Monthly Archives: May 2018

MSI Global Alliance appoints law member in Canada

MSI Global Alliance, one of the world’s leading international associations of independent legal and accounting firms, is delighted to announce the admission of Canadian law practice Bernier Beaudry to the association.

Based in Quebec City and Saint-Georges, Bernier Beaudry provides comprehensive legal services in the areas of business law, corporate law and litigation. The firm, with a team over 20 professionals, including 7 shareholders, was established in 1950. Bernier Beaudry also has an affiliate specialise in immigration law in Canada.

Bernier Beaudry’s client base includes dynamic small and mid-sized businesses as well as most of the Canadian banks.

Tim Wilson, chief executive of MSI, comments, “I am very pleased that MSI is further strengthening its presence in Canada, a globally important country. I look forward to Bernier Beaudry working closely with our members firms throughout North America and beyond”.

Jerome Beaudry, president of Bernier Beaudry, comments, “MSI is a great addition to our already broad offer of services that will definitely help our growing clientele, especially with their international needs, (given their ambitions!). We are looking forward to work and develop synergies with other MSI members around the globe”.

The admission of Bernier Beaudry adds to MSI’s existing membership in Canada, which now comprises eight legal and accounting member firms located in Montreal, Quebec City, Toronto, Vancouver and Yellowknife.

For further information please contact

MSI Global Alliance
Pauline Rottstock, Marketing and Business Development Manager
Tel: +44 20 7583 7000
Email: prottstock@msiglobal.org

About MSI Global Alliance

MSI is one of the world’s leading international associations of independent legal and accounting firms with over 250 carefully selected member firms in more than 100 countries. MSI was formed in 1990 in response to the growing need for cross-border co-operation between professional services firms.

MSI members worldwide work closely together to provide integrated, multidisciplinary services to meet each client’s legal and regulatory obligations and growth ambitions. MSI is ranked among the Top 20 international accounting and legal networks, associations & alliances.

Visit our website: www.msiglobal.org

Congratulations to Arné and Gillian Nel

“Let there be spaces in your togetherness, And let the winds of the heavens dance between you. Love one another but make not a bond of love: Let it be rather a moving sea between the shores of your souls.”

– Kahlil Gibran, The Prophet

31954570_10160174111370391_4350672076936314880_n

Congratulations to Arné and Gillian Nel who promised true and everlasting love to each other on 5 May. We wish you much happiness!

Value Added Tax (VAT) Rates Change

Effective Date:  1st April 2018

The Minister of Finance Dr. Moeketsi Majoro in his budget speech delivered in Parliament on 28 February 2018 announced changes in rates of Value Added Tax (VAT) on the supply of goods and services. Legal Notice No 27 has been published in the Government Gazette No 24 of 23 March 2018 to effect the changes. The new VAT rates are effective from 1st April 2018 and they are as follows;

  • The standard rate of VAT will change from 14% to 15%,
  • Electricity rate increases from 5% to 8%, and
  • Telecommunications rate increases from 5% to 9%.

Important Aspects to Note

Time of Supply

It is important to establish when the taxable supply is made as that is the time on which VAT should be accounted for (i.e. point at which VAT becomes payable to Lesotho Revenue Authority (LRA)). In simple terms, time of supply is the date on which the transaction occurs or is deemed to occur and that in turn determines the applicable VAT rate.

The general time of supply rule is the earlier of the date on which –

  • The goods are delivered or made available or the performance of the service is completed;
  • An invoice for the supply is issued; or
  • Payment (including part-payment) for the supply is made.

This note applies to most transactions that fall within the general time of supply rule. The note does not deal with special time of supply rules which apply on some transactions like; supplies made under rental agreements, hire purchase or finance lease, auctions, own or exempt use.

Prices Quoted or Advertised

All prices advertised or quoted by vendors for taxable supplies must include VAT at the applicable rate (unless the supply is zero-rated). Vendors must state that the price includes VAT in any advertisement or quotation, or the different elements of the total price must be stated i.e. the total amount of VAT, the price excluding VAT and the price inclusive of VAT. Vendors must therefore ensure that all price tickets, labels, quotations, advertisements, etc., reflect the new VAT rates from 1 April 2018.

Accounting Systems

From 1 April 2018, vendors must ensure that their accounting systems including sales and billing systems are updated to reflect VAT at all applicable rates. Vendors should test their systems for errors, and check that transactions are processed and reflected at the correct VAT rates.

