Tag: SARS

By Hanno Labuschagne for MyBroadband

The South African Revenue Service (SARS) has announced hundreds of vacancies for skilled workers across various fields as part of its plan to modernise its tax compliance systems with new and evolving technologies.

“SARS is preparing for a future where increasingly our work will be informed by data driven insights, self-learning computers, artificial intelligence and interconnectivity of people and devices,” the tax authority stated.

“Mindful of this, we are evolving our workforce to prepare for this exciting changed and changing world of work.”

“Whilst we continue to develop our own employees, we invite talented and passionate executives, who share our strong public service ethos and unmistakeable commitment to improving the material conditions and wellbeing of all South Africans,” SARS said.

These employees would assist in SARS’s mandate of ensuring optimal compliance with tax and customs legislation in South Africa.

Available positions
In addition to 200 South Africans who have recently graduated in the fields of Customs, Chartered Accountancy, Auditing and Legal, SARS is seeking 370 highly skilled leaders and specialists in specialised roles.

The latter includes Information and Technology specialists with the looking aptitudes:

  • Developers (C#, Java, Angular, Web, Data Warehouse [ETL/C#])
  • Database Administrators (SQL, Adabas)
  • Integration Designers
  • Websphere Application Server Specialists
  • SAP Specialists (GRC, FICA, HCM, SRM, Development & Integration)
  • IT Security Engineer
  • Software Engineers
  • Server Engineers (Wintel)

Other fields outside of IT in which vacancies are being offered include:

  • Data Management
  • Audit and Risk
  • Investigations and Auditing with specific focus on Tax Evasion and related matters
  • Legal Specialists and Consultants
  • Governance, Risk, and Compliance Specialists
  • Specialists in Trust Practice, Research and Analysis, Strategy and Advisory, Interpretive Tax Policy & Compliance

Massmart loses R1bn tax refund appeal

By Dineo Faku for IOL

Massmart has suffered yet another blow after the Supreme Court of Appeal ruled that the retailer could not claim nearly R1-billion worth of losses from the taxman for a share incentive scheme implemented 20 years ago for senior managers.

The Supreme Court of Appeal dismissed Massmart’s appeal of a court decision that gave the SA Revenue Service (Sars) a right to disallow R945 million in capital losses claimed by the group.

In his judgment, the appeal Judge Visvanathan Ponnan, said that the unpaid loans plainly constituted an asset in the hands of Massmart.

“There could thus be no loss to speak of. Instead, what Massmart purported to do was to account for the trust’s losses in its books,” Judge Ponnan said. “This despite the fact that at the outset they had received legal advice from Mr Lewis that they could not, by arrangement between them and the trust, change the incidence of capital gains or losses.”

The court action stems from the decision by Sars to block the capital losses claimed by Massmart after the company could not identify the asset disposed of which gave rise to the capital loss.

Massmart, the owners of Game, Makro and Builders Warehouse brands, approached the SCA after the Tax Court of South Africa dismissed the

company’s determination that it had suffered R954m capital losses during its 2007 to 2013 years of assessment by virtue of its dealings with the trust.

In 2000, Massmart resolved to adopt a share incentive scheme for its key management personnel, conducted through the Massmart Holdings Limited Employee Share Trust.

On June 12, 2000, the Trust Deed for the trust was adopted by Massmart, and the first trustees of the trust were an accountant, Mark Franklin, and Stephen Lewis, an attorney at Edward

Nathan and Friedland Incorporated.

Judge Ponnan said in his judgment that Massmart’s witnesses Franklin, former chief executive, Guy Hayward, the assistant to the share trust administrator, Sena Farquhar, had not helped the company’s case.

“Far from supporting Massmart’s case, the evidence of the three witnesses appears to have bolstered Sars’s contention that the notion that the so-called right constituted an asset, is illusory and an ex post facto reconstruction to establish a basis by Massmart for a claim for capital gains,” said Judge Ponnan.

For instance, during his testimony, when asked what was the basis upon which capital losses were claimed previously by Massmart before the appeal, Hayward said: “I have, M’Lord, I have no recollection, I’m not clear on that … I do not know that personally.”

While Franklin accepted that the funds that Massmart had advanced to the trust were recorded as loans, he testified, however, that there was never any intention that the loans would be repaid.

He could also not explain why the loans were recorded as unpaid loans in the financial statements of the trust and the balances were carried forward to each succeeding year.

Franklin had said it was for accounting purposes that funds advanced to the trust were described as loans because there was never any intention that it should be repaid.

“Well, it could have been described otherwise, but it was not a loan in the sense that a loan means that the trust was required to repay it, because the trust had no funds. “So it would never have been able to repay it,” Franklin said. “So in that respect the term loan is probably misleading.”

 

By Simnikiwe Mzekandaba for ITWeb

Some cyber security experts say the South African Revenue Service’s (SARS’s) decision to introduce a Web browser that supports defunct Adobe Flash Player has “severe” cyber security implications.

Citizens have also taken to social media to express their dismay at the revenue service’s decision to roll out a browser that enables Flash Player.

