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Thread: Anyone who needs TAX / Accounting Advice

  1. #71
    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by Imp View Post
    Hi i meant entertainment for staff such as year end functions or team building events.
    AFAIK you won't be able to claim input VAT on the end of year staff function, but teambuilding might also be described as training...
    The trouble with opportunity is it normally comes dressed up as work.

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    Hi Itai. I have a property business and may receive funds from abroad from potential investors. Are these funds deemed to be income in the current tax year (i.e. when funds are received)? Would my business be taxed on the entire funds or may I deduct certain costs/expenses etc.? What rate of tax would that be...??
    I would appreciate some input if you can assist. I am not very good at the finance stuff...
    Many Thanks

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    If the funds are an investment (loan or equity) then they are not income and are not taxed.

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    Share Transfer

    Hi Itai,

    My Client has shares in a company( Lets call this company X). Now he wants to start a new company (company Y). He wants to use the shares that he owns in company x as initial capital in company Y. This will then be the only assets in company Y. What would the tax effect be on this transaction?


    Regards

    Juan-Pierre

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    Hi,

    I have the following query in regards to the tax treatment of interest:

    Hypothetically speaking, if I started a company but could not obtain a bond in the companies name to purchase a property. If I obtain the bond in my personal capacity to fund buy the property in the companies name creating a loan account owing to me in the company, so not to be out of pocket the company will pay me the interest on the loan account which equals the amount of interest I am charged on the bond.

    Now the question is the interest earned from the business is that taxable?

    I feel this is not as the bond was specifically obtained to fund the purchase of the building, thus there must be some sort of exemption that I can play the interest paid on the bond against the interest earned from the company(loan account created due to using the bond the purchase the property in the companies name).

    Please can anyone assist in this regard.

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    You, in your personal capacity, would claim the interest on mortgage as an expense against the loan interest received. Presumably they would equate each other.

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    Quote Originally Posted by Andromeda View Post
    You, in your personal capacity, would claim the interest on mortgage as an expense against the loan interest received. Presumably they would equate each other.
    Thank you for the response, is there any article you can direct me to that would support this?

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    Good morning Itai

    I am interested in property investment and would like to purchase property to rent out. A standard deal would include Rates & taxes, Levies, and my bond repayment as expenses and then the rent as income. If an example deal looks as follows:
    Bond repayment = R7100
    R&T = R300
    Levies = R1320
    Rental income = R7200
    Cash flow = - R1520
    How would tax work on this, will any of this be tax deductible? Would there be any benefits from a tax point of view or will it only stay a loss?

    Thank you

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    Full Member EAB's Avatar
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    Good morning GBotha,

    The R&T and Levies will be tax deductible in full. Only the interest portion will be tax deductible, not the full bond payment.

    The loss can be deducted from your taxable income when calculating your income tax for the year. Just keep in mind that SARS can ring-fence the losses in some cases based on your personal tax profile.
    Wisdom is to do now what you will be satisfied with later

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    Quote Originally Posted by EAB View Post
    Good morning GBotha,

    The R&T and Levies will be tax deductible in full. Only the interest portion will be tax deductible, not the full bond payment.

    The loss can be deducted from your taxable income when calculating your income tax for the year. Just keep in mind that SARS can ring-fence the losses in some cases based on your personal tax profile.
    Just as a follow ups to the answer you provided:
    R&T and Levies deductible in full means that if I spend R1600 monthly on that, I can claim R19200 from SARS if a full year of payments were observed?

    If for the first year R4000 of my bond repayment was paid towards the interest, I can claim that from SARS as well? R4000*12 = R48 000.

    If those expenses are all claimed from SARS and my effective bond repayment is only R3100 (R7100-R4000), does the R7200 from rental income gets seen as positive cash flow after all of these deductions? (R7200 - R3100 = R4100) Will that amount then be taxable?

    Thank you for taking time to answer these questions. I don't think I have a very good understanding on this, but your help is much appreciated.

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