By Lameez Omarjee for Fin24
SA will miss its original tax revenue target by over R300-billion this year, said Finance Minister Tito Mboweni.
During the tabling of the special adjustment budget on Wednesday, the minister explained that the country is already behind its 2020/21 tax revenue target by R35.3 billion. As a result, government has revised down the tax revenue target from R1.43 trillion to R1.12 trillion.
National Treasury recorded a R63.3 billion revenue shortfall in the 2019/20 tax year.
“We expect to miss our tax target for this year by over R300 billion,” Mboweni said.
While Mboweni did not announce any tax hikes to make up the shortfall, he said that tax measures of R40 billion would be needed over the next four years. Tax proposals will be announced in the 2021 budget.
Furthermore Treasury will work to find spending adjustments of R230 billion over the next two years.
He also touted the idea of zero-based budgeting. “This means that we will try to reduce all expenditure that we thought we can no longer afford. After all, we are not as rich as we were ten years ago,” Mboweni said.
Analysts had expected the budget to reveal a significant shortfall as a result of the lockdown which restricted economic activity and by extension tax revenue collections.
To cushion the blows of the lockdown on consumers and businesses, government implemented a R500 billion stimulus package, which included R70 billion in tax relief measures. These entailed deferrals on some tax payments such as excise duties, carbon tax and employee taxes. Government also opted to postpone tax proposals for corporate tax hikes and SARS was directed to fast track VAT refunds. Donations to the Solidarity Fund, set up to support the vulnerable in society, were also declared tax deductible.
A ban on cigarette and alcohol sales also had negative implications for excise duty collections. Back in April SARS Commissioner Edward Kieswetter said these restrictions saw a loss of R1.5 billion in excise duties. The minister has also been outspoken about his opposition to the ban on these items.
Bernard Sacks, tax partner at Mazars, noted that certain sectors of the economy had still not been able to restart operations, while some others are operating to a limited extent.
“The difficulties faced by Minister Mboweni are now immeasurably greater. Ways must be found to fund the steep rise in healthcare spending… Social grant spending will show steep increases as the unemployment rate soars even higher,” Sacks said.
By Jasmine Stone for 2oceansvibe
The South African Revenue Services (SARS) will start issuing auto-assessments from 1 August.
On May 5, SARS announced new tax filing seasons and a much more heavy-handed approach to companies who are not submitting their EMP501s and IRP5s timeously.
There will be a renewed focus to ensure that all employers are fully compliant in terms of their filing and payment obligations. In order to achieve higher compliance, SARS will interface with the National Population Register, the Companies Registrar, and the Deeds Office.
SARS has put in place a three-phased approach:
- Phase 1 – April 15 to May 31 2020 – Employer and third-party filing
- Phase 2 –June 1 to August 31 2020 – Taxpayers to update their files (Bank Acc, addresses etc) / SARS follow up with non-compliant Employers/Third-party data providers / Auto Assessment of certain taxpayers and possible early filing for some taxpayers
- Phase 3 – September 1 to January 31 2021 – Tax filing for the remainder
Due dates for the submission of IRP5s and all third-party data (Bank interest certificates, Pension certificates, Medical certificates) is May 31, 2020. SARS has said that third-party data providers who remain wilfully non-compliant will be criminally charged during the period of June 1, 2020 to August 31, 2020.
In the two days prior to lockdown, SARS sent a number of notices warning employers who had filed their previous IRP5’s late, of criminal prosecution.
During the period up to August 31, SARS will auto-assess taxpayers who only have one IRP5. The taxpayers will have an opportunity to accept this auto-assessment, and if not accepted, will be required to submit their returns later.
It seems that SARS will allow certain taxpayers to file their returns before September 1, but only if their employers and third-party data providers are tax compliant. The wording used by SARS is, “individual taxpayers who are required to file but have not been auto-assessed may file early via on-line facilities if their employers & other third-party data providers are fully compliant (which includes no PAYE debt without a proper and secure deferment arrangement)”.
For all other taxpayers, SARS has delayed tax season to only open on September 1, whereas in previous years, it opened on the July 1. SARS will notify taxpayers to whom phase three filing applies.
It seems as though SARS strategy is to allow employees of tax-compliant companies to file early whilst employees of non-tax compliant employers will be required to wait until September 1 before they can file. This seems particularly harsh as this will probably hurt the hardest hit industries the most. This will also be a blow to taxpayers who were counting on submitting their tax returns as soon as possible in order to get their tax refunds.
