can tax compliance and cash flow planning be mentioned in the same sentence?

by Madeleen van Schalkwyk | April 5, 2022

Normally when you think of Tax and compliance, you think SARS, deadlines and of course that dreaded phone call from your accountant, giving you that instruction to pay, without any warning or planning. My question: can tax compliance and cash flow planning be mentioned in the same sentence?

First things first, what is tax compliance and cashflow planning?

Tax compliance is when you submit your tax returns (for all tax registrations) on time and make payment on time. This will result in no additional money owed to SARS, no penalties and interest and having the benefit of receiving a tax clearance certificates at a moment’s notice.

Cash flow planning is the ability to plan your payments and receipts to pay creditors on time without incurring unnecessary penalties and interest. Part of cash flow planning will be to invest surplus cash and by enhancing your working capital funding and eliminating your asset redundancy.

Knowing your deadlines and planning in advance is the key to tax compliance and optimal cashflow positions.

Missing a tax deadline can be costly:

Here is a summary of the most popular tax types and their deadlines.

Income Tax:

For this tax type you get corporate- and individual income tax. In both registrations you get provisional and non-provisional taxpayers.

Corporate income tax registration will be for a company, closed corporation, trust, or any registered entity. For this tax type, provisional tax is mostly mandatory. The first provisional tax return is due within the first six months after year end. The second provisional tax return is due at year end.
Annual income tax returns are due 12 months after year end.

These dates can be explained as follows:

company a
financial year end (for example) 30-Jun
Planning for the next tax deadlines will be as follows:
2021 annual income tax return 30 Jun 2022
2022 tax and financial year end 30 Jun 2022
2022 second provisional tax return 30 Jun 2022
2023 first provisional tax return 31 Dec 2022
2022 annual income tax return 30 Jun 2023
2023 tax and financial year end 30 Jun 2023
2023 second provisional tax return 30 Jun 2023
Failing to meet these deadlines will be costly. There is a 10% penalty for late payment of provisional tax. There is a 20% penalty for the underestimation of taxable income if in respect of the second provisional payment. Non submission penalties will be raised until all tax returns are submitted.

The tax year end for individual tax registrations is 28/29 February. Provisional tax will be due six monthly.

individual provisional taxpayer e
financial year end 28-Feb
Planning for the next tax deadlines will be as follows:
2022 tax and financial year end 28 Feb 2022
2022 second provisional tax return 28 Feb 2022
2023 first provisional tax return 31 Aug 2022
2022 annual income tax return 31 Jan 2023
2023 tax and financial year end 28 Feb 2023
2023 second provisional tax return 28 Feb 2023
Non provisional taxpayers will only have one tax deadline annually. The due date is usually in November.

Taxpayer R will have to file his 2022 (tax year ending 28 February 2022) tax return in November 2022.

Value Added Tax (“VAT”):

VAT, depending on your type or registration, is due by the 25th of the following month. If your Vat period ended on 28 February, your Vat return and payment is due by 25 March. SARS encourages taxpayers to make use of the online e-Filing platform. By using e-Filing you are granted an extra 5 days with the deadline now being extended to the 30th/31st of the following month.

There is a penalty for late submission, late payment and interest being accrued until the outstanding amount is settled. Non submission penalties will be raised until all tax returns are submitted.

Pay as you Earn (“PAYE”):

PAYE is due on the 7th of the next month following the payroll cycle. For example, the PAYE for February payroll is due on the 7th of March.

There is a penalty for late submission, late payment and interest being accrued until the outstanding amount is settled. Non submission penalties will be raised until all tax returns are submitted. Non submission penalties will be raised on EMP201 outstanding returns as well as the bi-annual EMP501 reconciliations. EMP501 reconciliations is due every six months. The first EMP501 for a tax year will usually be due by September/October annually, this is for the numbers from 1 March to 31 August. The second EMP501 for a tax year will usually be due by April/May annually, this is for the numbers from 1 March to 28/29 February.

Donation tax:

When you donate an asset or cash, you must complete a donations tax declaration form. This form and any donations tax on the donation needs to be submitted and paid by the end of the following month. Donations made during February 2022 will have to be declared and paid by 31 March 2022.

Security Transfer Tax (“STT”):

When shares are traded there is usually STT on this transaction. Whether the shares are listed or unlisted shares will determine when the STT is due. STT on unlisted shares is due within two months after the month in which the shares were transferred. If unlisted shares were transferred in October, the STT is due by 31 December.

Listed securities: Securities transfer tax must be paid by the 14th day of the month following the month during which transfers of listed securities occurred.

Being aware of these tax deadlines, submitting returns on time and paying on time will save you a lot of unnecessary penalties and interest.

Remember that when the deadline falls on a public holiday or the weekend, you must submit and pay on the Friday or business day before that weekend or public holiday.

E-Filing has a payment function where your tax practitioner can set the payment for a certain date. This payment pulls through to your online banking profile. You then authorise this on your banking profile. This payment method will ensure that the correct payment reference is used for the correct tax type. Most banks will allow future dated payments, i.e., completing the Vat return now and setting and authorising the payment for the end of the month. This payment will then be made on 00:01 on the 30/31st or 7th of the month, depending on the date you selected.

By knowing these deadlines, it is not necessary to wait for that phone call. By planning your cash flow, you can save money and make better decisions.

At waucomply we are registered tax practitioners who can assist you with you tax compliance and tax payments. We don’t believe in penalties and interest, only compliance.

Within the wauko Group, we can also assist with cash flow planning tools.

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *