Hello to all our clients, during our mid-winter season!
Please find below, our newsletter for this period.

THE LEARNING CORNER

Accounting profit is not the same as taxable income.

Accounting profit is a measure of the economic activity of the company, and is simply, income earned less all expenses i.e. the P&L Statement.

1. Included in expenses, may be allowances for capital items that are capitalised to the Balance Sheet. This includes depreciation, being a technical allocation of the cost of the asset capitalised to the P&L, over the economic useful life of that asset.2. Personal expenses, i.e. non business related, paid for by the company on behalf of the Director or his / her family, is legitimate, provided this is authorised by the Director. The common procedure for this non-business-related expenditure, is to allocate this to the Director’s Loan account with the company. This is a debt owed by the Director, back to the company. This has some tax implications, as SARS views this as an alternative method of extracting income out of the business and requires that the company raise interest on this loan account.3. Other expenses, such as for example, fines, and certain legal expenses, while genuine business expenses, are deemed by SARS, to be non-deductible against tax profit. For accounting purposes, these expenses are still allocated to the P&L but will require adjustment in determining taxable income.

Tax profit, or Taxable Income then is therefore, in most cases, different to Accounting Profit.

The Annual Financial Statements (AFS) prepared by Finsolve Group, will always reflect these adjustments on the last page of the AFS – taxable income calculation. This is a reconciliation of accounting profit and taxable income.

It is on Taxable Income, that the corporate tax rate is applied, currently 27%.

Taxable Income then, is all revenue earned, less deductible expenditure allowed.

The two general rules are:

1. All expenditure, not of a capital nature, incurred in earning that income, is deductible in arriving at Taxable Income. (Section 11a of the Income Tax Act).2. Capital expenditure, such as vehicles, equipment etc, are allowed as a deduction via tax depreciation or wear and tear allowances, provided the asset is used in the production of income. (Section 12e of the Income Tax Act).

The above two rules should act as guideline when deciding whether one can claim the expenses for tax purposes or not.

FINSOLVE SOLUTIONS | A Wealth of Experience

We understand that every business has unique requirements, which is why Finsolve Solutions offers tailored services to meet the specific expectations of each of our valued clients.
Including:
Taxation (Corporate and Personal) • Accounting • Financial Health Analysis • Business Valuations

Hello to all our clients, and season’s greetings.

Please find below, our newsletter for this period.

Attachements:
Greylisting
 

See attached order form which list all our offerings. If you require further information, please contact Ashton on ashton@bizfacility.co.za.
We will slowly be re-introducing our popular live face to face training workshops in the coming months – come and attend these and not only learn something new but enjoy the social interaction.

Remember, being aware of your business’s financial position and performance, is your responsibility – it is your livelihood and future after all.

Estate Planning and Trusts (FS Estates)
We remind all our clients of this offering – we have a highly experience lawyer and service provider working with us backed up with solid infrastructure.
Estate planning is vital for the protection of your wealth at time of your death, as the cost of estate management at time of death can be large. If you have assets that you or your trust own, you need to contact us asap.

Please contact us for more information and ensure you have plans in place. Death can come very quickly and unexpectedly. We offer very competitive executor fees for our clients.

Ensure you have a valid will in place – contact Ashton on ashton@finsolve.co.za.

The Learning Corner

• A business review
  A comprehensive review of business operations is a simple but powerful business tool. It enables business owners and managers to analyze performance in achieving goals and meeting key performance indicators (KPIs), and to identify problems and spot trends timeously.Most importantly, an effective review will reveal what is working and what is not, so the team can celebrate successes and build on what is working, and change what is not working to get better results.
  Business areas that need to be reviewed may include:
  • Business plan, sales, marketing and branding strategies.
  • Total income to total expenses, cash flow statement and debtors’ reports, actual vs budget spend, and the balance sheet.
  • Internal resources including the company’s people and processes.
  • Client base, client processes and customer satisfaction.
  • Statutory and regulatory compliance.
  • Fees, contracts and costs.

The best way to do a business review is to involve your entire team and to call in professional assistance for a clearer understanding, particularly of the financial aspects of the review.

• Goals and a plan for 2023, including a budget
  The business review will provide invaluable information and insights, creating a baseline from which goals can be set for the next 12 months. This enables planning for the year ahead, incorporating the necessary changes to get better results, as well as enhancing or duplicating the processes already generating good results.

• Measuring progress during the year ahead
  Measuring progress ensures both better management and greater motivation. What is measured can be managed, and progress on all business goals can be measured through, among others, regular and up-to-date financial reports, (KPIs) and project management tools.

