Your business cannot run from the taxman...

But you can make tax work in your company’s favour!

The Practical Tax Loose Leaf Service provides you with:

• Tax tips from experts to reduce your tax burden and avoid tax traps
• Legally sound advice to get you the tax deductions and refunds you deserve
• Plus, a Tax Helpdesk to answer all your questions!

Reduce your tax risks and avoid tax traps for less than R570, with the Practical Tax Loose Leaf Service.

And you can try it for a 14 day trial period!
This means that you can try this service for a full 14 days before you pay a single cent!

If SARS comes knocking at your door, are you 100% confident that all your books are in order?

When it comes to tax you need to make sure you know your rights and ensure you never pay too much tax or end up with penalties of as much as 200%. Just relying on your accountant or tax consultant could end up costing you hundreds of thousands of rands.

Protect your rights when SARS comes knocking at your door with the Practical Tax Loose Leaf - try it now risk free for 14 days.

How your tax consultant could end up costing you R1.2 million

Find out how to avoid tax penalties of up to 200% today.

Dear Reader

Relying on your accountant or tax consultant to do your taxes correctly could end up costing you thousands of rands… even R1 270 150.

Imagine SARS calls you and says they will be doing an audit of your business. You’re not worried as you know your accountant has paid all your taxes on time and your finances are up to date.

Following the audit you get an assessment saying you owe penalties of 200% and interest on all the money you owe, which means you will have to liquidate your business!

This is what happened to Mr Da Costa because he didn’t know anything about tax and relied entirely on his accountant to ensure he was paying the correct amount of tax… and paying it on time. Instead he got an assessment of R1 270 150!

If you know your rights and what you should be checking every month you can prevent this situation from happening to you. That’s why Fleet Street Publications has created the Practical Tax Loose Leaf for you.

This Loose Leaf provides practical tax advice in plain English (with no legalese), with step-by-step instructions, checklists and many, immediately understandable examples to make sure you know your rights, never pay too much tax or end up with penalties of as much as 200%.

Top SA experts write for the Practical Tax Loose Leaf

Simply click on the link and you’ll find some of the most important tax issues, taken from the current Practical Tax Loose Leaf. Experienced tax specialists give you hands-on advice on the right tax strategy for you to use to take the hassle out of any tax situation. In fact, one of our editors was a former SARS official for 16 years, so who better to give you insight into the inner working of SARS?

See for yourself how this Loose Leaf tackles your tax problems, giving you practical solutions that you will never find in other jargon-filled, technical publications on the market. And you can order it today for a risk free 14-day trial.

You will definitely find it worthwhile, even if you’re convinced of the abilities of your tax consultant. It’s simpler, faster and cheaper than waiting for advice from your tax consultant. Of course, during these 14 days you can also check how good your tax consultant really is…

Yours Sincerely,
 

Marius Maritz
Editor-in-Chief

PS: When you reply you’ll receive an invaluable free copy of Take on SARS and Win! worth R99. 

PPS: Place your order within the next two weeks and receive the How to Survive a SARS Audit booklet and CD containing 22 useful checklists. Be empowered to look at your business through the critical eyes of a SARS auditor. Know your rights and prepare your business.

Practical Tax Loose Leaf: Sample extract

Here’s your chance to take the hassle out of tax, audit-proof your business and make the Receiver your friend!

Working from home: The best tax-deductible ways

The tax-deductible possibilities for offices at home have been severely restricted. But for smart people, there is still some elbowroom. You can deduct the costs of all office supplies, from pencils to wastebaskets and office furniture.

If you’ve set up a business and operate from home, the portion you use for business purposes is tax deductible. It’s also possible to rent a room from parents or siblings. This way the money stays in the family and the expenses are approved 100%.

Protect your rights when SARS comes knocking at your door!

