Frequently Asked Questions
See the FAQ section below to see a history of the Frequently Asked Questions and Pierre's answers.The advice that we give via the Taxco website is based on the information provided by you. It is solely for use by the party to whom it was addressed to and may not be relied upon by any other person for any purpose whatsoever. Due care is taken to ensure that the advice that we give you is correct; however, having regard to the circumstances under which the advice is given, Taxco will have no responsibility to you or to any other person for any claim of any nature whatsoever arising out of or relating to this advice, and you indemnify Taxco, it’s member firms and correspondent firms and employees and agree to hold them harmless against any claim.
- If my employer assigns me to their Dubai branch, is my salary tax free?
- If an employer installs a burglar alarm in my house for the occasions I am away on business, is it taxable?
- What happens when my employer gives me a company credit card for entertainment?
- Why do I need Taxco to complete my tax return?
- How do I become a Taxco Tax Club member?
- What is Taxco's BEE rating?
- Can I have the use of a "pool" car tax-free?
- How are Taxco's fees determined?
- What is the best - a company or a trust?
- How long do I need to keep my tax records?
- Am I able to do my tax return over the phone or via the internet?
- Do I need to send all of my receipts to you or can I send a summary of my expenses?
- Are you able to deposit my refund into my bank account if i choose the fee from refund option?
- Can I take over my company car at its book value tax-free?
- Do I need a long-term contract to use your services?
- How long does it take to become a professional accountant?
- How private is my information?
- Do I really need a Balance sheet each month?
- How does accounting make me money?
- Do I have to pay a preliminary deposit each time I initiate or request a service?
- Do clients have a single point of contact with Taxco?
- What are some of the benefits of choosing a professional Taxco accounting service, as opposed to handling these matters on my own?
- Do you accept credit cards?
- Can my employer pay me a tax-free clothing allowance?
- Can I obtain a low-interest housing loan from my employer?
- Can I use a first-class air ticket given to me for my business trip to buy two economy class tickets and take my wife?
- Can a taxpayer only deduct travel expenses if he has a travel logbook?
- Can I claim domestic expenses for my home study/office?
- Can I claim VAT on local flight tickets?
If my employer assigns me to their Dubai branch, is my salary tax free?
The answer will depend on how long you will be outside South Africa. If you render service in a foreign country for longer than 183 days in any 12-month period and at least 61 days are continuous, then the foreign service income is tax-free here (and probably tax-free in Dubai too).
If an employer installs a burglar alarm in my house for the occasions I am away on business, is it taxable?
Even though the system is viewed as an essential item arising out of your employment, your family is making 'private' use of it, so it is therefore taxable.
What happens when my employer gives me a company credit card for entertainment?
There will be no fringe benefit, unless the company, on examining your credit card vouchers and descriptions of the entertainment, decides that the expenses were not business-related.
Why do I need Taxco to complete my tax return?
SARS has a "Pay now and argue later" policy. Taxco professionals are trained and experienced in the submission of tax returns. Even a small mistake on a submitted return can cause undue delay in getting your refund or worse, may put you out of pocket for penalties and interest. Not knowing the law is no longer an excuse, and we know the laws change a lot. At Taxco we stay abreast of these changes and pre-calculate the return result, discuss this with you to ensure that there are no surprises. We further stand right beside you in any SARS audit, explaining how your return was completed and submitted. Clearly, this sets us apart from the competition (who will typically stand well behind you, and a little to the left...)
How do I become a Taxco Tax Club member?
The Taxco Tax Club is for employees who don't need any tax hassles in their life. SImply Contact Us and we will be in contact with you and answer all the questions you may have and provide you with all the forms and explanations required. Be sure to check out all the related pages under the Wealth Tab.Click here.
What is Taxco's BEE rating?
Each member firm of Taxco is independant and have their own BEE rating. The Taxco Cape Town member e.g. qualifies as a Level 4 - Micro Exempted Enterprise (EME). You would need to contact the specific member firm to enquire about their BEE rating.
Can I have the use of a "pool" car tax-free?
Yes, but the definition of a "pool" car is very precise, and you will be unable to take the vehicle home on a regular basis. Furthermore, it must be regularly used by other employees.
How are Taxco's fees determined?
Our fees are generally based on the amount of time and expertise required to complete the task. Certain services have fixed fees based on our experience of the specific assignment. We understand that our clients are our reason for being in business and the determination of our fees must make business sense. We are confident that our services add value far beyond the price.
What is the best - a company or a trust?
