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Discover why a good tax record could save your company money

by , 26 August 2013
It's important that you comply with all the tax laws all the time. Not only is this good practice, but being on the right side of the law could save your company money too. Here's how...

It's in your best interest to comply with the Tax Administration Act (TAA). A good tax record can benefit your company in a big way especially when you run into trouble.

Not convinced?

Here's how a good tax record will benefit your company

SARS looks at your tax history when it makes certain decisions. It does this when, for example, it considers your objection and explanation or even the validity of your declared figures, explains the Practical Tax Loose Leaf Service.

This means if you object to a penalty or additional tax, SARS will scrutinise your tax record. It'll be more reluctant to discharge, waive or reduce penalties if you're a repeat offender. For example, if you have a history of:

  • Late payments;
  • Late submission of returns; and
  • Failure to submit returns or make payments.

Here's an example of how a good tax record will save your company money:

Let's says Elaine regularly submits her return for payment of Vat(VAT201) to SARS via eFiling.

On 31 July 2013, she tries to submit the VAT201 form to make a payment via eFiling. But this time around, she encounters a technical problem with the following error message: 'There has been an error. Please contact us if the problem persists.'

Unfortunately, the time is 16h45and she can't get hold of the SARS contact centre. She tries for the rest of the day and even into the evening, but the error persists. As a result, she only manages to submit the return and make payment the next day, on 1 August 2013, but SARS imposes a late payment penalty and interest.

Elaine objects to the penalty and the interest charged on grounds that it wasn't her intention to postpone or evade the payment of the tax. This was her first and only offence.

SARS approves her objection in part by discharging the full amount of the penalty. But interest remains payable because it couldn't be waived.

This means SARS considered the grounds of Elaine's objection and also assessed her history with regard to compliance.

But, if Elaine had a history of prior offences SARS would be less lenient about the penalty. For instance, SARS may under such circumstances have disallowed the objection or perhaps only waived a part of the penalty, for example by 20% or 50%.

So make sure you keep these important dates handy to ensure you have a good tax record

  • Value-Added Tax (Vat) - Last day of the month following the end of each tax period.
  • Employees' tax (PAYE) - 7th day after each month.
  • Skills Development Levy (SDL) - 7th day after each month.
  • Provisional tax (first period) - 6 months from the date of commencement of the year of assessment.
  • Provisional tax (second period) - Last day of the year of assessment
  • Provisional tax (additional payment) - 7 months after the last day of the tax year in the case where the tax year ends on 28/29 February. In the case where the tax year ends on any other date than on 28/29 February, you'll pay 6 months after the last day of the tax year.
  • Donations tax - 3 months from the date of the donation
  • Dividends withholding tax - The last day of the month following the month in which the dividend is declared by your company.

Remember, if you don't meet these due dates it'll have serious financial implications for you and your business. A simple query, if ignored, can escalate into a full-blown investigation and even a raid on your premises. This can cripple you or your business. But having a good tax record will save you money, so make sure you comply.

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