Don’t let SARS bully you – you have rights! Get off the back foot and exercise these three rights when SARS audits you:

1. SARS must give you at least 21 days’ notice. If you need more time, request an extension.
2. You’re entitled to request reasons for any adjustments SARS may make, so insist on getting the answers you may need!
3. SARS has no right to invade your privacy in the name of an audit. SARS can't search personal records and your home may not be searched by SARS without a warrant.

How to get a little “free” advertising

Advertising expenditure is generally deductible, provided that it’s incurred in the production of income and is not of a capital nature. For instance, a TV ad to be screened over a prolonged period of time would not be deductible as it would be viewed as being of a capital nature. However, your ad could be deductible where it is only screened over a short period.

How to make the most of your travel claims

Do you know what travel expenses you can and cannot claim? Do you know when or when not to use a logbook? Find out how to make the most of your travel expenses.

Save R23 863.20 by keeping an accurate logbook

Maintaining an accurate logbook is a tedious affair but the benefit of additional tax savings may make it worthwhile.

An accurate logbook means you can base your claim for travel expenses for business and private use on the actual distances travelled. You may also be able to reduce the taxable benefit of the company vehicle used by you. No logbook puts you at the mercy of the provisions of the Income Tax Act, that can in some cases be extremely costly.

Our practical example below shows you how you can easily save R23 863.20 by keeping an accurate logbook.

Who can benefit from an accurate logbook?

• Sole proprietors, commission earners
• Employees who receive travel allowances
• Employees, directors, members, etc. using a company owned vehicle

Example
Vincent, a commission earner, is entitled to claim his actual motor vehicle expenses as a deduction from business income received. The cost price of the vehicle used was R300 000. The total motor vehicle expenses for the year are the following:

Motor vehicle expenses

Fuel and oil                    R9 554
Insurance                      R9 780
Maintenance                  R3 564
Licence                         R120
Lease payments             R90 000
Total                           R113 018

Vincent is not, however, entitled to deduct the total cost incurred. An adjustment must be made for costs attributable to the private use of his motor vehicle. The quantum of this adjustment can be determined in two ways:

1. Where accurate records of private and business distances travelled were not kept:

Private usage is deemed to be equivalent to the first 18 000km’s (limited to 32 000km for the year). The allowable deduction is thus limited to:
 
Total expenses             R113 018

Deemed business use of vehicle
R113 018/32 000km x 14 000km

Allowable deduction R49 445.38

2. Where accurate records of private and business distances travelled were kept:

Private usage is calculated on the actual business distances travelled in relation to the total mileage.
 
Summary of information recorded in an accurate logbook

Private km                   10 983 km
Business km                20 276 km
Total distance            31 259 km

Allowable deduction where an accurate logbook is kept
Total expenses            R113 018

Deemed business use of vehicle
113 018/31 259km x 20 276km

Allowable deduction R73 308.58

An ACCURATE LOGBOOK would increase Vincent’s tax deduction by R23 863.20!

"Every businessman’s worst tax nightmare" – But here’s how to get rid of your Vat problems once and for all...

Your comprehensive guide to Value-Added Tax for managers and business owners

Claiming Vat on second hand or repossessed goods.

An important provision to the Vat Act concerns the claiming of Vat on second-hand or repossessed goods.

You must complete a Vat264 form, to assist you to comply with the provisions pertaining to the acquisition of second hand goods (Section 20(8) of the Vat Act, 1991).

Since 1 May 2004, all vendors claiming an input tax credit for the acquisition of second-hand goods or repossessed goods must complete the Vat264 form and retain this form for five years after completion of the transaction (as prescribed by Section 55 of the Vat Act).

Did you know you can download the Vat264 form from SARS website (www.sars.gov.za) under Vat/Vat Forms?

Throughout the Loose Leaf, we will highlight some of the most important websites and where exactly you can download valuable material you can use right away.