This week, SARS announced the release of an alternate SARS browser solution, as it tries to deal with the aftermath of the delay in migrating all eFiling forms from Adobe Flash to its chosen HTML5 platform.

In its statement, the tax collecting agency says taxpayers will be able to complete and submit the Flash-based forms not migrated to HTML5, in the interim, while it completes the migration.

“The SARS browser enables access to all eFiling forms, including those that require Adobe Flash, thus maintaining compliance with your filing obligations.”

SARS adds that existing Web browsers such as Chrome and Edge will continue to work for all forms already migrated.

Desperate measures
Even though software company Adobe announced in July 2017 that it will stop supporting Flash Player post 31 December 2020, SARS has been behind in completing the migration process.

As a result of the disruption caused by the migration holdup, last week the taxman said it would implement some remedial actions to assist taxpayers still experiencing issues.

At the time, the taxman didn’t point to a SARS browser among its list of solutions to deal with the disruption caused by the discontinuation of Adobe Flash, but has now indicated its availability.

Cyber security and small business expert Hennie Ferreira says SARS is obviously desperate for a solution; however, the current solution is not safe.

“Flash Player is no longer a secure technology and any solution that involves using Flash Player is not secure. I think SARS is making the matter worse by putting taxpayers at risk by using unsafe technologies.”

Ferreira highlights the only solution around the Flash Player issues is to not use it at all. “SARS should process all requests via e-mail and their call centres manually until they have fixed the eFilling system.”

SARS notes the browser is currently compatible with Windows devices only, a move that Ferreira says still excludes the thousands of Mac and Linux users.

Jason Jordaan, principal forensic analyst at digital forensics firm DFIR Labs, comments that it was not a good decision on the part of SARS to release a “new” browser, adding that it just contributes to confusion on the part of the end-user.

“The bottom line is that SARS had well over three years to migrate from Flash and they simply did not get it done in time. They had certainly been working on it as a lot of functionality was no longer dependent on Flash.

“SARS clearly had the capability to transition away from Flash, and had demonstrated that they could do so successfully. My concern is that deploying a new browser instead of simply fixing the problem (that they were aware of), on time, is an ineffective use of resources, at a time when all of us in the country are expected to tighten our belts.”

Unnecessary risk
SARS says its browser cannot be used for general Internet surfing, as it deploys as a separate application and can only be used to access the SARS eFiling Web site and SARS corporate Web site.

Ferreira emphasises that the security implications are severe. “It places every taxpayer, who still needs Flash Player to use the browser, at risk of cyber attacks. Adobe recommended to remove Flash Player completely or to uninstall it as it is insecure and will open computers up to cyber attacks.

“The second problem is that it also places the entire eFilling system at risk and makes the entire system vulnerable by using outdated and insecure technologies.

“The risks are not only on the forms that use Flash Player, but also creates the possibility for hackers to use Flash Player’s vulnerabilities to penetrate SARS’s systems and pivot further attacks from there.”

Jordaan notes that using a product that is no longer supported carries risks. “The browser that SARS has released is a Chromium-based browser, and while the latest Chromium build has Flash support removed, it is possible to still enable Flash to run.”

Compliance considerations
Ferreira stresses that the situation is a national embarrassment for SARS as it was well aware of the discontinuation of Flash Player.

“This is not acceptable and it clearly demonstrates the incompetence from SARS’s IT department to act in this way and ignore cyber security norms and standards and put their own systems and taxpayers’ systems at risk.

“Businesses in South Africa, under the POPI Act, are obliged to implement cyber security protocols by law or face serious consequences. By being forced to use insecure technologies by SARS, this means they are not POPI-compliant as there is a well-known vulnerability that is not being addressed and can place all personal information that they process at risk.

“There is a very good reason why all major browsers stopped supporting Flash Player and removed it from their software. Flash Player is a security risk. SARS is doing the opposite by providing a browser that continues to use Flash Player, despite Adobe clearly instructing everyone not to do so. Google Chrome, Mozilla Firefox, Microsoft Edge, Apple Safari, Opera Browser, and pretty much any other safe browser, discontinued its support for Flash Player.”

 

New tax rules you should know about

By Jean du Toit for IOL

The President has given effect to the 2020 tax proposals by signing three tax Acts into law. On 15 January 2021, the President gave his assent to the Rates and Monetary Amounts and Amendment of Revenue Laws Act No. 22 of 2020 (“Rates Act”), the Taxation Laws Amendment Act No. 23 of 2020 (“TLAA”) and the Tax Administration Laws Amendment Act No. 24 of 2020 (“TALAA”). These Acts were promulgated on 20 January 2021.

The Rates Act gives effect to changes in tax rates and certain monetary thresholds, whereas the TLAA and the TALAA contain more profound technical and administrative changes. Highlighted below are 10 key changes taxpayers need to know.

