2025 Budget Speech 2.0 | How it affects you and your business

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Finance Minister Enoch Godongwana’s 2025 Budget proposes several key tax and fiscal changes that will directly impact individuals and businesses. The most notable change is the phased increase in VAT, with a 0.5 percentage point hike planned to take effect on 1 May 2025 and another on 1 April 2026, increasing the VAT rate from the current 15% to 16% over two years. To mitigate the impact on lower-income households, the basket of VAT zero-rated food items will be expanded to include additional essential goods.

For individual taxpayers, there is no inflation adjustment to personal income tax brackets for the second consecutive year, leading to bracket creep as salary increases push individuals into higher tax brackets. Medical tax credits also remain unchanged.

Property buyers will benefit from an upward adjustment of 10% in transfer duty brackets from 1 April. Meanwhile, social grant recipients will see above-inflation increases, and the Covid-relief Social Relief of Distress grant has been extended until March 2026.

Government has unexpectedly opted not to increase fuel levies for the fourth consecutive year, while excise duties on alcohol and tobacco will rise above inflation, and the carbon tax on fuel and diesel will also increase.

With likely parliamentary opposition to some of the proposals, particularly the VAT hike, stand by for further changes!

SARS has also just released their “Budget 2025 Tax Pocket Guide” which provides a useful summary of the tax tables and their impact on taxpayers.

 

Your Tax Deadlines for March 2025

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  • 07 March – PAYE submissions and payments
  • 25 March – VAT manual submissions and payments
  • 28 March – Excise duty payments
  • 31 March – End of the 2023/24 Financial year, VAT electronic submissions and payments, & CIT Provisional Tax payments where applicable.

How to Save Big on Corporate Travel in 2025

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“He who buys what he does not need, steals from himself.” (Swedish Proverb)

Many think of corporate travel expenses as being a non-negotiable, and expensive part of doing business. The thing is, it is possible to cut back on travel expenses without cutting out the necessary requirements and little luxuries. Here are our four top tips for saving money on your corporate travel account.

  1. Plan ahead

    Most corporate travel is not an emergency. Whether you need to pitch to new clients in London, attend a conference in Los Angeles or visit a supplier in China, proper planning can save a great deal of money. All travel expenses increase the closer you get to the departure date. Simply looking at the necessary travel for the year ahead, scheduling it in advance and booking comfortably ahead of time will save you a significant amount. Flights are generally at their cheapest between 30 and 60 days before departure.

    Taking this one step further, you can also make sure you aren’t travelling during peak times. If you need to visit your clients every second month, make sure your trips don’t coincide with large conferences or entertainment events as these can drive up hotel costs.

    For domestic travel it makes sense to try and fly on Tuesday, Wednesday or Thursday, as flights are generally cheaper than on other days. Early morning or early afternoon flights (before 3 PM) are not only cheaper, but also tend to have fewer delays and cancellations – which means there’s less chance of additional accommodation or car hire charges.

  2. Set up a travel policy

    In order to effectively plan ahead and book all that’s needed, you need to implement a company-wide travel policy. This policy should cover all aspects of travel including:

    • The booking process for accommodation, flights, transfers, vehicle rentals and everything else.
    • Expenses and meal allowances.
    • The approval and reimbursement process.

    Making sure everyone is on the same page when it comes to travel means there are no unnecessary or unexpected expenses. As your accountants, we can help you to construct a travel policy that aligns with your budget and cash flow.

  3. Be as loyal as possible

    Hotels and airlines offer loyalty programs that reward their most frequent travellers with perks like airport lounges and dining discounts, but they also offer important benefits for the business. Airline loyalty members often get to cancel their bookings or change dates at a reduced fee, and the frequent flyer miles and rewards can add up to other free travel benefits. Hotels are much more forgiving on loyalty members when it comes to late and early check-ins and room upgrades. And they typically offer a guaranteed discount on their room rates.

  4. Use an agent

    Travel agents are basically a free (or at least very cheap) service for the people who use them. Often the prices are the same whether you book yourself or do it through an agency because the agent commissions are already built into the prices of the rooms, flights and car rentals. Booking with an agent can save your HR, receptionist or PA valuable hours that could be put into something more productive.

    Agents are already experts so paying them a small service fee (if required) to keep them on your books will allow them to search further for the best possible prices and benefits using their back-end travel systems. This may not save you money on flights as the airlines are generally pretty transparent, but it can make a big difference on insurance, car rental and accommodation. Agents are also much more likely to be able to wangle last-minute refunds or changes.

