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Tax 32 > Unit 2 - Individuals - EE Tax & Provisional Tax > Flashcards

Unit 2 - Individuals - EE Tax & Provisional Tax Flashcards

1
Q

When is EE tax done?

A

Monthly

Do calc on a monthly basis!!

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2
Q

What is the format used to calculate EE tax?

A

Step 1: Calc. balance of remuneration
(Monthly remuneration -
deductions)

Step 2: Calc. annual equivalent of balance
of remuneration.

Step 3: Calc. the annual tax thereon - tax rebates & medical rebates

Step 4: Apportion annual tax for part of the
year

Remember tax rebates & medical rebates

Do calc. every month!!

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3
Q

What is the format used to calculate EE tax if EE receives an annual payment?

A

Such as, B-Day bonus/13th cheque, incentive bonus, leave pay on resignation, merit reward, backdated salary, taxable restraint of trade

Step 1: Calc. tax on the annual equivalent
of the balance of remuneration
- Calc. balance of remuneration
(Monthly remuneration -
deductions).
- Calc. annual equivalent of the
balance of remuneration.
- Calc. the annual tax thereon

Step 2: Calc. tax on the balance of
remuneration + annual
remuneration amounts. (As you do
with Aggregates of RLSB) - tax
rebates - medical rebates.

Step 3: Calc EE tax on bonus (annual
remuneration amount)
Step 2 - Step 1

Remember tax rebates & medical rebates

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4
Q

Par 2(4) - What deductions are allowed from remuneration?

A
  • Contributions by EE to any
    pension/provident fund - which ER is
    entitled/required to deduct, ltd to
    permissible deduction under s11F
  • Any contribution to RAF by EE @ option of
    ER, which proof of pmt has been
    furnished, ltd to permissible deduction
    under s11F
  • Any contribution by ER to RAF for the
    benefit of EE, ltd to permissible deduction
    under s11F
  • Donations made by ER on behalf of EE to
    institutions that issue ER with s18A
    receipt/ ltd to 5% of EE remuneration
    after deducting all of the above amounts.

Proviso to contributions under s11F deduction:
- the amount of the contribution to be
deducted in calc EE tax must not
< R350 000 for the 12 months, it is
apportioned to months EE is employed -
it cannot exceed R29 167 p.m in the 12
months

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5
Q

Par 9(6) - What deductions are allowed from EE tax?

A
  • s6A medical scheme fees tax credit
  • If TP is <= 65 years, s6B(3)(a)(i) medical
    scheme fee tax credit
  • ER must deduct medical scheme fee tax
    credit if ER pays medical scheme
    contributions for/on behalf of EE
  • Deduction is @ ER option, if EE pays the
    contributions to the medical scheme,
    provided that EE gives ER POP of those
    fees.
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6
Q

What does remuneration include?

A

Salary & wages, leave pay, bonuses, gratuities, commissions, fees, overtime pay, emoluments, pensions, superannuation allowance, retiring allowance

  • Any subsistence allowance granted to EE
    in a month - that is neither spent by the
    EE while away from home for at least 1
    night nor refunded to ER = deemed to be
    remuneration in the following month
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7
Q

Par(a) of the definition of remuneration includes?

A
  • Annuities & living annuities
  • Other amounts pd for services rendered
  • Restraint of trade receipts
  • Amounts pd for variation of office
  • RLS
  • Any amount received/ accrued in commutation of amounts due under any contract of employment/service
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8
Q

Par(b) of the definition of remuneration includes?

A
  • Fringe benefitsExcl Fringe benefits relating to the use of
    a motor vehicle.
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9
Q

Par(bA) of the definition of remuneration includes?

A

The full amount of:
- Allowances & advances required to be
included in taxable income

Excl. travel allowance, allowance portion
of subsistence allowance, allowance pd
to the holder of any public office, &
allowances that are exempt ito s10.

*!! Any subsistence allowance granted to
EE in a month, that is either not spent
by EE while away from home for at least
1 night/ refunded to ER
= deemed to be remuneration in the
following month

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10
Q

Par(c) of the definition of remuneration includes?

