the information to Sars themselves. Further reading of the Gazette proves this understanding dangerously inadequate.

Firstly, it is important to note how widely the gazette defines a “reporting institution”. Included in the definition are, for example, all banks (including Postbank), companies listed on the JSE that issue bonds, debentures and similar financial instruments and organs of state that issue bonds (government bonds).

Secondly, that the “reporting institutions” must submit returns for both natural persons and, as per the Gazette, “other persons” which will include companies and trusts.

Thirdly, and possibly of greatest concern, is the information the Gazette dictates each return must contain. Whilst the requirements differ slightly for natural and “other” persons, the issues raised below are common to both.

The returns must disclose for all persons: identity particulars and tax reference numbers, the closing balances of the accounts at the end of the relevant six-month period, any interest amounts received or accrued by the persons from the “reporting institutions” and interestingly, monthly totals of all debits and credits to the accounts.

No clarity has been provided on the use Sars will make of this information. The information at the very least will assist Sars in identifying all persons who should be registered for Income Tax and VAT purposes and the non-disclosure of all receipts and accruals (local and foreign) by registered taxpayers when making provisional payments and submitting returns.

via Moneywebtax – Sars has more access to your bank account – Income tax.

VAT is a money machine for big government in Japan

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For years, I’ve been warning that a value-added tax (VAT) would be a terrible idea. Simply stated, politicians would have no reason to control spending or reform entitlements if they had a new source of tax revenue.

In this video, I explain why this European-style national sales tax is a money machine for bigger government.

via Just as Happened in Europe, the VAT Is Becoming a Money Machine for Big Govenrment in Japan « International Liberty.

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South African women entrepreneurs

Entrepreneurs

The 2012 Sanlam / Business Partners Entrepreneur of the Year competition has seen a  5% increase in the number of female finalists  which is a critical sign that speaks to general health of the South African economy, say organizers of the competition.

The resonates well with  the GEM research report on South Africa which showed that the total early-stage Entrepreneurial Activity (TEA) for South African females improved by 161.3% from 2001 – 2010, growing from 3.1% to 8.1%.

In a statement the organizers said female entrepreneurial activity has been proven to be a major catalyst in triggering economic growth in developing countries.

via South African women venture into entrepreneurship | UJUH.

Four weeks left to prepare PAYE submissions

Taxes

Taxpayers have just four weeks to prepare for the SA Revenue Service’s interim pay as you earn (PAYE) submission season, which commences on 1 September. There are important changes that will affect the PAYE reconciliation and submission process.

New legislation that took effect in March this year means medical aid contributions are no longer allowed as a tax deduction for employees under the age of 65. The medical aid capped amounts have also been replaced with medical aid tax credits.

“Companies that have not applied medical aid tax credits for the first six months of the tax year must correct this before they process their last payroll run this month (August),” says Laurica Kok, general manager at Softline Pastel Payroll.

“Those that do not have the correct medical aid legislation in place when submitting interim tax certificates will find that SARS will reject their submissions and they could face penalties for incorrect or late submissions.”

Kok adds that individual income tax reference numbers must be reflected in each submission. If one or more tax certificates do not include the tax reference number, the overall submission will be rejected.

“There are other important changes that will affect interim PAYE reconciliation submissions. These include a new interest rate for low or interest-free loans fringe benefits. Following the July reduction in the repo rate, companies must ensure that they apply the new official interest rate of 6% when calculating fringe benefits for August 2012.”

A new IT3(a) Reason code for tax certificates has been introduced by SARS for non-deduction of PAYE and must be applied on interim tax certificates. Code 08 will indicate a zero PAYE liability due to medical aid tax credits applied.

There are also new source codes for fringe benefits and tax deductions that must be applied to interim tax certificates, replacing the consolidated values SARS required prior to the 2012 tax year.

“Companies using up-to-date automated payroll software will find that all of these SARS PAYE requirements are implemented automatically, ensuring submission compliance.”

via Companies have just four weeks left to prepare SARS interim PAYE submissions | ITWeb.

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Small business owners innovate to stay ahead

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Small business owners are increasingly diversifying and innovating as they look to capitalise on the busy summer of events in the UK and improve their bottom line, according to Avivas bi-annual SME Pulse.

The numbers of SMEs putting on sales and discounts, diversifying into new areas or reducing overall prices have all increased in the last six months, with the desire to capitalise on the busy summer of sporting and other events likely to be one reason for this.

via Small business owners innovate to stay ahead in tough environment | Easier.

SA business owners look and learn.