Non-Compliant Trust? Penalties are Piling up…

"Trustees are reminded that compliance is mandatory, and non-compliance can result in fines and penalties." (SARS)

SARS has significantly increased its scrutiny of trust administration. What’s more, from the beginning of May 2026, automated administrative penalties apply to all non-compliant trusts – without exception.

Whether a trust is active or dormant, the trustees have a legal obligation to comply with SARS requirements, and the consequences of failing to do so are now immediate and ongoing. 

What does trust compliance entail?

All trusts must:

Who is responsible?

Trustees act as representative taxpayers of a trust in terms of the Income Tax Act and personally bear sole responsibility for ensuring full compliance.

This includes maintaining accurate trust information, ensuring that all legal and tax obligations are met, and initiating deregistration processes for trusts that meet the applicable criteria.

Consequences of non-compliance

From 4 May 2026, SARS will issue a penalty assessment notice for all outstanding trust income tax returns for tax periods from 2024 onwards.

Designed to encourage compliance, these penalties are applied consistently, recurring monthly until non-compliance is corrected. Monthly administrative penalties may range from R250 to R16,000 per outstanding return, depending on the trust’s taxable income for the preceding year and will accumulate until the non-compliance is corrected, up to a maximum of 35 months.

It doesn’t stop there. SARS may in specific circumstances hold trustees personally liable for the trust’s tax debts, and trustees are individually and jointly liable for the trust’s tax compliance.

In addition, non-compliance with SARS obligations may be regarded as a criminal offence and will attract penalties and interest. Trustees who fail to act face penalties, interest, and potential criminal charges.

What if my trust is no longer in use? 

SARS requires all registered resident trusts, without exception (and certain qualifying non-resident trusts), to meet the range of ongoing obligations.

A trust’s tax compliance obligations only come to an end once it has been formally deregistered with SARS. Until this process is finalised, the trust remains active for tax purposes and is exposed to penalties for continued non-compliance.

Where a trust is no longer being used for its intended purpose, trustees are encouraged to formally terminate the trust. The first step is to regularise the trust’s tax affairs by submitting all outstanding returns, settling all tax liabilities, and updating all trust information.

Thereafter the trust can be formally terminated through the Office of the Master of the High Court. Once the Master has issued written confirmation of termination, trustees can ask SARS to deregister the trust for income tax purposes.

Count on our expertise

If you have a trust, active or not, and are uncertain about its compliance status, contact us for expert advice and professional assistance.

Disclaimer: The information provided herein should not be used or relied on 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 us for specific and detailed advice.

© AccountingDotNews

Selling Your Business to Retire? Get This Tax Relief!

“A small business is an amazing way to serve and leave an impact on the world you live in.” (Nicole Snow)

Small business owners looking to sell their business or interest in a business as part of their retirement planning will be glad to know that meaningful tax relief has been provided for them in the 2026 National Budget.

Among other measures to support businesses, National Treasury raised the capital gains tax exemption for the sale of a small business for older persons (55+) from R1.8 million to R2.7 million, a long-overdue adjustment for inflation and rising asset values.

The higher exemption also applies to more businesses than it did before. Where small businesses used to be defined as those valued at R10 million or less, the limit has been increased to R15 million.

Do I qualify?

First check if you meet the bare minimum requirements:

Given the complexity of this determination and SARS’ requirement that relief must be determined on an asset-by-asset basis, professional tax assistance is highly recommended.

How could it benefit you?

Many small business owners rely on the eventual sale of their business as their primary retirement asset.

This tax relief can support succession planning, intergenerational transfers, and smart business exits, particularly for family-owned businesses. It encourages the sale of businesses, effectively unlocking capital and allowing for business continuity or reinvestment into the economy. 

Of course, the additional tax-free capital gain will also meaningfully boost your retirement security after years of building a business.

