# Regulatory Compliance Category > Tax Forum >  Anyone who needs TAX / Accounting Advice

## eitai2001

Hi Guys.

If any of you have a query you are unsure of relating to tax / accounting, ask it in here and I will try help you out. It will help me with my studying because I will go and search up (or maybe already know it well) ... and have it stuck into my head afterwords  :Smile: 

For Tax, I don't mean administrative issues ... examples would be if you are unsure about a pension fund contribution, or medical bills, or dividends from a foreign company, or if you have shares in a foreign company and aren't sure if you should declare the companies taxable income here, etc, etc.

For accounting ... perhaps you don't know how you should classify a transaction or a payment or event, operating lease, etc ... something like that

Regards

Itai

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AmithS (27-Mar-12), Citizen X (27-Mar-12), Dave A (29-Mar-10)

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## brown

Hi Itai, 

I need to find out since there's so much confusion around entertainment expenses and VAT. If I go out on a business trip and entertain potential clients, can I claim VAT on that? 

If my technician travel out of town, can I claim VAT on their meals?

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## JustinIT

Hi 

I hope you can help me i am really confused...

I just started a new job but they say i am contracted to them and therefore they don't have to deduct and pay my tax, but i've phoned SARS and they say if i spend more than 80% of my time at one employer, they must pay my tax. But my boss says his accountant says this isn't true.

They not the most helpful people at my work so i just want to know how i can go about paying my tax. Because I haven't been working for a while and received a fine from SARS recently i have to pay because i didn't submit my last 2 years tax returns as i wasn't working i didn't know i had to. and I don't want another problem in the future.

Any help will be much appreciated, 

Thanks in advance
Justin

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## eitai2001

> Hi Itai, 
> 
> I need to find out since there's so much confusion around entertainment expenses and VAT. If I go out on a business trip and entertain potential clients, can I claim VAT on that?


You cannot claim input VAT on the expenses incurred to entertain clients. The act makes no mention about entertainment regarding clients or commission based income as to what you would have in the Income Tax Act, and as such fall under the general denial of Input VAT on Entertainment.

Specifically Input VAT is denied on entertainment as defined (see below for definition) as per Section 17(2)(a), and the situation above does does not fall under the Provisio.




> If my technician travel out of town, can I claim VAT on their meals?


If your technician travels out of town, and stays at his destination for at least 1 night, then Input VAT may be claimed on his meals, accommodation and refreshments, provided that he travelled out of town for work purposes.

Specifically, although Input VAT on entertainment as defined in general is denied as per Section 17(2)(a), there is a provisio regarding the above situation under Section 17(2)(a)(ii) which allows you to deduct the Input VAT.

Regarding the above scenarios, these are the relevant parts out of the VAT act. I have highlighted the important parts in bold to make it easier to read, and if you read just the bold parts in order, it will make easier sense:




> Entertainment means the provision of any* food, beverages, accommodation, entertainment, amusement, recreation or hospitality of any kind* by a vendor whether directly or indirectly *to anyone in connection with an enterprise carried on by him*





> 2) Notwithstanding anything in this Act to the contrary, a vendor, *shall not be entitled to deduct* from the sum of the amounts of output tax and refunds contemplated in section 16(3), *any amount of input tax*-
> 
> a)* in respect of goods or services acquired by such vendor to the extent* that such goods or services are *acquired for the purposes of entertainment*: Provided that *this paragraph shall not apply where*-
> 
> ii) such *goods or services are acquired by the vendor for the consumption or enjoyment by that vendor* (including, where the vendor is a partnership, a member of such partnership)*, an employee*, office holder of such vendor, or a self-employed natural person *in respect of a meal, refreshment or accommodation*, in respect of *any night that such vendor* or member is [B]by reason of the vendor's enterprise or, in the case of such employee, office holder or self-employed natural person, he or she is *by reason of the duties of his or her employment*, office or contractual relationship, *obliged to spend away from his or her usual place of residence and from his or her usual working-place*. For the purposes of this section, the term âself-employed natural personâ shall mean a person to whom an amount is paid or is payable in the course of any trade carried on by him or her independently of the person by whom such amount is paid or payable and of the person to whom the services have been or are to be rendered, as contemplated in the proviso to paragraph (ii) of the exclusions to the definition of âremunerationâ in paragraph 1 of the Fourth Schedule to the Income Tax Act;

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brown (26-Apr-10)

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## eitai2001

> Hi 
> 
> I hope you can help me i am really confused...
> 
> I just started a new job but they say i am contracted to them and therefore they don't have to deduct and pay my tax, but i've phoned SARS and they say if i spend more than 80% of my time at one employer, they must pay my tax. But my boss says his accountant says this isn't true.
> 
> They not the most helpful people at my work so i just want to know how i can go about paying my tax. Because I haven't been working for a while and received a fine from SARS recently i have to pay because i didn't submit my last 2 years tax returns as i wasn't working i didn't know i had to. and I don't want another problem in the future.
> 
> Any help will be much appreciated, 
> ...


