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In terms of South African income tax legislation, South African tax residents and non-South African tax residents are taxed differently, as is the case in almost every country around the world. A South African tax resident is taxed in South Africa, by SARS, on its worldwide income, irrespective of where the income originates from or the source of the income.

A non-South African tax resident on the other hand, is only taxed in South Africa on the income that they earn from a South African source. For example, Barry is a French tax resident. He invested money into a South African bank account and earns interest on his investment in the South African bank account. Although Barry does not live in South Africa and he is not a South African tax resident, he will be required to declare this income on an income tax return to SARS and pay tax thereon. He will however be allowed the annual interest exemption, which is R23 800 for an individual below 65 years old and R34 500 for individuals above 65 years old. Whatever income Barry earns from a non-South African source though, will not be taxed in South Africa and Barry need not declare it in South Africa.

The same rule applies to immovable property, where a property is situated within South Africa, it has a South African source and thus if that immovable property is disposed of, there will be tax payable to SARS, whether the seller is a South African resident or a non-South African resident. If the seller of the immovable property is a non-South African resident, there will be an amount of tax withheld form the selling price, known as a withholding tax, which is considered to be a pre-payment of the capital gains tax that will eventually be due and payable by the non-resident taxpayer.

It is important to note that taxpayers operating in two or more jurisdictions are governed by double tax agreements between countries. A double tax agreement is where the two countries have agreed on who will have the taxing rights over a certain source of income earned by a taxpayer. It is therefore always important to consider first a double tax agreement, if there is a taxpayer who falls within more than one tax jurisdiction. If there is in fact no double tax agreement, both jurisdictions tax legislation may apply to the income earned by the taxpayer.

Take note that tax residency is a complicated matter and is determined from your ordinary residence and your physical presence in South Africa. It is therefore advisable to not make any assumptions when considering your tax residency status but instead consult with an experienced tax advisor.

Willem Oberholzer is executive director and Jade Els MCom Tax is a tax adviser at Probity Advisory.

PERSONAL FINANCE 

Accurate accounting is the single most important aspect of many successful businesses. In order for any business to remain successful employees must share the same values and commitment. It may also be the size of your business and employee responsibilities that could determine how they managed your accounts. Outsourcing may just be the answer in order to relieve the pressure and stress a small business may inflict on staff and you as owner.

So what are the benefits of outsourcing?

  • Accuracy

Accurate accounting is key to any successful businesses in order to avoid running out of cash as cash levels may not always be accurately stated. Furthermore, accuracy remains paramount in order for you to focus on the single most important aspect! YOU’RE BUSINESS.

  • SARS

Generally, as with most small businesses, employees take on a variety of roles and responsibilities, increasing their potential for mistakes. Removing the accounting / bookkeeping part of your day to day business management activities will eliminate aspects like late payments to SARS and incomplete monthly management accounts.

  • Software

The IT (AI) industry is for ever changing systems managing accounts. An outsourced accountant will, in all probability, make use of the latest and best programs and software available. It could therefore be a huge saving to your business to piggy back on your accountant rather than you spending much needed cash flow.

  • Expert advise

It’s not possible to be everywhere so outsourcing may just be what you need to exponentially grow your business, to the next level. Accountants are experts in their field and truly understand the importance of accurate accounting. Your accountant will always be there to provide assistance and advice so there is no better person to trust with your accounting

So why not call Accusum Accounting Services, with us it’s almost like owning your own staff without actually employing anyone. Please scroll through our website to see our extended list of service offerings.                       

 

                                         “We simply love the paperwork you hate”

As life gets busier, people have less time to commute to and from meetings. Luckily, with today’s technology the commute can be eliminated altogether and all you require is an internet connection to speak to your fellow colleagues.

Virtual meetings can be convenient if used correctly and it allows people from all over the globe to take part.