Save by informing SARS of any change in your Vat status

You are obliged to inform the SARS in writing of any change:

• In the name, address, constitution or nature of your principal enterprise;
• In the name of and address at which your enterprise is carried on;
• Where your turnover exceeds R30 million per annum;
• Should your turnover as a vendor on the payments basis (page V 01/017 of the Practical Tax Loose Leaf) exceed   R2.5 million per annum? This payments basis is not applicable to trusts,CCs and companies;
• In the composition of the membership of your partnership or joint venture. You are not required to notify the SARS of any change in the share - holding of your company (Section 25) and in the appointment or resignation of a representative vendor.

You have to inform the SARS within21 days of such a change. Failure to notify SARS of any of the above changes is an offence, and if found guilty you could be fined or imprisoned for a period not exceeding 24 months (Section 58).

Are subscriptions subject to Vat?

Question:
Are subscriptions paid by members of a country club subjected to Vat? The club is registered as a Section 21.

Answer:
Section 21 (not for profit organisations) are not obliged to register for Vat for the income collected to defray costs incurred for the common cause (levies etc). They are obliged to register for activities generating income in excess of R1 million where the activity is deemed to be “carrying on an enterprise”.

If income from “an enterprise” is less than R1 million the registration is voluntary. If the entity is not registered as a vendor then input tax will not be claimable. If the entity you refer to is potentially involved in an “Enterprise” activity where turnover exceeds R1 million. For example, if the entity had a bar and a restaurant, it would then be obliged to register and all revenue would be subject to Vat and in turn input tax will be claimable by the entity.

Working from home? The 7 little known deductible expenses

Section 23 (b) provides a number of negative and positive tests you need to apply to your various expenses.

Once you’ve determined that your expense is positive, and therefore deductible, you need to determine between direct and indirect expenses. You can claim all of your direct expenses, but only a portion of your indirect expenses.

What about wages to your domestic worker?

What SARS says: A domestic worker receives a salary for performance of her duties in your complete household. The salary is therefore not a deductible expense.

What we suggest: Deduct the wages you pay to your domestic for specific duties related to your home office e.g. cleaning your offices, answering your business calls and taking your messages.

How ‘Tim the Toolman’ reduces taxes

You may deduct the cost of repairs to the extent that repairs were actually incurred during the year of assessment. Make sure the repairs relate to:

• Repairs to property occupied for the purposes of trade
• Expenditure on treatment against attack from beetles of any timber forming part of such property
• The repair of machinery, implements, utensils and other articles employed for purposes of trade
 

For a full checklist of repairs that qualify as deductions see page C 04/025 of the Practical Tax Loose Leaf. 

Revamp your home office and save R23 200!

The income and capital gains consequences of effecting improvements to your home office are complex and often overlooked. Save yourself thousands by legally deducting the cost of improvements and applying the correct tax treatment. 

Take the situation where the close corporation through which you conduct your business is home based. You charge the close corporation a monthly rental for the use of a portion of your house as business premises. The business grows and to accommodate the expansion, you improve the office, by building on an extra room. 

Is the cost of improvement deductible and who can deduct it? Is the improvement a taxable benefit to any of the parties? What are the capital gains tax consequences? 

We delve deeper into the income and capital gains tax consequences of leasehold improvements and explore the pros and cons of the various courses of action available to you. 

For example, you build an extra room on your house for R80 000 to be used as an office. In terms of the written lease agreement with your close corporation it is must effect improvements to the premises to the value of R80 000. If the duration of the lease agreement is two years, the CC can deduct the cost of the leasehold improvements over two years i.e. R40 000 per annum. The CC will save R23 200 in tax on the deduction claimed over two years. 

You will have to include the cost of the leasehold improvements in your income, but this will be mitigated by any loss that you may incur in letting the office to the close corporation.

Avoid the CGT tax trap in just 30 minutes!

What is capital gains tax and how does it affect you? We tell you all the information you need to now to avoid the traps... 

Avoid the CGT tax trap in just 30 minutes! 

