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Speaker 1: Lunch with Pippa Hudson on Kate Talk. Join the conversation.

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Speaker 2: In our legal start today, I want to pick up

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Speaker 2: on something basically tipped off in conversation because of something

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Speaker 2: Edward kiss Fitter mentioned during his pre budget briefing last week.

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Speaker 2: The outgoing SARAS Commissioner mentioned that SARS is actively looking

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Speaker 2: into how to classify online influencers who generate an income

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Speaker 2: from their content as well as receiving obviously substantial perks

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Speaker 2: like travel opportunities and product samples and experiences, and kiss

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Speaker 2: Fitter told the media they were grappling with how to

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Speaker 2: define the idea of an influencer, whether that should be

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Speaker 2: a factor maybe of how many followers they have, for example,

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Speaker 2: But basically they are trying to ensure that they get

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Speaker 2: these people to declare their income for tax purposes, just

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Speaker 2: like everyone else is required to, even though that income

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Speaker 2: doesn't necessarily always look like money going into a bank account. Now,

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Speaker 2: it is something we've spoken with from a consumer's perspective

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Speaker 2: with Wendy Nola. Before influence is legally supposed to declare

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Speaker 2: if a post is paid for in cash or kind,

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Speaker 2: we know that that doesn't always happen I think we

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Speaker 2: can probably say doesn't often happen, but the new Sarce

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Speaker 2: focus gives us a good opportunity to look at the

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Speaker 2: broader question behind this, which is how non salary income

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Speaker 2: is viewed legally in South Africa. What the taxman asks

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Speaker 2: of you when you are receiving something else in addition

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Speaker 2: to a salary or something as a form of income

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Speaker 2: that's not necessarily cash in a bank account, a perk

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Speaker 2: of some kind, a side hustle, some form of non

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Speaker 2: monetary benefit. And to help us understand this, it's a

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Speaker 2: pleasure to have via zoom this afternoon Daniel Speakers, who

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Speaker 2: is director of tax tim. It's an online tax platform

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Speaker 2: designed to help users navigate their tax reterms with minimum

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Speaker 2: fuss and expense, and you'll find them at tax tim

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Speaker 2: dot com. It's been ages since we chatted to them,

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Speaker 2: so Daniel, it's great to have you on the show

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Speaker 2: this afternoon. Welcome back to Cape Talk.

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Speaker 3: Thanks Papa, it's great to be I must say, sitting

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Speaker 3: you're listening to your segment. I don't know whether I'm

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Speaker 3: proud or scared about the fact that I've been to

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Speaker 3: about eighty percent of those pubs that you've just mentioned.

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Speaker 3: So it's been good listening to the show this aftening.

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Speaker 2: I'm sure you've been working very hard and meeting your

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Speaker 2: clients at the corner table right here. Daniel. Thanks, I

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Speaker 2: appreciate your input this afternoon, because I know this is

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Speaker 2: quite a thawny sort of piece of ground to navigate

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Speaker 2: for some people. I mean, just before, I'm not going

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Speaker 2: to talk only about influencers, I promise, But what I

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Speaker 2: found curious about this comment of grappling with how to

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Speaker 2: define an influencer is surely how much money comes in

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Speaker 2: should be the thing they're worried about, not how many

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Speaker 2: people are being influenced by their comments. Isn't this social

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Speaker 2: media influencer marketing just a new form of deriving an

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Speaker 2: income from marketing and promotional activities, I mean, and that's

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Speaker 2: something Soarz knows how to deal with.

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Speaker 1: Yeah, I think that's a nice way. I think.

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Speaker 3: Firstly, I think you spot on, but I think you're

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Speaker 3: right when you say it's about how many people are influenced.

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Speaker 1: They shouldn't be about that. It's the whole concept.

