Tax? Relax.

TAXATION

Income Tax:

The only way to avoid paying tax, is to earn nothing.

Most of us find this option unacceptable; so we do all we can to avoid as much of that tax payable as possible. As a sole proprietor, or if you start a new or small business, the Receiver of Revenue cuts you quite a lot of slack. The best guideline is “Deductions must be both reasonable and justifiable”.

Whatever you do – avoid the temptation to evade tax. That is fraud, or just plain lying. The New Tax Administration Laws take penalties and back-taxes to whole new level. And the “Ï didn’t know” excuse will not get you out of trouble. Possibly the most common and most expensive mistake made by photographers and freelancers is to fail to report every cent earned. If your eFiling return lists 12 IRP5s, don’t assume that is everything. Double check.

If you are reading this Guide, you are almost certain to fall into the category of taxpayers required to register as Provisional Tax Payers. This will obligate you to do at least two special tax returns every year, estimating your tax dues and obligating you to make an interim payment if you are going to owe the Taxman money at the end of the Tax Year.

HINT: Find a Tax Practitioner who understands your business. Talk to a few of his/her existing clients. Even if you register a company, you won’t need an accountant or auditor until your business is well established; but a good Tax Practitioner will save you more than he costs you.

Employer’s Tax Responsibility:

With almost no exceptions, if you pay anyone for their time or services you are deemed to be an employer and you are obliged to register as such. You must deduct PAYE and pay that over to SARS within 5 days of every month end. Withholding tax from Freelancers is a contentious issue and SARS tax policies change almost monthly. Warning: SARS holds you -the employer – personally responsible if these deductions are not made.

HINT: see the hint above.

VAT

Until your Photography business sales total more than one million Rand annually, SARS would rather not give you a VAT number. If you are doing a turnover of R55,000 or more, they will consider your “voluntary” registration application, but they are not obliged to register you or any business invoicing less than R1million.

In fact, they are doing you a favour. As soon as you are VAT registered, your prices must go up by 14% and you will have yet another tax responsibility to administer. Independent Photographers are not likely to be able to reduce that 14% by much, as most of your direct costs are for human resources which are VAT exempt.

HINT: see the hint about Income Tax assistance.

Article by Tess Fairweather of Relax Tax

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