If you're considering retiring or selling soon, it's worth reviewing your timing with a tax advisor. We can assist you in reviewing your business valuation, assessing your CGT exposure and structure and timing your exit correctly to make the most of this meaningful tax exemption.

Disclaimer: The information provided herein should not be used or relied on 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 us for specific and detailed advice.

© AccountingDotNews

Annual Employer Tax Recon Due End May  

"Only accountants can save the world — through peace, goodwill, and reconciliations." (Unknown)

Employers are legally required to submit their EMP501 reconciliation with accurate and up-to-date payroll and tax information (including valid Income Tax Reference Numbers) for their employees during the Employer Annual Declaration season that runs from 1 April to end May 2026.

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

The submission must further balance across the three elements: monthly EMP201 returns for the period, the payments made to SARS, and the employees’ IRP5/IT3(a)s generated. As such, it provides an important opportunity to correct any errors that may have occurred during the year.

Preparing and submitting a correct and complete declaration on time can be technically challenging, especially for larger employers. But you neglect it at your peril, as it is a focus area for SARS and the consequences of non-compliance are many.

SARS focus area

The Annual Employer Reconciliation Declarations is a focus area for SARS, as it not only ensures employer compliance, but also enables SARS to issue individual taxpayers with pre-populated Income Tax Returns (ITR12) and income tax auto-assessments.

For this reason, employers can expect ongoing and increased scrutiny from SARS in this regard.

Technical challenges

Submitting a declaration that is correct, complete and on time (before end May) has always been technically challenging. But it just got even harder, as SARS has now upgraded missing or incorrect mandatory Income Tax Reference Numbers from a warning-level defect into a hard-stop submission defect when completing a declaration.

This means that employee details must be verified before submission and employees without tax numbers must be registered with SARS before the company EMP501 can be submitted. Missing or invalid employee tax numbers result in incomplete submissions that will prevent IRP5 certificates from being captured, causing delays and non‑compliance for the company and all employees.

Because so many employers struggle with technical challenges like these, SARS is rolling out technical clinics this year to make compliance easier. Or you could just let us handle it for you.

Consequences of non-compliance

Submitting incorrect or incomplete details, or submitting after the deadline, can result in:

In addition, if the EMP501 submitted is audited by SARS and PAYE liability is amended, the employer is required to re-submit the EMP501 as per the audit result.

Expert assistance is at hand

As the deadline looms, employers can be assured of technical challenges, increased SARS scrutiny, and even more tax-related admin and cost. All very good reasons to rely on our tax expertise and experience to ensure you submit correctly and on time.

Disclaimer: The information provided herein should not be used or relied on 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 us for specific and detailed advice.

© AccountingDotNews

When Growth Is a Tax Problem

"As your profitability grows, your taxes will too. In fact, paying more taxes is an indicator that your business health is improving.” (Mike Michalowicz)

Business owners work hard to grow revenue and increase profit. What often receives less attention is how that growth alters your tax obligations. Higher turnover can trigger VAT registration. Rising profit increases provisional tax exposure. Hiring staff adds payroll compliance risk. Expansion across borders introduces new tax jurisdictions. Even improved margins can create cash flow pressure when tax payments are due before debtors settle their accounts.

Crossing the VAT threshold

In South Africa, once your taxable supplies exceed the compulsory registration threshold (recently increased from R1 million per year to R2.3 million per year), you must register for VAT. Many businesses grow quickly and miss the moment they cross it. This simple mistake can trigger penalties, interest, and backdated VAT.

Cash flow can become a second issue. You collect VAT on sales, but input VAT claims lag if suppliers don’t issue proper invoices. If you price incorrectly, you may end up funding VAT from your own margin. You might even have to pay output VAT on sales before you have received payment from your debtors.

Growth often means higher transaction volume as well. That increases the risk of errors in VAT coding, zero-rated supplies, and mixed-use expenses. It’s easy to see how a small bookkeeping mistake can easily become a material tax exposure.