A

For EE tax purposes only:

  • 50% of allowances pd to the holder of
    public office
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11
Q

Par(cA) of the definition of remuneration includes?

A

For EE tax purposes only:

  • 80% of any travel allowance
  • 20% of travel allowance if ER is satisfied
    that at least 80% of the use of the vehicle
    will be for business purposes

Excl any travel allowance based on actual distance traveled.

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12
Q

Par(cB) of the definition of remuneration includes?

A

For EE tax purposes only:

  • 80% of the right of use of motor vehicle
    fringe benefit
  • 20% of the right of use of motor vehicle
    fringe benefit if ER is satisfied that at least
    80% of the use of the motor vehicle will
    be for business purposes
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13
Q

Par(cC) of the definition of remuneration includes as remuneration?

A

100% of any travel allowance that is based on the actual distance traveled by EE, to the extent that the allowance exceeds R4,64 per km.

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14
Q

Par(d) of the definition of remuneration includes?

A

Any gain determined in s8B if the proceeds are included in EE income ito that section

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15
Q

Par(e) of the definition of remuneration includes?

A

Any gain determined in s8C on the vesting of shares

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16
Q

Par(f) of the definition of remuneration includes?

A

Any amount required to be included in the income of a person ito s7(11).

s7(11) = Maintenance to a former spouse of a member of a retirement fund, pd by the fund, that is deemed to be income of member

17
Q

Par(g) of the definition of remuneration includes?

A

Any dividends that are taxable ito proviso dd, ii, jj, kk to s10(1)(k) are deemed to be income of the member

18
Q

What is excluded from the definition of remuneration?

A
  • Fees pd to a person for a service
    rendered in the course of any trade
    carried on independently (i.e. auditors,
    medical practitioners, lawyers,
    independent businesses.
    - Provided that the course of trade
    carried on independently is not
    mainly on the premises/subject to
    the control of the person paying. &
    - The person will be deemed to be
    carrying on a trade independently if
    throughout the YoA he employs 3/<
    EE on a full-time basis, other than any
    EE who are connected persons in
    relation to such a person.
  • Disability pensions ito certain Acts
  • Amounts pd to EE to reimburse him for
    expenditure incurred in the course of his
    employment.
  • Annuities under an order of
    divorce/similar separation
19
Q

What is the withholding tax which is deducted from EE remuneration on a regular (Monthly basis)?

A

EE tax

20
Q

Within how many days must the ER pay the EE tax over to SARS?

A

Within 7 days after month-end.

21
Q

When must the ER pay EE tax to SARS if the 7th day falls on a weekend or holiday?

A

EE tax is to be pd by the last business day before the 7th day.

If late payments are made - these are subject to penalties and interest.

22
Q

What happens in situations where an ER fails to deduct/withhold the full amount of EE tax:

A
  • ER becomes personally liable for pmt of
    EE tax if ER either does not withhold EE
    tax/ does withhold EE tax but does not
    pay it over to SARS
  • Where CSARS is satisfied that failure to
    withhold tax was not due to an intent to
    postpone payment of tax/evade ER
    obligations, provided that if there is a
    reasonable prospect of ultimately
    recovering EE tax/paying it over to SARS,
    CSARS may absolve ER from his liability.
23
Q

Is a non-resident ER liable to withhold EE tax?

A

Any ER that is non-resident which conducts business through PE in SA, is also liable to withhold EE tax iro EE who are liable for tax in SA

24
Q

Par 2(2B) 1/3/2022 - Must the retirement fund/insurer apply the fixed tax rate that the CSARS directs must be used when a retirement fund/licensed insurer pays an annuity to a person?

A

Yes - this must be done where the person who receives the annuity, receives an amount of remuneration from more than 1 < ER

25
Q

How many hours must a person work to be considered a Std EE?

A

=> 22 hours a week

< 22 hours but no other employment

26
Q

What is considered to be part-time/non-standard employment?

A
  • Workers employed daily, & pd daily
  • Casual commissions pd
  • Casual pmts to casual workers for
    irregular services rendered/Occasional
    services
  • Fees pd to part-time lecturer
  • Honoraria pd to office bearers of
    organizations, clubs, etc.

