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“A Trust is a ‘person’ for tax purposes and is therefore a taxpayer in its own right.” (SARS)

With Tax Season 2024 for trusts opening on 16 September, there’s no better time to draw trustees’ attention to SARS’ continued emphasis that all trusts must register for income tax purposes, including dormant trusts. Once registered, trusts are obligated to submit income tax returns that are aligned with other trust reporting requirements from SARS and substantiated by extensive supporting documents and information.

Trustees are held responsible for non-registration of trusts for income tax, and they will not be able to evade enforcement actions by blaming third parties for failing to file returns. “But I didn’t know I was meant to,” is not a valid excuse.

Trust tax returns can be filed from 16 September 2024 (much later than the usual June/July opening) until 20 January 2025.

Along with the new filing season dates, trusts also face several onerous compliance requirements – and some stiff potential penalties.

Onerous requirements

• SARS introduced changes to the Income Tax Return for Trusts (ITR12T) last year, with additional probing questions, and even more mandatory supporting documents.
• The range of mandatory and supporting documents that must be submitted with the ITR12T depends on the trust type, and may include:
  • All certificates and documents relating to income and deductions
  • Trust Deed and Letters of Authority
  • Resolutions/minutes of trustee meetings
  • Details of the ‘Main’ Trustee (the SARS registered representative)
  • Financial statements and/or administration accounts
  • Particulars of assets and liabilities
  • Confirmation of banking details
  • Proof of payment of any tax credits
  • Supporting schedules
• Detailed disclosure of the beneficial ownership, including the submission of identity documents of all beneficial owners. This information will be checked against the beneficial ownership register lodged with the Master of the High Court. Non-compliance could result in a trustee receiving a fine of up to R10 million, a prison sentence of up to 5 years – or both.
• To provide SARS with a clearer understanding of the assets, income and activities within trust structures, trust returns now feature additional questions such as any local or foreign amounts vested in the trust as a beneficiary of another trust.
• Information reported on the trust tax return must also align with the IT3(t) reporting of prescribed information by trusts, now also mandated by SARS. It includes trust distributions and their beneficiaries, trust and beneficiary demographic information, trust financial flows, and amounts vested in a beneficiary, including net income, capital gains and capital amounts. The first IT3(t) certificates are due to be submitted at the end of September 2024 for the 2023/24 tax year, and then on an annual basis.
• Despite the above reporting deadline, SARS confirmed that trust beneficiary income tax returns will not be pre-populated with IT3(t) data for the 2024 year of assessment. This means trustees must also provide details of trust beneficiaries’ 2024 trust earnings timeously to the beneficiaries for inclusion in their personal income tax returns, for which the submission deadlines remain unchanged despite the change in the trust tax filing season.

We can help you survive Tax Season 2024!

Without professional assistance, surviving trust Tax Season 2024 would be a tough ask. The complexity of the processes and the new requirements exponentially increase the risk of errors. And that’s before you factor in the significant time required to manually upload the extensive list of supporting documents – especially in light of SARS’ increased efforts to improve tax compliance and the severe penalties for non-compliance.

• 07 August – Monthly Pay-As-You-Earn (PAYE) submissions and payments
• 23 August – Value Added Tax (VAT) manual submissions and payments
• 29 August – Excise duty payments
• 30 August – VAT electronic submissions and payments, Corporate Income Tax Provisional payments where applicable, and Personal Income Tax Provisional payments.

“The hardest thing in the world to understand is the income tax.” (Albert Einstein)

Tax rebates, deductions and incentives provide relief to taxpayers by reducing the amount of tax payable to SARS, resulting in welcome tax savings. But how do you figure out which rebates, deductions or incentives apply to you – and what’s the procedure for claiming them?

This is where we come in. Chances are we’ve already applied a number of these rebates, deductions or incentives to your tax returns. But here’s a list of some of the tax rebates, deductions and incentives that could make a substantial difference to your SARS bill for the 2024 Tax Season. Some of them are fairly wellknown, but others are pretty obscure.

If you think you qualify for additional rebates, deductions or incentives, please do get in touch. We are committed to ensuring that you don’t pay more tax than you should.