Of course, there can also be benefits to registering for VAT, not least the potential right to claim input VAT on certain assets that have been purchased before you registered for VAT, and that are now used to make taxable supplies. VAT must however have been charged at the time of purchase. This can provide a nice inflow of cash, if handled correctly. Bottom line: speak to your accountant!

Provisional tax shocks

When profit rises, so does income tax. Owners often draw more cash as profits rise. They forget that tax on those profits has not yet been paid, and by the time the assessment arrives, the money is gone.

Provisional tax can be particularly problematic. Estimates based on last year’s lower profits lead to underpayment penalties when actual results are filed. Rapid growth can produce a large balancing payment in the second provisional period, or at year end.

Payroll expansion and compliance risk

Hiring staff is a sign of progress. It also triggers pay-as-you-earn (PAYE), unemployment insurance fund (UIF), and skills development levy (SDL) obligations. Errors in payroll setup multiply as your headcount increases. If payroll software isn’t configured correctly, you can under-deduct PAYE. Add penalties and interest, and growth in staff numbers can become a financial setback.

Share incentive schemes and other fringe benefits introduce potential tax complications. Without guidance, these benefits can be structured in ways that create unexpected tax costs for both employer and employee.

Operating across borders

Sometimes growth means selling beyond South Africa’s borders. Cross-border trade brings customs duties, foreign VAT, transfer pricing, and double taxation agreements into play.

A small e-commerce business that starts shipping internationally may create a permanent establishment in another jurisdiction without even realising it. That can expose them to foreign corporate tax. Currency gains and losses add volatility. If not monitored carefully, taxable income can rise even when cash flow does not.

Structural strains

The structure that worked at start-up may not suit a larger business. A sole proprietorship with modest turnover may be efficient. The same structure with higher profit can push you into a steeper marginal tax bracket.

When investors buy into new structures, share issues and valuations may raise capital gains tax and income tax questions if roll-over relief is not available. Growth may also expose structural weaknesses. Dividends tax and loans between shareholders and companies can create further tax considerations.

Capital expenditure and allowances

Expanding operations usually requires additional equipment, vehicles, or property. Tax deductions for capital assets now need to be considered. Meanwhile, disposal of older equipment may trigger recoupments or capital gains taxes. A growing business that upgrades assets frequently should definitely model the tax impact of these upgrades before committing.

Cash flow versus profit

Rapid growth often ties cash up in stock and debtors. Profit on paper doesn’t mean cash in the bank. Tax is calculated on taxable income, not on what clients have paid. What this all means is that a business can show strong profit, and owe tax on that profit, but still struggle to pay tax because of cash flow issues. Cash flow forecasting must include tax forecasting.

Audit risk

As turnover grows, so does visibility. Larger payrolls, higher VAT submissions, and bigger provisional payments attract scrutiny. Inaccurate returns that went unnoticed at a small scale can become costly when the numbers are larger.

Internal controls that were informal at start-up stage now need formal processes. Documentation matters. Contracts, invoices, and board resolutions must support your tax position. Without them, assessments become difficult to dispute.

Planning for growth, not reacting to it

Growth doesn’t create tax problems on its own. Lack of planning does.

Review your tax registrations before revenue spikes, update provisional tax estimates during the year, and align owner withdrawals with after-tax profit, not turnover. It’s also important that you reassess your entity structure as profit bands change, and model the tax impact of hiring, investing, or expanding offshore before you act.

Growth is a good problem to have. But it is still a problem if ignored. Engage your accountant early in the growth phase, not after the assessment arrives.

Disclaimer: The information provided herein should not be used or relied on 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 us for specific and detailed advice.

© AccountingDotNews

New VAT Thresholds: Thinking of Deregistering?

“Renette Oosthuizen, small business owner from Gauteng, had this tip: ‘Minister Godongwana, please increase the VAT registration threshold for small businesses to R2 million. The R1 million threshold has not kept pace with the cost of doing business.’” (Budget Speech 2026)

Some of the best news in the 2026 Budget is the proposed increases in the compulsory VAT registration threshold from R1 million to R2.3 million and in the voluntary registration threshold from R50,000 to R120,000, with effect from 1 April 2026.

