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This Weekly publication is issued by Aquilla Advisors cc (Specialising in Business Solutions to SMME's in all the various aspects of business) and Aquilla Financial Solutions cc (Specialising in Financial Services Advice and Intermediary Services).
It contains information useful to business owners, business advisors and managers
If you want to comment on anything in this newsletter, send us a mail to: . For more information on Aquilla Advisors , go to www.aquillaadvisors.co.za. Feel free to pass on this newsletter to other interested parties. You'll find the subscribe - unsubscribe function at the end.
CIPRO Annual Company Returns (Is Your Company Legal)
CIPRO have said annual returns were re-introduced as a result of poor compliance on the part of businesses to update their information as required by law on their Company registrations.
"The data will help the Registrar's office who requires constant and vigilant updating to ensure that it is relevant, accurate and up to date."
Companies and CCs must lodge a return every year, not later than the end of the month in which they were registered. The new return kicked in from 1 May 2005 for companies and 1 September 2008 for Closed Corporations. It must be submitted together with a prescribed fees. If your information is outdated or outstanding on your company documentation, you will be required to complete a CK2 and CK2A for Cc's and relevant CM documents for a company. Please remember that as of August this year you will also have to submit proof of residence for each member/ director as well as a certified copy of the ID and each director / Member have to sign in person.
Companies is only allowed to lodge annual returns electronically. Cipro will not accept or receive paper documents or cash from companies. This means that your company must open an account with CIPRO and deposit money to that account to do online processing and payments for these submissions.
Businesses that are deregistered will have to go through the hassle of reregistering and pay and submit all outstanding annual returns. Please make sure that your company is still registered by checking the CIPRO website. It is your responsibility to regularly verify and check your company's information or to notify the relevant authorities about any changes.
If your company was deregistered you are operating without the protection that the legal entity offers you and your co-shareholders / members. You will then each be responsible for any claims from creditors in your personal capacity.
To find out if your company is still registered, go to CIPRO website or Contact Cipro at 0861 843 384, or contact our offices who will gladly assist you in the process. It will unfortunately be a paid service.
Here are some of the key issues readers have raised over the past few weeks:1. SARS provides for an allowance for future expenditure on contracts
My company receives large grants and funds from contracts, however the expenses will only be reflected later as the contract runs for many months. I have received quite large sums up to this month, my year-end month, but will only have the expenditure over the next few months. As SARS expects us to show revenue of payment or an invoice (whichever is earlier), I will have to show the revenue. But will I be allowed to deduct the expenditure occurred after year-end in this tax year?
You could consider using the Section 24C allowance. This section provides for an allowance for future expenditure on contracts.
Prepayments similar to your circumstances often happen in the construction industry. This assists in cash flow problems caused by a tax liability on the prepayment when the deductible expense will only be incurred in a future period. The prepayment will form part of gross income. The Commissioner can grant an allowance at his discretion.The main rules are that the future expenses related to the prepayment will have to be deductible expenses (under Sections 11(e), 11(o), 12B or 12C), and the expenses have to be part of a contractual commitment relating to the prepayment.
In practice the Commissioner should grant you the allowance if you can satisfy him that the amounts received were received in terms of a contract; and the future expenses will be deductible. In practice the Commissioner will apply the gross profit percentage on the contract calculation method to determine the future costs.
2. Foreign pensions are exempt from income tax
I'm an SA resident earning a pension from the UK, which I contributed to while working and living in the UK. Do I need to declare it and pay tax on it?
A pension received by or accrued to any resident of the Republic from a source outside the Republic will be exempt income in the Republic (Section 10(1)(gC)).
We have a company and the income exists in consulting fees. There are 4 employees employed by the company, other than the owner: a receptionist, 2 accounting clerks and 1 other employee.
There is a difference of opinion between me and the auditor who will do the audit of the financial statements. The auditor is of the opinion that the company falls into the category of a personal service company and certain expenses will not be allowed as expenses and that the income of the company is subject to a tax rate of 35%.
My opinion is that it is not a personal service company because the income from one contract does not exceed 80 % of the income of the company. Could you please give me clarity on this issue?
For me to express an opinion I would have to review this in more detail, but it would appear that the company is not a personal services company (PSC) by definition, nor by intent. This definition is to prevent the avoidance of employees' tax, and not to hinder or levy additional tax on trades.
There are five big 5 factors I like to look at when determining whether a business is a personal services company. The services must be rendered on behalf of the company in one of the following five circumstances:
At first blush it does not appear as if you fall into one of these categories.
Remuneration payable to a PSC by the principal is subject to PAYE. The tax deductions of a PSC are limited to the amount of the remuneration paid to its shareholders or other employees.The income of a PSC is taxed at a rate of 35%.
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