Advice from our tax specialists:

How to make the most out of your travel claims

Subsistence allowance – is it R109 or R353 per day?

Working from home?
The 7 little known deduction methods

Win a ticket to the VAT masterclass worth over R8 000

Use a simple trust strategy to pay your estate duties and save 1.8 million

Avoid the CGT tax trap in just 30 minutes!

How to structure your salary to save thousands

Plus an invaluable gift – FREE!


How to make the most of your travel claims

By David van Niekerk, Editor Practical Tax Loose Leaf

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.

Tip

Maximise your travel claim

Remember: Claim the finance charges (interest) where your vehicle was purchased on a hire purchase contract. You may only claim the interest attributable to that particular tax year, e.g. if the contract is over 60 months, the deduction would be 12/60 of the interest chargeable, alternatively request your financier to confirm the exact amount paid for that year.

Any reduction or increase made by the financial institution in the interest payable should be taken into account. This is the one expense that is generally overlooked by the average taxpayer.

We explain more details in section C04 of the Practical Tax Loose Leaf

Save R26 637 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 enables you to base your claim for travel expenses attributable to business and private use on the actual distances travelled. You may also be in a position to reduce the taxable benefit of the company vehicle used by you. Not having a logbook means you are at the mercy of the provisions of the Tax Act, that can in some cases be extremely costly.

Our practical example below shows you how you can easily save R26 637 by keeping an accurate logbook.

Who can benefit from an accurate logbook?

  • Sole proprietors;
  • Commission earners or service-only independent contractors;
  • Employees who receive travel allowances; and
  • Employees, directors, members, etc. who use a company-owned vehicle.

Example

Example: No logbook

Mr Smith uses his personal vehicle for business purposes. He didn’t maintain an accurate logbook. His vehicle costs him R250 000 including VAT, but excluding finance charges. His travel allowance is R64 970 for the tax year ending 29 February 2016. He travelled a total distance of 17 600 km for the period 1 March 2015 to 29 February 2016.

Mr Smith won’t have a claim because he didn’t keep a logbook. If Mr Smith was taxed at the marginal tax rate of 41%, he’d pay tax of around R26 637 (R64 970 * 41%) on his travel allowance.
 

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Practical Tax Loose Leaf

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Example: Logbook kept

Assume Mr Smith maintained an accurate logbook as follows:
Business Travel

10 518 km

Private Travel

7 082 km

Total distance travelled

17 600 km


Mr Smith’s travel deduction is calculated as follows for the 2016 tax year:

Fixed cost = fixed cost/Total km:  

((84 945/17 600) x 100)

482.64c

Fuel cost

102.7c

Maintenance cost

44.1c

Total cost

629.44c

   

10 518km x 629.44c / 100

 

Allowable deduction (limited to the actual allowance of R64 970)

R66 204.50

Tax saving based on a marginal tax rate of 41%

R26 637.00

Mr. Smith will benefit in paying R26 637 less in taxes, compared to not keeping a logbook. Also, as we can see, the deduction exceeded the allowance! Mr Smith should talk to his employer to increase his travel allowance asap!

Order the Practical Tax Loose Leaf Service today with a 30 day money back guarantee


Working from home?
The 7 little known deduction methods

Deductible expenses

Here are seven direct expenses that are deductible:

  • Repairs and maintenance – in your office only
  • Telephone, fax, internet
  • Furniture, wear and tear
  • Stationary
  • Equipment
  • Wages, e.g. secretary
  • Replacement of globes

5 Common indirect expenses you can deduct:

  • There are also five common indirect expenses you can't deduct and eleven not-so-common indirect expenses. We’ll explain all of these in the Practical Tax Loose Leaf.

Many entrepreneurs run their businesses from home as it’s convenient and cost effective.

You can deduct certain expenses related to your home office, but a number of things need to be considered from a tax point of view.

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. We won’t deduct the 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.

 

Tip

 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, go to the Businesses: Allowances and Deductions chapter in the Practical Tax Loose Leaf.

Order the Practical Tax Loose Leaf Service today with a 30 day money back guarantee


 

Use a simple trust strategy to pay your estate and save R1.8 million!

Imagine you place R3 million worth of assets into a trust. You die in 2013 when the R3 million would have grown to R12 million. You will pay estate duty only on R3 million and NOT on R12 million. You save paying estate duty on R9 million, giving you a saving of R1.8 million.