KPIs, for example, are like scorecards that track performance against business goals and can be an effective tool for keeping team members motivated during the year. Experts suggest that smaller businesses should start by measuring only a few KPIs in the crucial business areas of income; customers; employees; and processes; but your accountant will be able to provide invaluable advice for your specific business

Regards
Gavin Beretta – Finsolve Group
Financial Director

Hello to all our clients, and season’s greetings.

Please find below, our newsletter for this period.

Taxation

Three deadlines!

Deadline 1: Our tax department is currently busy with finalising the 2022 tax year, which for natural persons ends on the 23rd January 2023. As time is now short, please react to their request for information speedily and comprehensively.

Deadline 2: the filing of Company and Trust tax returns, with a February 2022 year end, is due for completion by the end of February 2023.

Deadline 3: Provisional tax returns relating to the 2023 tax year will kick off in January, as the deadline for these returns is end of February. Our tax department will be contacting you shortly to begin the process. Please ensure sufficient funds are available to settle tax liabilities.

Importantly, if you could respond timeously to requests from our staff for documents and authorisation to file these tax returns, as, as usual, this is a high-pressure period.

Tax Audits

Further to our recent notification that SARS has withdrawn the old IT14SD audit and replaced it with a customized deep-dive audit, it is important that you as the taxpayer, be able to defend all expenses claimed in your tax returns, whether in your personal name, or that of your company or Trust.

We note that the new deep-dive audit is much more vigorous and probing, and is a reflection that SARS is returning to its pre- Zuma levels of operational performance.

Capital Gains Tax(CGT)

With the ever-increasing value of residential properties, you are again reminded that properties sold for greater than R2m, will be subject to CGT on that portion of profit, greater than R2m.

With this in mind, we recommend you implement the following:

1. Declare the sale of a property in your tax return,
2. Keep records of improvements made to the residential property over the life of ownership of that property, to increase the base cost of the property.

SARS will disallow any improvements claimed, if not substantiated with documents or bank statements, regardless of when they were incurred.
Further, any capital gains realised on the disposal of capital assets, need to be disclosed in the relevant provisional tax return – be sure to advise our tax department of this, if applicable, when approving your provisional tax returns this season. Under disclosure of income, results in penalties and interest levied by SARS.

Accounting

The 2022 Annual Financial Statements (AFS) season is now coming to an end as Steve and Sharon complete these statements and distribute for your review and sign off. Those entities with 2022 year ends other than February will be receiving priority from the AFS team.

Note that the AFS is used not only for filing company tax returns, but with CIPC as part of the annual return filing.
Other stakeholders, such as Banks and Shareholders are key users of these statements.

Remember, to ensure that your Close Corporation or Company, has a compliant Fixed Asset Register, as we find SARS is requesting this more frequently, as they focus on wear and tear (ie tax depreciation) allowances. This is ever so more important, in light of the deep-dive audits mentioned above.
 

Training (Bizfacility)

Our webinar training sessions continue to be extremely popular, as are our self-study online courses.

If you require further information, please contact Ashton on ashton@bizfacility.co.za.

We will slowly be re-introducing our popular live face to face training workshops in the coming months – come and attend these and not only learn something new but enjoy the social interaction.

Remember, being aware of your business’s financial position and performance, is your responsibility – it is your livelihood and future after all.

Estate planning and trusts (FS Estates)

We remind all our clients of this offering – we have a highly experienced lawyer and service provider working with us backed up with solid infrastructure.
Estate planning is vital for the protection of your wealth at time of your death, as the cost of estate management at time of death can be large. If you have assets that you or your trust own, you need to contact us asap.

Please contact us for more information and ensure you have plans in place. Death can come very quickly and unexpectedly.
.
Ensure you have a valid will in place – contact Ashton on ashton@finsolve.co.za.

The Learning Corner

The multitude of returns that require filing from a company perspective can be very bewildering and challenging.
Melanie has prepared an article on the company’s financial year life-cycle, to assist you in understanding the compliancy requirements of operating a legal entity within South Africa.

Finsolve Group Financial Year Life Cycle

Please take 5 minutes to read the document and familiarise yourselves with these requirements, which do come around with alarming frequency.

Please download the updated listing of Finsolve focal points – please keep on file for handy reference when wishing to contact our staff.

Finsolve Group Contact Persons
 

Hello all

Please find below, our newsletter for this period.

Taxation

Provisional tax season
Our tax department is currently busy with non-February year end provisional tax returns. February Provisionals will be implemented during July and into August, with a deadline of end of August. Jacqueline and Gert will be contacting you shortly to begin the process.