There is no simple answer to this question and your specific circumstances will determine the entity you may choose. Income tax for companies is generally less than business trusts and is the more accepted business entity, especially if more than one person (shareholder) is involved. The Companies Act offers clear rules and guidelines for individuals of how the company should be managed. Families and connected persons may find more assurance in a trust, as the trust deed is a flexible document and could offer far better Income tax advantages due to the income conduit principle applicable to trusts and the discretionary trust offers far better estate planning opportunities than a company, especially for the high net worth individual. I recommend you contact a Taxco professional to evaluate your specific circumstances so that you can make the correct choice.
How long do I need to keep my tax records?
You are required to keep your records for 5 years from the date of assessment. I therefore suggest you maintain your records for 6 years in total.
Am I able to do my tax return over the phone or via the internet?
Yes. You can complete our tax appointment letter located on our website, upload documents to your TaxBox, mail or fax us any other documentary proof or you can call our office on (051) 447 0825/7 to arrange a phone appointment with one of our tax consultants.
Do I need to send all of my receipts to you or can I send a summary of my expenses?
You only need to send a summary of your expenses to us, however for audit purposes you will need to ensure you keep all your receipts.
Are you able to deposit my refund into my bank account if i choose the fee from refund option?
Yes. If you choose this option your refund is paid into your Corporate Saver account, whereafter we will transfer our fees and your refund will be transferred to your bank account.
Can I take over my company car at its book value tax-free?
Probably not! If the market value, including Vat is greater that the book value you are paying, the difference is taxable.
Do I need a long-term contract to use your services?
No. We work on a month-to-month basis. You can cancel at any time, and you will be liable only for the work performed.
How long does it take to become a professional accountant?
Normally it takes between four to six years, as you are required to do a B.Com degree or equivalent with Accounts 3 and a 3 three year practical learnership with an SAIPA or SAICA ATC, which can run concurrently with your studies. After completion of your academic and practical requirements a final exam (PE) has to be passed to qualify for membership of SAIPA.
How private is my information?
We do not sell or compromise your information in any way. We treat all client information with the utmost confidentiality.
Do I really need a Balance sheet each month?
If your business is really small, you can manage it fine without creating a balance sheet each month. But any size business, including a part-time one, needs to create a good profit and loss statement each month. And, if inventories or accounts receivables are important in your business, balance sheets will clearly point out any significant fluctuations that you should be aware of.
How does accounting make me money?
Quite simply, accounting tells you if you are making money. If you create a profit and loss statement each month, you can ascertain your position quickly. If you are losing money, you can make changes in your operations, such as increasing prices or reducing expenses, to correct the situation long before the year’s end and ensure that your overall year will still be profitable.
Do I have to pay a preliminary deposit each time I initiate or request a service?
New clients are requested to make a pre-payment. We have programs that allow flexibility in preliminary deposits for returning clients. Contact your Taxco Record manager for more information.
Do clients have a single point of contact with Taxco?
We generally take a team approach, where a Record manager and a tax professional is assigned to a client They are available from the first day of integration to insure timely and accurate communications and to respond to any questions and issues that may arise. The Taxco Record manager is further supported by the entire accounting team with a clearly defined communication and escalation plan insuring continuity of service and support.
What are some of the benefits of choosing a professional Taxco accounting service, as opposed to handling these matters on my own?
Although it may seem that doing your own accounting will save you money, because you will avoid spending money on an accountant, choosing a professional accounting service such as the one provided by Taxco's Professional Accountants (SA), can actually end up saving you money – and a great deal of stress. Because our area of expertise is accounting, we are able to handle bookkeeping, budgeting, financial planning, tax management and various other areas with professionalism and an attention to detail that ensures the best allocation of your financial resources.
Do you accept credit cards?
Yes, we accept Mastercard and Visa.
Can my employer pay me a tax-free clothing allowance?
No, unless the clothing is clearly a uniform.
Can I obtain a low-interest housing loan from my employer?
Any employer can give you a low interest loan, but this will be taxable on the difference between the interest rate you pay and the current SARS "official" rate.
Can I use a first-class air ticket given to me for my business trip to buy two economy class tickets and take my wife?
It will give rise to a taxable fringe benefit in regards to your wife's ticket.
Can a taxpayer only deduct travel expenses if he has a travel logbook?