Risk free 30-Day money back guarantee

Order the Practical Tax Loose Leaf Service today. Then you have 30 days to use all the expert advice. If after 30 days, you decide it’s not for you, simply return it to us in its original packaging for a full refund! Complete the order form at the bottom of the page now.








There is a small hitch to this plan, though…

The Receiver will want to charge you estate duty on R3 million minus your deduction of R1.5 million = R1.5 million x 20% = R300 000.

You can reduce even this R300 000.

By increasing the abatement, through the use of a trust, from R1.5 million to R3 million for a married couple and save the R300 000 in estate duty!

There are many more ways you can use a simple trust strategy to save.

Trusts

The four major benefits of a trust are:

  1. The protection of assets from creditors.
  2. Tax - there are still huge benefits as far as tax goes with regards to a trust.
  3. Executors’ fees - no executors’ fees are paid on assets in a trust.
  4. Continuity - there is no freezing of your estate on death.






The ‘can you afford the top bunk in the penitentiary’ problem?

A bit more concerning than the home grown trust, is the position of offshore trusts in South Africa. We have provided compelling coverage of this saga in your Loose Leaf, especially now that some Draconian legislation allows for people to be imprisoned for life or fined.

But, it’s the onshore trust that is our speciality and we will delve deeper into our estate pegging theory to save and how to radically reduce executor’s fees. In fact, in the Practical Tax Loose Leaf, we will tell you exactly how you can reduce the quite exorbitant executor’s fees to zero!

Order the Practical Tax Loose Leaf Service today with a 30 day money back guarantee


Avoid the CGT tax trap in just 30 minutes!

By David van Niekerk, Owner: Ardent Accounting, Tax & Advisory | Vantage CA(SA)

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

What our readers have to say:

 “It contains information that is readily available – it’s almost like having a tax consultant on-site!”

M. Mitchell

“I have only had it a few weeks and already have used it extensively. In such a short period of time it is already an indispensable tool and never far from  my side, it has certainly been the best  investment I have made this year”

J. Musto

“Congratulations on an excellent book of reference – just what I need”

A. Hoole

“Very useful tool. I can see it becoming an essential ‘must have’”

C. Morris

“It is well indexed, updated throughout  the year in digestible chunks, keeps  me up to date and allows me to arrange  my tax affairs to my best advantage and keeps my accountant on his toes”

K. Mckenzie

“Absolutely fabulous. Keep up the good work”

C. Isaacs

Avoid the CGT tax trap in just 30 minutes!

One of the most horrific taxes yet to be launched on an unsuspecting public is capital gains tax.

This is basically the amount by which the proceeds exceed the base cost and is a tax you pay on the disposal of an asset.

We will explain the specific inclusion rates that apply to individuals and companies as well as 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, as well as many other costs related to the asset. Our full list of the main costs that form part of the base cost are published 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 are 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 does not matter whether the small business is held directly or whether it is a company, close corporation or partnership.

The capital gain or loss on the business is disregarded under the following conditions:
  • The market value of the assets of the business does not exceed R10 million
  • You hold at least 10 percent 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 have attained the age of at least 55 years or the disposal is in consequence of ill health, other infirmity, superannuation (retire from service on a pension) or death
  • Your total exemption under this dispensation is limited and may not exceed R1.8 million 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 R1.8 million 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 R10 million, otherwise it won’t be disregarded.

 Order and pay for The Practical Tax Handbook and be entered into the
draw to win a ticket to the “VAT masterclass 2016” workshop worth over R8 000!


Order the Practical Tax Loose Leaf Service today
with a 30 day money back guarantee


How to structure your salary to save thousands

By David van Niekerk, Owner: Ardent Accounting, Tax & Advisory | Vantage CA(SA)

Here’s the problem most employers and employee’s encounter on a daily basis:

Avoid being penalised by SARS for incorrect salary structuring

Let's say your company pays you a gross monthly salary of R10 000 with medical contributions of R1 500. Then the medical aid company increases its premium to R2 000.

Under the usual system of structuring salaries, you would make a salary sacrifice of R500. AND you'd need to comply with all the legal requirements to make that sacrifice as well. Then you can only claim your tax-free portion back in the month you make your contribution...