What is CGT?

The CGT monster was set loose on 1 October 2001, introducing a complex burden on taxpayers. 

CGT is the tax you pay when you sell an asset. The tax is calculated on the amount by which the proceeds from the sale exceed the base cost of the asset.

We will explain the specific inclusion rates that apply to individuals and companies and how to work out your base cost. If you get this wrong, you will pay more than you need to as the base cost also includes improvements you may have made to the asset, and many other costs related to the asset. Find the full list of the main costs in the Practical Tax Loose Leaf, as well as the full list of assets that are EXCLUDED from CGT. 

We will also include a feature on the special dispensation allowed to small business owners when it comes to CGT. This can be quite substantial in a lot of cases and we will take you through the various requirements you need to meet to qualify.

How will capital gains tax affect small businesses? 

If you're an owner of small businesses, you have been given a special dispensation when you sell your businesses to retire (Paragraph 57 of the Eighth Schedule). The purpose is to provide relief to small business owners who have invested their resources in their businesses to build up retirement capital. It doesn't matter whether the small business is held directly or whether it is a company, close corporation or partnership.

SARS disregards the capital gain or loss in the business under the following conditions: 

• The market value of the assets of the business does not exceed R5 million
• You hold at least 10 % of the share capital
• You have been substantially involved in the operations of the business
• You have held ownership or shares for a continuous period of at least five years
• You are at least 55 years or the disposal is because of ill health, other infirmity, superannuation (retire from service on a pension) or death
• Your estate receives the benefit in the event of your death
• Your total exemption under this dispensation is limited and may not exceed R500 000 in your lifetime. The dispensation is cumulative and not for each business or asset disposed of 

TIP
Do not attempt to claim more than the R500 000 to which you are entitled. SARS maintains records of exemptions already allowed and may judge apparent transgressions harshly. 

• All capital gains from the sale of your businesses must be realised within two years from the date of the first disposal. 

Remember: when selling more than one business, ensure the total market value does not exceed R5 million, otherwise it won’t be disregarded.

How to structure your salary to save you R1, 000’s

Here’s the problem most employers and employees encounter on a daily basis: Avoid being penalised by SARS for incorrect salary structuring.

Imagine a company pays a gross salary of R10000 with medical contributions above the line of R1500 and the medical aid company then increases its premium to R2000, under the usual system of structuring salaries you would make a salary sacrifice of R500.

The new medical aid rules effective from 1 March 2006 would require that the rebate (tax-free portion) can only be claimed in the month when the contribution is made. The medical aid provisions would be a perfect opportunity to revise your company policies. The requirements for a legal salary sacrifice are still required! 

But here’s the solution, from the Practical Tax Loose Leaf…
It’s simple – use a separate deduction. 

You can have a separate deduction of R500 until your next review, when this amount would be included in your newly negotiated total employment cost to company. 

As simple as that - and you’ve avoided a huge headache. 

The salary structuring system we’d like to tell you about allows more leeway for you to structure salaries in the future without affecting your gross salary now. 

For employers it means you will always know the exact cost to company of all your employees, making management decisions far easier in the future, especially when review time comes around again. 

We encounter numerous structuring problems with cell phones at the moment. Here’s another titbit on structuring… You use your private cell phone during the day. Your company pays you an amount of R400 per month towards the business use of your private cell phone. The R400 per month allowance will be taxed fully due to the dreaded Section 23 (m) and no deduction is allowed for people other than commission earners. 

Does that mean you can’t claim tax on business use of your cell phone? 

How to claim tax on your cell phone allowance 

If you're a commission earner you have no problem. The problem arises when you're not a commission earner. 

The company directly pays a portion of your cell phone as a business cost or you can claim the reimbursement every month. 

The good thing is you can still claim if you are a normal salary earner as you can claim a wear and tear allowance against the cell phone each year on your tax return. You can claim on average R1000 wear and tear allowance (apportioned based on business use). 

