TAX
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Your tax and UIF dutie
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s much as we may grumble, we can’t escape the fact that we have to pay our taxes. However, the tax process can be stressful, with rules that seem complicated and burdensome. Fortunately, SARS has introduced a simpler system called Turnover Tax aimed at helping small businesses streamline the process of paying tax. Tax experts recommend that you should register with SARS for turnover tax if your business has a turnover of less than R1 million a year. If that sounds like your business, then the first R335 000 of your annual turnover will be tax exempt. Beyond that level, you can expect to pay 3% of your annual turnover in tax, without having to work out VAT, income tax, provisional tax or capital gains tax.
What records to keep? The big advantage of turnover tax is that you don’t have to keep nearly as many records. In fact, for a cash-based small business, there are only three types of record that you have to keep track of: • All amounts received • Assets with a cost price of more than R10,000 at the end of the year of assessment • Liabilities exceeding R10 000 You can download a record-keeping workbook from the SARS website: http://www.sars.gov.za/TaxTypes/TT/ Pages/default.aspx
The responsibilities of an employer
Apart from doing our duty as tax-paying citizens, we also have to look after When to pay? our workers. For small businesses, this • There are three payment dates. The means making a contribution to the first payment is on the last business Unemployment Insurance Fund (UIF). day of August, which will be Thursday, It’s important, because the UIF provides 31 August 2017. workers with financial relief if, for some reason, they lose their jobs or are unable • The second payment is at the end of to work because of maternity, adoption the tax year, on the last business day of February, which will be Wednesday, leave, or illness. If a worker dies, UIF also provides their dependants with assistance. 28 February, 2018. • The final payment takes place after the tax return is submitted and processed.
Employers have to register themselves and their workers with the UIF and pay their contributions every month.
How much to pay? Work out your Turnover Tax by applying the following sliding tax rates to your turnover:
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0 - R335 000
0%
R335 001 - R500 000
1% of the amount above 335 000
R500 001 - R750 000
1650 + 2% of the amount above 500 000
R750 001 and above
6 650 + 3% of the amount above 750 000
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How it works is that the employer deducts 1% of a worker’s salary and pays it on their behalf to the UIF every month. The employer also makes a contribution of 1%. In other words, the UIF has to receive 2% of the value of the worker’s salary every month. The worker pays half, the employer pays the other half, but it is the employer, not the worker, who is required to actually transfer the funds to the UIF. Workers have to be registered as soon as they are employed. The Department of Labour states that only the following workers are not subject to UIF: • Workers working less than 24 hours a month for an employer • Learners • Public servants • Foreigners working on contract • Workers who get a monthly State (old age) pension • Workers who only earn commission UIF has to be paid within seven days after the end of the month. Payments can be made by means of eFiling, electronic payments through the Internet (EFT), or at an approved banking institution. Find out more at the SARS website: http://www.sars.gov.za/TaxTypes/UIF/ Pages/default.aspx