If you could respond timeously to requests from our staff for documents and authorisation to file these tax returns, as, as usual, this is a high-pressure period.

Note, that there is some COVID-19 relief for provisional tax payments, with regards to deferring some of the first payment to later in the year. Jacqueline will advise closer to the time

Tax season 2020
Note, that the 2020 annual tax season, has been pushed back to September 2020. More information on this later in the year.

Capital Gains Tax
With the ever-increasing value of residential properties, you are reminded that properties sold for greater than R2m, will be subject to CGT on that portion of profit, greater than R2m.
With this in mind, we recommend you implement the following:

1. Declare the sale of a property in your tax return,
2. Keep records of improvements made to the residential property over the life of ownership of that property, in order to increase the base cost of the property.

SARS will disallow any improvements claimed, if not substantiated with documents or bank statements, regardless of when they were incurred.

Employee versus Independent Contractor
We once again remind you of the distinction required between an employee and an independent contractor. This is vital if the IC is claiming deductible expenses against income earned.
See below for information:

TO PAYE OR NOT TO PAYE? THE EMPLOYEE VERSUS INDEPENDENT CONTRACTOR SAGA

A South African employer is legally required to deduct employees’ tax from remuneration paid to its employees – with the effect that such employee will pay income tax as he derives income. In determining whether an employer is required to deduct employees’ tax, it should therefore be determined whether “remuneration” is being paid to “an employee”.

What is an “employee”?
An “employee” is broadly defined to include, inter alia, any person deriving remuneration. Specifically included in the definition of an employee is a “personal service provider”.
A “personal service provider” is defined as a company or trust where a connected person in relation to such company or trust renders personal services and:

• such connected person would be regarded as an employee of the client if he/she rendered the service directly to the client; or
• the services are rendered mainly at the premises of the client and subject to the control of the client; or
• if less than 80% of the income of such company or trust is derived from a single client.

Should, however, the company or trust employ 3 or more third party employees on a full-time basis, the company or trust would not constitute a personal service provider.

What is “remuneration”?
“Remuneration” is very broadly defined as any amount of income paid or payable to any person by way of salary, leave pay, overtime, bonus, gratuity, commission etc., whether in cash or otherwise and whether or not for services rendered. The definition of “remuneration” further contains specific inclusions and exclusions.
Remuneration specifically excludes any amount paid in respect of services rendered by any person in the course of any trade carried on by him/her independently.
Accordingly, payments made to persons carrying on an independent trade would not constitute remuneration and accordingly, no employees’ tax is required to be deducted from such payments.

When is a person regarded as carrying on independent trade?
Statutory tests:

• NOT regarded as carrying on an independent trade if services are rendered at the premises of the client and is subject to the client’s control.
• WILL be regarded as carrying on an independent trade if employ three or more third party employees on a full-time basis.

If the above statutory tests are not conclusive, consideration should be had to the common law dominant impression test in determining whether an independent trade is carried on. The main aim of such considerations is to distinguish between the acquisition of a worker’s productive capacity (in the event of an employee) or a result (in the event of an independent contractor).
SARS’s Interpretation Note 17 (Issue 4) of 14 March 2018 sets out in detail the various considerations forming part of the common law dominant impression test. The table below sets out some of the indicative considerations in this regard:

Accounting

The 2020 Annual Financial Statements (AFS) season is now in full swing and Steve and Sharon complete these statements and distribute for your review and sign off.

Note that the AFS is used not only for filing company tax returns, but with CIPC as part of the annual return filing.
Other stakeholders, such as Banks and Shareholders are key users of these statements.

Remember, to ensure that your Close Corporation or Company, has a compliant Fixed Asset Register, as we find SARS is requesting this more frequently, as they focus on wear and tear (ie tax depreciation) allowances.

Operating Cash – After adjusting for cash tied up in Working Capital, the resultant figure will determine the cash generated from operations – a key indicator of the business’s pricing and cost control efficiency (or lack thereof).

Review this figure in your AFS, – if negative (in brackets) this is a red flag that the company cannot generate adequate cash to cover operating activities.

Download article on 25 cash flow tips in a crisis.

Training

Our webinar training sessions continue to be extremely popular, as are our self-study online courses.

Download order form and our list of training offerings. If you require further information, please contact Ashton on ashton@bizfacility.co.za.

Remember, being aware of your business’s financial position and performance, is your responsibility – it’s your livelihood and future after all.

Estate planning and trusts

We remind all our clients of this offering – we have a highly experience lawyer working with us backed up with solid infrastructure.
Estate planning is vital for the protection of your wealth at time of your death, as the cost of estate management at time of death can be large. If you have assets that you or your trust own, you need to contact us asap.

