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Don't let a cheap tax practitioner do your tax return! It could cost your business thousands

by , 26 March 2015
You may think that consulting a cheap tax practitioner is saving your business money! The truth is that you're undertaking major risks and you should never do that.

Here's why you should avoid using a cheap tax practitioner and what is it you should do instead!

This example illustrates the danger of using a cheap tax practitioner

To illustrate our point, here's an example of someone who works for a winery and who earns most of her income as commission. For the 2014 tax year, 80% of her income was commission.

As a consequence, she wanted to use the services of a tax practitioner to help her with her tax returns.

However, she knew she could claim her business expenses against her income but she didn't want to deal with the complexity herself. So she found what seemed like an amazing bargain – a tax practitioner who only charged R200 per return!

But this was just another example of how, you get what you pay for.

Here's what happened: The tax practitioner didn't know what she was doing on the tax return and couldn't see a section where a deduction amount was supposed to go. As a result, the tax practitioner told the taxpayer she couldn't claim the deduction – almost costing her R22 000!

The same risk applies to your business return, the ITR14.

If your tax practitioner doesn't know what he's doing, and can't find a section on the ITR14 annual tax return (because he didn't answer the questions on page 1 correctly), you could be losing out on valuable tax deductions.

Not only that, but if your tax practitioner tells you there's no option to claim a deduction ('because the return says so'), it might be a clear indication they're definitely not the correct tax practitioner for your  business.

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Keep in mind that, as a general rule, working with tax is not an easy job. Even more so for companies with capital allowance or special tax deductions (like learnerships). If your tax practitioner makes an error because he can't find the spot in a tax return to put a deduction figure in, chances are he doesn't know about all the deductions available to your business. Your tax practitioner should be an expert when it comes to the types of taxes applicable to your specific business.

So don't forget that using a cheap tax practitioner to do your tax return can prove very risky! Choose your tax practitioner on a different basis than that of the price!

Ask for your tax practitioner's TP number, which controlling body he's registered with, and his experience in your business' industry. If a tax practitioner is fantastic at individual taxes, it doesn't mean he'll be great at things your your business deals like transfer pricing or

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