    If your company is really big (or if you and your staff travel a lot) it may make sense to allow a corporate travel specialist to manage all of your travel requirements.


Bon voyage!

Corporate travel can be a very good investment – but there’s no reason to pay more than you should. Speak to us if you want any help trimming your business travel costs.

5 Things to Consider When Buying vs Leasing Equipment

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“I do not gather things, I prefer to rent them rather than to possess them.” (Jerzy Kosinski, Polish-American writer)

Deciding whether to buy or lease equipment can sometimes seem like an impossible choice. There are so many factors at play that it can feel like whatever you do will be wrong. We’ve put together a short list of five things to consider that should make the process a little easier.

  1. When do you need the money?

    Leasing has lower up-front costs than buying, but in the long term could end up costing your company more. Leasing can make it easier to conserve working capital and maintain a stronger cash flow, especially in the early days. However, if you buy, you will eventually pay the equipment off meaning your long-term costs will drop.

  2. Are you going to need to upgrade?

    Will the equipment you are looking for need to be upgraded? Or is it something you can use, as is, for years? Leasing equipment often comes with the option of upgrading it on the spot when newer versions come out. This gives companies more flexibility and the chance to be fully up-to-date at all times. If you’re sure of the long-term efficacy of a machine, however, it may make more sense to buy.

  3. Are there tax benefits?

    Some products will provide more benefits come tax time than others with deductions on offer for both leasing and buying. As your accountants we can help you to understand the exact implications of renting/buying your particular equipment and the amount and timing of tax relief that is available.

  4. Do you want to pay for maintenance?

    Leasing equipment can often mean that you don’t have to worry about maintaining it. While this will undoubtedly be built into the cost of your leasing contract, there’s great comfort in knowing that the maintenance is taken care of – and that if something goes really wrong you can get an immediate replacement. Do just check your lease agreement for any exclusions or restrictions – there is often an exclusion for “damage due to client negligence,” for example.

  5. Do you need to customise your equipment?

    If you lease your equipment, you probably won’t be able to customise it. It makes sense that the rental company needs to be able to lease the equipment to someone else when you’re done with it. If you own a machine you can generally do with it as you like, meaning you can take care of your special requirements.

The bottom line

Choosing between leasing and buying ultimately depends on your business’ unique set of circumstances.

Your Tax Deadlines for February 2025

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  • 07 February – Monthly PAYE submissions and payments
  • 25 February – Value Added Tax (VAT) manual submissions and payments
  • 27 February – Excise duty payments
  • 28 February – VAT electronic submissions and payments, Corporate Income Tax (CIT) Provisional Tax payments where applicable, and Personal Income Tax (PIT) Provisional Tax payments.

Are You Ready for the Next Provisional Tax Deadline?

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“Death, taxes, and childbirth! There’s never any convenient time for any of them.” (Margaret Mitchell)

What is provisional tax?

Provisional tax allows corporate and individual provisional taxpayers to pay their annual income tax in advance by making two or three payments during a tax year.

The aim is to prevent taxpayers from facing large income tax liabilities that are only revealed at the end of the year of assessment, when the annual personal income tax (PIT) return ITR12 or the annual corporate income tax (CIT) return ITR14 is filed in January.

While provisional tax payments can assist taxpayers by spreading their income tax liability over the tax year, they also create additional administrative obligations such as completing and submitting a provisional tax return (IRP 6) on time, twice or thrice a year. What’s more, they increase the risk of penalties, most notably under-estimation penalties.

Luckily you have us in your corner.


Are you a provisional taxpayer?

Companies are automatically provisional taxpayers. Individuals who receive income other than a salary may also be provisional taxpayers, depending on various criteria. Because SARS places the onus on you to determine if you are liable for provisional tax, it’s best to check your provisional tax status with us.


The 3 provisional tax payments

The first compulsory provisional tax payment is due within six months of the start of the year of assessment. So, if your or the company’s 2025 tax year commenced on 1 March 2024, the first provisional tax payment was due on 31 August last year.

This forward-looking payment is based on half of the total estimated tax for the full year, less employees’ tax already paid and any applicable tax credits and rebates.

The upcoming second compulsory provisional tax payment deadline is the last working day of the year of assessment (on 28 February if your tax year started on 1 March). It works somewhat differently, and the rules are far stricter – with harsh penalties for under-estimating taxable income for the year.

A third optional payment can be made after the end of the tax year, but before the issuing of the annual income tax assessment by SARS each year.


Crunch time!