I do recall something about that 80% before, but when searching google I found this website: http://www.psiberworks.com/Default.a...D=70&tabid=118

Which had this to say:



> 8.1                Individuals
> 
> Is the individual an independent contractor?  If yes, then no PAYE is deducted.  If no, then deduct PAYE according to the tax table/directive.  There are various tests of independence that can be applied with regard to independent contractors, and the questions to be asked are as follows:
> 
> 8.1.1        Is the payment made to the person for services rendered?  If no, PAYE is not deducted.  If yes, then the test applies as follows:
> 8.1.1.1     Does the person work full time for the client?
> 8.1.1.2     Does the person do this work for other clients?
> 8.1.1.3     Is the person under control of the client, times of work, quality, leave, etc.
> 8.1.1.4     Does the person receive benefits like medical aid, pension fund, etc.
> ...


It appears as these Laws have been amended and it is no longer the responsibility of the employer, my guess is it was done for practicality reasons.

I am not clear on the laws regarding "independant contractors" but what I believe is the way to approach it, is to keep records of all payments received from the company, and to include them in your personal income tax return which is submitted somewhere around October or so.

I am unclear as to why SARS has fined you, because if you earn less than 120k a year you do not need to register to submit a return ... however, saying they fined you makes me believe you went to them and registered to submit and received your Tax number.

I believe this is an issue best suited for a professional tax practitioner, and not just a student as myself.

I can help with calculations and such, but not so much the administrative side as it is not what we learn in honours.

Based on what I can find though, what I said above should be fine ... but I still reckon clarify with a professional Tax Practitioner, or go to a SARS office, and sit down and discuss with the general enquiries guys ... over the phone people are of very limited use.

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JustinIT (23-Apr-10)

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## JustinIT

eitei...

Thanks for your response and i think i will go to a tax practitioner.

Ya just for your info, The reason they fined me was because i had registered and submitted returns before but for those two years i didn't so i suppose they thought i just didn't submit even though i did dispute it.

Anyway, thanks again

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## geraldenek

JustinIT

You should google interpretation note 17 on the sars website - there is a lot of questions to be asked to see if you are indeed an independent contractor.  but if more than 80% of your total *income*  is derived from this one company they should deduct paye.

if they don't want to pay over your paye, the best would be to register for provisional tax if not registered already and declare those amounts on the returns (it's normally twice a year in Aug 2010 and Feb 2011 for the 2011 tax year (1 March 2010 - 28 Feb 2011)

The penalties you received from sars is R250 for each year which was because you did not submit your income tax returns - i did disputes for a few clients and got half off so maybe you are lucky  :Smile:

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JustinIT (24-Apr-10)

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## JustinIT

Geraldenek, 

Thanks for the info.

I am quite interested in what you said about registering as a provisional tax payer, but actually i have no clue what that means or requires. But i will do some research and see what i find.  :-)

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## Dave A

Justin, just go to SARS, say you are self-employed and need to register as a provisional taxpayer. 

There are a couple of extra returns a year to complete when you're a provisional taxpayer, but with SARS eFiling it's all dead easy nowadays.

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## PILATUS

Hi i am a Government employee and would like to find out if there are any i can claim back on my tax.I am building at my house and paying vat on every thing.What can the normal guy on the street claim for SARS?

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## JustinIT

> Justin, just go to SARS, say you are self-employed and need to register as a provisional taxpayer.


Ok thanks, it sounds like a plan.

Do you know if you have to pay more this way or anything

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## brown

> Hi i am a Government employee and would like to find out if there are any i can claim back on my tax.I am building at my house and paying vat on every thing.What can the normal guy on the street claim for SARS?


Hi Pilatus, unfortunately for you, as an employee you cannot claim anything on VAT. 

You must be in a trade and registered for VAT to claim input VAT. 

Even if you were in trade, you still wouldn't be able to claim any VAT on your house as it is for personal use and even if you were to use it for business purposes, you still wouldn't be able to claim any VAT unless if it was an industrial building...

Tax is crazy huh?  :Confused:

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## brown

> Do you know if you have to pay more this way or anything


Provisional Tax and PAYE alike are not really taxes in themselves, but prepayments towards your Income Tax, but they help to relieve you of the burden come end of assessment year. At the end of the day, you still pay the same amount calculated per the tax tables. 

BTW- in terms of your penalties, you should have filed a Notice of Objection, but  that you can only do within 30 days of receiving the assessment. You must remember just because SARS say you owe them doesn't mean they're always right. They work on assumptions in cases like those and if you don't know the facts, you will end up paying more than you should.

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## Dave U

Hi Justin

I'm reposting my reply from the other thread where you asked this question, to be sure anyone with a similar question sees it:

It seems you've been misinformed by SARS.  There are laws regarding 80% of revenue, but they apply to labour brokers and companies, not individuals such as yourself.  So on that count, at least, the accountant was correct.

The actual law that is relevant here is exclusionary subparagraph (ii) of the definition of "remuneration" in the Fourth Schedule of the Income Tax Act.  What this law basically says is that, even though employers don't normally have to deduct income tax from independent contractors, they are legally required to do so in the following cases:

the worker is subject to the *control* of any other person as to the manner in which the workerâs duties are or will be performed, or as to the hours of work; orthe worker is subject to the *supervision* of any other person as to the manner in which the workerâs duties are or will be performed, or as to the hours of work; orthe amounts paid or payable for the workerâs services consist of or include earnings of any description which are payable at *regular* daily, weekly, monthly or other intervals

Note that, if any of the above 3 points are true for you, they are legally required to deduct tax.  I'm assuming, at the very least, that the third point holds (you're paid regularly), if not all of them.  I hope that having a reference to the actual law helps to convince your boss and his accountant.  Are they deducting tax for the other workers at the company?  If not, it's almost certain that your employer is just too lazy to do it correctly.  Remind him that the law also says that he will be liable for the taxes to SARS, not you.