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Speaker 3: And I think this story has gotten quite a bit

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Speaker 3: of news attention over the last little while, and Obviously

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Speaker 3: mister Keyswatter speaking about it adds to that. But I

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Speaker 3: think that the point is that this isn't really something new.

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Speaker 3: I think it's stars trying to adapt to the new

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Speaker 3: change of how marketing works, the new digital way of life.

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Speaker 3: I'm sure it will change even more in the next

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Speaker 3: coming years with where the world's going. I think the

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Speaker 3: point is just they trying to create a bit of

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Speaker 3: clarity around the fact that it isn't just cash in

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Speaker 3: your bank account that is seen as income that you

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Speaker 3: need to declare on. It's always been the case that

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Speaker 3: if you receive something in kind or whether that's a

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Speaker 3: gift or a travel it is something that is taxable.

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Speaker 3: And I think because of the nature of influencers and

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Speaker 3: how that industry has grown, I think it's just become

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Speaker 3: more topical to almost pinpoint to influencers to say, listen,

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Speaker 3: it's not just if you receive money via cash. It's

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Speaker 3: actually all things that you need to declare and that

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Speaker 3: is seen as taxable income like it's always been.

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Speaker 2: Yeah, yeah, I mean, And that is the key thing

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Speaker 2: we wanted to get across today that the concept of

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Speaker 2: income as viewed in South African law is not restricted

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Speaker 2: only to a salary or to money going into a

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Speaker 2: bank account. Can you give us some examples of some

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Speaker 2: of the other things that SARS would regard as income

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Speaker 2: even if it's not cash in the bank.

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Speaker 3: Well, it's literally as simple as any product or service

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Speaker 3: or gift that you are offered in exchange or offering

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Speaker 3: that service. So to make it as simple as possible.

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Speaker 3: If if someone gives you a five thousand rand vulture

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Speaker 3: in exchange for you posting three TikTok videos, that's five

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Speaker 3: thousand rand of income that needs to be declared on

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Speaker 3: a text return.

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Speaker 1: You might not have received the cash.

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Speaker 3: If you go on a free if you've been sponsored

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Speaker 3: a free holiday, or you get to go to a

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Speaker 3: lodge because you're there to shoot some content. They look

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Speaker 3: at the fair market value of that and see that

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Speaker 3: as income that you've received for performing you services. And

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Speaker 3: that's why it needs to be declared.

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Speaker 2: And calculating how much that is valued at must be

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Speaker 2: quite quite an art. I mean, if it's a as

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Speaker 2: you say, if it's if it's a gift varcher, it's easy.

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Speaker 2: It's the total sum on the face of the gift voucher.

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Speaker 2: But if somebody is sent you know, a crate of

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Speaker 2: a new wine to help promote do they have to

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Speaker 2: then declare the value of each bottle of that wine

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Speaker 2: as if they had bought it on the website? And

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Speaker 2: whose responsibility is it to calculate that value?

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Speaker 3: So you're right, it can become very tricky. I think

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Speaker 3: that the definition says fair venue. Now fair value is

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Speaker 3: what can that be? What can that be obtained that

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Speaker 3: in the market. So to use the Lodge example, I

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Speaker 3: guess that the influencer would then have to go and say, okay, cool,

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Speaker 3: what are these? What does this actually what would it

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Speaker 3: take someone in the market to actually have the same

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Speaker 3: experience that I've just had to go and derive what

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Speaker 3: the fair market is.

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Speaker 1: It's obviously tricky. It's it's not always black and white.