Tax season deadlines for non-provisional taxpayers will be November 16, 2020 and provisional taxpayers will be January 31, 2021.
The pressure is on employers to ensure that all their returns are submitted and deferred payment arrangements are put in place if they are not able to pay.
Chief economist of the Efficient Group, Dawie Roodt, recently told Business Tech that South Africa’s growing budget deficit may result in further tax increases to help cover the shortfall.
Increased taxes could arise because:
- Moody’s may downgrade South Africa’s sovereign credit rating to sub-investment grade because of the country’s poor economic figures
- The fiscus is in deep trouble
- Debts owed by state-owned enterprises amount to around half a trillion rand
- SARS is struggling to collect sufficient taxes to cover the government’s growing fiscal deficit
Taxes could take the form of:
- An increase in personal income tax
- A VAT hike
- A potential increase in fuel levies
- Fiscal drag (when people, who have normal inflation-related increases in pay, jump into new higher tax brackets because the brackets have not also moved up by at least inflation)
- Stealth, or hidden, taxes
SARS (South African Revenue Service) has encouraged taxpayers to submit income tax returns via the SARS eFiling or the SARS MobiApp when the tax season commences on 1 July 2019.
Taxpayers who do not use SARS eFiling or the SARS MobiApp and require assistance from SARS branch staff to file their income tax returns will only be able to do so from 1 August 2019 to 31 October 2019.
What is the SARS MobiApp?
The SARS MobiApp is a mobile channel from which you can complete and submit your Income Tax Return (ITR12).
You can easily install the SARS MobiApp from the App Store (for Apple devices) or Google Play Store (for Android devices). On the SARS MobiApp you can register, complete, save and submit your 2019 return, as well as returns from previous years.
You may also use the app for the following:
- Register for eFiling
- Reset your username and password
- File your return
- Upload and submit supporting documents
- Make a payment to SARS
- Set up a Call Back from the SARS Contact Centre
- View a Notice of Assessment
- Request and view the Income Tax Statement of Account
- View the status of the return
- Use the tax calculator
- Which devices are compatible with the SARS MobiApp?
- iOS version 10 to latest
- Android version 5.0 to latest
Source: Algoa FM
The South African Revenue Services (SARS) on Monday announced it will be migrating to a new hosting platform for its electronic services this month.
SARS said the “new and reliable platform” features the latest technology on the market, and includes a refresh of SARS’ hardware and software.
According to a statement, this is part of their journey towards digital transformation, which is expected to deliver a myriad of innovative solutions in support of their mandate to make it easy and safe for taxpayers to comply.
During the migration the following services will be affected:
- SARS eFiling
- eFiling app
- Employer and SARS website
The Customs Electronic Data Interchange (EDI) gateway, which is the primary electronic channel used by Customs clients to communicate with SARS, will not be impacted.
Clients are encouraged to conclude all transactions on these systems well before the migration. However, urgent transactions that need to be made during this period can be done manually at all of their branches which will operate on normal hours.
By Katya Stead for Fin24
The South African Revenue Service (SARS) announced on Monday afternoon that it had collected R1 287.6bn in tax for the financial year ended March 31 2019, some R14.6bn less than what was estimated in the revised Budget.
The tax agency’s acting head, Mark Kingon, made the announcement in Pretoria. The 2019 revised Budget estimated a tax haul of R1 302.2bn for the past financial year.
“It should be noted that these are preliminary results, which will be subject to detailed financial reconciliation and a final audit.” the agency said in a statement.
While SARS collected more tax in total in the year ended March 31, it also paid out more in refunds.
The revenue collection agency said that gross collections grew by 8.6% year-on-year. Refunds recorded an even more impressive annual growth of of 22.7%.
“The gross amount collected is R1 575.4bn, which was offset by refunds of R287.8bn, resulting in net collections of R1 287.6bn. The net revenue outcome of R1 287.6bn represents a growth of R71.2bn (5.8%) compared to the 2017/18 financial year.”
This follows the announcement by the minister of finance during the mini budget that the VAT refund envelope would be increased to allow the release of refunds from the fiscus back into the economy.
VAT refunds for the year totalled R229.2bn, an increase of R38.1bn, or 19.9%, over the previous year.
