Vat Matters: Is SARS more a pelican than a vulture?

Dear Reader,

We’re 15 days away from celebrating the holidays, and the FSP financial team is still buzzing with loads of activity. We’re planning loads of exciting new financial products, interesting Vat and tax seminars and the valuable update schedule for 2012 is alreay planned.

So, you’d better continue reading your daily Tax Bulletin to be sure that you stay in the loop of what’s going on, what’s hot and how to stay one step ahead of SARS througout 2012.

The Vat, Tax and Accounting Helpdesk experts are also taking a well deserved break in December, so please remember that the last day for sending through your Helpdesk questions is 13 December 2011. The Helpdesk teams will be back in action on 3 January 2012.

Because this is the last Vat Matters for 2012, Peter Franck – our Vat Helpdesk Guru – wanted to share this bit of tax history with us. Continue reading below to find out more.

A bit of history

Did you know that an interesting bit of tax history can be found above the entrance to the old Receiver of Revenue building in Calendon Street, Cape Town?

The architect of the building, who had numerous disputes with the taxman, was asked to have two pelicans in the frieze, depicting money being collected – instead, he put two vultures in the frieze!

So who are we dealing with – a pelican or vulture?

There are a number of signs pointing out that SARS is a bird of a different feather. As taxpayers we were faced with many challenges this year dealing with SARS, from the new reporting requirements on Vat returns to the supplementary declaration form called IT145D.

This IT145D form requires companies and close corporations (but not sole traders at this stage) to reconcile

1.    Remuneration per IRP5’s and IT3(a)’s to total employee costs per tax return;

2.    Accounting profit to taxable income;

3.    Output tax per VAT201’s to turnover;

4.    Input tax to cost of sales; and

5.    Vat imports and exports per Vat returns to Customs declarations. If your accounting records and tax compliance aren’t up to scratch, your headache has just become a migraine!

And why are the screws suddenly being tightened?

Well, SARS was R13 billion under budget at the end of September this year, which indicates a collections shortfall of almost R30 billion by March next year – and that means no bonuses for the SARS bigwigs.

To make matters worse, SARS now has almost R90 billion in outstanding debt, and less than 60 percent of Vat and PAYE returns are filed on time.

In my opinion I think the bird we’re dealing with is a vulture with ruffled feathers and boy, is it circling, getting its tax claws out for 2012! So now more than ever it’s important for businesses to know their finances inside out and stay on top of SARS.

To help you stay one step ahead of the taxman, take a look at what kept the finance team busy this week:

Accounting Matters: Don’t make these 6 mistakes. If you do, CIPC won’t accept your company docs
Answers to three Companies Act questions which have been bugging accounting and auditing practitioners, and business owners alike.

REMINDER: Your company's information manual is due by 31 December 2011!

Who must have a Proatia Manual?

1.    A sole practitioner;

2.    A partnership;

3.    Private companies and close corporations.

So, if you run a business you need a Proatia Manual!

Tax Matters: Don’t donate more than 10% of your taxable income!

Before you make your donation, remember these donations are only deductible as long as they meet certain criteria...

Until next year!

Lenell Hattingh
Vat Product Manager

P.S. You’ve only got 7 days left to buy your copy the Proatia Template. Hurry - The clock is ticking… The 31 December deadline is only 3 weeks away…