There are a lot of myths about provisional tax.
These often lead to taxpayers neglecting their tax duties, over-paying or worse, underpaying on their provisional tax obligation.
As the 31st of August deadline for provisional tax approaches, it's crucial you know the facts about provisional tax so you can make your payment correctly and on time.
To help you with this, today we uncover five of the common myths about provisional tax.
Are you claiming interest charges on an asset you haven't used yet? Don't!
Picture this... You buy property and start building an office. With two weeks to go to completion, you take out a loan and buy office equipment.
But you hit a snag.
The builders can't finish your offices for another three months. In the meantime, you're paying interest on equipment you're not even using yet.
So you claim the interest as a deduction from SARS. This way you can at least get something out of the delay.
But, if you do this, you'll be making the biggest mistake when it comes to claiming interest charges.
How you can avoid making this mistake
The truth is, you can't claim this deduction. Because you haven't used the equipment to produce income for your business yet.
The trick is knowing when you can claim the interest as a deduction.
Good news: You won't trigger CGT if you dispose of an asset in one of these ways...
Capital Gains Tax (CGT) is the tax you pay on the profits you make on the disposal (sale) of your assets.
The good news is, there are tax breaks and exclusions in South African tax law designed to give you tax relief and lower your CGT bill.
And if you dispose of an asset in one of these four ways, then there's no disposal for CGT.
Eight ways to LEGALLY beat the taxman
There are a few Capital Gains Tax (CGT) loopholes that can save you thousands of rands every single year and, in some cases, let you off the CGT hook completely…
Click here to get your hands on them
Three reasons why you need to analyse your financial statements
You probably have an accountant who prepares your financial statements diligently every month.
And what usually happens... you file them away, without so much as a second glance.
I know you don't worry about preparing your financial statements because you have a competent team who you know and trust to do it.
But you really should be analysing your financial statements. Here's why…
The five forbidden items you can't claim input tax on
The VAT law lets you claim input tax on the supplies you need to buy in order to run your business.
But you can't claim input tax on everything.
There are five forbidden items you can't claim on. And if you do, SARS will not only reverse your input tax deductions. They'll also slap you with a 200% penalty, plus interest and fines. And they'll conduct a VAT audit on your business that could go as far back as five years into your records.
But I don't want you to get in that situation.
Here are five forbidden items you must never try and claim input tax on...
Do you dream of the day you don't have to answer petty VAT queries?
Do you spend hours each day answering VAT questions you think the person should know the answers to?
Are you tired of your finance team bugging you with simple VAT queries because they're scared to make the decision themselves?
Take back your time, so you can deal with the big issues!
Hand each one of your team this guide tomorrow. This way you'll never have to answer another niggling VAT law question...and you'll know the decisions they make will be legally correct.
Until next time,
David van Niekerk,
Editor in Chief: The Practical Tax Handbook
P.S. Do you want to make sure your provisional tax calculations are correct? Or if you need more help with provisional tax, check this out