Speaking at the results release on Monday, Mamiky Leolo, acting group executive of the tax, customs and excise unit at SARS, said the shortfall was near historic proportions. “This is the highest decline we’ve seen since the Great Depression. The deviation is R14.6 billion. I think in terms of the numbers it is a bit of a shock. But statistically, we are 1.1% off. We’ve done a very good job under tough circumstances.”
Despite the shortfall, the agency is targeting a total of R1 422bn in tax revenue collection for the 2019/20 year.
Axed SARS boss Tom Moyane has written to President Cyril Ramaphosa demanding that Ramaphosa withdraw his letter of termination to Moyane before the end of the week.
In a letter issued via his attorney Eric Mabuza on Tuesday, Moyane gave Ramaphosa a deadline of 12 noon on Friday November 9 to withdraw the termination on grounds that the president’s conduct was “irrational, unlawful and invalid”.
“[W]e are instructed to demand, as we hereby do, that you must forthwith withdraw your letter of termination dated 1 November 2018, restore the status quo which obtained before the service thereof (i.e. that our client is suspended with pay pending the outcome of the Disciplinary Inquiry) and duly await the outcome of the pending Constitutional Court application and/or the Disciplinary Inquiry,” the letter reads.
Last week the Presidency confirmed that President Cyril Ramaphosa had fired Tom Moyane as the commissioner of the South African Revenue Service (SARS).
Ramaphosa had heeded the recommendations of the Nugent Commission of Inquiry, which submitted its interim report at the end of September.
Retired judge Robert Nugent and his assistants unanimously agreed that Moyane does not have the character of a person fit to lead Sars and he should be removed from office as a matter of urgency.
SARS e-filing is at risk
By Baldwin Ndaba for IOL
The e-filing tax system will crash in the next two years unless urgent measures are undertaken to recall Barry Hore, who masterminded the IT system dubbed Modernisation.
Senior South African Revenue Services (SARS) official Andre Rabie issued the warning during the conclusion of his testimony before the Nugent Commission tasked to probe administration and governance at SARS since suspended commissioner Tom Moyane took over in September 2014.
Moyane allegedly scrapped an IT system which was introduced by former commissioner Pravin Gordhan in 2007 while he was still at the helm.
The system was continued in SARS even after Gordhan accepted a ministerial post in 2009. Witnesses testified that the Modernisation programme improved the SARS IT system, capturing data of all taxpayers including big business and multinational companies.
According to Rabie, a newsflash announcement on December 12, 2014 – three months after Moyane’s appointment – marked the end of the Modernisation project.
Sue Burger, a senior project manager at SARS, yesterday gave shocking details of Moyane’s decision to end the Modernisation system and its impact on her unit. Burger said Moyane’s decision placed more than R66million worth of projects at risk.
Three witnesses, including Burger, painted a worrying picture about how Moyane allegedly collapsed IT systems, customs enforcement measures and nearly scrapped the e-filing tax system – a few months after taking over.
Earlier the commission heard that the modernisation was introduced in SARS in 2007 when Gordhan was there.
Burger told the commission she was the SARS project manager for customs enforcement. She was the leader of a team of 12 people while others also had people working under them, she said.
SARS, at the beginning of each year, under the Modernisation project, adopted an annual performance plan to improve revenue collection and to implement any new legislation introduced by the government, Burger said.
All the units worked as a team and had regular meetings to assess their achievements and failures including budgeting for their different projects.
The commission heard that this was the practice since the tenure of Gordhan and continued with SARS commissioners without fail until September 2014, when Moyane took over.
Burger and others testified that their troubles began on December 12, 2014, when a newsflash appeared on their internal communication system announcing the scrapping of the Modernisation project.
“We were not consulted about it. The decision placed more than R66m worth of projects at risk. It was just like the curtain had fallen,” Burger said.
She told the commission that SARS had since December 2014 failed to account for more than R22m worth of assets which were captured in the e-Central system.
She said Moyane then introduced a new IT partner, Gartner, to set up a new IT system.
According to her, all project managers were grouped into one under her leadership.
Gartner is one of the companies the National Treasury has compiled a dossier on – it was paid more than R200m without proper procurement processes.
Yesterday, the commission heard that Gartner scrapped all the Modernisation legacy projects, but Burger said they had to plead for the e-filing system to be retained.
The hearing continues.
By Sunita Menon for Sunday Times
The South African Revenue Service (SARS) has undershot Treasury’s revised revenue target for 2017-18.