The Journal of Accountancy provides some tips on how to successfully interact in virtual meetings:

Utilise video to foster engagement. By using the webcam and seeing attendees facial expressions, the meeting can be more personal which will make it less likely that someone zones out from the conversation.

Set out an agenda and state the agenda in the beginning of the meeting. By sticking to an agenda you are able to stay on track and maximise the use of everyone’s time.

Use resources such as sharing documents or presenting a few slides. By making it more interactive it will increase the productivity of the meeting.

Make notes as you would in a normal meeting. It is likely that by the end of the meeting you would have forgotten most of what was said. By making notes you are able to review what is expected of you.

Set out some parameters for the meeting and do not allow the discussion to veer into anything that would not be permitted in an office meeting. Loud noises and interruptions should be avoided. The timeline should be strict and people should join the meeting on time as they would in person.

Eliminating painful driving time can make life a lot easier for busy individuals. By using these tips, virtual meetings should be a breeze.

 

Source Accounting Weekly

Accounting apps market grows, but jury is out on effectiveness

The market for accounting apps in Australia has recorded more growth. Some are convinced of efficiency gains, while others believe the market is beyond saturation point.

New research from Xero, released today, shows that businesses that used connected apps grew revenue by 5.5 per cent compared to the 3.6 per cent revenue growth for businesses not using apps in the 2017–18 financial year.

Further, Xero found businesses that used at least one app in 2017–18 increased employment by around 40 per cent more than businesses that did not use apps.

However, the vast amount of apps on the market have divided opinion, with Change Accountants and Advisers managing director Timothy Munro believing that accounting firms will struggle to navigate the heavily populated space.

“From my perspective, they are way too many add-ons and that’s not a criticism of the add-ons,” said Mr Munro.

“Anyone is welcome to come up with a great idea and get out there and sell it but the Xeros and the MYOBs and the Quickbooks out there are trying to push all these add-ons and I think that accountants are thinking, ‘hey I should be getting into these add-ons’ but they are not focusing on the bread and butter which is the compliance.

“There are very few add-ons that small-to-medium accounting firms can adequately help with so we just focus on one or two but there are 600 to 700 out there and there’s no way a small to medium sized accounting firm can understand what they all do, let alone support and recommend them.”

Mr Munro’s comments echo those of KPMG technology lead, Fleur Telford, who earlier told Accountants Dailythat clients were “overwhelmed” by the amount of apps on the market.

“There are just so many apps on the market now, and we are hearing that people are overwhelmed when they’re considering what is right for their business,” she said.

On the flip side, Sequel CFO chief executive, David Boyar believes competition produces positive outcomes for the industry. He notes there was still a large segment of the market that have yet to adopt any apps.

“You still got 30 per cent of Australian businesses still using paper BAS, so there’s still massive opportunity for Australian businesses to grow and to make their businesses more efficient to cut out a lot of the manual clerical work in the business and then use that time to either grow the business, look after their own mental health or do something else,” said Mr Boyar.

“You’re talking about a really pointy end of innovation and there are a lot of people who are going to try and enter that space and I think competition’s great, let them compete because we as the consumer are going to win.”

Getting it right

For Mr Munro, an effective approach in his business is being proficient with a capped number of apps.

“Far too many firms try and implement something for a client where they don’t have good experience in it, they are not going to make any profit on it and the clients are not going to have a good outcome,” he said.

For accountants who don’t have a firm grip on what’s available for them in the market, and then how to use the products, their network of advisers can come into play.

“Sometimes just having a base awareness of the apps that are out there is good enough and you can tell your client to look at a certain product,” said Mr Boyar.

“If you’re an accountant that is not tech savvy and doesn’t want to be tech savvy, the best option is to build a network, build your own community of advisers and find people who you can refer your clients to.”

Future proofing

Late last year, Smithink founder, David Smith, said he’s finding a number of niche products being developed as add-ons to core accounting software aren’t lasting long past start-up phase.

