Johannesburg: July 2021 newsletter

JULY 2021 NEWSLETTER
Home office claims whilst working from home during Covid lockdown

If you are an employee who works from home and has set aside a room to be occupied for the purpose of “trade”, e.g. employment, you may be allowed to deduct certain home office expenses for tax purposes.

However, there are requirements that need to be met in order to qualify for the deduction, which are as follows:

• The home office should be equipped for and regularly and exclusively used by the employee to work for the employer from whom they earn remuneration;
• At least 50% of their remuneration is variable income, such as commission or discretionary bonuses, etc. Also at least 50% of the employees’ working hours are spent away from the office provided by the employer (ie at the home office). If the employees’ remuneration is not less than the 50% of variable income as mentioned, they can still claim home office expenses if they spend more than 50% of working hours working from their home office.With lockdown period where many employees continued to work from home, and the post lockdown period, where employers are still requiring employees to work partially from home (in an effort to minimise potential Covid exposure in the workplace), this could mean that salaried employees might possibly spend an aggregate of more than 50% of their working time in the 2021 tax year at home.If such employees would seek to claim home office expenses in their 2021 tax returns, it is important that they retain invoices pertaining to expenses incurred (eg internet connectivity, cellphone expenses, stationery and computer and printing equipment). It is also important that they keep a spreadsheet record of the days spent working from home to substantiate their deduction claim.In the event of the employee not working at least 50% of their time in the tax year from home, and thus not being able to claim a deduction in their 2021 tax return, such employees may consult with their employers to seek reimbursement of the costs so incurred by them in working from home.The following is a guide to developing a good business plan Core elements of a business plan

• Execute Summary: Describe your business and what you are doing. A good executive summary will include the market problem and your intended solution(first impressions count)
• Industry and Competition: Define your niche. Know your industry and on what terms it operates, like pricing and demand, identify your competition and how you distinguish from them.
• Execution: How will you sell your product or service? Which methods will you utilize to market your product or service that will bring the best return on your investment?
• Organization: Determine the responsibilities for each member in your team. If you are just starting out, tell your story of what brought you to this point(Lenders are interested in the people behind the business as much as in the business itself)
• Financial Status: Sum up the profits and loss of your business until now, and create a projection of funds you need to continue operating, include all the financial details of your company
• Appendix: Collect reference documents, legal agreements statements, charts, collateral and other resources that supports your business plan.2021 INCOME TAX RETURN2021 Individual tax season opened up on 01 July 2021To enable us to complete your above income tax return for the year ended 28 February 2021, could you please send us the following, where applicable, as soon as possible:

• IRP5/IT3(a) Certificates.
• Certificates of interest earned, both local and foreign.
• Please ensure that all details of interest on investments are obtained and provided to us. Failure to dothis could potentially result in penalties being imposed for non-declaration of income.
• Certificates for retirement annuity fund contributions paid.
• Certificates of medical aid contributions paid and a schedule of expenses not covered by medical aidscheme, as well as copies of these invoices and proof of payment thereof.
• Details of dividends received, both local and foreign.
• Rental income and any other income, both local and foreign. Please also include details of expenditureincurred in the production of rental income. Please include a certificate of bond interest paid, levy statements and rates and taxes if claiming this expenditure. SARS will not allow this expenditure without these documents.
• If you received a travel allowance or a company car or claim travel expenses against business income, details pertaining to your motor vehicle ( a comprehensive log book of all business and private mileage, vehicle purchase date, purchase price, registration number, odometer reading at the beginning and end of the tax year, and purpose of all business trips).
• Details of any investments made or redeemed.
• Details of any fixed property purchased or sold.
• Any other information pertaining to your tax return.
• Should you receive business income, SARS will require a statement of assets and liabilities. We willrequest this from you if needed.We would also like to point out that the Tax Administration Act that came into effect on 1 October 2012 has fixed penalties for non-disclosure of taxable income. It is therefore essential that we are given all information pertaining to your tax return please. The Tax Administration Act also provides for penalties for late submission of tax returns, hence our appeal to you to please supply your tax documentation timeously.

Having a solid, written business plan is vital if you are seeking funding for your business

complete your tax return as soon as possible to email address tax@iapa.co.za. It would be appreciated if you could gather all the above documentation and send it in one batch, if possible.

Quotes

• “The road to success and the road to failure are almost exactly the same” Colin R Davis
• “Opportunities don`t happen. You create them.” Chris Grosser
• “I find that the harder I work, the more luck I seem to have.” Thomas Jefferson
• "There are two types of people who will tell you that you cannot make a difference in this world; thosewho are afraid to try and those who are afraid you will succeed.” Ray Goforth
• “Successful people do what unsuccessful people are not willing to do. Don`t wish it were easier; wish youwere better.” Jim Rohn
• “Stop chasing the money and start chasing the passion.” Tont Hsieh
• “Success is walking from failure to failure with no loss of enthusiasm.” Winston Churchill.
• “I owe my success to having listened respectfully to the very best advice, and then going away and doingthe exact opposite.” G K Chesterton

Services we provide

We would appreciate it if you can forward the above, as well as any other relevant documentation required to

Phone: 011-887-8593 or 082-821-3449 | Email: david@iapa.co.za | Visit our website

link: www.iapa.co.za

Important Note

The information contained in this Newsletter is of a certain nature, and may in certain circumstances be subject to misinterpretation. Consequently, we recommend that our advice be sought when acting upon the information contained herein.

While every care has been taken in the compilation of this Newsletter, no responsibility of any nature whatsoever shall be accepted for any inaccuracies, errors or omissions.