This will immediately ease the disproportionate administrative burden and compliance cost on small businesses which would have had to register soon. What’s more, VAT registered businesses may apply to deregister for VAT if they no longer exceed the increased compulsory registration threshold on 1 April 2026.

Deregistering for VAT can improve cash flow. But it’s a decision that should not be taken without consulting us, as it can trigger substantial adverse tax consequences that might well convince you not to deregister.

Reduced admin and costs

The compulsory registration threshold had not been adjusted for inflation since 2009. The new R2.3 million threshold, which slightly outstrips inflation, will ease the previously disproportionate compliance burden relative to turnover on smaller businesses. It may also spur unrestrained growth among many small businesses which felt forced to contain themselves to avoid the VAT net and its never-ending impact on admin and cashflow.

Option to deregister

Given the above, many small businesses will be keen to deregister for VAT. The good news is that it is possible for VAT registration to be cancelled – provided certain requirements are met. The first is that all outstanding liabilities and obligations in terms of the VAT Act have been resolved or settled. 

The Commissioner will issue a notice of cancellation of registration which will also inform the vendor of the date on which the cancellation takes effect and the final VAT period.

SARS says output VAT on certain assets on hand at the time must also be declared together with any other output tax and input tax in the VAT return for that final tax period.  In other words, you must declare the amount of output VAT on the value of the business’ assets at the date of deregistration and pay this over to SARS.

There is also a general unpaid-creditor claw-back provision that requires a vendor to reverse previously claimed input VAT by accounting for output VAT on amounts due to creditors but not paid within 12 months of the date they became payable. This rule applies throughout the VAT registration period but is also triggered immediately before a vendor ceases to be registered. 

Commonly referred to as “exit VAT”, this can cause immediate and possibly substantial financial implications that could strain your cashflow. 

Before deregistering

If you are interested in deregistering for VAT, we urge you to speak to us to ensure you fully understand the financial implications and can carefully plan the timing to avoid tax surprises and cash flow problems.

Disclaimer: The information provided herein should not be used or relied on 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 us for specific and detailed advice.

© AccountingDotNews

15% Global Minimum Tax (GMT) Goes Live at SARS

"An agreement that will really change the world." (Olaf Scholz, former German Finance Minister)

In October 2021, a global minimum tax framework for large multinational enterprises (MNEs) was established with the introduction of the GloBE (Global Anti-Base Erosion) model rules by the OECD (Organisation for Economic Cooperation and Development).

These rules address profit shifting by multinational groups to low- or no-tax jurisdictions and ensure a minimum level of tax is paid on income in every jurisdiction in which MNEs operate.

South Africa enacted the GloBE minimum tax legislation in 2024 and 2025, enabling SARS to impose a multinational top-up tax at a rate of 15% on the excess profits of affected MNE Groups. This tax effectively brings the overall taxation of foreign profits up to a minimum agreed level of 15%, where those profits have been subject to little or no tax offshore.

As such, the GMT is expected to generate significant additional tax revenues by curbing tax avoidance, ensuring multinational corporations contribute their fair share of taxes, and extending the country’s tax base.

The GMT is expected to raise an estimated R2 billion in South African tax revenues. The broadened tax base will open opportunities to lower the personal income tax burden on individuals, or to consider more globally competitive corporate tax rates than the current 27%, which is well above the international average.

Which companies are directly affected?

The GloBE Rules apply to MNE Groups whose consolidated annual revenues equal or exceed EUR 750 million in at least two of the tax years immediately preceding the reporting fiscal year.

GMT deadlines

The local legislation governing GMT is deemed to have come into operation on 1 January 2024 and applies to MNEs’ subsequent “fiscal years”. Here are the deadline dates as published by SARS.

