Whether it’s referred to as the End of Financial Year or “EOFY”, Close of the Financial Period, Financial Year End or FYE, or simply ‘Year End’, this important time is just around the corner for many companies on the 28th of February. It is the end of the annual accounting period and an ideal opportunity to assess your company’s finances and performance.

In this article, we find out why companies have a specified financial year end; why it is important; how to ensure your business ticks all the financial year end compliance and tax boxes; and how to reap the maximum benefits from an accurate and timely closing of the financial year. 

 


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Tax Deductions (PAYE) on your Pension or Annuity

Where a pensioner has one source of income during a tax year, our employees’ tax (PAYE) deduction system ensures the correct PAYE deductions from their pension or annuity.

However, where a pensioner is in receipt of more than one source of income, the different sources of income are combined at the end of the tax year to determine the correct amount of tax due.  By adding all the sources of income, they are placed in a higher tax bracket, which creates the tax due to SARS at year-end.  This is not a new principle and it applies to everyone, not only pensioners.

Although pensioners can request their retirement fund administrator to deduct a higher amount of PAYE so that any tax due at year-end is adequately covered, not many pensioners are making use of this option, which then leaves them with an unexpected tax debt at year-end.

To assist pensioners with more than one source of income, recently introduced legislation makes provision for SARS to determine a more accurate PAYE deduction amount. We do this by using the latest data available to SARS.  Your retirement fund administrator will then deduct a more accurate amount of PAYE from your pensions or annuities.

It is SARS intention to introduce this service with effect from 1 March 2022.

In practice, this will mean the following:

  1. You do not have to do anything, because SARS will provide your retirement fund administrator with the PAYE deduction percentage;

  2. For pensions or annuities payable during March 2022 and for the periods thereafter, your retirement fund administrators will use this rate to deduct PAYE from your pension or annuity;

  3. The rate provided by SARS will be valid for the whole tax year, unless circumstances that influence your year-end tax liability change. In such a case, your retirement fund administrator may revert to applying the normal PAYE deduction rate, with effect from the month in which he/she becomes aware of the change in circumstances;

  4. The PAYE deducted from your pension may be slightly higher, but in return, you are unlikely to be faced with an unexpected tax bill at the end of the tax year;

  5. You may, at any time, request your retirement fund administrator or continue with an arrangement to deduct PAYE at a rate higher than the rate provided by SARS;

  6. You may also request your retirement fund administrator to use the normal PAYE deduction rate, and not the one provided by SARS. This may put you back into a position where you can expect a high tax bill at year-end.

Your retirement fund administrator is already aware of all the above.

     
     
  IMPORTANT TAX DEADLINES TO REMEMBER   
     
        31 January 2022: Individual provisional taxpayer’s 2021 tax returns   
        28 February 2022:  Companies, Close Corporations and Trusts with February year ends 2021 tax returns   
        28 February 2022:  2022 second provisional tax estimates and payments for provisional individual taxpayers, Companies, Close Corporations and Trusts with February year ends   
       
       
 
February 2022 NEWSLETTER
Financial Year End Reporting: Challenges to Manage, Opportunities for Benefit

Whether it’s referred to as the End of Financial Year or “EOFY”, Close of the Financial Period, Financial Year End or FYE, or simply ‘Year End’, this important time is just around the corner for many companies on the 28th of February. It is the end of the annual accounting period and an ideal opportunity to assess your company’s finances and performance.

In this article, we find out why companies have a specified financial year end; why it is important; how to ensure your business ticks all the financial year end compliance and tax boxes; and how to reap the maximum benefits from an accurate and timely closing of the financial year. 

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Six Tips for Creating a Distraction-Free Home Office
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A pre-pandemic (2017) Global Workpace Analytics study found that the number of people working from home in America had increased 115%. They predicted a continuing increase in home offices, but surely could never have foreseen the absolute boom in them that the Covid-19 pandemic produced.

What was initially a temporary solution to an unusual problem has now become a way of life for many corporate employees, with tens of thousands more working for themselves as freelancers in the gig economy at home.

Though home offices come with numerous benefits including possible tax deductions, fewer time-wasting meetings and no commute they can also offer up a number of brand new distractions that can make productivity difficult. With that in mind here are 6 tips for building a distraction-free home office.

   
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Small Businesses That Survived 2021 – How They Made It
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Statistics South Africa recorded 997 liquidations of companies and close corporations between January and June 2021, 44% up from the 763 corporates over the same period a year before, reflecting how tough the impact of the pandemic has been on the private sector. The medium and long term knock-on effects of the pandemic and restrictions on business activity will doubtless be even more detrimental, and the danger to businesses, particularly small businesses, should not be under-estimated.

There are lessons to be drawn from businesses that survived, and it is important to note how they made it through one of the toughest economic climates in memory. 

We share four insights which every business should take note of in planning for the future…

   
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Seven Crucial Tax and Other Issues to Address When an Employee Dies
ArticleImage The death of an employee can be a devastating event in a company, particularly in smaller businesses where colleagues work together closely and have become like an extended “work” family.
 
In times of pandemic employers unfortunately face an increased likelihood of an employee passing away and should be prepared to handle this event with the necessary respect and compassion and to keep the business running, while also ensuring that the various compliance and tax matters are addressed swiftly. In this article, we look at seven crucial issues to address immediately when an employee has died.
 
This will not only ensure that the deceased’s family do not experience delays caused by the company but will also reassure other employees.
   
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Budget 2022: The Minister of Finance Wants to Hear from You!
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Finance Minister Enoch Godongwana has invited the public to share suggestions on the 2022 Budget he is expected to deliver on Wednesday 23 February 2022.

The Ministry of Finance: “As usual, the budget allocation always aims to strike a balance between competing national spending priorities … suggestions must pertain to what should government be spending on, how to address a large budget deficit, new sources of tax revenues, and other budget-relevant information … Minister Godongwana looks forward to your contributions.”

Go to National Treasury’s “Budget Tips for the Minister of Finance” page and fill out the online form. 

   
Your Tax Deadlines for February 2022
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  • 7 February Monthly Pay-As-You-Earn (PAYE) submissions and payments

  • 25 February Excise Duty payments

  • 25 February Value-Added Tax (VAT) manual submissions and payments

  • 28 February Value-Added Tax (VAT) electronic submissions and payments, PIT & CIT Provisional Payments where applicable.
   
Disclaimer

The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.


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