The provisional return for the second period to 28 February is retrospective and based on the total estimated tax for the full tax year (less the first period provisional tax and employees’ tax already paid, and any applicable tax credits and rebates).

The second estimate must be quite accurate as heavy under-estimation penalties apply.

  • Where the taxable income is less than R1 million; and the second period estimate is less than 90% of the actual taxable income and less than the ‘basic amount’ (taxable income assessed for latest preceding year of assessment), a 20% penalty is imposed on the difference between the employees’ and provisional tax already paid and the lesser of normal tax on 90% of the actual taxable income or normal tax on the basic amount, after deductible rebates.
  • Where the taxable income is more than R1 million; and the second period estimate is less than 80% of the actual taxable income, a 20% penalty is imposed on the difference between the employees’ and provisional tax already paid and the normal tax on 80% of actual taxable income after deductible rebates.

Bear in mind that SARS can ask for your estimate to be justified, so you will need accurate records of all the source documents and calculations used to determine your estimate. Even so, SARS can increase the estimate if they are dissatisfied with your amount, and this is not subject to an objection or appeal.

To avoid this, SARS provides the following advice: “the amount of the estimate must be determined sensibly and by careful reasoning and judgment, in a mathematical manner, and using experience, common sense and all available information”.

We can ensure this holds true for your provisional tax, be it corporate or individual.


Further penalties to watch out for…

  • Even if you or your company owes no tax, a ‘nil’ return showing taxable income as equal to zero must still be filed timeously. Failing to do so will attract administrative penalties.
  • If an IRP6 is filed more than four months after the deadline, SARS will consider a ‘nil’ return to have been submitted. Unless the actual taxable income really was zero, an under-estimation penalty will also apply to a late submission.
  • Not making your provisional tax payments on time will also result in an immediate late payment penalty, calculated at 10% of the provisional tax amount, regardless of whether it’s not paid at all or simply paid late.
  • Interest will also be levied on the underpayment of provisional tax because of under estimation, and on late payments.

Rely on our expertise 

The rules of provisional tax are daunting and confusing, and yet SARS holds provisional taxpayers responsible for their tax affairs. That’s why it makes sense to allow the experts to prepare and/or review your provisional tax and income tax returns prior to submission.

What Your Balance Sheet Says About Your Business

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“It sounds extraordinary, but it’s a fact that balance sheets can make fascinating reading.” (Mary Archer)

A balance sheet reveals a company’s “book value” by showing what assets it owns, what liabilities it owes, and the equity or net worth attributable to its owners, at a specific point in time.

Because all resources or assets are either funded by borrowing (liabilities) or owner investments (equity), the fundamental accounting equation that underpins the balance sheet is:

Assets = Liabilities + Equity. 

Key components of a balance sheet

  1. Assets are resources controlled by a company that are expected to generate future value. These include current assets, such as cash, accounts receivable, and inventory; and non-current or long-term assets such as property, equipment, trademarks, and patents.
  2. Liabilities are obligations the company owes to external parties. These include current liabilities, such as accounts payable, payroll and short-term loans, and non-current or long-term liabilities like bonds, leases and deferred tax liabilities.
  3. Owners’ equity represents the net worth of a company after liabilities are deducted from assets and includes retained earnings and contributed capital, among others.


What your balance sheet says about your business

The balance sheet is an important tool for evaluating your company’s financial health and operational efficiency.

By providing an overview of the assets and liabilities of the company and how they relate to each other, the balance sheet can help answer questions such as whether your company has a positive net worth, whether it has enough cash and short-term assets to cover its obligations, and how indebted it is compared to its peers.

The balance sheet will show when a company is borrowing too much money, if the assets it owns are not liquid enough, or if it has enough cash on hand to meet current liabilities.

For this reason, balance sheets are also used to secure capital, private equity funding, business loans or bank finance, as they allow stakeholders to assess the financial health of a company, its solvency, and its ability to repay short-term debts.


Using your balance sheet for better management

Business owners and managers, as well as other stakeholders such as lenders or investors, can leverage the balance sheet alongside other financial resources to enhance decision-making and performance.

When analysed over time or comparatively against competing companies, a balance sheet can reveal ways to improve the financial health of a company.

Financial ratios are important tools that draw data directly from the balance sheet and other sources and are used for fundamental financial analysis. Some common ratios include:

  • Liquidity and solvency ratios show how well a company can pay off its debts and obligations using existing assets. They also allow for monitoring long-term liabilities to maintain sustainable debt levels.
  • Financial strength ratios, such as debt-to-equity ratios, measure the relative proportion of debt and equity used to finance a company’s assets. A higher debt-to-equity ratio shows that a company is more heavily financed through debt, showing an increased leverage. These ratios indicate how financially stable a company is and how it is financed.
  • Activity ratios focus mainly on how well the company manages its operating cycle, which includes receivables, inventory, and payables. These ratios can provide insight into the company’s operational efficiency.