Please contact us for more information and ensure you have plans in place. Death can come very quickly and unexpectedly
.
Ensure you have a valid will in place – now!

Regards
Gavin Beretta – Finsolve Group
Financial Director

Dear All,

Please find below, our newsletter for this period.

Taxation

Our tax department is fully engaged with filing of 2019 tax returns. The deadline is at end of November for non-provisional taxpayers and end of January 2020 for provisional taxpayers.

A company’s tax return must be filed within 12 months of its year end.

Please ensure you respond timeously to request from our staff for documents and authorisation to file these tax returns.

Note, that the 2^nd provisional tax return for 2020, is end of February 2020. More information on this in the new year.

As an aid in understanding the Financial Life Cycle, refer to the two attached Flow Charts.32 

View Document here

View Document here

We also bring to your attention two new developments this tax season, as follows:

1. SARS is now actively removing money from business bank accounts post issue of a final demand for outstanding tax debt – Finsolve can assist with either a Deferment or Compromise
2. The increased instance of SARS request for IT14SD returns for Supplementary Data post submission of Company Income tax returns for 2019, in effect a mini audit. Finsolve will manage this on your behalf with SARS.

Accounting

The 2019 Annual Financial Statements (AFS) season is now winding down as Steve and Sharon wrap up the final AFS.

See above mentioned Financial Life Cycle schematic via link below:

View Document here

View Document here

The AFS is used not only for filing company tax returns, but with CIPC as part of the annual return filing. Other stakeholders, such as Banks and Shareholders are key users of these statements.

Remember, to ensure that your Close Corporation or Company, has a compliant Asset Register, as we find SARS is requesting this more frequently, as they focus on wear and tear (ie tax depreciation) allowances.

See link below on so called “Debit” shareholder loans – those loans where you as the shareholder have withdrawn funds out of the business in excess of what was injected. There are some significant negative consequences of this position. Our monthly management reports highlight this for you.

View Document here

Accounting Jargon:

Operating Cash – After adjusting for cash tied up in Working Capital, the resultant figure will determine the cash generated from operations – a key indicator of the business’s pricing and cost control efficiency (or lack thereof).

Review this figure in your AFS, – if negative (in brackets) this is a red flag that the company cannot generate adequate cash to cover operating activities.

See article on 6 ways to ensure your business maintains a healthy cash flow via link below:

View Article

Training

Our webinar training sessions continue to be very popular. We have also launched masterclass series – which are deep dive two-day training session with course specialists to really understand the issues facing businesses, such as vat, bookkeeping etc– check out our website for more details and ensure you stay current with vat, credit collection and many other topics. www.bizfacility.com

Remember, being aware of your business’s financial position and performance, is also your responsibility – it’s your livelihood and future after all.

Estate planning and trusts

We remind all our clients of this offering – we have a highly experience lawyer working with us backed up with solid infrastructure.

Estate planning is vital for the protection of your wealth at time of your death, as the cost of estate management at time of death can be large. If you have assets that you or your trust own, you need to contact us asap.

Please contact us for more information and ensure you have plans in place. Death can come very quickly and unexpectedly

.

Ensure you have a valid will in place – now!

Regards

Gavin Beretta – Finsolve Group

Financial Director

November 19

Dear All

Herewith our AUGUST newsletter for your information.

The 2016 tax season is well on its way, and e-filing opened for the 2016 tax year which ended February 2016 for most clients.

In addition, there is a provisional tax deadline for end August, for the P1 2017 tax year. ( ending February 2017 ) – Have you filed your submission yet ?

Finsolve has full services to assist you in preparing the information for filing of all required tax returns.

It is advisable to give urgent attention to and collect all your supporting documents to streamline the tax filing season.

Other Tax Services offered include:

• E-filing
• VAT Registration and Returns
• PAYE Registration and Returns
• Submission of Employee Tax Info
• Provisional Tax Returns
• SARS Disputes, Audits & Compromises

What is an Independent Review?

Owners of Small and Medium Enterprises (SMEs) have been obliged to bear the cost of an audit for years. The criteria changed with the implementation of the new Companies Act of 2008 ( effective May 2011) and now they may not have to.

While there are several factors to consider, the decision ultimately depends on the newly introduced Public Interest Score which is calculated in terms of Regulation 26 of the Companies Act.

Under this system, a company is allocated points according to the number of its employees, its annual turnover, its stakeholders and the level of third party liabilities at the end of the financial year.