Source: SARS

How will the tax be calculated?
Registration and reporting obligations
SARS is ready: Are you?

SARS is actively preparing to administer the GloBE framework, with a dedicated project team, including IT and system engineers, and a specialised unit within its Large Business & International Unit. It aims to promote voluntary compliance and simplify adherence with the GMT legislation.

Even so, a significant compliance burden and increased reporting scrutiny awaits affected companies. They will have to comply with new and technically demanding rules, even if no global minimum tax is ultimately payable. This will likely require specialist expertise, resulting in substantial additional compliance costs.

We invite you to rely on our expertise to navigate this new corporate tax landscape, with its first reporting deadline just around the corner in June 2026.

Disclaimer: The information provided herein should not be used or relied on 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 us for specific and detailed advice.

© AccountingDotNews

Budget 2026: What it Means for You and Your Business

“The 2026 Budget marks an important turning point for South Africa.” (Dr Duncan Pieterse, Director-General, National Treasury)

Some of the best news in Budget 2026 is the real GDP growth of an estimated 1.4% for 2025, rising to 2% in 2028, and a debt ratio that will stabilise during this financial year and decline thereafter.

Inflation also declined to 3.2% in 2025 (from 4.4% in 2024), improving affordability for households and keeping interest rates down. At the same time, growth-enhancing reforms have progressed and confidence in South Africa’s fiscal outlook has improved, enabling a sovereign ratings upgrade and lower borrowing costs.

No income tax or VAT increases

Against this backdrop, government has withdrawn the R20 billion tax increases it had planned for this budget and instead proposes inflationary relief for taxpayers.

This means no increase in VAT and no increase in income tax for individual or corporate taxpayers.

Inflationary relief, finally

After two years with no inflationary relief, personal income tax brackets and medical tax credits are fully adjusted for inflation.

The tax threshold for individuals below age 65 is now R99 000, and medical tax credits will increase from R364 to R376 for the first two members, and from R246 to R254 for additional members.

Bottom line: taxpayers will keep more of their income in real terms than in the previous two years.

In addition, limits, rebates and duties are also inflation-adjusted for contributions to tax-free investments, the retirement funds deduction cap and capital gains tax (CGT) exclusions.

An increase in the annual tax-free savings account contribution limit to R46 000 (from R36 000) and the limit to retirement fund deductions from R350 000 to R430 000, are encouraging South Africans to save more. 

Capital gains tax limits

The Budget also proposes increasing the annual exclusion on capital gains tax from R40 000 to R50 000 for individuals and special trusts, and the annual exclusion for individuals in the year of death from R300 000 to R440 000.

The exclusion that applies on the disposal of a primary residence will increase from R2 million to R3 million. Very good news for anyone planning on selling their home.

Corporate tax

The corporate tax rate remains unchanged at 27%. The global minimum tax rules will be implemented in 2026/27, a move expected to raise around R2 billion (down from an earlier estimate of R8 billion) by reducing profit shifting by multinationals.

More good news for businesses, especially small companies, is the increase in the VAT registration threshold to R2.3 million (previously R1 million), effective from 1 April 2026.

In addition, asset disposals by small businesses of as much as R15 million will be exempt from capital gains tax, a 50% increase on the current limit.

The annual turnover limit for turnover tax is also adjusted for inflation (from R1 million to R2.3 million). In addition, the restriction on tax year end dates will be removed to make the turnover tax regime more attractive.

A proposed review of the urban development zone tax incentive will explore better support for affordable housing developments in urban areas.

Sin taxes & fuel

Alcohol, tobacco, and vaping excise duties already increased in line with inflation (3.4%), effective 25 February.

Under consideration is a national online gambling tax, proposed at 20% on gross revenue, for further consultation during 2026.

The customs and excise levies on fuel remain unchanged but fuel levies have increased, with the general, Road Accident Fund and carbon tax levies up for both petrol and diesel from 1 April.