For individuals

• Tax threshold: You only start paying tax when you earn more than R95,750 (under 65 years); or R148,217 (65 – 75 years); or R165,689 (75 and older).
• Tax rebates: Taxpayers also qualify for a R17,235 primary rebate; an additional secondary rebate of R9,444 if over 65, and a further tertiary rebate of R3,145 if over 75.
• Medical tax credits for medical scheme contributions can be deducted from your tax payable at R364 each per month for you and your first dependent, and R246 for each subsequent dependant.
• The additional medical expenses tax credit allows qualifying out-of-pocket medical expenses to be deducted from the normal tax payable. This applies to medical expenses that were not recovered from your medical aid.
• Retirement fund contributions to a locally-registered pension, provident, or retirement annuity fund are deductible subject to certain maximum limits.
• Amounts received/accrued from tax-free investments are exempt from tax, subject to limitations.
• Donations to certain approved public benefit organisations are allowed as deductions, up to a maximum of 10% of taxable income.
• A solar energy tax credit of 25% of the cost of the solar PV panels (maximum R15,000) is available for new and unused solar PV panels acquired and used for the first time between 1 March 2023 to 29 February 2024.
• Home office expenditure: Employees who have a dedicated area used regularly and exclusively for “trade” in their home may be allowed to deduct, pro-rata, certain expenses like rent, repairs, utilities, phones and internet.
• The foreign tax credit is a rebate against income tax for foreign taxes paid on foreign-sourced income.
• Taxpayers carrying on a business in their individual capacity or in partnership may deduct business expenditure or losses on the same basis as companies.

For businesses

• Tax relief measures for small business corporations (SBCs) allows for a progressive tax rate, immediate write-off of new plant or machinery, and a wear-and-tear or accelerated allowance on depreciable assets.
• Tax relief for qualifying micro businesses involves a simplified turnover tax, instead of the usual taxes (income tax, provisional tax and Capital Gains Tax) payable by companies.
• Energy efficiency savings incentive provides a deduction for savings from implementing energy-efficient methods in the production of income at R0.95 for each kilowatt hour (or equivalent) saved.
• The redesigned renewable energy tax deduction for certain machinery, plant, implements, utensils and articles used in production of renewable energy allows a 125% deduction of the cost incurred for eligible assets brought into use for the first time between 1 March 2023 and 28 February 2025. Machinery, plant, implements, utensils and articles used in production of renewable energy outside of the above-mentioned period may qualify for a separate deduction (which allows a 100% deduction of costs incurred).
• Research and development (R&D) costs related to certain R&D activities are 150% deductible, while depreciation on R&D machinery and capital assets may be accelerated and buildings used in R&D may be written-off over 20 years.
• The learnership agreements tax incentive allows employers that train employees in a regulated environment an additional income tax deduction. (This is not the same as the Employment Tax Incentive (ETI) that encourages the employment of young people by reducing employees’ tax due by the company).
• Donations to certain charitable organisations approved as public benefit organisations are tax deductible, up to a maximum of 10% of taxable income.
• A depreciation (wear and tear) allowance may be deducted on movable assets used for the purpose of trade. There’s also an allowance for assets disposed of or scrapped during a year of assessment.
• Interest expenses incurred in the production of non-exempt income and for the purposes of trade are generally deductible.
• Bad debts are tax deductible under certain circumstances and a tax allowance is also provided for doubtful debts.
• The foreign tax credit is a rebate against income tax for foreign taxes paid on foreign-sourced income or a deduction against income of foreign taxes paid on SA-sourced income.
• There’s an allowance for new commercial buildings or improvements used by a business during the assessed year, equal to 5% of the cost to the taxpayer.
• There’s an allowance for certain residential units, equal to 5% of the cost to a taxpayer of new units or improvements.
• Deductions in respect of erection or improvement of buildings in Urban Development Zones have been extended until 31 March 2025.
• A Special Economic Zones (SEZ) incentive in certain SEZs includes a reduced corporate tax rate of 15%; a 10% allowance on the cost of new buildings or improvements; and an employees’ tax reduction for the employer by virtue of the ETI (with SEZs eligible for the ETI to apply irrespective of the employee’s age).

Tip of the iceberg

These are just some of the tax rebates, deductions or incentives available to taxpayers. Our expertise in correctly identifying and applying the relevant rebates, deductions or incentives to your tax matters can significantly reduce your tax burden this tax season.

“One of the fun things about venture capital is you are constantly learning new ideas and strategies from one business and then applying them to others.” (Joe Lonsdale, technology entrepreneur and investor)

At its simplest, the term Venture Capital (VC) simply refers to capital that’s invested in any business or project where there’s an element of risk. Typically, this refers to innovative new companies, but it can also refer to money invested in everything from opening a new branch, to updating your factory or building a new wing on your restaurant. Every deal you see on Dragons Den is a venture capital deal.

