Summary
Summary Taxation FRK122
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Chapter 7 of FRK122:taxation A summary of tax, the types of tax, the calculation of capital gains, income, donation, estate, and dividend tax.
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CHAPTER 7Taxation
,Background of the South African Revenue Service
Tax is what you “pay to be a part of civilization”
SARS established by legislation: The South African Revenue Service Act 34 of 1997.
Administrative autonomous organ of the state
o Outside public service
o Within public administration
Main Functions
o Collect & administer all national taxes, duties and levies
o Collect other revenues
o Protect against illegal importation & exportation of goods & services
o Facilitate trade
o Advise the Minister of Finance on all revenue related matters
Mandate includes:
o supporting the economy
o providing the revenue needed to build a democracy
Deliver a customs service that:
o maximizes revenue collection
o protects South Africa’s borders
o facilitates trade
Fiscal Policy, National Budget Speech and Taxation
Taxpayer
Government SARS
Fiscal policies Tax laws
Minister of Financial Comissioner
Different Types of Taxation
There are many types of tax.
1. Income Tax: Income tax is levied on all income and profit received by a taxpayer
2. Capital Gains Tax (CGT): CGT is part of income tax. It is triggered when you make a profit from selling
something you own (an asset)
3. Value Added Tax (VAT): VAT is an indirect tax based on the consumption of goods and services
, 4. Donations Tax: Tax payable on value of property disposed of by a resident by means of a donation
5. Estate Duties: Estate duty is levied on the nett estate of a deceased individual
6. Companies Tax: A South African resident company is subject to corporate income tax on its
worldwide income, irrespective of the source of the income**[Dividend tax is a withholding tax and
replaced Secondary Tax on Companies; Companies withhold tax from the amount of dividends paid
out to shareholders] *
1. Income Tax
Income tax is levied on all income and profit received by a taxpayer which includes Individuals;
Companies; and Trusts. Main source of income for Government and imposed by Tax Act 58 of 1962
Any form of employment income = registration with SARS
The minimum income qualify for income tax is as follows:
Person 2021 2020 2019
Under 65 87 300 79 000 78 150
Between 65- 75 131 150 122 300 121 000
75 and older 151 100 136 750 135 300
Because it is impractical to expect taxpayers to pay a large sum of tax once a year = Pay As You Earn
(PAYE) AND Provisional Tax
PAYE
Employers must deduct PAYE from the salaries, wages & bonuses of its employees
PAYE paid over to SARS monthly by employers
Employers must issue Employees with Tax Certificate = IRP5/IT3(a)
Provisional Tax:
For taxpayers who earn income other than salaries & wages
3 payments:
o 6 months into Year Of Assessment (YOA) –
o 12 months into YOA = end of YOA –
o 6/7 months after YOA (See Diagram 1)
Diagram 1: provisional tax payment schedule
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