Other tax proposals

Local investors diversifying offshore will appreciate the increase in the single discretionary allowance (SDA) for individuals from R1 million to R2 million per calendar year.

The Budget also proposes that investment returns generated by regular collective investment schemes (CIS) and retail investment hedge funds be taxed as capital, to encourage savings and to provide the industry with tax certainty.

Managing your taxes in the new tax year

As these tax proposals are implemented, along with other technical amendments contained in the 2026 Budget, taxpayers are likely to require professional tax advice.

We invite you to rely on our expertise and advice to determine the impact of Budget 2026 on your tax affairs.

Disclaimer: The information provided herein should not be used or relied on 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 us for specific and detailed advice.

© AccountingDotNews

Budget 2026: Your Tax Tables and Tax Calculator

Individuals taxpayers

Source: National Treasury

Source: National Treasury

Tax limits adjusted

Source: National Treasury

Sin taxes raised

Source: National Treasury

Fuel Levy hikes

Source: 2026 SARS Budget Guide

How much will you be paying in income, petrol and sin taxes?

Use Fin 24’s four-step Budget Calculator here to find out the monthly and annual impact on your income tax, as well as what you will pay in terms of fuel and sin taxes.

Bear in mind, however, that the best way to fully understand the impact of the proposals in Budget 2026 on your personal and business affairs is to ask us.

Disclaimer: The information provided herein should not be used or relied on 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 us for specific and detailed advice.

© AccountingDotNews

Your Year-End Tax Checklist: Smart Moves Before 28 February

"The avoidance of taxes is the only intellectual pursuit that still carries any reward. (John Maynard Keynes)

1. Boost your retirement savings

Contributing to a Retirement Annuity (RA) before 28 February can reduce your taxable income and grow your long-term wealth. If you haven’t maximised your annual tax deduction for contributions to retirement funds, this is a good moment to review it. Got any questions – ask us.

2. Top up your Tax-Free Savings Account (TFSA)

Each member of your family (even minor children) can have a TFSA and you can contribute up to R36,000 per year to each account. Interest and dividends paid from and capital growth inside a TFSA are completely tax-free, making it one of the most powerful long-term investment tools available.

3. Consider making a section 18A donation

Donations to qualifying Public Benefit Organisations (PBOs) and some other donees that are approved to issue section 18A receipts, are tax-deductible (up to 10% of taxable income). If you’re planning to give, now is a good time to do so.

4. Review your investment gains and losses

If you’ve realised capital gains this year, you may be able to offset them by realising losses on underperforming investments. This is known as “tax‑loss harvesting” and can help reduce your capital gains tax. If you’re unsure if this applies to you, we can definitely assist. There is also a CGT exclusion (up to R2 million in gains) on the sale of your primary residence so the timing of your house sale may have big tax implications (positive or negative).

5. Check your interest income

South Africans enjoy an annual local interest exemption of R23 800 (R34 500 for individuals 65 or older). If your interest income is close to or above the threshold, it may be worth reviewing where your cash is held and whether a more tax-efficient structure makes sense. Our advice here could be crucial.

6. Gather all your Tax Certificates

Make sure you have the necessary documents from your investment platforms, including:

These will make your tax return smoother and help avoid SARS mismatches.

7. Review medical and other allowable expenses

If you’ve had out-of-pocket medical costs or other deductible expenses, gather those records now so they’re ready for your return.

8. Provisional taxpayers: Double‑check your estimate

If you’re a provisional taxpayer, your second payment is due at the end of February. Ensuring your estimate is accurate can help you avoid penalties later.

A stitch in time saves nine

If you’d like help reviewing any of these items or want to explore opportunities specific to your financial plan, we are here to support you.

Disclaimer: The information provided herein should not be used or relied on 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 us for specific and detailed advice.