The bottom line is that simply calling someone a contractor does not make it so.

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## Silvia41

I am an independent contractor, but my employer(s) deduct PAYE on a monthly basis.

I would like to know what am I entitle to claim back, as an IT professional, I incur expenses related to my work, such as computer hardware and software, cell and 3G for communication purposes, books, studies, stationery, etc. What am I entitled to claim back?

Thanks for your help
Silvia

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## eitai2001

Hi Silvia.

Independant Contractors are unfortunately out of my focus at varsity. Usually I would say you are allowed to claim back all expenses incurred for business which would be the above (although hardware and software if your own, you would claim wear and tear, not the actual item), but since you are getting paid a "salary" and having "paye" deducted, I'm not quite sure. My gut tells me you would still be able to deduct these expenses but I can't say for certain.

Regards

Itai

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## Podosky

Does an Independent Contractor get Substance and Travel Allowance?

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## eitai2001

I'm afraid I can't really help you with Independant contractors ... but I would have two trains of thought:
1) If the contractor is treated as an employee and receives an allowance, he will be taxed upon it and thus will be allowed as a deduction what an employee is allowed.
2) If the contractor is treated as a company and receives an allowance, it will be taxed as an income to the company, and the related expenses will be allowed as a deduction unless specifically excluded in the act.

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## Dave A

> Does an Independent Contractor get Substance and Travel Allowance?


From a tax point of view, by my understanding you can claim actual costs incurred in the generation of income.

Allowances are largely for employees, although there are exceptions. For example, if you attend a conference overseas for business purposes you may claim a daily subsistence allowance.

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## Ice

Hi Dave
I need serious help.  My husband and I are starting a small business - we have just applied for the company registration number and are still waiting for that.  I'm just anxious to make sure I am allocating all our expenses etc correctly and was wondering if you wouldn't mind answering a couple of questions?  I would really appreciate.  The business will be run from home - we'll be using about 20% of our house for an office and storeroom for products.  I need to know if we are paying about R3500 bond on the property each month  (only owe about R250 000 on the house which is valued at about R1.5 M) what portion of that can I allocate as a business expense?  (i.e from the interest on the bond and can I allocate some of the bond payment towards it?  or do I charge a rental? - percentage of the property value?   
Second thing I need to know is - we own two cars - one is paid for and the other is on HP.  Both cars will be used for business and private use by my husband and I.  I need to know if there is a percentage I can allocate towards the vehicle that is paid off and also what amount of the HP plus interest can I allocate as an expense?  These vehicles are privately owned - how does that affect things?  
I keep reading this term "depreciation" with regards to office equipment etc - would this relate to the vehicles and if so - how?  what about computers and the other office equipment?
I also need to know about travel allowances and could it apply to us?  and if you keep a travel logbook - do you still keep all petrol slips etc?  Jeez thats a lot of questions - I hope you can help.

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## Mark Atkinson

Hi Ice, 

Perhaps I can help you.

With regard to expenses, to my knowledge all general expenses in respect of the property you are running the business from can be apportioned to the business according to the floor area of the business in relation to the floor area of the property. For example, your bond, if your office takes up 10 square metres and your property is 50 square metres, you could apportion 10/50 = 20% of your bond to the business. 

For expenses such as telephone bills and and travel allowances, where the phones or vehicles are being used for both business and private usage, specific records need to be kept in order to claim the business portion.  

This is looking at it from a taxation point of view.  It's essentially the same for accounting records when splitting your private and business expenditure.  Any expense which you incur for the business can be recorded as an expense in your accounting records.

Regarding your vehicles, if they are privately owned, you wouldn't record them as assets of the business.  You can record and claim expenses incurred in the production of income, however, such as petrol.  I'm not quite sure about the HP and interest. You might be able to apportion it, but I'm really not 100% sure. 

Regarding depreciation: You would be able to record depreciation on any depreciable assets which belong to the *business*. Thus, if your vehicles remain privately owned, you wouldn't be able to claim depreciation on them. On any office equipment etc belonging to the business, you would be able to set a depreciation policy and claim that percentage each year as an expense.  I would recommend, for simplicity's sake, that you take a look at SARS' Wear & Tear policies for various assets and match your depreciation policy to that. This will mean that your depreciation expense and your wear & tear allowance should be the same each year. 

As far as travel allowances is concerned: Travel allowance is a deduction in respect of tax. In order to claim a travel allowance you first of all need to be an employee who is given a travel allowance by the business. Secondly, you need to keep accurate records in a logbook as well as any expenses which you incurred (petrol slips).  Then, unless it's changed in the last year (I'm not sure), you can deduct the business portion of that travel allowance using SARS' formula. 
I think from a business point of view you can expense the portion of running costs of the vehicle which pertains to the business. (You could probably split this using the logbook) 

If I'm wrong with anything please somebody correct me. I've kind of hit a blank on my general bookkeeping knowledge, it's shocking!  :Frown:  This is what 3rd year accounts does to you!  :Wink: 

Hope that at least helps you in some aspects, Ice.

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Dave A (23-May-11)

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## Dave A

I think Mark covers many of the points very well - just the handling of vehicles, I guess. And thinking about it, I understand why Mark is struggling for a definitive answer - because there are a few ways to go about this and the best way probably depends on the exact circumstances.

The first year in business often is rather exploratory as there are so many things that are guessed at without much definitive information to help.

My suggestion is: 
Keep a log book for each vehicle so that you can differentiate between business and private milageKeep a record (complete with slips) of running costs - fuel, maintenace, licencingKeep a copy of your HP/lease agreement handy, and keep track of your instalments
You will now have a clear trace of the detail required for your accountant to finalise your financial records in this regard and advise you as to the best way to manage these going forward.

Practically, this could be done as seperate expense line items in the business's "management accounts" (I like it this way because it is more likely you'll actually keep track of these things). Then when it comes to finalising your accounts with your accountant, these expenses can be reallocated if required.

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## Ice

Tx Dave!!  I'm just trying to get everything right from the start and any and all help from yourself and FORUM members will be greatly appreciated.  I'm a little confused about the difference between the TRAVEL ALLOWANCE and claiming the expense of petrol as in my mind they conflict with each other??  Also  if I buy a computer for instance for the company - can I not just allocate that as an expense straight off?

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## Mark Atkinson

Ice, you need to try and separate expenses in your mind as TAX DEDUCTIONS and EXPENSES.  A travel allowance is a deduction in respect of your taxable income. An individual (employee) can claim this deduction if he gets a travel allowance. Because if you think about it, what a travel allowance actually is, is an employer paying/reimbursing and employee for his travel expenses.  

The EXPENSE is what the business puts through it's income statement.  That would be petrol & maintenance costs, etc.  

With regard to expensing a computer straight off, no you can't. A computer falls under the accounting definition of an asset and therefore needs to be recorded as such. The "expense" can be claimed over it's useful life in the form of depreciation.  If there's anything I'm sure of, it's that. You definitely can't expense the whole amount straight off.

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## Dave A

> Also  if I buy a computer for instance for the company - can I not just allocate that as an expense straight off?


If it costs less than R7000.00, you can expense it straight away in terms of the small item write-off allowance. If it costs more than that, you need to capitalise it and depreciate it at the allowed SARS depreciation rate (three years for personal computers and 5 years for mainframes).

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AndyD (23-May-11), BusFact (24-May-11), Mark Atkinson (23-May-11)

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## Mark Atkinson

I wasn't actually aware of the small item write-off allowance. That's useful!

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## Dave A

> I wasn't actually aware of the small item write-off allowance.


I'd better expand on the allowance then. There are two things to bear in mind when applying this allowance:
The item can't be part of a set (basically, you can't break up something into parts to work around the limit). The example generally used is a diningroom set, which you can't break down to the table and each individual chair as it functions as a set.It can't be an asset purchased to rent or lease to another party.
Obviously the "set" issue can get interesting when it comes to IT infrastructure.

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Mark Atkinson (23-May-11)

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## Mark Atkinson

> Obviously the "set" issue can get interesting when it comes to IT infrastructure.


I can imagine.  I'm sure if the "set" (example a PC including all peripherals) cost less than R7000 then it wouldn't be an issue?  If you're buying a supercomputer and a 42" TV to use as a monitor then you might have an issue  :Wink:

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## Ice

Hi again!!!

On the question of depreciation again.  If I buy a computer valued at R7500 for example and I pay CASH for it but only relfect a 1/3rd portion of that amount in my books for the first year - how do I enter that into my books cause the full CASH AMOUNT will show as having been paid from my bank account and then the bank figure amount will be incorrect?  If the COMPUTER is purchased on terms then how do I reflect this in my books?

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## Dave A

You would create a *fixed asset* line item on your balance sheet called Computer equipment. (And depending on what accounting software you're using, you could create a sub-account for each computer asset).

You debit the fixed asset account for the full value of the purchase and credit the bank account used to make payment.

Depreciation entries are done separately, normally at the end of financial year.

If the computer is bought on terms, you would add either a current liability (repaid within 12 months) or long term liability account (repayable over more than 12 months). From there you'd debit the fixed asset account and credit the liability account you created. As you make payments, you'd then be debiting the liability account and crediting the bank account used to make payments.

Just to add one other wrinkle, if you rent the equipment or purchase on hire purchase, you'd expense your payments as an item on your income statement as you make payments.

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## Ice

jeeez - I need a bookkeeper!

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## Dave A

What financial software are you using?

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## Ice

Quickbooks Simple Start. 

I added a post earlier on but clicked on REPLY WITH QUOTE by accident and I cannot see that post on this forum.  Do you know where it would have been posted to?

thanks for all your help thus far!!!

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## Dave A

> Quickbooks Simple Start.


I helped someone set up with it not too long ago. It works fine as a basic accounting package, but... I guess I'm used to more features.
It should be enough to keep you out the clutches of a book keeper though. The Quickbooks method of input forms should really help the non-accountant to produce a fairly error-free set of books.




