Pay AS You Earn (PAYE)

Pay As You Earn (PAYE) is employees tax that all income earners are by law supposed to pay. The South African Revenue Service (SARS) has a threshold income for PAYE which is reviewed every tax year.

According to law, an employer must register with the SARS within 21 business days after becoming an employer, unless none of the employees is liable for the normal tax. An employer who has registered for PAYE should also register for Skills Development Levy (SDL) unless they are exempt from registering for SDL (visit the SARS website for more information). An employer can also register for Unemployment Insurance Fund (UIF) (visit the SARS website for more information). Once the employer registers for PAYE he has to ensure that every month all tax due to SARS is deducted from the employees’ income and paid over to SARS before the deadline. This employee tax is calculated in accordance with tax tables that are prepared and reviewed by SARS every tax year. Calculations can be done manually if the employer does not have a payroll system in place or they can be done using software that has building table and all the employer has to do is capture the salary information for an individual and the payroll system will automatically calculate the PAYE to be deducted from the individual’s income.

Once all the calculations have been done for all employees and the total amounts have been gathered, and EMP201 is generated from SARS efiling, completed and submitted to SARS. Payment will have to be made to SARS before the due date as well.

Six months into the tax year a reconciliation is done and submitted to SARS. At the end of the tax year an annual reconciliation (EMP501) will have to be done (more info on the SARS website).

By |2018-05-03T13:54:05+02:00May 3rd, 2018|General|0 Comments

Part2: Bitcoin- the tax effect

We continue our discussion concerning the digital financial revolution headlined by emergence of Bitcoin as a medium of exchange. Today we look at the tax implications of trading with and in Bitcoin, and buying or selling cryptocurrencies.

On 6 April SARS issued a media release elaborating on its stance on Bitcoin and other cryptocurrencies and the tax effect. In the statement SARS reiterated that they will ‘’continue to apply the existing income tax rules to cryptocurrencies’’ and they expect taxpayers to declare cryptocurrency gains and losses as part of taxable income. Like with any other income, the responsibility lies with the tax payer to declare their income; the consequence of non-compliance is penalties and interest.

SARS felt it is not necessary to introduce new guidelines regarding cryptocurrencies and the consequent tax effect as current legislation can be used to enforce tax compliance. The South African Income Tax Act does not define what ‘’currency’’ is. Although cryptocurrencies like bitcoin are forms of digital currency and can be used as currency or a medium of exchange; they are not legal tender in South Africa. Thus SARS says it does not regard them as a currency for income tax purposes or Capital Gains Tax. Instead SARS considers cryptocurrencies as intangible assets, the same way shares, unit trusts etc. are regarded under the Income Tax Act. You own the asset, and have proof of ownership but it cannot be physically encountered by our natural senses.

So what happens when you produce and or sale goods in exchange for Bitcoin? Well the Income Tax definition of gross income is cash or otherwise, received by or accrued during the period of assessment; excluding amounts of a capital nature. Thus if you do use Bitcoin as a medium exchange in your trade, you will be required to declare this income; as income can take any form. For instance, living in a company house, or getting a car as a service award are all instances of receiving income payable under Income Tax regulations; thus surely Bitcoin is no different. Thus it is a matter of ascertaining market value of these receipts in local currency at for income tax reporting purposes. This also means that taxpayers can claim expenses associated with Bitcoin accruals or receipts as long as this expenditure is in the production of taxpayer’s income or for the purposes of trade. This means that if you also spent Bitcoin in production of Bitcoin income, you can also claim these expenses on your tax return.

There are instances where cryptocurrencies can be taxed under Capital Gains Tax, it is a matter of determining; using current legislation whether an accrual or receipt is revenue or capital. An example is if you gain bitcoin through mining or exchanging normal currencies for these; with the intention of holding the currency in anticipation of an appreciation of value. This results in a capital gain or loss if when you sell the Bitcoin, you gain more currency or less than when you initially bought the cryptocurrencies. This obviously works the same way as other assets like shares or unit trusts. On the other hand if you are a Bitcoin trader, then Bitcoin becomes your stock and income earned is of a revenue nature.