In some instances, transactions processed after 1st April 2018 may be subject to the old VAT rate e.g. 14%. This, as previously indicated will depend on the applicable time of supply rule. This therefore means that it must be ensured that accounting systems are able to accommodate the different VAT rates.

Documents: Quotations, Cash Register Slips, Tax Invoices, Debit and Credit Notes

Vendors must ensure that any quotes received on or after 1st April 2018 correctly reflect the new VAT rates. On the other hand, cash register slips and tax invoices issued must reflect the correct VAT rate in order to avoid disputes with consumers and additional taxes and penalties where the output tax is under declared as a result of the incorrect VAT rate used.

Supplier must be contacted if an incorrect VAT rate is reflected on a document, or the amount is incorrectly calculated.

Vat Returns

The correct VAT rates must be used when calculating the input tax on goods or services acquired during the tax periods before and on or after 1st April 2018. Vendors must also ensure that adjustments reflected on the VAT returns in respect of debit or credit notes, are made at the correct VAT rates. The VAT Return has been updated to reflect the new VAT rates.

Importation of Goods

Registered importers or clearing agents must take note that Customs declarations reflect the new VAT rates, generally 15% in respect of goods entered for home consumption on or after 1st April 2018. Invoices issued by the clearing agent for their services of clearing the goods must reflect the correct standard VAT rate. The rate will depend on the general time of supply rules (that is, the earlier of when an invoice was issued, the performance of a service was completed or payment/part-payment was made).

Notes

  • This NOTICE mainly deals with the transitional aspects and does not cover all other aspects of VAT.
  • The normal requirements for a tax invoice and all other documents have not changed.
  • VAT registration and other requirements, including thresholds for registration, have not changed.
  • Care must be taken in filing VAT returns for periods after 1 April to ensure that there is no overstatement of
    input tax claimed.

This article is a general information sheet and should not be used or relied upon 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 financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Valid Tax Invoice Requirements for VAT Vendors

When making a purchase for your business, you should always ensure you receive a valid VAT invoice. This enables you to claim input VAT from SARS. With the change in VAT rate from 14% to 15%, VAT has come under the spotlight. This brings more focus on VAT compliance and more specifically on when we can claim input VAT on an invoice, and what constitutes a valid VAT invoice. This is something small that is very much neglected when it comes to monthly bookkeeping. It is very important to pay attention to the invoices that are sent to your accountants as these invoices need to be “valid” before the input VAT can be claimed from the South African Revenue Service (SARS).

Please read through the following crucial information carefully with regard to valid VAT invoices.

South Africa operates on a VAT system whereby VAT registered businesses are allowed to claim the VAT (input VAT) incurred on business expenses from the VAT collected (output VAT) on the supplies made by the business. The most crucial document in such a system is the tax invoice. Without a valid tax invoice, a business cannot deduct input tax paid on business expenses.

The VAT Act prescribes that a tax invoice must contain certain details about the taxable supply made by the business as well as the parties to the transaction. The VAT Act also prescribes the timeframe within which a tax invoice must be issued (i.e. 21 days from the time the supply was made).

A business is required to issue a full tax invoice when the price is more than R5 000 and may issue an abridged tax invoice when the consideration for the supply is R 5 000 or less than R5 000. No tax invoice is needed for a supply of R50 or less. However, a document such as a till slip or sales docket indicating the VAT charged by the supplier will still be required to verify the tax deducted.

As from 8 January 2016, the following information must be present on a tax invoice for it to be considered valid by SARS:

  • Contains the words “Tax Invoice”, “VAT Invoice” or “Invoice”;
  • Name, address and VAT registration number of the supplier;
  • Name, address and where the recipient is a vendor, the recipient’s VAT registration number;
  • Serial number and date of issue of invoice;
  • Correct description of goods and /or services (indicating where the applicable goods are second hand);
  • Quantity or volume of goods or services supplied; and
  • Value of the supply, the amount of tax charged and the consideration of the supply.

This article is a general information sheet and should not be used or relied upon 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 financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

How the VAT increase affects your business

Consumers and suppliers have by now had an opportunity to familiarise themselves with the increased Value-Added Tax (VAT) rate of 15% since 1 April 2018. There are however many technical considerations related to the increase that remain unclear. One such an uncertainty is with regards to deposits paid prior to the effective date of the increase, while goods and services are only rendered thereafter.

