INDIVIDUAL SERVICES

Financial Strategy

OUR INDIVIDUAL SERVICES

Any effective wealth or financial strategy must consider the impact of taxes. We offer a combination of sophisticated tax planning, consulting and compliance services with our signature high level of personal attention. Gaining an understanding of your unique needs allows us to focus on uncovering opportunities for tax savings so that you can concentrate on building, protecting, and preserving your wealth.

Income tax is the normal tax which is paid on your taxable income. 

Do I need to submit an income tax return?

You do not need to submit an income tax return if you meet all the criteria below:

  • Your total employment income is less than R350,000 per year,
  • You earn employment income from only one employer
  • You receive no other income or allowances
  • You are not claiming any deductions

 

Examples of amounts an individual may receive, and from which the taxable income is determined, include –

  • Remuneration (income from employment), such as, salaries, wages, bonuses, overtime pay, taxable (fringe) benefits, allowances and certain lump sum benefits
  • Profits or losses from a business or trade
  • Income or profits arising from an individual being a beneficiary of a trust
  • Director’s fees
  • Investment income, such as interest and foreign dividends
  • Rental income or losses
  • Income from royalties
  • Annuities
  • Pension income
  • Certain capital gains

Top Tip: When completing your return, you will require the following documentation in order to verify the existing, pre-populated information that appears in the return, as well as to complete any remaining portions:

  • IRP5: This is the employees’ tax certificate your employer issues to you. 
  • Certificates you received for local interest income earned. 
  • Any other documentation relating to income received or accrued, such as remuneration that has not been reported to SARS by your employer, or business or investment income, etc.
  • Details of medical expenses paid, and medical scheme contributions made.
  • The relevant certificates reflecting your retirement annuity fund contributions made.
  • A logbook and other documents in support of business travel expenses (if the travel allowance is part of your remuneration or if you have the right of use of a company car taxable benefit).
  • Any other documentation relating to the allowable deductions you wish to claim.

What is an individual income letter?

When requesting financing a bank or other financial institution may often want a letter from an accountant confirming the income of an individual, particularly if that individual is a Director and/or shareholder of a business.

This is primarily because of the amount of control that the individual has over the salary declarations and cash accounts of the business.

At its simplest, it’s just a letter confirming the monthly salary; however it can get quite complex with salary, dividends, drawings against a loan account, and other sources of income.

IGrow CA can help you check if you need to submit a tax return and what returns are outstanding to SARS by:

  • Setting up an e-filing profile and running a tax status report
  • Confirming what returns SARS sees outstanding
  • Advising you on how to compile the relevant data to complete any outstanding submissions with possible tax optimisations
  • If any returns are required giving you guidance on the best ways to submit and a quote from our side to complete this.

Igrow CA can help with these registrations and will :

  • Collect documents
  • Make a SARS appointment
  • Set up your e-Filing profile
  • Register Income and Provisional tax types on e-Filing
  • Collect, review and submit documents to SARS
  • Perform a single visit to SARS to validate any documentation
  • Confirm all outstanding tax returns based on your e-Filing tax status

With the above process, you will have a clear picture of what your current and outstanding SARS obligations are in relation to Income and Provisional Tax. Your e-filing profile can then be used with any accounting or tax service provider for current and future returns.

Provisional Tax is the mechanism by which you pay SARS amounts related to your income tax assessment. It happens twice a year with Provisional Tax 01 and 02. It is not a separate tax, just the payment mechanism.

The first provisional tax submission is required 6 months after the start of the financial year.

The second provisional tax submission is required 12 months after the start of the financial year.

It contains the best estimate of the year’s total taxable income as well as the related estimate of total tax payable for the year. Half of this estimated tax amount is then usually paid over to SARS.

There may be mitigating factors such as assessed losses that can reduce the amount. Don’t  forget about the Small Business Corporation (SBC) Tax or Turnover Tax options where applicable.

We can help with this process and will :

  • Review your financial records for the first six months of the financial year
  • This should include the cash movements on all bank accounts, as well as any unpaid sales or purchase invoices
  • Determine the appropriate tax rates to apply and work with you to build the best estimate for the total year’s income and tax amount
  • Confirm the final figures with you for completion
  • Submit the IRP6 provisional tax return on eFiling return, or provide you with the figures to fill in
  • Submit the first round of supporting documents if using a lower than the ‘basic amount’

If SARS would like to do further audits on your business documentation beyond what we supply this will incur an additional charge from our side to assist.

SARS reversed your/your company’s refund or raised a higher tax liability?           

Taking effective steps against SARS to resolve this problem is called ‘tax dispute resolution’. Tax dispute resolution is one of our areas of expertise. We know of and understand all the remedies available to taxpayers to resolve these types of tax problems with SARS, through the tax objection and tax appeals processes.

A tax clearance certificate (TCC) is a document issued by SARS confirming that the applicant’s tax affairs are in order.

TCCs are required for tender applications, to reflect “good standing”, for foreign investment, and for emigration purposes.

Financial Statements are one of the key tools business owners need to plan, structure, invest and grow. They provide high-quality, understandable and globally accepted financial reports for the position and performance of your business.

Small to Medium-sized entities often require financial statements:

  • As part of the application for financing and overdraft facilities
  • If an investment opportunity presents itself the financial statements will form part of the due diligence process
  • Simply for owner’s use
  • Compliance

Financial statements can be prepared according to the International Financial Reporting Standards (IFRS) framework or The International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SME’s) framework.

We can help determine which framework is appropriate for your business.

Financial Statements can be separate per entity or consolidate the statements of a number of entities.

Important dates for individuals

Tax Season – Tax Season for individuals normally runs from July to November (for non-provisional taxpayers), with provisional taxpayers having until end January to file via eFiling.

Provisional Tax – The filing and payment by individuals of provisional tax (IRP6’s) is
  • 31 August (1st period)
  • 28 February (2nd period)
  • 30 September (3rd period)

How can we help you?

If you need any help or assistance with Trust Accounting, IGrow Chartered Accountants are here to assist you.