By |2018-04-26T13:34:30+02:00April 26th, 2018|General|0 Comments

Bitcoin

Part1: A financial revolution?

The rise of the bitcoin has been phenomenal, with one Bitcoin now worth over US$ 11,500 or R220, 000. Bitcoin was first introduced in 2009, but was first valued in 2010. A bitcoin user decided to use 10,000 units of these to buy two pizzas. These units are today worth over US$100 million. This must have been the most expensive pizza!

Bitcoin is a cryptocurrency. Cryptocurrencies are digital assets designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets. Cryptography is synonymous with encryption; which is the conversion of information from a readable state to apparent nonsense. The sender and intended recipient share the decoding technique needed to recover the information sent, thereby ensuring that unwanted persons cannot decode the information. Cryptocurrencies use decentralised control as opposed to centralised electronic money and central banking systems.

2011 saw the introduction of more alternative cryptocurrencies known as altcoins (alternative coins) which aim to improve on the usability of the bitcoin. In 2014, the largest Bitcoin exchange Mt. Gox went offline, and 850,000 bitcoins disappeared and the owners lost out. At the time, these bitcoins were worth US$450 million and would be worth US$4,4billion today. These are the pitfalls of a currency designed to ensure anonymity and without central control. By last year, a Bitcoin was worth US$10,000; due to the increase in trade and places where the currency is accepted as a unit of exchange.

Regardless of its phenomenal success, Bitcoin is not universally accepted as currency or legal tender. This is because governments, central banks and business have no control over the supply of bitcoins. Traditional financial authorities have not backed it up as legal tender. The way bitcoin is traded has made it difficult for central banks and tax authorities all over the world to trace the trade and hold traders accountable for their gains or short-comings. Governments cannot cease Bitcoins as proceeds from illegal trade or as a forfeiture of assets for non-compliance with particular laws. What then are the tax implications of bitcoin trading? We will discuss this in the next article.

By |2018-04-11T10:49:45+02:00April 12th, 2018|General|0 Comments

Action Model 4 Fear

This video speaks about fear. Fear is a feeling induced by perceived danger or threat that occurs in certain types of organisms, which causes a change in metabolic and organ functions and ultimately a change in behaviour, such as fleeing, hiding, or freezing from perceived traumatic events.

The different kind of fears that we have learnt and adopted are fear of height, the dark,  snakes, spiders, etc. What are you afraid of?

 

F

By |2017-12-15T12:08:03+02:00December 20th, 2017|General, Uncategorized|0 Comments

Action Model 3 Frustration

Frustration is the feeling of being upset or annoyed as a result of being unable to change or achieve something. We all have levels of frustration in our lives; depending on external stimuli. The external stimuli may be as a result of health issues, eating habits, loud music or any other unwanted noise e.t.c. It is very interesting to monitor someone’s frustration and you can do an energy diary and a frustration diary. If you are someone who finds yourself constantly frustrated; instead of trying to address the frustration, you need to address the causes. To do this you will need to figure out the source of your frustration.

 