© AccountingDotNews

February Provisional Tax Deadline: How to Avoid Stiff Underestimation Penalties

“Today, it takes more brains and effort to make out the income tax form than it does to make the income.” (Alfred E. Neuman, Mad Magazine Mascot)

Provisional tax is among the most confusing aspects of the tax regime – and it’s also the most heavily penalised. There are numerous declarations and payments overlapping throughout each year, not to mention a raft of rules and exceptions.

The next provisional tax deadline for the 2026 tax year (coming up on 27 February 2026) is also the trickiest and most important provisional tax deadline of the year. This is because the income estimates declared must be highly accurate. A stiff 20% under-estimation penalty can apply if the declared income estimate doesn’t fall within 80–90% of the actual taxable income.

Our professional assistance is your ticket to avoiding non-compliance and stiff penalties.

Must you pay provisional tax?
What is provisional tax?

Provisional tax is not a type of tax, but rather a way of paying an annual income tax liability in two or three payments during a tax year. This prevents taxpayers from facing one large tax bill at year-end when the annual personal income tax (PIT) return or corporate income tax (CIT) return is filed.

Making provisional tax payments allows you to spread the tax liability across the year. But it also creates additional administrative obligations (calculations, returns), and increases the risk of penalties – particularly under-estimation penalties.

Three provisional tax payments each year

The following rules apply to individuals and to companies / trusts with a year of assessment running from 1 March to 28 February:

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

Further penalties to watch out for
Rely on our expert assistance

The rules of provisional tax are daunting and confusing, yet SARS holds provisional taxpayers responsible for their tax affairs.

SARS recommends that the provisional tax estimate is determined sensibly and by careful reasoning and judgement, in a mathematical manner, and using experience, common sense and all available information.

Our professional assistance is invaluable as you prepare and review your provisional tax and income tax returns prior to submission. We proactively take care of all necessary steps to correctly calculate estimated taxable income and submit timeously – in the process saving you time, money, and hassle.

Disclaimer: The information provided herein should not be used or relied on 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 us for specific and detailed advice.

© AccountingDotNews

NPO? NGO? NPC? PBO? What’s the Difference Anyway?

“A rich man without charity is a rogue; and perhaps it would be no difficult matter to prove that he is also a fool." (Henry Fielding, English writer and judge)

Across the country, tens of thousands of groups run feeding schemes, environmental projects, schools, clinics, and training centres, often built on passion rather than profit.

But while “NGO” is the word most people use, it’s not actually a legal term in South Africa. Entrepreneurs who fund or collaborate with non-profits need to know what each term really means, because it affects compliance, governance, and whether your donation qualifies for a tax deduction.

Alphabet soup: What does it all mean?

NGO (Non-Governmental Organisation)

NGO is a broad, informal term used for any group doing social good outside of government. It could be a community group, a youth initiative, or a local charity. There’s no single registration for an “NGO” in South Africa and literally anyone can use the label. 

NPC (Non-Profit Company)

Some charitable organisations register as NPCs with the Companies and Intellectual Property Commission (CIPC). This suits organisations that want a more formal company structure, complete with directors and a Memorandum of Incorporation.  

NPO (Non-Profit Organisation)

An NPO is a specific legal status created by the Non-Profit Organisations Act. You need to apply to the Department of Social Development (DSD) with your constitution or founding document. Once approved, you get an official NPO number and a certificate that opens doors which funders, corporates and even banks. Non-Profit Companies (see below) can also apply to be NPOs, in which case both sets of rules apply.

PBO (Public Benefit Organisation)

Both NPOs and NPCs must apply to SARS to become PBOs if they want to unlock the tax benefits available to charitable organisations (more info below). 

 
What’s the point of registering?

Many groups, particularly small ones, will run perfectly well without registering. Registering does, however, bring a number of real advantages.

Any entrepreneurs working with or donating to a cause should always ask for proof of registration as an NPO or NPC.

When does “non-profit” mean tax-free?