It is my experience that there are two circumstances under which taxpayers could claim business-travel and related expenses as tax deductible expenses. These circumstances are as follows:
1. The taxpayer is in receipt of travel allowances, or
2. The other taxpayer who
• incurs travel expenses for the purposes of producing income (typical section 11 (a) of the Income Tax Act claim), or
• is a commission-earner, or
• is a sole-proprietor and claims a deduction for travel expenses.
The taxpayer is in receipt of travel allowances
Section 8 of the Income Tax Act is relevant and refers to `certain amounts to be included in income or taxable income’. Section 8(1) (b) (ii) of the Income Tax Act reads as follows:
(1)(b) ii) subject to the provisions of subparagraph (iii), where such allowance or advance has been paid to the recipient in order that it may be utilized for defraying expenditure in respect of any motor vehicle used by the recipient, the portion of the allowance expended by the recipient during the year of assessment for business purposes shall, unless an acceptable calculation based on accurate data is furnished by the recipient, be deemed to be an amount calculated by applying the rate per kilometre determined in the manner prescribed by the Minister of Finance by notice in the Gazette for the category of vehicle used, on a distance travelled during the said year for business purposes (other than private travelling as contemplated in subparagraph (i));
iii) where such allowance or advance is based on the actual distance travelled by the recipient in using a motor vehicle on business (excluding the said private travelling), or such actual distance is proved to the satisfaction of the Commissioner to have been travelled by the recipient, the amount expended by the recipient on such business travelling shall, unless the contrary appears, be deemed to be an amount determined on such actual distance at the rate per kilometre fixed by the Minister of Finance by notice in the Gazette for the category of vehicle used;
It can be concluded that section 8(1)(b)(ii) and more precisely the words`recipient during the year of assessment for business purposes and such actual distance is proved to the satisfaction of the Commissioner to have been travelled by the recipient’ makes it a requirement for taxpayers in receipt of travel allowances to keep and maintain accurate data of their business travel.
It is further noted that this section of the Act applies only to travel allowances awarded to employees. It is a requirement of the Act that the taxpayer must justify the business kilometres travelled by the recipients of the travel allowances. This section of the Act does not apply to the other type of taxpayers mentioned above, that is, those taxpayers not in receipt of travel allowances.
The other taxpayers
So what are the documentary requirements for the other taxpayers who wish to claim business- travel expenses when submitting their IT 12 for 2012?
It is argued that Section 8 (1) does not apply to the following:
• taxpayers claiming deductions in respect of the production of income (in terms of Section 11 (a) of the Income Tax Act) and
• sole-proprietors or commissioner-earners.
An accurate data/record of business travel is, nevertheless, required for the other taxpayers immediately listed above. How do we arrive at such a conclusion? Why are the other taxpayers still expected to supply accurate records of their business-travels when making this claim?
When commission-earners or sole-proprietors and any other taxpayers claim a deduction of travel expenses when submitting their IT12 returns, section 11(a) is triggered - except for taxpayers in receipt of travel allowances who have to produce accurate data but in terms of section 8(1) (b) (ii) of the Income Tax Act relevant..
Section 11(a) and Section 82 of the Income Tax Act is relevant and in order to meet the requirements of Section 11(a), the following is required:
i. the amount of expenditure must be “actually incurred”;
ii.Such expenditure is not of capital nature, and
iii. Expenditure incurred in the production of income.
In practice, we observe item (i) and (ii) occur – expenditure was actually incurred and was not of a capital nature - but fail the test for the third requirement implying that the `business travel’ undertaken was not `wholly and exclusively for the purpose of trade’ - this was the situation in tax case law (Commissioner for Inland Revenue v de villiers 1962 (1) SA 581 (a)).
In addition, Section 82 of the Income Tax Act which stipulates that the taxpayer must supply the proof of expenditure which in this situation is the proof of business kilometres travelled.
Taxpayers claiming for business-travel expenses will be met by the decision in `Golby v Secretary for Inland Revenue 1969 (2) SA 377 (A) [31 SATC 59]’ which requires that taxpayers have to prove to what extent they are entitled to deduct certain travelling expenses. The supply of accurate data of business travel and related expenses is indispensable in all cases when claims for business-travel are made against taxable income!
The Income Tax Act is unambiguous that the taxpayer – the claimant of expenses - must furnish proof that the amount claimed by the taxpayer meets all the aforementioned requirements.
What is ‘accurate data’?
There is, however, one vague issue that requires further elaboration. What is an accurate set of data / records?
How may a taxpayer prove that business kilometres were travelled? The answer is that only a credible logbook can justify business kilometres travelled!