By |2017-12-13T13:55:27+02:00December 13th, 2017|General|0 Comments

An introduction to Patents

This article comes from the website of VonSiedels with their permission

What is a patent?
A patent is a limited monopoly granted by the state to an inventor, or other person entitled to the invention, in exchange for a full disclosure of the invention to the public. This monopoly entitles the patent holder to prevent others from using the invention in any practical manner for the duration of the patent so that only the patent holder enjoys any profit or advantage that the invention affords for the period. After expiry of the period members of the public is free to use the invention.
Is my invention patentable?
To be patentable in South Africa an invention must be new, inventive and useful.
“New” means that the invention has not been made available to the public anywhere in the world – by word of mouth, by use, in any printed publication, or in any other way – before a first application is made for a patent. It is difficult to establish whether an invention is, in fact, new, but novelty may be assessed by carrying out searches through existing printed publications that include previously published patent specifications.
“Inventive” means that the invention must not be obvious to a person of ordinary skill in the art to which the invention relates. Put differently, the invention must not be so similar to what was available or used previously that it required little or no ingenuity to make the invention; that is to say, it must involve an inventive step. For example, it would be obvious to make an article that was previously made exclusively of metal in a plastic material, if there were no special and unforeseeable advantages to making it in plastic.
“Useful” means the invention must be capable of being applied in trade, industry or agriculture.
In addition to the above three requirements, there are certain “inventions” which cannot be patented in South Africa. The most important of these are pure business methods and computer programs. This prohibition, however, does not extend to inventions that merely make use of business methods or computer programs, while not constituting business methods or computer programs as such. We urge you to contact us if you are uncertain as to whether an invention constitutes a pure business method or computer program.
Lastly, a method of treatment of the human or animal body by surgery, therapy or diagnosis is not patentable in South Africa.
How long does a patent last?
A South African patent lasts 20 years from the date of application, subject to the payment of annual renewal fees as from the third anniversary of the filing date.
How easily can someone else get around my patent?
The scope of protection afforded by a patent is defined by the patent claims. A well-drafted set of patent claims will prevent others from being able to reverse-engineer the invention by including or excluding inessential features while still using the basic idea of the invention. This is why the use of patent attorneys who are experienced in the drafting of patent specifications is so important.
What can I do with a patent?
A patent is property and may be sold (by way of assignment) or licensed for use by others. Alternatively, a patent can be used defensively to prevent others from exploiting the invention, provided the patent holder exercises with the invention to an adequate extent.
How do I apply for a patent?
A patent application is made by filing a patent specification, together with the necessary forms and government fees, at the Patent Office in Pretoria. The patent specification, which includes a description of the invention as well as any drawings which may be necessary for a clear understanding of the description, may be either a provisional or complete patent specification.
If the invention is not yet in its final form it is preferable to file a provisional patent application first, and then a complete patent application within 12 months, because improvements made to the invention can be incorporated into the complete patent specification. A complete application may be in the first instance if sufficient information about the invention and its implementation are available.
If given a description of the invention, we will prepare the patent specification and the necessary forms and file a patent application on your behalf. All the administrative functions will be carried out by our offices.
How do I get patents in other countries?
A patent application must be filed in each country in which protection is sought. However, in respect of most countries in the world, corresponding foreign patent applications can be filed within 12 months from the first patent application in terms of the Paris Convention.
The Patent Cooperation Treaty (PCT) provides a mechanism to delay the filing of individual foreign applications by a further 18 months and also provides a facility for tailoring a patent specification according to the results of an international search and examination. Should you require patent protection in more than 2 or 3 foreign countries, we usually recommend filing a PCT patent application, unless it is essential that granted patents be obtained in the foreign countries as soon as possible.
A PCT application must be filed within 12 months from the date of first filing a patent application, regardless of whether the first patent application is a provisional or complete South African patent application.
What are the costs involved?
The cost involved in preparing and filing a provisional or complete patent application will vary from case to case and will depend on the length of the patent specification and that will, in turn, depend on the technology and the type of invention.

By |2017-11-15T15:36:41+02:00November 15th, 2017|General, Legal|0 Comments

Make your Year End lists

As a team or alone make a list of all the things you have not yet gotten to this year. Time to purge that guilt and get it all on paper for all to see. This is great therapy for a team to share the items that were not done. IT is not a guilt trip, but a time of celebration of what was not done because you were too busy doing other things.

Then cross off the items that are now no longer relevant to the business or team. This leaves you with a new list that will feed into next week’s plan.

 

By |2017-11-10T09:10:50+02:00November 10th, 2017|General|0 Comments