> I added a post earlier on but clicked on REPLY WITH QUOTE by accident and I cannot see that post on this forum.  Do you know where it would have been posted to?


There's nothing in the moderation queue.  :Confused: 
It might well be lost  :Sorry:

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## Ice

Mostly I'm doing well with it - just things like the depreciation of an asset is difficult to enter in.  Where do our postings on this forum go to if we "reply with quote"?  I'm trying to find a posting I made which hasn't appeared here?

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## Ant15

Hi there

REALLY HOPE YOU CAN ASSIST ME ON THIS

I currently work at a school doing teaching, but after hours I do private work as a physio for the disabled children for a maximum of 2 hours a day.

I have bought my own equipment and using one of the schools rooms to do my practice.

What I need to make 100% sure about is what tax I am liable to pay? I earn an income from the school (salary = R9500 p/m) and an income from my practice ( roughly R4000 p/m).

Do pay seperate tax per income or must I combine the two incomes?
Secondly the income from the practice, at what tax rate must I pay it, or since its only 
R48,000 p/y do I even have to pay tax on it?

Another thing is, can I charge VAT on the practice invoices and how would I go about that?
Can I claim back for the equipment bought?

Please can someone urgently assist me on this. It would be highly appreciated. Thanks

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## Mark Atkinson

Hi Ant15,

First of all, yes you would have to pay tax on the income earned from the practice.  

_I am assuming you run the practice as a sole proprietorship._

You need to declare income from all sources in your tax return, so you would list both your salary and your income from your physio practice as separate line items on the same tax return. (It just adds to your total tax payable.) I'm not 100% sure but you may be able to register as a provisional tax payer for your practice income, and make half-yearly provisional tax payments.  

You may also claim any expenses which are used in the production of that income as deductions. (For example, if you buy massage oil to treat customers, you may claim that as a deduction).

The fact that your income from the practice is only R48000 p/a is inconsequential as your total income combined is over the tax threshold.  If you only earned R48000 p/a from the practice, then you would be below the tax threshold and not have to pay tax.

One thing that I think you might have an issue with is the fact that you use one of the schools rooms to do your practice.  Do you pay rent to the school for this?  If you do, you may claim that as a deduction. If you don't, however, (and this is where I need somebody to back up my opinion) you might have to declare a reasonable rent for that room as an *income*.  My tax knowledge is a bit rusty, but I seem to remember something about if an employer gives you the use of an asset for free or for less than a reasonable payment, you need to declare the difference as an income. 

As far as VAT is concerned, I'm not sure whether I would bother registering for VAT at that sort of turnover. (I'm not even sure you would be able to in the first place.)  You don't charge or claim VAT until you are registered as a VAT vendor.  You only need to register as a VAT vendor once your turnover reaches R1 million per annum.  My advice would just be to save yourself a whole lot of effort and steer clear of VAT altogether. 

Hope that helps.  :Smile:

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## BusFact

I second Mark's answer above. Although I don't have any knowledge about the deemed rental either.

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## Dave A

> My tax knowledge is a bit rusty, but I seem to remember something about if an employer gives you the use of an asset for free or for less than a reasonable payment, you need to declare the difference as an income.


 :Hmmm:  The employer is supposed to declare the deemed value as a fringe benefit in the IRP5 they issue.

Thinking about all the possible catches, it certainly wouldn't hurt to have written permission to use the classroom for this little venture.

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## tax$$$

Hi

I have a company (Comp A) which holds longterm fishing rights (ie 15 years hake longline etc).  Comp A originally bought the quotas from another company after the Minister gave the necessary approval for the transfer.

The fishing rights were accounted for as intangible assets and are written off over the remaining 'lifetime' of it.  Are these amounts tax deductable or not?  And does it form part of A11(gC) / A23I?

Your help would be much appreciated.  Thank you.

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## Mike Simmonds

No it does not fall under Section 11 (gC) or Section 23I of the Income Tax Act, the reason being that it does not fall within the definition of 'intellectual property'.

It appears that these rights are actually goodwill and therefore not tax deductable.  

However if these rights actually cost 'another company' money to acquire, and in their hands it was an normal expense or a Section 24 C expense then that portion should rightfully also be tax deductible in your hands.

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## dewmap

Hi

Would appreciate some help with First Provisional submission that has to be made. The question relates to the estimated taxable income. Do I calculate that figure by using the first 6 months estimated income or do I have to estimate the income for the full year and then divide that figure by 2. 

The problem I have is that we have been abroad and have only been back in SA from the 1 Aug, therefore only one month salary before the first submission. If I have to estimate on the full year the estimated income will be high compared to the tax that the employer deducted which will only be for 1 month. This will result in us having to pay in a huge amount on the first provisional submission. Am I right in this assumption or do I have it totally wrong.

Any help would be appreciated, Thanks

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## Mike Simmonds

> If I have to estimate on the full year the estimated income will be high compared to the tax that the employer deducted which will only be for 1 month. This will result in us having to pay in a huge amount on the first provisional submission.


Do you receive any other income besides your salary?  In other words, why are you registered as a provisional taxpayer?