With that in mind, accountants need to be aware of the potential for disruption, particularly where they are using an app that is new to the market or not tied to an established software vendor.

“A lot of these businesses don’t last long. They are little start-ups, they give it a go, they fade away,” Mr Smith told Accountants Daily at the time.

“You don’t want to train your staff and spend all of that effort to get yourself up to speed, and then it may not keep advancing, or people may not invest in it.”

 

Source Accounting Weekly

I came across an article in an accounting magazine about growing your business through referrals, but started falling asleep when the author got into psycho-babble about projecting positive body language. This is the kind of stuff you get in Cosmopolitan magazine: smile often, have an open body posture, make eye contact and pay attention to non-verbal gestures, such as tone of voice.

What the hell is this? Are you trying to get a date?

If that’s how you’re going to win clients, then I think the game is a bust.

This is a subject I know something about. Some years ago I started writing a blog about a particular aspect of the law: how to defend yourself against blood-sucking banks, and all the devious ways their creepy lawyers had invented to side-step the law. I wrote just like this. Aggressive, mocking, outraged, sometimes funny. I quickly figured out which articles people like to read:

  1. Humanise the story: put a real human being at the centre of it, and tell their tale of misery in dealing with the banks, how they were evicted from their homes for falling three months into arrears, or had their car repossessed. Nearly everyone can identify with this, since there is hardly a soul on the planet who hasn’t hit a financial wobble. And, truth is, most people think the banks are a worthy target for abuse (whether right or wrong).
  2. Tell the reader something about the law they don’t know. Here I was guided by the best lawyers in the business. Make the reader feel they can fight back, that they have rights even if they owe the bank money, that that can regain some of the dignity that is stolen once you enter litigation with lenders.
  3. Connect with the reader at an emotional level. Make them angry or make them laugh. This is a call to action. The reader wants to do something, to move from effect to cause. They want to feel part of a like-minded community. They only feel weak when they are alone.

This became my style guide. My inbox flooded with emails. To this day I receive emails from people who trip up on articles I wrote years ago. I don’t give legal advice but I can refer them to a network of people who can.

Getting attention

Here’s the point I am trying to make to you, dear accountants: if you want referrals, never mind about your body language or having to fake a smile. You must have something unique to offer.  You have to capture your share of that mysterious and elusive commodity: attention. You do that by being really attentive to the clients you already have. Shower them with love, and then tell them straight: you are expanding your practice and are on the lookout for new clients. You ask them for referrals. Don’t be shy. You’re the master of business turnaround, or IT, or whatever.

Because you know in your heart of hearts that you are better at your job than anyone else around. If you don’t, you need to cultivate that belief. You know you can solve that guy’s problems and save him money.

Money talks

When you talk like that, you have someone’s attention. Money talks. When you can show someone a way to save money, or make more money, the deal is all but sealed.

While you pay special attention to the clients you already have, you want new ones. That takes a different approach. I wrote about it here. You need to send out professional-looking newsletters, create a blog, update it with content regularly, promote it on social media. That’s not hard to do. But if you push out dry, turgid prose without offering any new insights, you will kill it off in no time. Don’t be shy to hold a strong opinion on something. Like Markus Jooste of Steinhoff did nothing wrong. Every press outlet in the country is beating up on this guy. That’s cowardly. Maybe someone should stand in his corner and offer a different viewpoint. Maybe it’s true, maybe it isn’t, but I don’t enjoy seeing a man being kicked when he is down.

Become an opinion leader

Promote yourself as an opinion leader. Don’t be afraid to be contrarian, but don’t be contrarian for the sake of it. Believe me, you will get noticed.

Put out communications in the form of newsletters and blog posts. Write great headlines, and great ledes (opening sentences): punchy, arresting and devoid of froth. Humanise the story: relate the events of a client that you just helped avoid bankruptcy. Talk about the effect it had on his wife and kids. Get the emotional juices flowing.