VAT vendors often require that consumers pay a deposit to secure the future delivery of goods or services (for example, an advance payment for the manufacture of goods, bookings in advance for holidays or accommodation etc.). The deposit paid by the consumer is then off-set against the full purchase price once they eventually receive the goods or services. The question arises what VAT rate the consumer will finally be subject to, where they paid a deposit before 1 April 2018, but the actual delivery of goods or services only takes place thereafter.

The answer to this question is found in the time of supply rules contained in section 9 of the Value-Added Tax Act.[1] In terms thereof, the “time of supply” of goods and services is at the time an invoice is issued by a supplier, or the time any payment of consideration is received by the supplier, whichever is the earlier. Two important concepts stem from this rule.

Firstly, an “invoice” needs to be issued by a supplier. In terms of section 1 of the VAT Act, an “invoice” is a document notifying someone of an obligation to make payment. It is therefore not necessary that a “tax invoice” – which has very specific requirements – needs to be issued. If consumers received only a “booking confirmation”, “acknowledgment of receipt” or similar document prior to 1 April 2018 that did not demand payment (such as tax invoice or pro-forma invoice), the time of supply was not triggered, and consumers will be subject to the 15% VAT rate once the goods or services are finally delivered after 1 April 2018.

Secondly, any deposit that was paid by the consumer, would have had to be applied as “consideration” for the supply of the goods or services to constitute “payment”. In this regard, consumers are largely dependent on how VAT vendors account for deposits in their financial systems. If deposits are accounted for separately (which is often the case with refundable deposits or where there are conditions attached to the supply) and only recognised as a supply when goods or services are received by the consumer, the deposit (although a transfer of money has occurred), would not constitute “payment”. For example, the time of supply may only be triggered once a guest has completed their stay at a guest house after 1 April 2018, resulting in VAT being levied at 15%.

The take away from the time of supply rules is therefore that payment of a deposit prior to 1 April 2018 does not necessarily result in a supply at 14% VAT and the rate to be applied is dependent on the specific facts of each case. Both consumers and VAT vendors should also take note that there are a number of rate specific rules that apply during the transition phase, and are encouraged to seek advice from a tax professional when they are in doubt about the rate to be applied.

[1] 89 of 1991 (the “VAT-Act”)

This article is a general information sheet and should not be used or relied upon 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 financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Employer Annual Reconciliation Due

Newtons_PAYE-02

Employers should be aware that Employer Annual Reconciliation submission due date is fast approaching. If the relevant deadlines are missed, certain penalties will apply.

When should it be paid?

The Employer Annual Reconciliation starts on 1 April 2018 and employers have until 31 May 2018 to submit their Annual Reconciliation Declarations (EMP501) for the period 1 March 2017 to 28 February 2018 in respect of the Monthly Employer Declarations (EMP201) submitted, payments made, Employee Income Tax Certificates [IRP5/IT3(a)], and ETI, if applicable.

What do I need to do?

Employer Annual Reconciliation involves an employer submitting an accurate Employer Reconciliation Declaration (EMP501), Employee Tax Certificates [IRP5/IT3(a)s] to be issued and, if applicable, a Tax Certificate Cancellation Declaration (EMP601).

Every employer who is registered at SARS for Pay-As-You-Earn (PAYE), Unemployment Insurance Fund(UIF) or Skills Development Levy(SDL), should submit an EMP501. An employer is required to submit accurate reconciliation declaration (EMP501) in respect of the monthly declarations (EMP201) that was submitted, payments made and the IRP5 / IT3(a) certificates for the following periods:

  • Annual period: this is for the period from 1 March 2017 to 28 February 2018
  • Interim period: this is for the period from 1 March 2018 to 31 August 2018

What is PAYE?

Employees’ Tax refers to the tax required to be deducted by an employer from an employee’s remuneration paid or payable. The process of deducting or withholding tax from remuneration as it is earned by an employee is commonly referred to as Pay-As-You-Earn, or PAYE.

What happens when you miss the deadline?

Employers who miss deadline submissions on any of the below are subject to a percentage-based penalty:

  1. Non-submission of an Employer Annual Reconciliation (EMP501) on or before the due date.
  2. Non-submission of employee IRP5 / IT3(a) certificates.
  3. Submission of incorrect or inaccurate data relating to the IRP5 / IT3(a) certificates.

This penalty will be charged for each month that the employer continues to fail to remedy the non-submission.

Avoid the confusion and late submission by contacting us for assistance.

This article is a general information sheet and should not be used or relied upon 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 financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)