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Speaker 3: To the Valucher example that you spoke about, the point

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Speaker 3: is that the owners definitely lies on the tax player

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Speaker 3: to be as honest and compliant as they can be

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Speaker 3: and to prove to sars that that's what they declare

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Speaker 3: that is is fair. Now, it's obviously something that's that's

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Speaker 3: it's tricky. If you there's people can also argue. You

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Speaker 3: hear people speaking about the fact that how will SARS know,

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Speaker 3: and I've just received a new gift of sneakers, how Like,

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Speaker 3: why must I go and declare that. You can have

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Speaker 3: that argument, but the point is that that SARS operates

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Speaker 3: on the assumption that people are honest and that people

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Speaker 3: do voluntary comply and and that's always been the basis

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Speaker 3: of how tax works. And then that's why they have,

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Speaker 3: whether that's lifestyle audits or however methods they use to

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Speaker 3: make sure that people are actually compliant. The point is

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Speaker 3: it is on your It's the onus is on you

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Speaker 3: to actually always be truthful, to stay compliant, make sure

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Speaker 3: that you're doing the right things. Try to find the

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Speaker 3: best way of proving what the fair market value is

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Speaker 3: in this specific example.

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Speaker 2: Okay, commenting from t on r WhatsApp line saying, what

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Speaker 2: a very interesting conversation about the changing landscape of work

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Speaker 2: and tax. Tea's comment is, Ordinarily one would think that

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Speaker 2: sample products or gifts that influencers receive would not be

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Speaker 2: classed as income. But the sheer volume of these non

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Speaker 2: monetary items received could make a tidy sum if sold

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Speaker 2: off for cash, so that money would need to be

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Speaker 2: declared then anyway, No, but what if the sample products

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Speaker 2: were never sold and there's no monetary gain. Am I

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Speaker 2: understanding you correctly? Daniel saying SAZ doesn't care whether you

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Speaker 2: used it yourself or sold it to somebody else. The

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Speaker 2: fact is you received the benefit of something to the

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Speaker 2: value of rand x. Is that correct?

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Speaker 1: Correct?

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Speaker 3: Because you've received the venue, it is essentially seen as

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Speaker 3: as income in your Let's assume that you are doing

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Speaker 3: your you are running your your profile, your social profile

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Speaker 3: from your personal almost as a sole proprietor.

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Speaker 1: That is seen as as income that you've received.

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Speaker 3: Now, the one important point that I would also make

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Speaker 3: is remember SOARS doesn't necessarily just tax tax income.

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Speaker 1: They tax profits.

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Speaker 3: If you think about a company, Let's say that an

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Speaker 3: influencer actually decides to run to run this in a

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Speaker 3: pty limited structure as a as a small business, they

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Speaker 3: tax you get taxed on profits. So the other sort

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Speaker 3: of tipic for influencers is to remember that SALZ also

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Speaker 3: allows for legal deductions. Predominantly, the sort of rule of

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Speaker 3: thumb is if those deductions are in the production of income.

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Speaker 3: So if you can prove that I've been able to

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Speaker 3: earn money from shooting the content, but I actually had

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Speaker 3: a canvas subscription that I had to pay. That could

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Speaker 3: be a very valid deduction that you could also claim

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Speaker 3: as a deduction against that income, and essentially, at the

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Speaker 3: end of the day, you'll be taxed on the profit

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Speaker 3: that you've made. The point is that the pair of

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Speaker 3: sneakers or the luxury game lodge is seen as a

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Speaker 3: as a as an entry into the bigger poo of

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Speaker 3: what was the actual income I received.

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Speaker 1: Then you look at what.

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Speaker 3: Can I actually as a claim as a valid deduction

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Speaker 3: that I expenses that I incurred in the production of

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Speaker 3: that income, being that the luxury launch trip for the

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Speaker 3: pair of sneakers, and SA says, okay, cool.

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Speaker 1: On the profit that's left over, We're going to text

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Speaker 1: you on that.

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Speaker 3: Yeah.

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Speaker 2: Yeah. So I mean example, I earn some extra freelance

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Speaker 2: income doing things like MC jobs or hosting book launches,

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Speaker 2: et cetera, and I have become pedantic about collecting. I

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Speaker 2: will keep the record of the mileage I've driven to

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Speaker 2: get to that book launch, the parking slip that I

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Speaker 2: paid for to park at that book launch. And that's

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Speaker 2: what my accountant wants to see every year or twice

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Speaker 2: a year in my case when I chat to her.

