Anyone who needs TAX / Accounting Advice

[JustinIT]

Justin, just go to SARS, say you are self-employed and need to register as a provisional taxpayer.

Ok thanks, it sounds like a plan.

Do you know if you have to pay more this way or anything

[brown]

Hi i am a Government employee and would like to find out if there are any i can claim back on my tax.I am building at my house and paying vat on every thing.What can the normal guy on the street claim for SARS?

Hi Pilatus, unfortunately for you, as an employee you cannot claim anything on VAT.

You must be in a trade and registered for VAT to claim input VAT.

Even if you were in trade, you still wouldn't be able to claim any VAT on your house as it is for personal use and even if you were to use it for business purposes, you still wouldn't be able to claim any VAT unless if it was an industrial building...

Tax is crazy huh?

[brown]

Do you know if you have to pay more this way or anything

Provisional Tax and PAYE alike are not really taxes in themselves, but prepayments towards your Income Tax, but they help to relieve you of the burden come end of assessment year. At the end of the day, you still pay the same amount calculated per the tax tables.

BTW- in terms of your penalties, you should have filed a Notice of Objection, but that you can only do within 30 days of receiving the assessment. You must remember just because SARS say you owe them doesn't mean they're always right. They work on assumptions in cases like those and if you don't know the facts, you will end up paying more than you should.

[Dave U]

Hi Justin

I'm reposting my reply from the other thread where you asked this question, to be sure anyone with a similar question sees it:

It seems you've been misinformed by SARS. There are laws regarding 80% of revenue, but they apply to labour brokers and companies, not individuals such as yourself. So on that count, at least, the accountant was correct.

The actual law that is relevant here is exclusionary subparagraph (ii) of the definition of "remuneration" in the Fourth Schedule of the Income Tax Act. What this law basically says is that, even though employers don't normally have to deduct income tax from independent contractors, they are legally required to do so in the following cases:

• the worker is subject to the control of any other person as to the manner in which the worker’s duties are or will be performed, or as to the hours of work; or
• the worker is subject to the supervision of any other person as to the manner in which the worker’s duties are or will be performed, or as to the hours of work; or
• the amounts paid or payable for the worker’s services consist of or include earnings of any description which are payable at regular daily, weekly, monthly or other intervals

Note that, if any of the above 3 points are true for you, they are legally required to deduct tax. I'm assuming, at the very least, that the third point holds (you're paid regularly), if not all of them. I hope that having a reference to the actual law helps to convince your boss and his accountant. Are they deducting tax for the other workers at the company? If not, it's almost certain that your employer is just too lazy to do it correctly. Remind him that the law also says that he will be liable for the taxes to SARS, not you.

The bottom line is that simply calling someone a contractor does not make it so.

[Silvia41]

I am an independent contractor, but my employer(s) deduct PAYE on a monthly basis.

I would like to know what am I entitle to claim back, as an IT professional, I incur expenses related to my work, such as computer hardware and software, cell and 3G for communication purposes, books, studies, stationery, etc. What am I entitled to claim back?

Thanks for your help
Silvia

[eitai2001]

Hi Silvia.

Independant Contractors are unfortunately out of my focus at varsity. Usually I would say you are allowed to claim back all expenses incurred for business which would be the above (although hardware and software if your own, you would claim wear and tear, not the actual item), but since you are getting paid a "salary" and having "paye" deducted, I'm not quite sure. My gut tells me you would still be able to deduct these expenses but I can't say for certain.

Regards

Itai

[Podosky]

Does an Independent Contractor get Substance and Travel Allowance?

[eitai2001]

I'm afraid I can't really help you with Independant contractors ... but I would have two trains of thought:
1) If the contractor is treated as an employee and receives an allowance, he will be taxed upon it and thus will be allowed as a deduction what an employee is allowed.
2) If the contractor is treated as a company and receives an allowance, it will be taxed as an income to the company, and the related expenses will be allowed as a deduction unless specifically excluded in the act.

[Dave A]

Does an Independent Contractor get Substance and Travel Allowance?

From a tax point of view, by my understanding you can claim actual costs incurred in the generation of income.

Allowances are largely for employees, although there are exceptions. For example, if you attend a conference overseas for business purposes you may claim a daily subsistence allowance.

[Ice]

Hi Dave
I need serious help. My husband and I are starting a small business - we have just applied for the company registration number and are still waiting for that. I'm just anxious to make sure I am allocating all our expenses etc correctly and was wondering if you wouldn't mind answering a couple of questions? I would really appreciate. The business will be run from home - we'll be using about 20% of our house for an office and storeroom for products. I need to know if we are paying about R3500 bond on the property each month (only owe about R250 000 on the house which is valued at about R1.5 M) what portion of that can I allocate as a business expense? (i.e from the interest on the bond and can I allocate some of the bond payment towards it? or do I charge a rental? - percentage of the property value?
Second thing I need to know is - we own two cars - one is paid for and the other is on HP. Both cars will be used for business and private use by my husband and I. I need to know if there is a percentage I can allocate towards the vehicle that is paid off and also what amount of the HP plus interest can I allocate as an expense? These vehicles are privately owned - how does that affect things?
I keep reading this term "depreciation" with regards to office equipment etc - would this relate to the vehicles and if so - how? what about computers and the other office equipment?
I also need to know about travel allowances and could it apply to us? and if you keep a travel logbook - do you still keep all petrol slips etc? Jeez thats a lot of questions - I hope you can help.