SARS collected R1.216-trillion for 2017-18‚ Finance Minister Nhlanhla Nene said at the announcement of the preliminary revenue results in Pretoria on Tuesday. Tax revenues amounted to R700 million‚ or 0.06%‚ short of the revised estimate announced in the February 2018 budget‚ but still represents growth of R72.4 billion or 6.3% from 2016-17.
Malusi Gigaba‚ who was finance minister at the time‚ announced in the budget in February that tax collection of R1.217-trillion was expected — up slightly from the previous estimate of R1.214-trillion but still much lower than the ambitious R1.265-trillion target announced in 2017.
Treasury still expects a R48.2-billion revenue shortfall for 2017-18‚ which it says reflects weak growth‚ administrative challenges at SARS‚ and increased tax avoidance.
Under the watch of suspended commissioner Tom Moyane‚ SARS has in recent years reported revenue shortfalls on a scale not seen since the 2008 financial crisis.
SARS collected a gross amount of R1.415-trillion in 2017-18‚ which was offset by refunds of R234.3 billion. Personal income tax contributed R462 billion‚ value-added tax (VAT) contributed R297 billion‚ company income tax contributed R220 billion and customs contributed R49 billion.
An improved trend in revenue collection in the latter part of 2017 was offset by a contraction in March‚ because of timing issues and base effects relating to bringing collections forward.
“Up until February we were right on track but the collections in March broke this‚” said SARS head of research Randall Carolissen.
Nene said: “Tax compliance is one of the key determinants of revenue collection. SARS has seen a decline in compliance.
“Ninety percent of the budget comes from revenue collections and forms the basis of our fiscal framework‚” he said.
The 2018 budget demonstrated that growth was expected to be higher and that the government had made significant changes to the fiscal framework‚ including revising the expenditure ceiling downwards‚ Nene said.
The revenue estimated for 2018-19 is R1.345-trillion‚ which represents growth of 10.3%.
By Jean Du Toit for City Press via News24
You need to be aware that, if you have outstanding tax debt, the SA Revenue Service (SARS) has the power to reach into your bank account and take the outstanding funds by instructing your bank, as its agent, to allow it access – sometimes even without notifying you.
The chances of this happening increase when the end of the tax year is approaching and when SARS has not reached its budget target.
In fact, the Tax Administration Act provides that SARS may notify any third party to pay any money it holds on your behalf to the receiver. Failure to comply makes the bank (or even your employer) personally liable for your debt.
SARS is kind compared with the French
The French Revenue Authority is known for having piloted this tactic. In France, even if the Revenue Authority has no basis to collect outstanding funds, you will be held liable for the legal fees if there is some fault on your part, such as not responding to notices or not having kept your taxpayer particulars up to date.
Here, taxpayers are especially annoyed if SARS acts on a false tax debt or if proper procedure is not observed. SARS is required to adhere to the procedure prescribed by the act, which imposes procedural requirements on to it – for example, to send a final demand 10 business days before it proceeds with the collection.
Alarmingly, however, there are cases in which SARS has withdrawn funds from taxpayers’ accounts without their being notified. Whether this is a result of deficient communication from SARS or a flagrant disregard for the prescribed tax procedure is not relevant, as the withdrawal can be reversed either way.
Don’t put your head in the sand
Taxpayers must be alert when it comes to any attempts by SARS to communicate with them, as ignorance of the legal process will be to your detriment. The biggest mistake taxpayers make is ignoring their tax status, perhaps hoping the problem will go away.
Here are some useful tips:
Regardless of any assurances by your tax practitioner or friend who has been doing your taxes, draw a “statement of account” from your SARS e-filing profile. If the statement shows an outstanding debt, even if it is erroneous, you must act immediately.
The SARS collection process is not suspended if you have objected to an assessment. You must always do a separate suspension of payment request, and this must contain the correct motivation.
Even when there is an obvious mistake on SARS’ part, incorrectly claiming that you owe taxes, or where a SARS official has assured you that the mistake will be rectified, SARS is not legally bound to solve your problem. SARS’ debt collection department is a separate business unit with its own objectives. It is removed from normal tax assessments and will pursue any outstanding debts if no suspension is in place.
It must be understood that the law must protect society to ensure that everyone pays their taxes, and defaulters must effectively be dealt with. Unfortunately, the innocent taxpayer may also get the treatment under these harsh provisions, but, because tax is ultimately a function of law, there is always a legal recourse in these instances.
* Du Toit is an attorney at Tax Consulting SA.