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Speaker 2: So it's about keeping a record to be able to say,

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Speaker 2: here are the costs associated with what I earned, and

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Speaker 2: here is the profit from it that needs to be

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Speaker 2: considered by the taxman. Now, Daniel, let's talk about at

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Speaker 2: what level that becomes of interest to the tax man.

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Speaker 2: Because a couple of people asking this same sort of thing.

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Speaker 2: Do you view this if it's like your side hustle,

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Speaker 2: do you view that income separately from your main income?

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Speaker 2: So we know there is a tax threshold below which

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Speaker 2: you don't pay tax. I think it's just under one

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Speaker 2: hundred thousand rand in the latest thing, if I'm not mistaken.

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Speaker 2: So if say you were earning seventy five thousand rand

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Speaker 2: in your salary job, you don't have to file a

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Speaker 2: tax return, but now you're getting an extra forty thousand

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Speaker 2: rand in perks and benefits from the side hustle that actually,

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Speaker 2: combined would push you over that threshold. Does SARS look

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Speaker 2: at it that way as a combined total or would

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Speaker 2: they view the two entities separately and say, well, you're

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Speaker 2: still under the threshold for your main job and your

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Speaker 2: side hustle.

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Speaker 3: No, So, unfortunately, they do look at it as one

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Speaker 3: single taxpayer, and they will look at the total income

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Speaker 3: that you earn, and then they'll say, based on that income,

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Speaker 3: you fall into a tax bracket of an effective tax

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Speaker 3: rate that you need to pay because your income is

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Speaker 3: at a certain level. But they look at all types

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Speaker 3: of income. The other point that I'll add is you

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Speaker 3: touched on your accountant bothering you twice a year. That's

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Speaker 3: that's because I'm assuming you've qualified as a provisional taxpayer.

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Speaker 3: Which is another thing that influences and freelancers need to

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Speaker 3: realize is what Sarce says is if you if you

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Speaker 3: earn above the tax threshold and you earn non salaried income,

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Speaker 3: you actually have to register as a provisional taxpayer as well.

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Speaker 3: Now a lot of people will hear that and think

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Speaker 3: not like not that as well? Why is that additional tax?

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Speaker 3: It's it's not an additional tax. It's a different method

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Speaker 3: of SAWS electing money from you. If you are just

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Speaker 3: a salary employee, you your your employer will withhold payers

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Speaker 3: you earn and they'll pay that over to SAWS any

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Speaker 3: non salaried income that you earn. What SA says is, okay,

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Speaker 3: you've got to register as a provisional taxpayer. Those are

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Speaker 3: two or three additional tax filings that you've got to

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Speaker 3: do in a in a tax period, and it's actually

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Speaker 3: just ways of paying the money over to saws in

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Speaker 3: a in a in a better cadence, almost like your

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Speaker 3: employers paying it when you earn a salary. And that's

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Speaker 3: another thing that I think influencers might not realize is

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Speaker 3: they might actually be in a provisional tax situation where

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Speaker 3: they've got to register as a provisional text player as well.

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Speaker 2: It's a hugely important point, thank you, and they're very

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Speaker 2: sticky about getting those submissions in within deadline. And your

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Speaker 2: forecasts have anticipated income, et cetera. That's the one difficulty.

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Speaker 2: I mean a lot of times when you're talking Daniel

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Speaker 2: about freelance income, you know, side hustles, et cetera, it

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Speaker 2: can be very erratic income and very hard to predict

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Speaker 2: because you don't know from one month to the next

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Speaker 2: whether you're going to be offered you know, the next

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Speaker 2: job or not. I'm sure there's many an actor or

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Speaker 2: musician listening to this going I don't know from one

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Speaker 2: month to another where I'm going to be making income

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Speaker 2: that month. You've got to be really quite sort of

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Speaker 2: particular in reporting and adjusting. If that situation changes from

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Speaker 2: what you told SARS, your forecast income is going.