In addition, a credible logbook implies that a logbook cannot be `done’ retrospectively, but must be completed and updated continuously, throughout the year. A `retrospective’ logbook can easily be detected for its `defects’ and taxpayers are urged not to undertake the `retrospective’ route.
Taxpayers who do not have credible logbooks will not be eligible to claim deductions of travel expenses under Section 11(a) against taxable income. There are several court cases – including the two court rulings cited in this brief – which confirms this outcome.
Therefore, the party bearing the onus of proof – the taxpayer in this situation - must establish the facts. If this tax matter is taken to court, the taxpayer is required to provide in court `admissible evidence’ and it is likely that `admissible evidence’ could be in the form of a credible logbook and not guesswork or estimation of deductible expenses.
According to court decisions, such as the Golby v Secretary for Inland Revenue 1969 (2) SA 377 (A) [31 SATC 59], that while a taxpayer may be entitled to a business-travel claim, unsupported assertions as to the amount of the expenditure incurred by the taxpayer taxpayers would not augur in favour of the taxpayer – the claimant. Expenses based exclusively on the taxpayer’s estimate, and claimed by the taxpayer cannot and will not win the court’s favour.
What is a logbook?
This briefing note has demonstrated that in order to claim the cost of business travel, taxpayers in all situations must base their claim on the actual business kilometres travelled and are required to prove of the business kilometres travelled to the satisfaction of the Commissioner.
In order to be able to do so, all taxpayer (including recipients of travel allowances) must keep accurate written records of their business travel and include, at a minimum, the following information:
• The odometer reading on the first day of the tax year.
• The odometer reading on the last day of the tax year.
• For all business travel –
- the date of the travel;
- the kilometres travelled; and
- business travel details (where and reason for trip).
Written records of this information are often referred to as a logbook.
It is not necessary to record details of private travel (for example that the taxpayer went to play table tennis on a certain date and a certain number of kilometers was travelled) or daily opening and closing odometer readings.
The taxpayer could use an excel spreadsheet to record the aforementioned travel details with relative ease. However, SARS has a logbook which taxpayers may use and that is available on the SARS website.
Can I claim domestic expenses for my home study/office?
The deduction of any expenses in respect of any residence/domestic premises is prohibited, except where a part of the residence/premises is occupied for purposes of trade. Such part of the premises will only be regarded as being used for trade if:
• It is specifically equipped for purposes of the taxpayer’s trade; and
• It is used regularly and exclusively for such purposes.
• If the income against which the deduction is claimed flows from the holding of employment or an office, no deduction is allowed unless:
• The income from such employment or office is derived mainly from commission or other variable payments, which are based on work performance and duties are mainly performed otherwise than in an office which is provided by an employer;
or
• The taxpayer’s duties are mainly performed in the study at his/her private residence.
The following guidelines are given with regard to a claim for a home study:
- There must be a direct relationship between the incurring of the expenses and the production of income.
- The taxpayer must, in terms of the requirements of a service contract with his/her employer, maintain, for example, a study at his/her private residence.
You are reminded that The study may be used only for business purposes.
The taxpayer is expected to prepare a schedule detailing the following must be prepared and retained for a period of five years should SARS request it.
- What is the nature of the occupation and why is it necessary to maintain a study at home?
- A copy of the service contract, service regulations or personnel code.
- Does the employer place an office at his/her disposal at the workplace? Full details of any restrictions in the use of this office are to be furnished, as well as a letter of confirmation from the employer.
- Is the work of such a nature that he/she is expected to work at home after hours? Full details of how frequently the home study is used as well as a statement confirming the use thereof is required from the employer.
- Is the taxpayer required to use the home study to interview or supply information to clients or employees after hours?
- Is the home study specifically equipped for purposes of the trade? You are reminded that if the part of the home is not specifically equipped for business purposes, the taxpayer would be specifically denied this deduction. A motor-mechanic usually uses a garage - attached to a residence - to fixed motors cars - installed an under carriage in order the he may inspect vehicles from below the surface - is a good example of equipment specifically installed for business purposes. The `home -garage' cannot be used for any other purposes.
- Is the study used regularly and exclusively for his/her work?
- To what extent is the study indispensable to the proper carrying out of his/her tasks?
Can I claim VAT on local flight tickets?
Domestic air tickets are subject to Vat. A vendor can claim the input tax on these tickets provided that such expenses have incurred in pursuance of making taxable supplies. Be cautious with domestic air-travel tickets, as it includes airport taxes and VAT is not levied on the full consideration paid.