Here’s where many people get caught out. Just because an organisation is registered as an NPO doesn’t mean they are automatically exempt from tax. To enjoy tax benefits, like exemption from income tax and giving donors section 18A certificates, the organisation must also apply to SARS for Public Benefit Organisation (PBO) status. (Being granted Section 18A status requires a separate approval on top of PBO status.)

That approval comes with conditions: funds must only be used for approved public-benefit activities, and annual returns must be filed. PBO status will always make an organisation more attractive to donors because their contributions can now become tax-deductible and exempt from donations tax.

How do finances and reporting work?

NPOs

Must keep proper accounting records and submit annual reports to the DSD.

Within six months of their year-end, they must prepare a statement of income and expenditure, a balance sheet, and an accounting officer’s report confirming compliance.  

Must have a committee or board. These individuals carry fiduciary responsibility, meaning they are directly accountable for how the funds are used.

NPCs

Follow company law and must lodge annual returns with CIPC.

An NPC that is also registered as an NPO will also have to comply with the requirements for an NPO. 

Must appoint at least three directors. These individuals carry fiduciary responsibility, meaning they are directly accountable for how the funds are used. 

 

While this might sound like a lot of admin, it protects both sides. Donors get transparency, and the organisation builds a track record for future funding.

Three key questions

Anyone partnering with a non-profit should always review its governance set-up before committing resources and be able to answer the following questions:            

  1. Is it registered with DSD or CIPC or both?
  2. Does it have PBO approval from SARS?
  3. Are its financials current and submitted?

If the answer is “yes” to all three, then you are working with an organisation that’s not just doing good – it’s doing good in the right way.

As your accountants, we can ensure that you’re taking advantage of all the tax benefits available to you.

Disclaimer: The information provided herein should not be used or relied on 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 us for specific and detailed advice.

© AccountingDotNews

Outstanding Tax Debt? SARS’ Expedited Debt Compromise Ends 31 December 2025

“The South African Revenue Service is always ready to assist taxpayers to fulfil their legal obligations.” (SARS)

Acknowledging that taxpayers often find it difficult to settle tax debt due to financial challenges, SARS has launched an expedited debt compromise process to help eligible taxpayers settle outstanding tax debts swiftly and on more favourable terms.

The normal debt compromise process remains available to all taxpayers, and learnings from this expedited process will be used to enhance the broader system.

What is a debt compromise?

A compromise is a written agreement between SARS and a taxpayer in which SARS agrees to accept a reduced amount as full and final settlement of a tax debt.

Once the taxpayer pays the agreed amount and complies with the terms, SARS waives the balance of the debt. However, if the taxpayer defaults or fails to remain compliant, SARS can reinstate the full debt.

Expedited debt compromise eligibility criteria
Submission requirements

Taxpayers applying for the expedited tax debt compromise process must provide comprehensive relevant supporting documentation with their applications, which must be submitted by 31 December 2025.

These documents include:

It is important that disclosures are accurate – if they aren’t SARS might not even consider the application.

SARS has committed to resolving qualifying applications within four weeks, using dedicated teams and enhanced workflow management.

Approved compromise settlements may be paid either in full (once-off payment), or in instalments as agreed by SARS.

Act now to avoid escalation

From 1 January 2026, SARS will escalate enforcement against taxpayers who remain non-compliant and have not applied for compromise. Such enforcement may include civil judgments against the taxpayer, writs of execution, collection of money from third parties such as banks, attachment of taxpayer assets, holding directors or members personally liable for the debt, sequestration or liquidation of the taxpayer, or preservation of assets against the debt. To support this intensified enforcement, SARS is engaging 260 legal collectors and 30 legal practitioners.

If you are struggling with long-overdue tax debt, this expedited tax debt compromise process may offer your best chance to finally resolve it – on favourable terms, nogal.

Contact us without delay, as applications close on 31 December 2025 and can only be submitted by registered tax practitioners.

Disclaimer: The information provided herein should not be used or relied on 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 us for specific and detailed advice.

© AccountingDotNews