The balance sheet can also contribute to planning for growth, for example, by showing if the company has the assets, resources and capacity to expand, or if reinvestment or additional funding is required.


We can provide and interpret your financial reports

A balance sheet is an invaluable strategic management tool – provided you know how to interpret it.

We can provide your company with this important business tool (along with other key financial reports such as your income statement and cash flow statement). 

Building a Business: Should You Bring in Funders or Go it Alone?

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“As an entrepreneur, one of the biggest challenges you will face will be building your brand. The ultimate goal is to set your company and your brand apart from the crowd.” (Ryan Holmes, Founder and CEO of Hootsuite)

Trying to get a business off the ground is challenging. Every step of the process requires a mountain of time and investment. Choosing between going it alone or involving others as partners or investors is a decision that should not be taken lightly. In this article we’ll break down the options available and take a look at the pros and cons of each.

  1. Going it aloneSelf-funding, also known as bootstrapping, is when a business owner goes it alone, providing all funding, time and energy themselves.

    Pros of bootstrapping

    Whether you’re finding the money from savings, or your monthly pay cheque at another job, bootstrapping is perfect for the entrepreneur who wants full control over their business. With no partners on board, all decisions are yours to make, and all the profits, achievements, and losses are yours alone.

    Apart from the independence it offers, bootstrapping can also be easier. There’s no time spent filling in application forms or putting together pitch decks to impress would-be investors. There is also no accrued interest on the debt involved and no loss of equity in your own business. This makes running the business far simpler.

    Cons of bootstrapping

    On the downside, bootstrapping can be much slower. Each cent spent on the business needs to come from your own pocket and so necessary investments need to be prioritised from month-to-month. Things that are essential for success may need to wait another month – and this can mean your break-even point takes longer to arrive.

    Bootstrapping also increases your chances of failure, as some expenses simply can’t wait if you want to make money. Bootstrappers are also more likely to become frustrated with the slow pace and give up.

  2. Tapping into venture capitalVenture capital (VC) is one of the most popular routes for finding funding in entrepreneurship. This is where a company or an individual provides funding to your business in exchange for a percentage of ownership.

    Pros of VC

    Venture capitalists are able to offer significant investment in the company and can often provide all the funding necessary to take the company from start-up to established business. What’s more, venture capitalists likely come with significant experience in business and a strong network of contacts.

    Cons of VC

    Working with venture capitalists requires that you give up some control of your business. This new partnership can create friction if the person who pays the bills doesn’t share your ideas of where the company should be headed. In some instances, their investment may even give them a majority stake and the dream you had of being your own boss might now be a thing of the past.

  3. Touched by an angel (investor)Angel investors are also happy to provide the financing necessary for your business to thrive. Unlike VC, however, they are typically looking to take a more background role and are hoping to cash in when your company has become established.

    Pros of angel investors

    Angel investors generally offer more flexibility than VC. They aren’t looking to get involved – they’re looking for business owners and ideas that stand a good chance of succeeding without their intervention. This means they’ll often provide funding to businesses others may not touch.

    Cons of angel investors

    Angel investors are looking for part ownership of the business and you should therefore expect to lose some of the equity in your company. Because they’re investing without getting involved, angel investors know they may lose their money. This means they are generally unwilling to invest as much time or money as a venture capitalist might, so you should expect to still do some of the bootstrapping yourself.

    Remember that angel investors are interested in one day getting a big payoff. They are looking for that moment when the company can be sold or listed on a stock exchange. This means they may pressurise you to make decisions that aren’t necessarily in the company’s best interests.

  4. Borrowing from the bankAn old-fashioned bank loan is another way of bringing money into a business.

    Pros of bank loans

    Taking out a bank loan gives you the money you need to grow the business. You also do not lose any equity in your company.

    Cons of banks loans

    The interest on a loan can be problematic and over time may add up to a significant amount – often the cost of debt is much higher than the cost of giving away equity to investors. If the company fails, you may still be required to pay off the loan in your personal capacity. There may also be some trouble securing the loan in the first place: banks want to know that they are lending to people who can pay them back!


The bottom line

Accessing funding is a decision you should consider carefully. Ask yourself what you need from your business, what you can afford and just who you would be going into business with.