This list is not exhausted.

  • EE tax @ flat rate of 25%
27
Q

Define ER.

A

A person who pays/is liable to pay remuneration to someone else

Incl:
- Trustee in an insolvent estate
- Executor/administrator of benefit fund,
retirement fund/any other fund
- Anyone acting in a fiduciary capacity, a
like a trustee of a trust
- Person responsible for paying
remuneration under provisions of any
law/out of public funds

Excl:
- Agents that pay remuneration on behalf
of another ER

28
Q

Define EE.

A

A person(not a company) who receives remuneration/ to who remuneration accrues

Incl:
- Natural person who is a labor broker
- A person who works for/on behalf of a
labor broker
- PSP
- Anybody who/which Min. of Finance
declares to be EE.

29
Q

Define a provisional TP.

A
  • Any person (other than a company) who
    derives income
    • from ER not registered for EE tax
    • which is not remuneration/any
      allowances
  • Any company/CC
  • Any person notified by CSARS that he is a
    provisional TP.
30
Q

What is excluded from the definition of a provisional TP?

A
  • Any tax-exempt PBO
  • Any tax-exempt recreational club
  • Any body corporate, share block company
  • Any small business funding entity
  • Any non-resident owner/charterer of any ship/aircraft
  • A natural person who does not derive any
    income from carrying on of any business
    if:
    • taxable income for relevant YoA < tax
      thresholds
    • Taxable income for YoA derived from
      interest, dividends, foreign dividends,
      and rental from letting fixed property
      and remuneration from ER not
      registered for EE tax < R30 000
  • Deceased estate

Any entity as defined in s30B

31
Q

What are the 2 compulsory payments made per tax year?

A

1st payment:
- covers first 6 months of YoA
- 31 Aug 2023 for individuals tax year of
28 Feb 2024

2nd payment:
- Covers last 6 months of YoA
- Pd before the end of YoA - 28/29 Feb
2024 for individuals tax year of 28/29
Feb 2024

32
Q

When is the voluntary 3rd provisional payment made?

A

If YoA ends on 28/29 Feb 2024 = 7 months thereafter = 30 Sept 2024

Payment made to avoid penalties & interest

33
Q

What is the 1st provisional payment based on?

A
  • Estimate of taxable income
  • Estimate may not be < basic amount
    without CSARS permission
  • If the estimate is more than the basic
    amount, the basic amount may be used.
  • Estimate excl.
    • RLSB
    • RLSWB
    • SB
34
Q

What is the basic amount for individuals?

A

Taxable income based on the latest preceding YoA
LESS:
- Any taxable capital gains included
therein
- RLSB
- RLSWB
- SB
- Any amount contemplated in par (d) of
GI def.

35
Q

What is the basic amount for companies?

A

Taxable income based on the latest preceding YoA
LESS:
- Any taxable capital gains included
therein

36
Q

What is deemed to be the latest preceding YoA?

A
  • Preceding YoA iro of which estimate is
    made, &
  • Iro which notice of assessment issued by
    CSARS is not received in less than 14 days
    before the date, the estimate is submitted
    to CSARS

Provided that if the estimate must be made:
- More than 18 months after the end of the latest preceding YoA, the basic amount must be increased by 8% per annum of that amount

37
Q

What is the format for the 1st provisional payment calculation?

A

Step 1: Calc tax payable on estimate/basic amount

Step 2: Deduct rebates (primary, secondary & tertiary)

Step 3: Divide tax payable by 2

Step 4: Deduct any EE tax (EE tax for first 6 months)

Step 5: Pay the difference to SARS

38
Q

What is the format for the 2nd provisional tax payment calc?

A

Step 1: Calc tax payable on estimate/ basic amount

Step 2: Deduct rebates (primary, secondary, tertiary)

Step 3: Deduct any EE tax ( EE tax for full YoA)

Step 4: Deduct the first provisional tax payment

Step 5: Pay the difference to SARS

39
Q
A

Tax 32 (22 decks)

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