It’s true that venture capitalists tend to invest in companies that look likely to disrupt big markets, and those with patentable ideas or innovative services. But VC funding is an option for all businesses. It’s usually offered in exchange for a minority stake in your business.

If you’re considering VC for your business, you need to understand the pros and cons.

Advantages of VC

1. Show me the money
   
   Venture capitalists can provide the funding necessary to either build your start-up from scratch or to expand your existing business. The cash can come in a single lumpsum payment or through additional funding rounds as needed.

2. Learning curve
   
   Because they’ve often had experience working with similar companies, venture capitalists can offer strategic and operational guidance to help your business thrive.

3. It’s all about who you know
   
   Most venture capitalists bring a valuable network of contacts. They can often assist with hiring key personnel, accessing international markets, connecting with strategic partners, and co-investing with other firms when you need more funding.

Disadvantages of VC

1. It’s a control thing
   
   When you take money from a venture capitalist, you gain a new business partner, and you lose a portion of your ownership and control. Depending on the deal, this could mean you’re now working with someone whose methods are different to yours and who may want to take the company in a different direction.

2. Pressure to sell
   
   Venture capitalists usually earn their money when a company “exits”, either through a sale, or an Initial Public Offerings (IPO). It goes without saying that they can often have different goals and ideals to you, the business owner – especially if you want to own and run your own business indefinitely.

3. Grow – or else
   
   Venture capitalists may come with stringent requirements on growth: how fast they expect it to happen, and which targets they need to hit by certain dates. Depending on your contract, you may find the funding you expected is not released when the goals are missed.

VC has some large positives and can be a massive help to both new and existing business. However, it does also come with some large concessions.

“We can in fact change the world and make of it a better place.” (Nelson Mandela)

Rolihlahla Mandela was born into the Madiba clan in Mvezo, Transkei, on 18 July 1918. He was given the name Nelson by a teacher on his first day at school. Affectionately known as Tata, grandfather of the Rainbow Nation, Mandela is best remembered for successfully leading South Africa’s transition from apartheid to a multiracial democracy.

Mandela is the only person honoured by the United Nations with his own international day: Nelson Mandela Day on 18 July each year. On this day people around the world honour Mandela’s contributions and humanitarian work by following the example he set. He donated half of his presidential salary and part of his Nobel prize money to help street children. And he established the Nelson Mandela Children’s Fund which continues his legacy by focussing on education, HIV/AIDS and ‘peace and reconciliation’.

Nelson Mandela’s life and words of wisdom provide inspiration that can help you lead your business to greater success.

1. “Everyone can rise above their circumstances and achieve success if they are dedicated to and passionate about what they do.”Passion and dedication are crucial to successful business: passion drives innovation and creativity, and dedication keeps you going when things get tough.
2. “Vision without action is just a dream, action without vision just passes the time, vision with action can change the world.”As an entrepreneur or business owner, vision is vital. But it doesn’t count for anything if you and your team don’t take action to make it a reality.
3. “The mark of great leaders is the ability to understand the context in which they are operating and act accordingly.”
   Today’s business context is more complex, multifaceted, and fast-changing than ever before, requiring agility in both decision making and execution.
4. “After climbing a great hill, one only finds that there are many more hills to climb.”Entrepreneurship and business ownership inherently entail challenge after challenge, day after day, year after year. Expect and embrace challenges, focussing on finding the opportunities they hold.
5. “The brave man is not he who does not feel afraid, but he who conquers that fear.”

   We all face many kinds of fears all the time: fear of failure, disappointment, the unknown, even of success. What sets entrepreneurs and business owners apart is that they don’t allow fear to stop them – they are brave enough to try, to step out, to take the risk … despite the fear.

6. “Education is the most powerful weapon which you can use to change the world.”Continuously educate yourself to better manage and grow your business. Also educate and upskill your employees on an ongoing basis: offer mentorships, internships, learnerships and apprenticeships; facilitate capacity building for Non-Governmental Organisations (NGOs); and sponsor schools or scholarships in the community or in your industry.
7. “Overcoming poverty is not a task of charity, it is an act of justice.”
   
   Even small businesses can make a meaningful contribution, and it makes sense to start in your immediate community. Make an authentic, long-term contribution that will have a lasting impact, by focusing your company’s contribution around your product, service or expertise, and aligning it with your vision.

Hopefully you can apply some of Mandela’s wisdom in your own business. And don’t forget to give 67 minutes of your time on 18 July.