The Practical Tax Loose Leaf team has a better way to do this, one that doesn't involve sacrifice and extra work. One that SARS won't look at twice, reassess and penalise you for.

In fact, the salary structuring solutions that the Practical Tax Loose Leaf Service team has uncovered allow you more leeway to structure salaries in the future without affecting your gross salary now.

These include...
  • The deductions salary earners can still claim
  • The three non-negotiable requirements your employment contracts must meet to minimise your tax
  • The most common mistake taxpayers make when calculating their pension fund deductions... and what you must to do to avoid it
  • Five tax safeguards to include in your employment contracts

The solutions also allow you to know the exact cost to company of all your employees, so making management decisions will be easier... especially when review time comes around again.

Order the Practical Tax Loose Leaf Service today with a 30 day money back guarantee


Subsistence allowance – is it R109 or R353 per day?

Individual tax issues like medical deductions, retirement and allowances are some of the most important concerns of our readers.

Just take a look at the real-life problems people face on a daily basis from SARS. In this case one of our readers had a problem with the seemingly simple matter of a subsistence allowance. It’s not always that simple in practice. Here’s how we helped our reader…
 

Subsistence Allowance – is it R109 or R353 per day for the 2016 tax year?

Question:

We paid an employee a subsistence allowance in the 2016 tax year @ R109 per day. The Receiver has queried it with the following points:

  • Whether the employer only paid for incidental cost or
  • Whether the employer paid for meals and incidental costs.

I am not sure what they want. We paid the employee R109 plus meals and accommodation. What is classified under incidental cost?

Are they actually asking if meals were paid with this R109?

Answer:

The only possible purpose of the query issued by SARS is perhaps an attempt to limit the allowances granted to the employee.

Remember the limits (tax free amounts for the 2016 tax year) were as follows:

  • R353 per day for meals and incidental costs; and
  • R109 per day if there are incidental costs only.

My understanding is you paid the employee R109 per day only to cover incidental costs and meals and accommodation was for the account of the employer.

Our sections on medical tax credits, fringe benefits, retirement, bonuses and many other individual taxes will highlight the most practical elements you need to know.

Remember, if you don’t handle these individual items correctly, you WILL get a query from the Receiver.

Order the Practical Tax Loose Leaf Service today with a 30 day money back guarantee


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

All tips, recommendations and information in the Practical Tax Loose Leaf are 100% legal, and checked by 2 independent consultants, but often underutilised.

In each case you will receive:

  • Practical advice explained in simple English
  • Step-by-step instructions
  • Checklists with which you can test if you have forgotten anything
  • Proven sample formulations for contracts and letters
  • Real-life case studies
  • Each and every item referenced and justified
  • Hassle-free tax advice: from bookkeeping to the annual statement of accounts
  • Business travel: Do you need a log book?
  • Expenses: How to obtain the approval of all entertainment expenses as business expenses
  • SARS Audits: How to overcome audits and enquiries from SARS
  • Depreciation: How to achieve the highest possible tax savings with depreciation
  • Working from home? We’ll tell you about all the costs you can deduct LEGALLY
  • Corporate and Personal Tax: How to balance corporate & personal tax burdens in the most tax efficient way
  • CGT: All the assets which are excluded from Capital Gains Tax
  • Trusts: All you need to know about South African and Offshore Trusts
  • 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 foreign tax
  • Company car vs travel allowance: different scenarios, very different outcomes
  • Residence based tax and what it means to your company
  • Purchase, financing or leasing: Which method is the most tax efficient?
  • 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 anti-laundering measures, banking, exchange controls, insurance, invoicing, immovable property, taxation of foreign operations and much more…

Complete the order form NOW and receive your FREE Gift:

“Take on SARS and Win!”

In this ground-breaking booklet you’ll find out:

  • The benefits of 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
  • And more…!

Satisfaction guaranteed with our money back promise

We firmly believe that the Practical Tax Loose Leaf Service will more than repay its cost. However, if you’re not satisfied for any reason simply return it – in its original packaging – within 30days of receipt, and we’ll refund you every cent!