The Public Interest Score is calculated thus:

• 1 point for each employee or the average number of employees throughout the year.
• 1 point per million rand of third party liability. This is the money owed in terms of loans, debentures, and other financing.
• 1 point for each million rand of turnover during the financial year. If the turnover is half a million rand, score ½ point.
• 1 point for every individual who, at the end of the year, is known to have a direct or indirect beneficial interest in the company. This will include shareholders, beneficiaries of a trust where a trust is a shareholder and other stakeholders.
• Companies scoring 350 points or more are required to have an audit.

Any company, whatever its points score, that holds funds of R5 million or more for a client in a fiduciary capacity, at any time during the year, is also required to have an audit.

Companies scoring between 100 – 350 points must have an independent review conducted by a registered auditor or an Independent review, conducted by a certified accountant.

Companies scoring less than 100 points are required to have an independent review conducted by anyone who qualifies as an accounting officer, unless circumstances indicate otherwise (ie owner manged).

The new system sounds complicated but knowing where the SME fits into the points system simplifies matters.

So does knowing the difference between the two options.

An audit is a thorough examination of a company’s financial status executed by a registered auditor. It involves tests of internal controls and substantive procedures and carries far more weight than a review in that it would result in the auditor expressing the highest level of assurance. This is referred to as ‘reasonable assurance.’ Companies seeking loans may be required by their bank to have an audit before their application is considered. Thus, the decision to not have an audit may very well impair an entity’s ability to obtain external funding.

A review on the other hand provides a lesser level of assurance that a company’s financial statements do not have any known errors or misstatements. It must be undertaken by an independent accounting professional who can be but does not have to be a qualified chartered accountant, unless otherwise required under the points system.

One thing is clear. SMEs with a Public Interest Score of less than 100, which are no longer required to have an audit, will save money!

Finsolve has full services in providing Independent Reviews as well as Audits for your business.

If you require any further information regarding any of the above services, please do not hesitate in contacting Melanie at our offices on 086 148 8883.

Content compiled by
Gavin Beretta – Financial Director
MBA, FCIS, CMT
FinSolve – Registered Accountants,
Business Valuation and Tax Practitioners

Regards,
Gavin
August 2016

Dear All

Herewith our MAY newsletter for your information.

Taxation

Please note we have recently launched a new service of Tax Dispute Management. There is a large demand from clients to have their tax affairs resolved, specifically referring to tax debt write offs and repayment of debt plans.

SARS is relentless in perusing its outstanding debt and this service will assist you in safely and professionally managing the issues around this.

Wendy Walters, has over 20 years’ SARS experience in dealing with, inter alia, compromises and repayments plans, and brings with her, the insight of how SARS operates when dealing with these requests.

Please note that this service is charged independently from your standard services fees.

Other Tax Services offered include:

• E-filing
• VAT Registration and Returns
• PAYE Registration and Returns
• Submission of Employee Tax Info
• Provisional Tax Returns
• SARS Disputes, Audits & Compromises

Accounting
Attached document, “Demystifying Accounting” that you can refer to as a guide to understanding financial statements. It’s an easy read and to the point. Please read through the document (only 15 pages), which covers the following areas:

• Importance of Cash Flow
• Cash Flow vs. Profit
• Working Capital Cycle
• Managing Debtors
• Managing Suppliers
• Managing Inventory (Stock)

The emphases is on cashflow.

Content compiled by
Gavin Beretta – Financial Director
MBA, FCIS, CMT
FinSolve – Registered Accountants,
Business Valuation and Tax Practitioners

Regards,
Gavin
May 2016

Hello all

Please find below, our newsletter for this period.

Taxation

The 2015 tax season is in full swing and all taxpayers are reminded to send in their tax documents to enable seamless filing of tax returns.

Jacqueline is processing many returns and we thank you for your assistance with her queries.

Just an early reminder that non provisional taxpayer deadline is end of November, while provisional taxpayers the deadline is end of January 2016.

…and then straight into provisional tax mode which is end of February 2016.

I attach some tax saving strategies that we will be looking to either implement or re look during 2016 to ensure our clients are tax efficient.

Franchising

I attach an article on how to go about franchising as a method of expansion for your business. This is relevant to many of us and the article explains the process of how to implement.

Accounting

When you receive our financial statements, we tend to focus on the Income Statement and then maybe the Balance Sheet. However, arguably the most important document, the Cash Flow statement is the one that never gets looked at.

Review our article on how to read a cash flow statement – and then calculate the cash conversion ratio to see how effectively you are turning profits into cash.

Finally, from the Finsolve Team, we would like to thank you all for your support and assistance over the past year. Have a wonderful festive season over December and remember to drive safe!

Regards

Gavin Beretta

November / December 2015