So all is not lost. At the end of the day, there is still a place for a cell phone allowance. The 2008 budget proposal introduced changes to cell phones and how they will be taxed. Want to know how this can be implemented? We’ll reveal to you in the Practical Tax Loose Leaf

Know the law on avoiding tax: You are now presumed GUILTY

SARS has been dealt a better hand in dealing with you if you try to avoid tax. SARS knows where it stands. The question is: do you? 

Do you plan on obtaining an “innocent” tax benefit? If your main or only reason to enter into any arrangement is to receive a tax benefit, SARS will brand you guilty of avoiding tax. The Revenue Laws Second Amendment has been enacted, and, yes, believe it or not, this is exactly what it proposes.

And guess who has to prove their innocence… YOU! 

Here's another situation where SARS has the upper hand. 

If there is a dispute or legal proceeding and SARS thinks you have tried to avoid tax, the onus shifts to you. That's right – you will have to prove that obtaining a tax benefit was not your only or main reason for entering into the arrangement. Your affairs will be closely scrutinised. Your promise that you never intended to avoid paying tax won't be enough! 

For example, you want to introduce a company car scheme by means of a salary sacrifice arrangement. You will have to prove, that the salary sacrifice arrangement was not entered into for the sole or main purpose of obtaining a tax benefit for your employees. 

Remember: When you enter into ANY arrangement where there is a tax benefit, you must record (minutes of meetings, email and other communications) your motivations and purposes. SARS may ca to justify your actions! 

If your main or only reason for entering into an arrangement is to obtain a tax benefit… don't do it!!! 

Follow the link and order your copy of the Practical Tax Loose Leaf and find more reasons why staying legal is best

What else you’ll discover in the Practical Tax Loose Leaf

• Hassle-free tax advice: From bookkeeping to the annual statement of accounts
• Expenses: How to obtain the approval of all entertainment expenses as business expenses
• Depreciation: How to achieve the highest possible tax savings with depreciation
• Corporate and Personal Tax: How to balance corporate and personal tax burdens in the most tax efficient way
• CGT: All the assets which are excluded from capital gains tax
• Office expenses: How to make as many things tax deductible as possible
• Directors’ tax and PAYE: All the best tax savings tips
• Foreign tax: How to keep a foreign presence without paying foreign tax
• Company car vs travel allowance: different scenarios, very different outcomes
• The best tax avoidance methods for estate planning
• In each update: The most important new judgments and administration decisions in brief and what they mean to you and your business
• Information on tax tables, banking, exchange controls, insurance, invoicing, immovable property, taxation of foreign operations and much more… 

All tips, recommendations and information in the Practical Tax Loose Leaf are 100% legal, and checked by 3 independent consultants,

In each case you will receive:  

• practical advice explained in simple English
• step-by-step instructions
• Check lists with which you can test if you have forgotten anything
• Proven sample formulations for contracts and letters
• Real-life case studies
• Fully referenced and justified examples

Be 100% ready for your SARS audit! When you order your Practical Tax Loose Leaf, we’ll send you How to Survive a SARS Audit absolutely free!

Arm yourself with the ammunition to survive your SARS audit: 

    * 22 checklists to assess your risk, 13 items SARS will check
    * 4 expenses SARS will target
    * 11 questions SARS will ask you
    * What to do when SARS issues an assessment

The How to Survive a Tax Audit: Checklists CD will help you know:

    * What documents you must keep
    * The risk areas on your balance sheet
    * How to minimise your payroll risk
    * The general checks in a Vat audit
    * What questions to ask when disputing an assessment 

About the Authors

Marius Maritz
Marius Maritz completed his MA (Finance) at the University of Alabama, USA, in record time. He was also accepted by the Harvard University (USA) Executive Corporate Financial Management Programme, and successfully completed this course. More recently, as a newly accepted member of the South African Institute of Tax Practitioners (SAIT) he has received the accolade of Master Tax Practitioner.

Maritz is well-qualified to tackle taxation. He has served as an Associate Professor in the fields of Specialisation in Strategic Financial Management, Financial Management and Taxation at the UNISA Graduate School of Business Leadership.  Here, he was also involved in the development of executive and masters level programmes.

Maritz has served on the Board of Directors of a number of companies, thanks to his specialisation in the area of Financial Management. He has also consulted to a number of corporations, so he has extensive hands-on experience.

Today, he is the chairman of Certified Master Auditors (CMA) Incorporated, www.cmaauditors.co.za.

Ettiene Retief
With more than a decade of experience, Ettiene is a specialist in taxation and the interpretation and application of tax laws. Ettiene is a partner at Financial Tax & Remuneration Services, (FTR Services). Ettiene holds membership of the Institute of Directors, South African Institute of Professional Accountants and the Association of Certified Fraud Examiners. He is Chairman – Tax Technical Committee of South African Institute of Professional Accountants. 

Antonie Goosen
Antonie is senior partner of the tax advisory- service.com (a company he founded) and a former SARS official with 17 years of experience at SARS. Who better to get your affairs in order with SARS? 

Peter O’Halloran
Peter is an independent advocate. He has a Master’s degree in tax and is currently working on a Doctoral thesis in taxation. He has almost 20 years experience in tax and estate planning. Peter specialises in tax research, structuring and litigation. 

Andre van Staden
Andre has a masters in tax law and is a specialist with 9 years of experience on a wide variety of taxation matters, including correct remuneration structuring and complete payroll solutions to achieve sound corporate governance and legislative compliance. 

Anthony van Zantwijk
Anthony is a specialist in intellectual property commercialisation. He holds a LLM (tax) (Wits); is a partner at Sibanda & Zantwijk and a fellow of the Institute of Intellectual Property Law. Anthony consults to the treasury and SARS on the taxation of IP.

NO  MONEY NOW
GUARANTEED RISK-FREE TRIAL

By ordering your copy of Practical Tax Loose Leaf today:

– You will learn how to avoid excessive tax burdens.
– Receive 100% legal tips, recommendations and information.
– Get the expertise of three independent consultants.
– In each section you will receive:

  • Practical advice in plain language
  • Step-by-step instructions
  • Checklists to make sure you haven’t forgotten anything
  • Proven sample formulations for contracts, letters to SARS etc.
  • Many, immediately understandable examples

– Your Loose Leaf will always be 100% up-to-date. You’ll receive the most recent information with updates and supplements delivered to you regularly, plus additional information that would benefit your business.

 – Additional FREE services:

• Tax helpdesk: We will answer any quick tax questions by email. Available to all paid-up subscribers.
• Unlimited permission to copy all sample forms and contracts as long as you have purchased the Loose Leaf
• Valuable weekly tax e-letter answering pertinent questions and covering key changes in the tax world 
• Online access to past updates

 – FREE Gift: “Take on SARS and Win!”

In this ground-breaking booklet you’ll find:

• The benefits of Appropriate Dispute Resolution (ADR)
• How to object to an assessment by SARS
• What to do if your objection gets disallowed
• When SARS may/may not settle your dispute
• The regulation of ADR

– Fast Reply BONUS gift: How to Survive a SARS Audit and the accompanying CD containing 22 useful checklists

Are you ready for your SARS audit? Are you 100% sure about that? Arm yourself with ammunition like this to survive your SARS audit:

• 22 checklists to assess your risk
• 13 items SARS will check about your assets
• 4 expenses SARS will target during the audit
• 11 questions you’ll be asked about your cash flow statement
• What to do when an assessment is issued

 – You only pay for the Practical Tax Loose Leaf once you receive it. We’re so sure that you’re going to benefit from the Loose Leaf that if you’re not happy, simply return it within 14 days of receipt, and we’ll forget about the bill.