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## dewmap

yes, rental income

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## Mike Simmonds

OK, what you really need to do is calculate what your total taxable income for the year will be.  Then calculate the tax payable on that.  Then estimate if the tax that is being deducted on your salary for the year is going to cause a shortfall or a refund.  If there is a shortfall then this is the amount that needs to be paid over to SARS.

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## mummy60

Hi, My problem is with the sarsefiling site.I accidentally ran my mouse over request for historic data on the provision tax which I had returned last year. this somehow saved as version 2 and is sitting as saved not filed. I am concerned as this has a figure in that was paid last year and is incorrect for this year. I have today submitted my correct provisional tax for 2012-1 but I cannot remove the saved one which is on last years form (last years date) but showing as due 25.11.2011.

  RETURN TYPE    STATUS               DATE    DECLARED AMOUNT VERSION LAST UPDATED BY  
  IRP6         Filed through eFiling    2010/08/26      3557.46         version1  



  IRP6        Saved                       2011/08/02        3557.46        version 2 
 I have contacted SARS 3 times and been given 3 different answers, none of which will work. can anyone help please?

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## Mike Simmonds

1. Check the Provisional Statement of Account to confirm that SARS has received your return.
2. Confirm that the payment is showing in the Payment History section.
3. If both of these are in place, ignore the saved return.
4. Give SARS a call and confirm receipt of return and the payment.

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mummy60 (30-Aug-11)

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## geraldenek

mummy 60 - to get rid of the return just sitting there - i would normally say submited manually - as this has been already submitted.  SARS has never had a problem with this and clients stuff is up to date.

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Dave A (30-Aug-11), mummy60 (30-Aug-11)

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## confused

Hi there. I need someone to help me out please. I'm terribly confused and this is really stressing me out.  I have no idea how this tax thing work. All I know is that the employer is responsible to deduct PAYE from an employees salary and that it is the employer's responsibilty to register the employee for income tax etc?  I have been unemployed for the last few months, but before I was retrenched my tax was deducted from my salary. I also noticed a PAYE no on my pay slip. Is that my registration no? I have never earned above R120 000 a year and therefor have never done returns and from what I read you only register for income tax if youre have to do tax returns. So what if I start a new job, do I keep the same PAYE no, am I already registered for tax, or does the new company have to register me again. Is it my responsibilty to register for income tax or the employer's? Also, what happens if I was to be employed as an independent contractor? obviously with no contract the employer is not liable to deduct PAYE until I sign a contract stating a monthly salary. but does this put more stress on me? if i was to still earn less then R120 000 a year as a independent contractor, no need to do tax returns nor register? Please confirm, I'm highly stressed out about all this. Thanks.

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## Mike Simmonds

Hi Confused, welcome to the forum.

It is your responsiblity to register for Income Tax.  The PAYE reference number belongs to the employer.  Independent Contractors do pay PAYE, or at least the Employer should make PAYE deductions.

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## confused

Thanks. So even if you work at a retail store like music or cna or cardies you still have to register for income tax?  I don't understand how it is my responsibility since I heard from allot of people that it is nothing I need to be concerned about, the employer has to register me, deduct the tax and make sure sars gets it.  I'm sure many of my friends hasn't personally gone to register, it's the employers responsibility or so I've been told.  Also when are you suppose to do tax returns? Surely it's not necessary if your income is less then R120 000 a year and your interest on savings/investments are below the threshold as an employee or independent contractor?

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## Mike Simmonds

http://www.sars.gov.za/Wizard2011/Wizard.htm

Try this wizard, it should answer quite a few of your questions in terms of registration

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## mummy60

Thanks again Geraldene
Is it possible to get help with this? A provisional taxpayer with rental income only and approx R400 bank interest per year.has left South Africa to work overseas.He didn't apply for tax clearance as he was not sure whether he would stay overseas. He now plans to stay overseas 3 years or longer. What should be done? Can he apply on line for this? Also do his overseas earnings have to be declared as Rands and does he have to apply for foreign tax credits for his overseas tax paid? Or do his earnings not have to be declared as he has paid tax overseas? Would he be classed as a dual resident? Will he have to surrender his South African ID and passport? Also as this is his 1st provisional tax form for rental income does the amount go in the estimated taxable income column and does he leave the individual rebate of R10260 showing on the provisional tax form?Sorry to ask so many questions but this friend really needs help. i'd be grateful for any help you can give.

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## Slippy

> Thanks. So even if you work at a retail store like music or cna or cardies you still have to register for income tax?  I don't understand how it is my responsibility since I heard from allot of people that it is nothing I need to be concerned about, the employer has to register me, deduct the tax and make sure sars gets it.  I'm sure many of my friends hasn't personally gone to register, it's the employers responsibility or so I've been told.  Also when are you suppose to do tax returns? Surely it's not necessary if your income is less then R120 000 a year and your interest on savings/investments are below the threshold as an employee or independent contractor?


Employer has to be registered themselves, employees have to register their own selves. employer will pay the tax to Sars on behalf of employee, thereafter it's between Sars and employee.

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## Dave A

> employees have to register their own selves.


Actually, with e@syfile the employer can register the employee for income tax - and most times quite easily too.

But it does the beg the question - is the employer *responsible* for registering the employee for income tax nowadays?

Perhaps a moot point - I'm not sure it's even possible to do the PAYE recon returns if there is anyone in there without an income tax number - so at the very least the employer is lumbered with driving the process.