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Speaker 3: To be correct. And look, I think that when you

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Speaker 3: do the forecast, you do it almost in six month cycles,

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Speaker 3: but you spot on you've got it. Depending on how

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Speaker 3: much additional income you earn, you've got to be about

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Speaker 3: eighty or ninety percent.

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Speaker 1: That's the SaaS guidelines and how accurate.

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Speaker 3: You need to be in order to get that that

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Speaker 3: number as close as possible.

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Speaker 1: It's it's obviously very difficult.

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Speaker 3: I think that's one of the things we do at

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Speaker 3: text them is we try to provide we've got our

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Speaker 3: core product of how we make tax really easy and

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Speaker 3: accessible and simple for all South Africans, both from an

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Speaker 3: individual tax return perspective and a provisional tax return perspective,

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Speaker 3: but we also provide a whole bunch of educational tools

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Speaker 3: and tracking tools. We've got blog book tools and bank

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Speaker 3: statement readers that really try and make it easy. Because

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Speaker 3: you're write it's become as very easily becomes a hell

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Speaker 3: of a lot to manage, and at the end of

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Speaker 3: the day, it is it's your responsibility to remain compliant.

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Speaker 3: So it's it's sometimes people just almost want to close

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Speaker 3: their eyes and say and say like, oh, well, it's tock.

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Speaker 3: I can't deal with all of this. But the reality

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Speaker 3: is it's still the problem doesn't go away, And I

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Speaker 3: guess that's what's essentially what we try to do is

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Speaker 3: we just say, let's help try and make staying compliant

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Speaker 3: as easy and simple for all South.

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Speaker 2: Africans, absolutely as easy as possible. So before we must

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Speaker 2: wrap up, Daniel Michael asking what about Christmas gifts? If

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Speaker 2: a client, for a customer, for example, sends you a

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Speaker 2: thank you gift at the end of the year, are

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Speaker 2: you required to declare those for tax purposes?

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Speaker 3: It can become very technical. No, but the short answers

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Speaker 3: is no for some specific reasons. I think the way

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Speaker 3: to think about it is is it's it's receiving it's

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Speaker 3: receiving reward in kind for your services. So it's if

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Speaker 3: I was a Christmas gift is a bit different because

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Speaker 3: it's someone.

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Speaker 1: Just potentially saying thank you.

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Speaker 3: But if I decided that I go to my company

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Speaker 3: and I no longer want to be paid in cash,

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Speaker 3: I want to be paid for doing what I do

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Speaker 3: in travel vouchers, that is a that is a remuneration

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Speaker 3: for what I'm busy doing, and therefore it's in come

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Speaker 3: in nature. I think that's where it becomes. It could

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Speaker 3: become very technical. I'm sure I don't want to boil

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Speaker 3: your listeners with text on a Monday afternoon, But.

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Speaker 1: The short answer is no, I think you're fine with

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Speaker 1: the Christmas gift.

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Speaker 2: Okay, Thanks Michael, I'm glad you asked the question. Daniel,

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Speaker 2: Thank you very very helpful and interesting conversation, and hopefully

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Speaker 2: it's tipped off a few people who might be of

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Speaker 2: the stick my head under the duveo and hope SARS

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Speaker 2: doesn't notice variety to take it a bit more seriously.

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Speaker 2: We really appreciate your time this afternoon. Thanks Papa, Daniel

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Speaker 2: Speaker's director of Tax Tim and do check out. They've

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Speaker 2: got really, really helpful tools on that site tax team

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Speaker 2: dot com. Even if you've just got a bog standard

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Speaker 2: single income tax return that you need a bit of

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Speaker 2: help in submitting, it's a great place to look for

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Speaker 2: help Tax tim dot com