Straight answers to common questions.
Plain-language answers to the questions we are asked most often, across SARS, trusts and estates, payroll, company tax and non-profits. General guidance only, not advice on your specific facts. When it matters, speak to us.
SARS, assessments and penalties.
How long do I have to object to a SARS assessment?
Eighty business days from the date of the assessment. You may first request reasons within thirty business days, after which the objection period runs from the date SARS gives adequate reasons. Business days exclude weekends, public holidays and 16 December to 15 January.
Do I have to pay the disputed tax while I object?
Unless you obtain a suspension of payment under section 164 of the Tax Administration Act 28 of 2011, the “pay now, argue later” principle applies and SARS can collect. We lodge the suspension request together with the objection.
Can a SARS penalty be reduced or removed?
Often, yes. Understatement penalties depend on a behaviour category that is frequently disputable, and SARS bears the onus of showing the category applies. Administrative penalties are challenged first by a request for remission. A bona fide inadvertent error attracts no understatement penalty.
What if I have already missed the deadline?
SARS may condone a late objection for up to three years on reasonable grounds, but it is discretionary. The sooner you bring it to us, the stronger the prospects, so send it through without delay.
More detail in our SARS Dispute Resolution and Verification guides, or see how a dispute works.
Trusts, wills and deceased estates.
Do I need a trust?
A trust can help with estate planning, asset protection and continuity, but it carries real cost, administration and fiduciary duties under the Trust Property Control Act 57 of 1988. It is not right for everyone. The decision should follow your objectives, not a template, and we work through it with you before recommending one.
How is a trust taxed?
A trust is taxed at a flat 45 percent unless it is a special trust. In practice income and gains are often taxed in the hands of beneficiaries or the donor under the conduit principle (section 25B) and the attribution rules (section 7) of the Income Tax Act 58 of 1962. The right outcome depends on how the trust is set up and administered.
Do I need a will?
Yes. Without a valid will your estate is distributed under the Intestate Succession Act, which may not reflect your wishes and usually takes longer to wind up. A clear will, reviewed periodically, is the foundation of any estate plan.
What happens to my estate when I die?
An executor is appointed, the estate is reported to the Master of the High Court, debts and taxes are settled, and a liquidation and distribution account is prepared before assets are distributed. Estate duty applies at 20 percent, rising to 25 percent on the dutiable amount above R30 million. The process takes time, and good planning shortens it.
See our Deceased Estates, Trusts and Estate Planning guides.
Employing people.
When must I register as an employer?
You must register for PAYE with SARS within 21 business days of becoming liable to deduct employees’ tax, and submit monthly EMP201 declarations. Depending on your payroll you will also register for the Skills Development Levy and for UIF.
What is the difference between PAYE, UIF and SDL?
PAYE is employees’ tax withheld from salaries. UIF is the unemployment insurance contribution, one percent from the employer and one percent from the employee. SDL is the Skills Development Levy of one percent of payroll, payable by employers above the earnings threshold. All are declared on the monthly EMP201.
Does my business qualify for the Employment Tax Incentive?
Possibly. The Employment Tax Incentive Act 26 of 2013 gives employers a PAYE reduction for qualifying employees, generally aged 18 to 29 and earning within set monthly thresholds. The rules are specific and the claim must be supported, so we confirm eligibility before claiming.
See our Becoming an Employer guide, or try the salary & PAYE calculator.
Running a company.
Does my company need an audit or an independent review?
It depends on your public interest score, how your financial statements are compiled, and your Memorandum of Incorporation, under the Companies Act 71 of 2008 and its regulations. Some companies must be audited, others qualify for an independent review, and some owner-managed companies are exempt from both. Our engagement finder gives an indication, and we confirm the correct engagement for your company.
When must I register for VAT?
Registration is compulsory once your taxable supplies exceed R1 million in any consecutive twelve-month period. Voluntary registration is available once you have made taxable supplies of more than R50 000 in the past twelve months. Whether voluntary registration helps you depends on your customers and margins.
What is the company income tax rate, and what is provisional tax?
The corporate income tax rate is 27 percent. Companies are provisional taxpayers and must submit two provisional returns (IRP6) during the year, with a third optional top-up payment, to pay tax in advance rather than in one amount at assessment. Small business corporations may qualify for reduced graduated rates.
What is beneficial ownership, and do I have to file it?
Yes. Companies and close corporations must file a beneficial ownership register with the CIPC, identifying the natural persons who ultimately own or control the entity, and keep it up to date. It is now tied to your annual return. We prepare and maintain the register for clients.
See our Beneficial Ownership and New Business guides, or the business tax calculators.
Non-profit organisations.
What is the difference between an NPO, an NPC and a PBO?
They are not the same thing. An NPC is a non-profit company registered with the CIPC under the Companies Act. NPO registration is a separate registration with the Department of Social Development under the Nonprofit Organisations Act 71 of 1997. A PBO is a tax status granted by SARS. An organisation can be all three, and each has its own requirements.
How does my organisation become tax exempt and issue section 18A receipts?
You apply to the SARS Tax Exemption Unit for approval as a Public Benefit Organisation under section 30, carrying on approved public benefit activities. Separate approval under section 18A is needed before you may issue donation receipts that give donors a tax deduction, and section 18A carries its own record-keeping and reporting obligations.
If your situation is not here, ask us.
Every business is different. Send us your question and we will point you in the right direction.