Businesses really have been made an extension of SARS nowadays  :Roll Eyes (Sarcastic):

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## Mike Simmonds

> Perhaps a moot point - I'm not sure it's even possible to do the PAYE recon returns if there is anyone in there without an income tax number - so at the very least the employer is lumbered with driving the process.
> 
> Businesses really have been made an extension of SARS nowadays


Dave it certainally is possible to perform a recon without having tax numbers for employees, the registration process is as a result of these recons.  SARS has all the employee info as soon as you have submitted the return.

SARS would not register someone for Income Tax unless they had a personal bank account and proof of residence, but done via the EMP501 system, there is no verification.  Reminds me of the times when one could get a VAT number over the telephone in around 15 minutes  :Big Grin: 

SARS has very cleverly made businesses responsible for doing all the data capturing that prior to 2007 was their responsibility.  As stated elsewhere on the forum, SARS doesn't even pre-populate the returns anymore  :Mad:

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## mummy60

Is it possible to get help with this? A provisional taxpayer with rental income only and approx R400 bank interest per year.has left South Africa to work overseas.He didn't apply for tax clearance as he was not sure whether he would stay overseas. He now plans to stay overseas 3 years or longer. What should be done? Can he apply on line for this? Also do his overseas earnings have to be declared as Rands and does he have to apply for foreign tax credits for his overseas tax paid? Or do his earnings not have to be declared as he has paid tax overseas? Would he be classed as a dual resident? Will he have to surrender his South African ID and passport? Also as this is his 1st provisional tax form for rental income does the amount go in the estimated taxable income column and does he leave the individual rebate of R10260 showing on the provisional tax form?Sorry to ask so many questions but this friend really needs help. i'd be grateful for any help you can give.As today is the last day for provisional tax filing hoping I can get advice on this one.

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## confused

Ok, so if I was to start doing work for a start off company as an independent contractor because the owner is not sure whether the business will be a success and therefore does not want to pay me a salary and without signing an agreement or contract and I get only one month's pay (on work done, not on outstanding work) due to the business not going ahead anymore, do I need to register as a provisional tax payer/do tax returns?? For example that is all I get and I'm fortunate enough to be employed by another company as a employee, did I have to go through the trouble of registering as a provisional taxpayer? What are the exemptions for taxpayers not having to register as provisional taxpayers/filing returns?? Thanks for the help.

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## Dave A

> Will he have to surrender his South African ID and passport?


About the only guidance I can give with some confidence is he won't have to surrender his SA ID or passport merely on the basis of currently being resident overseas.

I also don't believe the failure to obtain a tax clearance has any bearing on the SA tax implications of him being currently resident overseas.

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mummy60 (31-Aug-11)

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## mummy60

Hi Dave, thanks so much for that, do you maybe know if as this is his 1st provisional tax form for rental income does the amount of the rental income go in the estimated taxable income column and does he leave the individual rebate of R10260 showing on the provisional tax form? Time is running out, almost the deadline. Thanks so much for your help

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## Dave A

I regret that's out of my experience  :Sorry:

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mummy60 (01-Sep-11)

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## mummy60

thanks for the other help you gave

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## kahoel117

hi all.

i have a question about efiling. again.
i filed an tax return to sars and recently got the statement of account (itsa34).
now it says R-3204.12
just to be sure. must one pay in to sars or get back ? silly q i know :O

also. i want to start a company soon. unclear about taxes on the goods i sell though.
do you add vat to the goods and pay that vat amount per item to sars ?
not very good at the taxes.  :Frown: 

your help will be appreciated.

k

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## Mike Simmonds

The (-) sign indicates a refund ............... that is good!

In terms of VAT and the goods that you buy and sell, you will first need to register for VAT with SARS.  Check the VAT vendor guide on the SARS website, it really explains everything and gives practical examples.

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Dave A (04-Sep-11), kahoel117 (03-Sep-11)

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## kahoel117

hi mike

Thankss ! usually when i see i minus i get worried. lol.
will browse through the sars website for the vat info. thanks again

k

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## Imp

Hi
I know for VAT purposes entertainment client or staff is not claimable (unless away from home for a night) but for the purpose of deducting for income tax is it deductible? my thoughts would be client yes but staff no. but i could be wrong ..... thank you

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## cagenuts

Certainly any expense deemed to be of a business nature can be deducted as an expense from an income tax perspective. I'm not sure what you mean by 'staff' expenses though?

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## GJC

Hi eitai2001

Please see my question earlier today.

Perhaps you can shed some light?

GJC

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## Imp

> Certainly any expense deemed to be of a business nature can be deducted as an expense from an income tax perspective. I'm not sure what you mean by 'staff' expenses though?


Hi i meant entertainment for staff such as year end functions or team building events.  Thank you

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## cagenuts

> Hi i meant entertainment for staff such as year end functions or team building events.  Thank you


That is a legitimate business expense but I'm not sure about claiming the VAT though. Perhaps on certain things but I suspect that if the bar bill is separate for example,  then no.

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## Dave A

> Hi i meant entertainment for staff such as year end functions or team building events.


AFAIK you won't be able to claim input VAT on the end of year staff function, but teambuilding might also be described as training...

