Results 1 to 4 of 4

Thread: income tax, invoices and payments

  1. #1
    just me duncan drennan's Avatar
    Join Date
    Jun 2006
    Location
    Cape Town
    Posts
    2,642
    Thanks
    119
    Thanked 94 Times in 77 Posts

    income tax, invoices and payments

    This is something that I've had people disagree with me on so I just wanted to get your opinion...

    My understanding is that income tax is payable on what has been invoiced, regardless of whether or not you've actually received the money (unless it is a bad debt which is written off).

    I've had people say no, it is only payable on what you've actually been paid.

    Obviously a tax consultant is the right person to ask, but what is your opinion?
    [SIGPIC]Engineer Simplicity[/SIGPIC]
    Turn ideas into products | The Art of Engineering blog

  2. #2
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    20,980
    Thanks
    3,055
    Thanked 2,462 Times in 2,067 Posts
    Blog Entries
    12
    In terms of Generally Accepted Accounting Practice (GAAP), the calculation of profit/loss on income statements is based on the date on which the liability (for either party) is incurred. In most instances this is when the invoice is generated/dated.

    When it comes to calculating taxable nett income, however, there are exceptions called practice notes. And there are lots of them.

    For example, the cost of your audit/drawing up of financial accounts is provided for in your income statement in the year the liability is incurred and accordingly reduces your profit for the year - ie. the financial year under revue. However, in terms of a recent practice note this cost is only allowed as a tax deductible expense in the financial year in which it is paid.

    Even if you're pretty good at drawing up accounts to Income Statement and Balance Sheet, I strongly recommend you run through them with an accountant who is familiar with all the ins and outs before submitting them to SARS for assessment. A half hour, or even one hour consult with a good accountant once a year is money well spent. In fact, I'd say the bare minimum.
    The trouble with opportunity is it normally comes dressed up as work.

  3. #3
    just me duncan drennan's Avatar
    Join Date
    Jun 2006
    Location
    Cape Town
    Posts
    2,642
    Thanks
    119
    Thanked 94 Times in 77 Posts
    Quote Originally Posted by Dave A View Post
    Even if you're pretty good at drawing up accounts to Income Statement and Balance Sheet, I strongly recommend you run through them with an accountant who is familiar with all the ins and outs before submitting them to SARS for assessment. A half hour, or even one hour consult with a good accountant once a year is money well spent. In fact, I'd say the bare minimum.
    That is for SURE! There is just way too much I don't know to wing it alone
    [SIGPIC]Engineer Simplicity[/SIGPIC]
    Turn ideas into products | The Art of Engineering blog

  4. #4
    Silver Member Candy Bouwer's Avatar
    Join Date
    May 2006
    Location
    Sunningdale Umhlanga, Durban
    Posts
    249
    Thanks
    1
    Thanked 4 Times in 4 Posts
    " Just make sure you choose one that is not "all talk" and no constuctive action."
    "NETWORKING" is a "CONTACT" sport!"
    Alcocks Electrical Entomological Hygiene

Tags for this Thread

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •