Tax complications got
you dangling by a thread?
Breathe easy with a CA(SA).
The complications that surround tax season are enough to choke the life out of any small business. From the top of your mind, do you know what your Compulsory VAT Registration Threshold is? What exactly does the Income Tax Act mean for a business like yours?
A CA (SA) can fill in the blanks…
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What is internal control?
It is the system of checks and balances to ensure the company’s financial records are accurate and reliable being the result of transactions that are carried out and recorded timeously, accurately and efficiently.
The effectiveness of internal controls is dependent on management’s attitude towards controls.
Indications of a strong internal control environment
- Employees possess the necessary skills and competence required
- Recruitment agencies or HR checks and verify the details in CVs properly.
- Proper inhouse training to staff
- Clear roles and responsibilities
- Separation of duties are in place between functions of initiation, authorization, recording and reviewing.
- Monitoring of staff performance
Strong document controls include:
- Easy to understand designed forms
- Sequentially pre-numbered documents to be able to track, record and reconcile documents.
- Orders and Invoices approved by management
- Payments approved by management
- Physical verification and inspections are performed
- Supporting documents accompany orders and deliveries
- Information on documents comply with VAT requirements
- Documents are filed regularly and in a logical manner
Strong Accounting and Admin controls include:
- Reconciliations between accounting records and source documents – bank accounts, supplier statements, customer statements.
- Overall review done by management.
- Statutory requirements such as VAT returns, Payroll returns, Tax returns reviewed by management.
- Filing are done in a logical manner i.e. monthly file for expenses and income.
Tax Clearance Certificates
Tax Compliance Status
SARS’s system makes it easier for taxpayers to obtain a Tax Clearance Certificate (TCC) and the system allows taxpayers to obtain a Tax Compliance Status PIN which can be used by third parties to verify your compliance status online via SARS eFiling.
To be tax compliant you need to:
- Have all outstanding returns submittedie. VAT returns, PAYE returns, Income Tax Returns
- All moneys owed to SARS must be up to date.
- Be registered for the tax products that you are liable for.
The taxpayer can view their status before requesting a certificate and identify non-compliance.
A Tax Practitioner can view your status on your behalf and assist to remedy any non-compliance.
A Tax Practitioner can request your Tax Compliance Status online via eFiling.
Benefits of using a tax practitioner.
- It enables the business owner to focus on his core activities while all administrative burdens are dealt with by qualified professionals.
- Tax Practitioners have a dedicated Call Center for specific taxpayer related queries.
- Tax Practitioners have dedicated offices for taxpayer related queries and can book appointments with SARS.
- They provide advice about the application of a tax Act.
- Complete or assists with the completion of a tax returns.
- A tax practitioner belongs to a regulatory body.
- Has to comply with SARS requirements for qualifications and experience.
- Participate in continuous professional development programmes to ensure their knowledge stays ups to date.
The Tax Administration Act (2011) has been amended requiring tax practitioners to register with a recognized controlling body, and with SARS.
The list of currently recognized controlling bodies:
• Chartered Institute of Management Accountants (CIMA)
• Chartered Secretaries Southern Africa (CSSA)
• Financial Planning Institute (FPI)
• Institute of Accounting and Commerce (IAC)
• SA Institute of Chartered Accountants (SAICA)
• SA Institute of Professional Accountants (SAIPA)
• SA Institute of Tax Practitioners (SAIT)
• The Association of Chartered Certified Accountants (ACCA)
• Association of Accounting Technicians Southern Africa (AAT(SA))
• Law Society of South Africa
• General Council of the Bar of South Africa, Bar Councils and Societies of Advocates referred to in Section 7 of the Admission of Advocates Act, 1964
• Independent Regulatory Board for Auditors (IRBA)
What are the requirements in order to register as a tax practitioner?
A tax practitioner, must meet the following requirements:
- Belong to or fall under the jurisdiction of a Recognised Controlling Body as referred to in 240A of the Tax Administration Act.
- Have the minimum qualifications and experience set by your Recognised Controlling Body.
- Have no criminal convictions for the offences described in s 240(3) of the Tax Administration Act.
- Participate in continuous professional development programmes set by your Recognised Controlling Body.
Wessels & Associates is a SARS Registered Tax Practitioner.We can submit the following statutory returns via e-filing or other portals on your behalf:
Back to Basics: Accounting for Assets
Assets versus Expenses
When you process payments into your accounting software the decision must be made there and then whether the payment should be categorized as an asset or an expense.
It is therefore important for the processor to understand what the difference is at the input stage to avoid corrections to be made later or to avoid losing track of assets that was purchased.
How to identify an asset
Assets are resources controlled by a business as a result of past events and from which future economic benefits or service potential are expected to flow to the business.
The most obvious difference between an asset and an expense is that that an asset gives you a long-term benefit whereas an expense gives you only a short-term benefit. Assets are usually used over more than 12 months whereas expenses are used up immediately or over a shorter period.
How to identify if it is an expense
If it is not an asset, then it can be classified as an expense.