Your Tax Deadlines for January 2025

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  • 07 January – PAYE submissions and payments.
  • 20 January – End of Filing Season 2024 for Provisional taxpayers & Trusts.
  • 24 January – VAT manual submissions and payments.
  • 30 January – Excise duty payments.
  • 31 January – VAT electronic submissions and payments, & CIT Provisional Tax payments where applicable.

Starting a New Business? Here Are the Tax Implications…

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“A goal without a plan is just a wish.” (Antoine De Saint-Exupery, author of The Little Prince)

Want to start a business? SARS warns you to be aware of the tax obligations of running a business, whether it’s in the form of a legal entity or in your personal capacity.

Considering the tax implications before starting a business will result in substantial benefits down the line. These include better budgeting and cash-flow planning, cost savings, and easier administration and compliance.


Pound of flesh

Depending on the type of business entity you establish, different tax rates and rules apply. On the flip side, certain tax incentives and opportunities to reduce the administrative burden may be available.

Legal entities like private companies, close corporations (CCs) and non-profits are automatically registered with SARS for corporate income tax when they register with the Companies and Intellectual Property Commission (CIPC).

This is not required for a non-legal entity like a sole proprietorship or partnership. In these cases, the owner or partners are taxed in their individual capacities on their share of taxable profits. Certain tax rebates and credits apply, which can reduce overall tax liability.

Legal entities may qualify for different tax incentives and preferential rates like the turnover tax system, the small business corporation (SBC) incentive, or accelerated deprecation relief available in Urban Development Zones.


Corporate Income Tax (CIT) 

Every business (legal entity or individual) is liable for income tax. But the rates of taxation – and the rules – can vary widely.

  • For companies (including CCs) the standard corporate tax rate is 27%. In addition to filing an annual return, companies are required to submit provisional tax returns twice a year – and to make the required payments on time.
  • Turnover tax is a possible alternative for sole proprietors, partnerships, CCs and companies with a qualifying annual turnover not exceeding R1 million. This simplified annual tax, calculated on your turnover, replaces income tax, provisional tax, VAT, capital gains tax and dividends withholding tax (if the annual dividend does not exceed R200,000). This substantially reduced administrative burden is a significant benefit for small businesses. The first R335,000 of annual turnover is tax exempt – and the highest tax rate is just 3%.
  • Qualifying companies may register as a small business corporation (SBC) for additional tax incentives, including a tax exemption for the first R95,750 of annual taxable income, and a reduced corporate tax rate up to a taxable income of R550,000.


Employee taxes

Every employer must register for pay-as-you-earn (PAYE), deduct it from remuneration paid to employees (along with Unemployment Insurance Fund contributions) and pay it over to SARS. Once annual salaries, wages and other remuneration exceed R500,000, the Skills Development Levy (SDL) also becomes payable.

As an employer, you must submit monthly returns and payments to SARS. There are also two compulsory reconciliations during the year.

Some relief is available through the Employment Tax Incentive (ETI), allowing for a reduction in PAYE for qualifying companies that employ young people.


VAT (Value Added Tax)  

VAT registration becomes compulsory if the value of invoices raised by an entity (or is expected to be raised due to a written contractual obligation) exceeds R1 million in any consecutive 12-month period.

Your business can also choose to register for VAT voluntarily. This will benefit businesses with sizeable VAT input claims.

New businesses should factor in the increased administrative requirements of VAT registration and compliance. There are also cashflow implications as your business has a VAT liability before payments on invoices are received – a significant risk if invoices are paid later than expected.


Other taxes that may apply

  • Companies that import or export goods must be registered (and will be liable) for customs and excise taxes.
  • A dividends tax of 20% must be withheld by the company and paid to SARS when its shareholders earn dividends.
  • Depending on the industry and the specific business activities, further taxes such as carbon tax, sugar tax, transfer duties, and Capital Gains Tax (CGT) may be applicable.


Tax implications for business owners

Business owners who pay themselves a salary will already be paying PAYE. If there are no additional income streams, they don’t need to register for provisional tax.

If, however, a business owner receives any other income in addition to this salary, whether from another source, or dividends or investment income from the business, registration as a provisional taxpayer may be necessary if the requirements of the provisional taxpayer definition are met.

New business owners often can’t draw a salary for some time. Personal expenses paid by the company can be allocated to a loan account, or the owner can draw down a loan. These expenses will unfortunately not be deductible for CIT purposes.


The most tax-efficient solutions for your new business 

When starting a business, tax planning is critical. It adds significant value and protects you against unexpected tax liabilities.