Death and tax are two things that are hard to avoid. While death has no particular timing, taxes have. Every year, there are a few months when a business/individual has to submit tax. The tax season of 2020 is just around the corner and this season is no different.
There are some changes and modifications. The pandemic is responsible for a few. South African Revenue Service or SARS has bought relief at certain areas while others are still stringent enough to give sweaty palms to any business owner.
In the 2020 tax season, SARS is imposing a 10% punishment on taxpayers. What it is, how one can avoid it, and how useful a professional billing and invoicing software for enterprise is are some questions that we are trying to decode in this post. So, scroll down and know more about it.
Tax Season during the Pandemic
The whole world is the nippers of a deadly pandemic this year. While some regions have witnessed relief, some are still badly impacted. The world was under strict lockdown for a considerable amount of time.
Considering this, the National Treasury released the revised tax bill offering a legislative framework on 1st May 2020. Out of all the changes, our point of interest for today is the penalty relief.
As per the revised draft bill, any taxpayer, who is short of capital to pay off the provisional tax amount in and timely submits its provisional tax return, fails to pay the due tax amount is liable to pay the 10% penalty.
This penalty is percentage-based and is imposed due to the late payment of provisional tax. SARS has a regulating authority to monitor this tax penalty and holds the right to make changes as per the circumstances.
SARS can wave-off this penalty if the taxpayer is bound by any:
- A natural or human-made disaster
- Civil disturbance
- Service disturbance
- Serious financial hardship
- Any other analogous seriousness
Not every business can afford this penalty. 10% penalty can be a huge sum for some business owners.
Here are some tips that can help avoid this penalty in the best possible manner:
Never underestimate this penalty – Here is why
If you’re thinking that SARS will be lenient on this penalty then you’re wrong. Most businesses consider that this penalty is not very much stringent. But the reality is different. SARS is very much serious about this penalty. Even a one day delay will be taken into consideration.
There are business owners that devalue revenue and profit calculation and do nothing to alleviate the tax pressure on-time. And once the pressure is too much to handle, they find ways to maintain a safe distance from it. This is why such businesses become an easy target for this penalty.
So, it’s important that you take this penalty seriously and find ways to always keep it at bay.
Use a feature-rich billing and invoicing software for enterprises
Taxation is a tedious job and we all know that. It takes a lot to keep tabs on tax-related activities. But, SARS will take it as an excuse. So, you must keep tabs on every tax-related activity and never miss out on any payment.
A feature-rich and AI-empowered billing and invoicing software for enterprises will help you in this. Its time tracking and auto-billing features help a business to do effective invoice management. Every transaction detail will be auto-updated and the tax amount will be auto-calculated.
It keeps the track of tax payment due dates and updates you before the date approaches.
You can even set reminders and notifications on free timesheet and invoicing software to ensure that there are on-time reminders.
With all these features and facilities, the odds of missing out on any tax payment are very less. There will be timely tax payments always and you can easily keep the 10% penalty at bay.
Apart from this penalty, your business can be penalized for wrong invoicing.
Well, this is something that no business would ever want to face. This is where free invoice and time tracking software comes into the picture.
The powerful AI and machine learning of billing and invoicing software for enterprises help a business to keep invoicing accurate in the least possible efforts.
Always support accurate calculations
Once you calculate your income and profits, SARS might ask you to clarify the estimates. This is needed to find out whether or not the amount is justified. If SARS is not satisfied with the estimate, it can increase it. Hence, make sure that you are doing the right and accurate estimates using the free invoice and time tracking software. With the least possible efforts, this tool will help you generate accurate estimates and calculations.
Conduct an audit before the deadline of SARS tax payment approaches
This penalty is applicable if a business fails to understand that it is short of capital and still fills for tax return. This situation will not occur if a business is checking whether or not it is short of capital.
To make this happen, we would suggest you carry out a quick and internal financial audit before the tax season comes. Doing so will help a business to find out how much amount is taxable and how much is not.
The ideal finance and invoice management practice is to carry audits after three months. This practice is beneficial to remain vigilant about your tax implications and pay what you are liable for before time.
The penalty of any kind hurts. SARS has imposed a straightaway 10% penalty for late payment. Why bear it when you can avoid it? Just stay informed and vigilant.
It is wise to stay informed about your transaction history and cash flow to find out the total revenue and taxable amount. With these tips, you can easily keep that extra 10% penalty at bay. Also, make sure to use good billing and invoicing software and track every due tax payment and avoid any delay.