Specialise in something

Specialise in something and let people know how great you are at it: like detecting fraud, showing how working capital is squandered, or better budgeting for a more profitable business. There are a hundred ways you can do this.

My accountant has been my friend for decades. He will always be my accountant because he has become a buddy. I refer others to him. I don’t make any money out of this. I do it to help people.

Try this out and thank me later at Christmas with a bottle of Jameson.

 

Source Accounting Weekly

 

In an article by Helena Wasserman featured in Business Insider SA, taxpayers are alerted to the top 18 mistakes one could make on a tax return.

Are you preparing to file your own tax return now that tax filing season is open? SARS is waiting for returns according to Wasserman, and she urges tax filers not to make these common mistakes.

1. Bank account declaration must be true.

Filers who declare that they do not have a bank account in SA could incur a R16,000 administrative penalty if the statement is found to be false. This advice was given by Gratia Snyman of Gautax, a Joburg-based tax and accounting service.

2. Non-declaration of investments.

SARS has its finger on the pulse in respect of investments. Investment houses provide information directly to SARS. If you fail to declare any investment, SARS will penalise you!

3. Not filing a return when you have to.

Marc Seivitz, director of the online tax assistance service TaxTim advises that individuals are under a misconception if they believe they don’t have to file a return if they earn under R350,000.

Seivitz says: “This is incorrect, there are very limited circumstances for when taxpayers do not need [to] file their return. We always advise taxpayers to file anyway just to ensure they are always fully compliant with SARS.”

Also important to note is anyone under 65 who earned more than R75,750 in the past tax year from any source must have a tax number.

4. Pension contributions information.

The information regarding pension contributions should already be reflecting in your IRP5. Don’t make the mistake of duplicating this information.

5. Declare all income.

Sars requires taxpayers to declare all income irrespective of whether it has been taxed by an employer.

6. Avoid numerical errors.

Pinky Ndaba of Durban-based firm Professional Accountants and Tax Consultants says arithmetical mistakes are a big contributor to taxpayers not getting a refund or, conversely, having to pay in large sums of money to SARS.

7. Unnecessary Typos.

Ndaba also advises that incorrect spelling of names when compared to identification documents may result in the system kicking you out and rendering the return incomplete.

8. Keep all records updated.

SARS relies on information obtained from other departments such as Home affairs to verify taxpayer identification information. Make sure you update your records as changes happen.

9. Double check your IRP5.

Make sure your employer has correctly populated your IRP5 before you attempt to file. If there are any errors, the employer will have to correct these and resubmit via EasyFile.

10. Declare rental income.

According to Snyman, property transfer attorneys submit full information to SARS. If you don’t declare rental income, SARS will find you and issue a penalty!

11. Claim your tax-free reimbursement for business travel.

There are specific criteria to be met but taxpayers must remember to claim a reimbursement for tax-free business travel. On the contrary, if you do opt for a travel allowance, ensure your employer provides a letter with an explanation of the calculation of the fringe benefit.

12. Keep proof of medical expenses.

In order to claim a refund for expenses not covered by your medical aid, you will need supporting documents as proof of payment.

13. Married in community of property? Avoid doubling up.

Both spouses need to declare all interest earned, capital gain and losses and rental income for properties. According to Snyman, if you have indicated to SARS you are married in CoP, the system will calculate the split.

14. If you earn a salary, don’t claim fees.

Individuals may not claim professional subscription fees if they earn a salary not mainly derived from commission.

15. Get a Tax-free savings account.

Individuals should not miss the opportunity to save in a tax-free savings account. Invest up to R33,000 per year and pay no tax on interest, dividends and capital gains.

16. Claim in respect of donations.

Individuals may claim up to 10% of their taxable income for donations to public benefit organisations (PBOs). As long as they obtain a valid s18A certificate and a PBO number required for a tax return.