In Summary: How to identify an Assets
It is a resource
• Something you can use
• You have control over it
• You have access to it
• Has a value
There was a past events
• It was bought or donated or built
There will be future benefits or service potential
• Services to the company or rentedout of income.
Examples of assets:
• Office equipment
• Furniture and fittings
• Motor vehicles
• Plant and equipment
The Cost of an Asset
What should be included in the cost of an asset
Initial Costs is the costs directly attributable to bringing the asset in its location and condition as intended such as:
• Purchase costs
• Import duties
• Non-refundable taxes
• Less any discount or rebates
• Site preparation and development
• Initial delivery and handling costs
• Installation and assembly costs
Later costs incurred
To capitalise the cost incurred later on an existing asset depends on what it the cost will do for the asset:
Cost will be capitalised if :
It extends the useful life of the fixed asset
It increases the economic value of asset
It Increase capacity/production of asset
If it is an upgrade or refurbishment
Expense the later cost if:
It is incurred to restore asset to a working condition for example fixing or maintaining it.
Asset Register is a record of information on each asset that supports the effective financial and technical management of the assets.
The asset register should also facilitate proper financial reporting.
Please contact us on email@example.com to request a free consultation.
Accounting is one of the most important functions of a modern business enterprise. Accounting has become an integral part without which, no commercial activity can be run profitably and successfully.
An experienced accountant has taken front seat in present day business activities.
The CA(SA) is more than just a professional accountant. CAs(SA) participate in rigorous ongoing learning to stay current with trends and developments in the profession. A Chartered Accountant have the ability to give effective advice on financial planning, growth, optimal resource management or any other business area in-between.
A Chartered Accountant can help you to:
- Improve the quality of your financial information
- Control costs and improve your resource management
- Streamline your internal processes to be more efficient
- Help build your own capacity within your business.
- Help you stay compliant with statutory requirements
When you want to take your business to the next level, you need to partner with a responsible professional who has a holistic business approach and knowledge that enables them to approach things differently.
A CA(SA) has the strategic and analytical background to help you formulate a winning strategy and avoid costly mistakes.
As a SARS Registered Tax Practitioner we have a healthy professional relationship between SARS. This is key in providing a service to our clients the taxpayers.
This enables you, the business owner or manager to focus on your core business activities while all administrative burdens are dealt with by a qualified professional.
Only a registered tax practitioner is allowed by SARS to do the following on your behalf.
Income Tax returns
- Individual annual taxes
- Company annual taxes
- Registration of income tax for individuals and companies
- Registration of VAT for Companies
- Tax Clearance Certificates for Goods Standing and Tenders
- Monthly EMP201 declarations to SARS
- Interim PAYE reconciliations EMP501 – First 6 months of the year
- Annual PAYE Reconciliations EMP501 – Full year
- Annual IRP5 Preparation and submissions
Difference between an Audit and an Independent Review
An audit gives a positive assurance (the highest level of assurance) indicating that the financial statements are a fair representation of the operations and financial condition of the business.
An independent review in contrast gives limited or negative assurance of the fair presentation of the financial statements and their alignment to the appropriate financial reporting standards of the company.
Public Interest Score
For private companies the decision to audit or to do an independent review is determined in part by the Public Interest Score of a company.
Based on the Public Interest Score calculation private businesses scoring 350 points or more must be audited.
Between 100 and 349 points means non-owner companies will be reviewed if their statements are independently compiled, and they will be audited if internally compiled.
Owner managed companies with 100 points or less will be exempt completely from audit or review if they so choose but must still prepare financial statements.
The Companies Act, 2008 (Act No 71 of 2008) together with Regulation 26(2), defines the method for the calculation of a PIS and requires that a PIS is calculated for all companies. As set out in Regulations 26(2), 27-30, 43, 127 and 128 of the Companies Act, the PIS determines:
- Which financial reporting standards apply to a company;
- Whether a company should be audited or independently reviewed in the public interest;
- Whether a company must file a copy of its annual financial statements with the CIPC;
- Whether a company requires a Social and Ethics Committee; and
- The size of the company for purposes of appointing a Business Rescue Practitioner.
Other Accounting Services
Capacity building is the process by which individual and organizations obtain, improve, and retain the skills and knowledge needed to do their jobs competently.
Accountants can assist with:
- Developing and up-skill your staff
- Accounting Standards training
- Design and implement internal controls
- Fixed Assets – Registers and Asset Management Policies
- Sage Pastel support and training
Wessels & Associates
Our services are offered either in house or at your premises and include:
- Monthly Company Bookkeeping.
- Management Reports: Income Statement, Cash flows, Budgets, and more.
- Preparing Annual Financial Statements
- Preparation of Tax Returns, VAT, Payroll, SARS objections and appeal.
- Tax directives and tax clearance certificates.
- Assistance with design of accounting and internal processes.
- Internal audits.
- Independent Regulatory Board for Auditors (IRBA)
- South African Institute of Chartered Accountants (SAICA)
We provide initial free consultation to determine your business accounting and financial reporting needs.
Our fees are based on a combination of the required hours and level of skills needed which is driven by the size of your business and an estimated number of transactions.
We will be happy to provide you with a detailed quotation of our package for your business.