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## cybersangoma

Hi Itai. I have a property business and may receive funds from abroad from potential investors. Are these funds deemed to be income in the current tax year (i.e. when funds are received)? Would my business be taxed on the entire funds or may I deduct certain costs/expenses etc.? What rate of tax would that be...?? 
I would appreciate some input if you can assist. I am not very good at the finance stuff...
Many Thanks

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## CLIVE-TRIANGLE

If the funds are an investment (loan or equity) then they are not income and are not taxed.

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## Juan99

Hi Itai,

My Client has shares in a company( Lets call this company X). Now he wants to start a new company (company Y).  He wants to use the shares that he owns in company x as initial capital in company Y.  This will then be the only assets in  company Y.  What would the tax effect be on this transaction?  


Regards 

Juan-Pierre

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## IanW

Hi,

I have the following query in regards to the tax treatment of interest:

Hypothetically speaking, if I started a company but could not obtain a bond in the companies name to purchase a property. If I obtain the bond in my personal capacity to fund buy the property in the companies name creating a loan account owing to me in the company, so not to be out of pocket the company will pay me the interest on the loan account which equals the amount of interest I am charged on the bond.

Now the question is the interest earned from the business is that taxable?

I feel this is not as the bond was specifically obtained to fund the purchase of the building, thus there must be some sort of exemption that I can play the interest paid on the bond against the interest earned from the company(loan account created due to using the bond the purchase the property in the companies name).

Please can anyone assist in this regard.

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## Andromeda

You, in your personal  capacity, would claim the interest on mortgage as an expense against the loan interest received. Presumably they would equate each other.

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IanW (07-Mar-18)

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## IanW

> You, in your personal  capacity, would claim the interest on mortgage as an expense against the loan interest received. Presumably they would equate each other.


Thank you for the response, is there any article you can direct me to that would support this?

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## GBotha

Good morning Itai

I am interested in property investment and would like to purchase property to rent out. A standard deal would include Rates & taxes, Levies, and my bond repayment as expenses and then the rent as income. If an example deal looks as follows:
Bond repayment = R7100
R&T = R300
Levies = R1320
Rental income = R7200
Cash flow = - R1520
How would tax work on this, will any of this be tax deductible? Would there be any benefits from a tax point of view or will it only stay a loss?

Thank you

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## EAB

Good morning GBotha,

The R&T and Levies will be tax deductible in full. Only the interest portion will be tax deductible, not the full bond payment.

The loss can be deducted from your taxable income when calculating your income tax for the year. Just keep in mind that SARS can ring-fence the losses in some cases based on your personal tax profile.

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## GBotha

> Good morning GBotha,
> 
> The R&T and Levies will be tax deductible in full. Only the interest portion will be tax deductible, not the full bond payment.
> 
> The loss can be deducted from your taxable income when calculating your income tax for the year. Just keep in mind that SARS can ring-fence the losses in some cases based on your personal tax profile.


Just as a follow ups to the answer you provided:
R&T and Levies deductible in full means that if I spend R1600 monthly on that, I can claim R19200 from SARS if a full year of payments were observed?

If for the first year R4000 of my bond repayment was paid towards the interest, I can claim that from SARS as well? R4000*12 = R48 000.

If those expenses are all claimed from SARS and my effective bond repayment is only R3100 (R7100-R4000), does the R7200 from rental income gets seen as positive cash flow after all of these deductions? (R7200 - R3100 = R4100) Will that amount then be taxable?

Thank you for taking time to answer these questions.  I don't think I have a very good understanding on this, but your help is much appreciated.

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## Andromeda

Hi Gbotha

Try to forget about cash flow; income and expenses are what matters.

You are taxed on all income less all expenses incurred in producing that income.

So, 
Income = R86,400
Rates = -R3,600
Levies = -R15,840
Bond Interest (assume) = -R48,000
Taxable Income = R18,960

Some things to note:
Bond interest will reduce every month. The finance institution must provide you with a tax certificate each year.
At some point you will incur other related expenses, repairs & maintenance, insurance and there may be others.

Also bear in mind that if you are married in community of property then the profit or loss on the activity should be halved.

If there is a net income amount, it will be added to your other income and taxed together. If the other way round it is deducted from your taxable income, but bear in mind that it may be ring fenced depending on your particular circumstances.

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## Frad

Hello Itai , Are you able to teach here ? if I sold 6 shares on the JSE this tax year , I made a loss of R 18,000 , Do i need to fill this loss in my tax return and can this loss be carried over to the next tax year return and be taken off gains if I made any? They are not subject to CGT . Where do I enter this in my Tax Return ? Many Thanks Frad

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## teefire

Hi eitai

I really hope you can help!

I desperately need advice on how best to do my tax returns such that I can get refund from SARS. Each time I do my returns I end up owing SARS.

My travel allowance is structured at R5000 per month.

How many kilos do I have to travel in order to get a refund or AT LEAST not end up owing SARS?

I would really appreciate your help and assistance

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## fredie88

> Does an Independent Contractor get Substance and Travel Allowance?


From a tax point of view, by my understanding you can claim actual costs incurred in the generation of income.

Allowances are largely for employees, although there are exceptions. For example, if you attend a conference overseas for business purposes you may claim a daily subsistence allowance.

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