Glossary of terms

The government agency responsible for tax collection and enforcement of tax laws in South Africa, ensuring compliance with income tax, VAT, customs, and excise duties.

A consumption tax levied on goods and services at every production stage, ultimately borne by the end consumer. In South Africa, the standard VAT rate is currently 15%.

A policy framework aimed at addressing historical inequalities by promoting economic participation and ownership for black South Africans, including initiatives in employment, skills development, and procurement.

A summary document issued annually by employers to employees, detailing income earned, taxes deducted, and UIF contributions for tax filing purposes.

A system where employers deduct income tax from employees' salaries and remit it directly to SARS, ensuring tax obligations are met progressively as income is earned.

A tax imposed on employers to fund national workforce training initiatives, calculated as a percentage of the total payroll.

A government fund that provides short-term financial relief to workers who lose employment, take maternity leave, or cannot work due to illness.

A method of paying income tax in advance based on estimated earnings, primarily for individuals and companies with irregular income streams.

A statutory body resolving workplace disputes, including unfair dismissals, wage issues, and working conditions, often without resorting to court action.

An online platform provided by SARS for taxpayers to submit tax returns, view tax statuses, and manage tax-related queries and documentation conveniently.

The systematic recording of all financial transactions, including income, expenses, and assets, to maintain accurate business records.

An independent examination of financial statements and records to ensure accuracy, compliance with regulations, and fair representation of a company’s financial position.

Internet-based computing that provides remote access to software, data storage, and applications, enabling real-time collaboration and financial management.

An accounting method to allocate the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.

A tax on the profit made from selling an asset, such as property or shares, calculated as part of a taxpayer’s income.

A central accounting book or digital system where all transactions are recorded, categorised, and summarised.

A financial statement that provides a snapshot of a company’s assets, liabilities, and shareholders' equity at a specific point in time.

Also known as a profit and loss statement, it outlines a company’s revenues, expenses, and net profit over a specific period.

The movement of money in and out of a business, critical for understanding liquidity and operational efficiency.

The residual interest in the assets of a company after deducting liabilities, often representing ownership value.

Adherence to laws, regulations, and industry standards to avoid penalties and maintain good standing with regulatory bodies.

Creating a financial plan that estimates income and expenses over a specific period, aiding in resource allocation and decision-making.

Predicting future financial outcomes using historical data and market trends to guide strategic planning.

An expense that can be subtracted from gross income to reduce taxable income, such as medical aid contributions or business-related expenses.

The process of calculating and disbursing employee wages, salaries, bonuses, and deductions while ensuring compliance with tax regulations.

Reorganising a company’s structure or operations to improve efficiency, reduce costs, or better align with strategic goals.

The process of determining the monetary worth of a business, asset, or investment, often used in sales, mergers, or financial reporting.

Profits distributed to shareholders as a return on their investment, usually expressed as a percentage of earnings.

Total income earned before deductions, taxes, or other withholdings are applied.

The amount remaining after all expenses, deductions, and taxes have been subtracted from gross income.

A method of accounting where revenues and expenses are recorded when they are incurred, regardless of when payment is made or received.

Long-term tangible assets such as machinery, buildings, or vehicles used in business operations that are not consumed within a single accounting period.

The ability of a business to meet short-term financial obligations by converting assets into cash.

Money owed to a business by customers for goods or services delivered but not yet paid for.

Obligations a business owes to suppliers or creditors for goods and services received.

The difference between current assets and current liabilities, reflecting a company’s operational efficiency and financial health.

A financial metric expressing the percentage of revenue that remains as profit after expenses are deducted.

The point where total revenue equals total costs, indicating no net profit or loss.

Procedures and systems designed to ensure accuracy, reliability, and integrity in financial reporting and safeguard against fraud.

A measurable value that indicates how effectively an individual or organization is achieving specific objectives.

A chronological record of financial transactions or changes in data, enabling traceability and accountability.

The conclusion of a company’s accounting year, when financial statements are prepared for reporting and compliance.

The total revenue or sales generated by a business over a specified period.

Growth strategies that balance economic progress with environmental preservation and social equity.

Identifying, assessing, and mitigating risks that could adversely affect a company’s operations or profitability.

The ability of a business to generate earnings relative to its revenue, costs, and investments.

A limited assurance engagement where an independent accountant evaluates a company’s financial statements for compliance without performing a full audit. It’s often required for certain small to medium enterprises under South African law.

A scoring system in South Africa determining the level of financial reporting and assurance required by a company, calculated based on turnover, employee count, and other factors.

A financial report prepared by accountants presenting financial information in a clear format, without providing assurance or verification of accuracy.

Internal financial reports prepared periodically (e.g., monthly or quarterly) to provide business owners and managers with insights into financial performance and help guide decision-making. They often include income statements, balance sheets, and cash flow reports.