 


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Our Panel of Experts

David van Niekerk

David is a qualified chartered accountant and registered with the South African Institute of Chartered Accountants. He is also a registered tax practitioner with SARS and has been since 2004. David believes in absolute integrity and the highest quality service when handling his client’s business and personal portfolios. He has been involved in tax consulting since 1999, offering clients both complicated legal tax interpretation, structuring and advice, to assisting with basic tax filing. He is also involved in statutory and forensic auditing, accounting, risk and internal control assessment and planning. David is passionate about his client’s business, knowing that dedication and motivation holds a natural reciprocity to providing professional services.



Ettiene Retief

With 10 years’ experience, Ettiene is a specialist in taxation and the interpretation and application of tax laws. Ettiene is a partner in, and the financial director of Financial Tax & Remuneration Services, (FTR Services). Ettiene holds membership of the Institute of Directors, Institute of Commercial and Financial Accountants of Southern Africa and the Association of Certified Fraud Examiners. He is the Tax Technical Advisor for the members of the Institute of Commercial and Financial Accountants of Southern Africa.



Annja Louca


Annja Louca is a qualified chartered accountant and is registered with the South African Institute of Chartered Accountants. She is also a registered tax practitioner with SARS and has been since 2010. In addition to external auditing, she is a certified internal auditor and is registered with the International Internal Auditing Board of SA. Annja manages a small financial services business (ANLO Services) that strives to deliver exceptional customer service while providing the full ambit of financial solutions (Tax, Auditing, Accounting, Payroll and Secretarial).



Tom Jordi

Tom has an honours degree in advanced taxation. Working as a tax and business consultant, he gained a knowledge and understanding of the inner working of small to medium business with a focus on compliance issues stunting the potential for growth. During this time he joined the South African Institute of Tax professionals as a Master Tax practitioner. He became involved in the establishment and compliance challenges of businesses, schools, Non-profits and of course individual entrepreneurs. He has also published a tax manual for use in an introductory tax course focused at senior high school level, aimed at equipping tomorrows entrepreneurs. In 2014 he established Jordi tax, which seeks to continue the work he does with these entities, leveraging off of relationships created with other professionals, technology and a back to basics understanding of compliance issues.



Lizelle Talbot

Lizelle has a BCom Hons and a Masters degree in taxation from the University of Pretoria. She is a registered Master Tax Practitioner with the South African Institute of Tax Practitioners.

She has been specialising in tax since 2007 and has been an independent tax consultant since 2012. She is currently acting as the group tax specialist for a large listed group of entities.

30 DAY MONEY BACK GUARANTEE

By ordering your copy of
Practical Tax Handbook today you'll:

  • You'll learn how to avoid excessive tax burdens.

  • All tips, recommendations and information in the Practical Tax Handbook are 100% legal.

  • Everything is checked by 2 independent consultants.

  • Receive in each section:

    • Practical advice in plain language
    • Step-by-step instructions
    • Check lists to make sure you haven’t forgotten anything
    • Proven sample formulations for contracts, letters to SARS etc.
    • Many, immediately understandable examples
  • You’ll receive the most recent information with updates and supplements delivered to you.

  • Additional FREE services:

    • Unlimited permission to copy all sample forms and contracts as long as you have purchased the handbook
    • Daily email service answering pertinent questions and covering key changes in the tax world
    • Access to a personalised Tax Helpdesk service (The AccountingandTaxClub.co.za) where a team of tax experts are available 24/7 to answer your specific questions.
  • Win a ticket to the “VAT masterclass workshop” in May worth over R8 000

  • Get a FREE Gift:When you order the binder plus updates. “Take on SARS and Win!”

  • In this ground-breaking booklet you’ll find:
    • The benefits of 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
    • And more…!
  • Only pay for the Practical Tax Handbook once you receive it. We’re so sure that you’re going to benefit from the handbook that if you’re not happy, simply return it within 30 days of receipt, and we’ll refund you.

Who should subscribe to the Practical Tax Handbook?

• Accountants • Bookkeepers • CEO’s, Directors and Managers of all companies •
• Financial Managers and Directors • Anyone who deals with tax on a daily basis •

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Copyright © 2017, Fleet Street Publications (Pty) Ltd.
The information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. No action or inaction should be taken based solely on the contents of this publication. We do research all our recommendations and articles thoroughly, but we disclaim all liability for any inaccuracies or omissions found in this publication. No part of this publication may be reproduced or transmitted in any form or by means of electronic or mechanical, including recording , photocopying, or via a computerised or electric storage or retrieval system without permission granted in writing from the publishers.