17. Don’t neglect to declare an investment in a venture capital fund.

Joon Chong, tax partner at law firm Webber Wentzel says, “An investment in a Section 12J venture capital fund can be claimed as a deduction.”

18. Avoid spending your tax refund too quickly.

Snyman warns taxpayers not to allocate their refund based on the estimates received from SARS. It would be prudent to wait for a final completion letter first.

 

Source Accounting Weekly

The number crunchers at the DA have tallied up the amount of irregular, fruitless and wasteful expenditure in government departments and state-owned entities (SOEs) and it comes to a staggering R100,9 billion.

Earlier this month the DA put the figure at about R76 billion. But that was before it had sight of the “serial mismanagement” offenders at SAA, SA Express and Denel. As those reports dribbled in, the figure shot to more than R100 billion.

To put that in some kind of perspective, this is equivalent to 6,7% of total revenue budgeted for 2018/19.

An analysis of 2017-18 financial reports submitted to Parliament by government departments and entities has revealed irregular expenditure of R72,6 billion.

One has to sympathise with the Auditor General who has to wade through the thicket of graft and misspent money year after year.

To get a sense of how bad things have gotten, take a look at just one government-owned entity, the Passenger Rail Agency of SA (Prasa). Its latest annual report for 2018 shows:

  • Irregular spending of R24,2 billion
  • Fruitless and wasteful expenditure of R1 billion
  • A net loss for the year of R925 million.

The AG issued Prasa with a qualified audit opinion, due to the large amount of dodgy spending, and the unclear accounting of passenger fares. Despite spending all this money, the entity achieved only 21% of its performance targets.

“Prasa’s results are a slap in the face to all those commuters who queue for hours attempting to catch trains that never arrive. With fuel prices sky-rocketing and 9.6 million unemployed, the neglect of the train system that provides vital links to jobs clearly shows that the ANC does not care about the daily struggles of South Africans,” says DA spokesperson on Access to Jobs, Geordin Hill-Lewis.

“Prasa also joins the list of departments and entities that the AG has expressed serious uncertainty over their ability to remain a going concern. There are now eight entities and one department at risk of financial collapse, in addition to the commercially insolvent SABC,” These are mind-boggling figures that in the private sector would result in mass firings or jail sentences. In the revolving door public sector, this is the result of cadre deployment and a culture of insouciance. When there are no consequences for mismanagement, mismanagement continues.”

Fruitless and wasteful expenditure across all state entities and departments came to R4,1 billion. This is money that could have been saved if reasonable care had been taken. For example, the SABC spent thousands of rands transporting board members to Cape Town for the SABC Board Inquiry‚ but then refused to appear before the inquiry. Easy when it is other people’s money.

This R4,1 billion is enough to fund the salaries of over 22 000 police officers or 21 000 nurses. Or 100 new schools.

The DA says irregular expenditure across all departments and government entities stood at R42,8 billion. The figure for the most recent year is double that of the previous year and does not include all departments and entities as some are yet to table their report. Irregular expenditure occurred when expenditure was not properly managed and was sometimes an indicator of corruption.

Eskom had the largest sum of irregular expenditure of all departments and entities with R19,6 billion‚ followed by Sanral (R10,5 billion)‚ Transnet (R8,1 billion)‚ Department of Water and Sanitation (R6,2 billion) and the SABC (R5 billion).

However‚ this is not the full picture, says the DA. “The Auditor-General also highlighted departments where irregular expenditure was identified that was not included in their reported figures.”

The Department of Police was cited for not including irregular expenditure of R968 million in its financial statements‚ leading to a qualified audit opinion.

The AG certainly has one of the toughest jobs in the country, documenting and investigating spendthrift government entities. We are repeatedly told that efforts have been made to clean up management at Eskom, SAA and other SOEs, yet the results continue to shock and amaze. To loosely paraphrase former UK Prime Minister Margaret Thatcher, we are fast running out of other people’s money.

 

Source Accounting Weekly