Best Practice: SARS VAT and Payroll Audit 2021

Overview

In the 2021/2022 Budget Speech delivered on 24 February 2021, the Minister of Finance, Tito Mboweni, stated: “We owe a lot of people a lot of money. We must shore up our fiscal position in order to pay back the massive obligations we have incurred over the years.”

The taxpayer should not underestimate the resolve of SARS to collect taxes, penalties, and interest wherever possible. The dispute resolution process (even though technically sound) favours SARS from a cash flow and a timing perspective and many taxpayers can simply not afford the cost of disputes and the time to resolve tax uncertain positions.

This workshop-webinar focuses on an anticipatory and precautionary approach to avoid costly disputes with SARS. By adopting the principles discussed in this workshop-webinar, an investment is made into tax certainty where disputes with SARS are avoided. Where tax uncertain positions are progressed through the legal system, the chances of success will be improved exponentially if the principles discussed in this webinar are adopted.

Workshop-webinar content

Dealing with SARS PAYE audit
South Africa’s budgeted gross tax revenue for the 2021/2022 fiscal year is R1.5 trillion of which personal income tax makes up 38%. Most of the personal income tax is collected through the PAYE system making this the single most important tax collection mechanism for SARS. Despite the importance of PAYE, the risks associated with non-compliance is often underestimated.

Employers are often unable to recover non-deducted PAYE from employees in which case the PAYE liability must be grossed up with the underlying taxes paid on behalf of the employee (which is a fringe benefit in itself). Assuming a 45% marginal rate, the tax liability on a fringe benefit where the PAYE is not recovered from the employee will be 81.81%. (In order to provide an after-tax benefit to an employee of R1 000, the total pre-tax amount must be R1 818.18 on which 45% tax is R818.18 [81.81%]).

In this workshop-webinar we will discuss each element of the PAYE lifecycle which starts with a tax friendly employment letter and Employee Benefit Form that provides tax certainty on all elements of remuneration. The PAYE lifecycle ends with the dispute resolution process, which risk should be minimised if appropriate attention is given to all elements of the PAYE lifecycle. We will discuss how to avoid understatement penalties by adopting a robust system of tax management.

In addition, we will discuss practical case studies of disputes with SARS, highlighting PAYE risks, including, but not limited to the following:

• Salary sacrifice principles and cost to company principles.
• Setting of travel allowances, including the reimbursement of fuel, maintenance, e-Toll, and business-related km.
• Bursaries and study loans.
• Relocation allowances.
• Section 8C gains and losses.
• Section 7C variable remuneration.
• Home study costs, wi-fi, cell phones and computers.
• Gifts, awards, and incentive trips.
• IT 14SD reconciliations.
• The employee spending significant time away from home (e.g., construction workers and expatriates).

Dealing with SARS VAT audit
VAT revenue is estimated to be 25% of the Gross National Tax Revenue for the 2021/22 fiscal year making it 56% more important than Corporate Income Tax that constitutes 16% of Gross National Tax Revenue. From a vendor’s perspective, VAT is arguably the single most important tax to manage in an organisation since errors can occur on output tax and input tax and affects each element of the business process. It is a transactional tax with limited exclusions.

In this workshop we will discuss each element of the VAT lifecycle which starts with a VAT friendly ERP system and ends with the dispute resolution process. We will discuss how to avoid understatement penalties by adopting a robust system of tax management.

In addition to the VAT 201 preparation lifecycle, we will discuss VAT risk management policies and procedures regarding the following processes:

• Corporate structure, loan funding, capital funding, reorganisations.
• Fixed asset management.
• Purchases and stock management.
• Sales and debtor management, including bad debts.
• VAT and payroll management.
• Shared services centres and recovery of costs.

We will also discuss practical case studies of disputes with SARS highlighting VAT risks including but not limited to the following:

• IT 14SD.
• Apportionment rules.
• Deemed supplies.
• Documentary requirements on exports.
• Entertainment.
• Cost recoveries.

Who should attend?

Tax practitioners, tax accountants, tax managers and tax executives.

Presenter

Johan Heydenrych CA(SA)

Johan has specialised in taxation since 1991. He was a tax partner in KPMG from 1997 to 2020 and is currently a partner in the Kreston SA network specialising in taxation. He provides a wide range of tax services to various clients across industries. These include, but are not limited to, the following:

• Advice on tax risk management and tax governance.
• Tax compliance services including but not limited to ITR14 and IT14SD.
• Dealing with tax disputes including representing clients at alternative dispute resolution (ADR) hearings.
• Submission of documentation and revised returns under the voluntary disclosure programme.
• Issuing of tax technical opinions on income tax, value-added tax (VAT) and PAYE. This includes preparing briefs to senior counsel and submissions of requests for binding opinions from SARS.
• Audit support services including normal tax and deferred tax disclosure and disclosure of uncertain tax positions.
• Assistance with implementation of tax reporting for new accounting standards such as IFRIC 23, IFRS 9, IFRS 15 and IFRS 16.
• Facilitation of tax diagnostic sessions with existing and prospective clients.
• Advice on mergers, acquisitions and reorganizations.
• Tax due diligences
• Advice on tax implications of recapitalization transactions, debt restructures, liquidations and de-registrations.

Johan has been a regular presenter for The Tax Faculty over the past five years. In 2020, he presented webinars on tax risk management, Covid-19 relief, ITR14 preparation, dispute resolution, value-added tax and tax and business rescue. He also prepared several practical case studies for the Professional Certificate in Tax Opinion and Dispute Writing course presented by the Tax Faculty.

Education and qualifications

• BCom (Accounting), Cum Laude.
• BCom (Accounting Hons), Cum Laude (Award: Best student in Audit 700).
• Certificate in the Theory of Accounting.
• MCom (Taxation), Cum Laude, (Award: Best MCom [Tax] student).
• Chartered Accountant (specialising in taxation).
• Member of SAICA.
• Registered tax practitioner.

CPD

This event and successful completion of the online assessment will secure 4 hours verifiable output Tax CPD points.

Event Investment

CPD Subscribers: 100% discount for all 2021 CPD subscribers. Not a CPD subscriber yet? Click here to register now.

Other member: R575.00

Company price (5 attendees maximum): R950.00

Payments and cancellations

• All payments must be made by EFT or by credit card, at least 3 working days before commencement of an event.
• Kindly note that should payment not be received 2 days after the event, legal action will be taken
• Proof of payment will be requested at registration, if payment does not reflect on Taxfaculty`s bank account.
• Only written notice of cancellation will be recognized.
• Conditions:
  • If the cancellation occurs more than 4 working days prior to the event no cancellation fee will be charged.
  • If the cancellation occurs less than 4 working days prior to the event a 100% cancellation fee will apply.
• Delegates who book and fail to attend will be liable for the full event fee.
• Taxfaculty`s liability in the case of an event being cancelled will be limited to a refund or credit of the event fee.
• Please click here for the full terms and conditions.