Here’s what you need to know about your IT3B and IT3C certificates: The IT3B certificate is all about the income you’ve generated from your investment. It’s going to reflect: Local dividends: this is the amount which has been paid to you in dividends from JSE listed companies in the last tax year. We automatically pay 20% dividend withholding tax on these for you, so this appears on your certificate to let SARS know that it’s done and dusted. Make sure you disclose this on your tax return and that’s it - finished and klaar. Foreign dividends: this represents any dividends you received from JSE listed companies which earn money overseas. We’ve paid the 15% dividend withholding tax on your behalf, but you still need to disclose this on your tax return. Taxable dividends: This represents REIT (Real Estate Investment Trust) distribution and applies to those of you who hold shares in a company that invests in property. Interest: This amount of interest, which you earn on local and foreign investments, is considered as income and you'll need to declare it to SARS. Bank Accounts Interest: This is the interest you earn on your bank accounts and deposit accounts. Any interest you earn in a year over R23 800 (R34 500 if older than 65) is taxable when you submit your tax return. The IT3C certificate is all about capital gains. How much did your investment grow? Did you sell anything? Did you earn any profit by doing so? You’re only taxed on shares or unit trusts that you sell. Your IT3C certificate is going to show: A list of companies or unit trusts you’ve invested in; How many shares/units you have in each and how much you bought them for. Because you can buy shares for a certain price on one day, and then buy more of the same shares on another day when the price is different, the cost per share is going to be shown as an average of those prices – to keep things simple! So if you bought 1 share at R50 on Monday and another at R100 on Wednesday, you’d have two shares which you paid R150 in total for. Even though they were bought at different prices, the average cost per share is going to be: R150 divided by 2 shares = R75.00 per share. If you’ve sold a share at a higher price than when you bought it, you’ve made yourself some dosh haven’t you? SARS is going to want in on that. ‘Proceeds’ is going to reflect the amount you sold your shares at and ‘Profit/loss’ is going to reflect how much money you made or lost in that sale. The good news is that SARS is only interested in this amount if it is greater than R40 000 – that’s when you’ll start getting taxed on it. Adapted from: Easy Equities
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SARS would to remind taxpayers of their obligation to submit outstanding tax returns. Taxpayers who do not submit their returns are charged a penalty, which can range from R250 to R16 000 per month, depending on the taxable income of the taxpayer. It is a criminal offence not to submit a return, and continuous non-compliance will lead to criminal prosecution. SARS’ responsibility is to collect tax and customs duties on behalf of the country, and is committed to ensuring that each and every taxpayer pays their fair share towards the growth of our country. The Revenue Authority will be taking a tougher stance on those who do not submit their returns and deliberately seek to avoid their tax obligations. If you have any queries on your personal or business tax, contact our Finance Department, email [email protected], tel (011)658-1333 Source: SARS City Press spoke to Lesedi Seforo, tax project manager at the SA Institute of Chartered Accountants, about the best tax practices for freelancers. Should you form a company or register as a sole proprietor? Seforo says the decision over what legal form you should use should not only be determined by tax, but also by other commercial concerns such as limitations of personal liability. In the case of a sole proprietor, you are the legal entity; in the case of a company, the company would be the legal entity and would hold the liability. From a tax perspective, however, it may not make sense for a one-person consultancy to register as a company. Seforo says the main consideration as far as income tax is concerned has to do with the rate of tax levied on a company versus a sole trader. Most freelancers use the fees they charge as their income and do not necessarily reinvest in the business because the nature of their business does not require capital. For any of your Tax queries please contact Su-Chin or Su-Lan, email [email protected], tel 011 658 1333 Source: Finance 24 INCOME TAX Individuals and special trusts A new top bracket has been introduced for personal income tax - individuals’ taxable income above R1.5 million per year will be taxed at 45%. Previously, the top bracket of 41% was set at R701 301. The new top marginal income tax bracket is accompanied by partial relief for bracket creep 1. The personal income tax rates for the 2017/2018 tax year are listed below. Companies and trusts
TAX RATE The income tax rate for companies has remained unchanged at 28%, while the income tax rate for trusts (other than special trusts) has increased to 45%. TAX THRESHOLDS Tax thresholds have increased to: R75 750 for taxpayers younger than 65 R117 300 for taxpayers aged 65 to below 75 R131 150 for taxpayers aged 75 and older REBATES The primary rebate (deductible from tax payable) has increased to R13 635 per year for all individuals. The secondary and tertiary rebates have increased to: R7 479 for taxpayers aged 65 and older R2 493 for taxpayers aged 75 and older INTEREST EXEMPTIONS Interest exemptions have remained unchanged at: R23 800 per annum for individuals younger than 65 years R34 500 per annum for individuals 65 years and older MEDICAL TAX CREDITS Monthly tax credits for medical scheme contributions will increase from: 1.R286 to R303 per month for the person who pays the contributions and the first dependant on the medical scheme 2.R192 to R204 per month for each additional dependant Bracket creep occurs when the income tax tables are not fully adjusted for inflation, and inflationary salary adjustments increase an individuals’ effective tax rate, reducing real income. As the increases to taxable income brackets, the tax thresholds, and the rebates are below the expected level of inflation, taxpayers will face a real increase in their effective personal income tax rate in 2017/2018. INTEREST WITHHOLDING TAX (IWT) AND DIVIDEND WITHHOLDING TAX (DWT) Interest Withholding Tax (IWT) on interest from a South African source payable to non-residents has remained unchanged at 15%. Interest is exempt if payable by any sphere of the South African government, a bank or if the debt is listed on a recognised exchange. Dividend Withholding Tax (DWT) on dividends paid by resident companies and by non-resident companies for shares listed on the JSE has increased from 15% to 20%, effective 22 February 2017. The exemption and rates for inbound foreign dividends have also been adjusted in line with the new local DWT rate, resulting in a maximum effective rate of 20%. TAX-FREE SAVINGS ACCOUNTS The annual limit on contributions to tax-free savings accounts has increased from R30 000 to R33 000. RETIREMENT LUMP SUM TAXATION At retirement: The retirement lump sum tax table is unchanged. The table below illustrates how retirement lump sums will be taxed. Click to read more If you have any queries on your personal or business tax, contact our Finance Department, email [email protected], tel (011)658-1333 Source: Allan Gray |
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January 2025
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