1.Withdrawal of retirement funds upon emigration

From 1 March 2021, taxpayers will no longer be able to access their retirement benefits upon completion of the emigration process through the South African Reserve Bank, commonly referred to as “financial emigration”. After this date, taxpayers will only be able to access their retirement benefits if they can prove they have been non-resident for tax purposes for an uninterrupted period of three years. Importantly, taxpayers can still access their retirement benefits under the old dispensation if they file their financial emigration application on or before 28 February 2021. If you miss this deadline, your retirement benefits will be locked in for a period of at least three years

2.Anti-avoidance rules bolstered for trusts

The anti-avoidance rules aimed at curbing tax-free transfers of wealth to trusts have been strengthened to prevent persisting loopholes. The amendment is directed at structures where individuals subscribe for preference shares with no or a low rate of return in a company owned by a trust connected to the individual. Ongoing changes to these rules again bring into question the thinking that trust structures are tax efficient.

3.Reimbursing employees for business travel expenses

Employees are not subject to tax on an amount paid by their employer as an advance or reimbursement in respect of meals and incidental costs where the employee is obliged to spend a night away from home for business purposes, provided it does not exceed the amount published in the Government Gazette. The TLAA includes an amendment which extends the treatment to expenses incurred on meals and other incidental costs while the employee is away on a day trip. It is important to note that this will only apply if the employer’s policies expressly make provision for and allows such reimbursement.

4.Relief for expats confirmed

Due to the travel restrictions under the Covid-19 pandemic, the days requirement for the foreign employment exemption has been reduced from 183 days in aggregate to 117 days. The relaxation only applies to the aggregate number of days and the requirement that more than 60 of the days spent outside South Africa must have been consecutive remains applicable. This amendment is not a permanent fixture and will only apply to any 12-month period for the years of assessment ending from 29 February 2020 to 28 February 2021.

5.Employer provided bursaries

The Income Tax Act makes provision for the exemption of bona fide bursaries or scholarships granted by employers to employees or their relatives. Historically, employees used this exemption as a mechanism to structure their remuneration package to reduce their tax liability. The exemption will no longer apply where the employee’s remuneration package is subject to an element of salary sacrifice; that is where any portion of their remuneration is reduced or forfeited as a result of the grant of such a bursary or scholarship.

6.Tax treatment of doubtful debts

The doubtful debt allowance provision has been amended to bring parity between taxpayers that apply IFRS 9 and those who do not. Where the taxpayer does not apply IFRS 9, the amount of the allowance is calculated after taking into account any security that is available in respect of that debt.

7.Roll-over amounts claimable under the ETI

The Employment Tax Incentive Act has been amended to encourage tax compliance. The amendment determines that excess ETI claims of employers that are non-compliant from a tax perspective will no longer be rolled over to the end of the PAYE reconciliation period.

8.Estimated assessments

The terms under which Sars may issue an assessment based on an estimate has been expanded. Sars may now issue an estimated assessment where the taxpayer fails to respond to a request from Sars for relevant material. The amendment also bars the taxpayer from lodging an objection against the estimated assessment until the taxpayer responds to the request for material.

9. Sars can withhold your refund if you are under criminal investigation

In terms of the Tax Administration Act, Sars is entitled to withhold refunds owed to taxpayers in certain circumstances. The TALAA expands these provisions to determine that if you are subject to a criminal investigation in terms of the Tax Administration Act, Sars is entitled to withhold any refund it owes you, pending the outcome of the investigation.

10.Criminal sanctions for minor tax offences

Previously, a taxpayer would only be guilty of a criminal offence for non-compliance under the Tax Administration Act if they “wilfully” failed to comply with their tax obligations. With the new amendments, non-compliance will constitute a criminal offence where it is as a result of the taxpayer’s negligence. In other words, intent is no longer required; where you are non-compliant as a result of ignorance of your obligations, you may be found guilty of a criminal offence. These offences are subject to a fine or imprisonment of up to two years.

Final comments

Taxpayers need to speak to their advisors to understand these changes and special heed must be paid to the administrative changes that are now law. The most important change that applies to all taxpayers is the one that criminalises negligent non-compliance. This and other administrative changes mean that taxpayers will be held to a higher standard, which serves as a cue for everyone to take ownership of their tax affairs.

 

Who pays taxes in South Africa?

National Treasury and the South African Revenue Service (SARS) have published the annual Tax Statistics for 2020.

The 2020 edition provides an overview of tax revenue collections and tax return information for the 2016 to 2019 tax years, as well as the 2015/16 to 2019/2020 fiscal years.

The highlights of the statistics include:

  • Tax revenue collected amounted to R1 355.8 billion, growing year-on-year by R68.1 billion (5.3%), mainly supported by Personal Income Tax (PIT) which grew by R35.3 billion (7.2%).
  • 1,776,301 (40.9%) of assessed taxpayers were registered in Gauteng;
  • 580,464 of assessed taxpayers lived in the Johannesburg Metro and were taxed on an average taxable income of R512,785;
  • 1,171,410 (27.0%) of assessed taxpayers were aged between 35 to 44 years;
  • 2,352,902 (54.2%) of assessed taxpayers were male and 1,985,021 (45.8%) were female;
  • The assessed taxpayers had aggregate taxable income of R1.6 trillion and a tax liability of R360 billion. Their average tax rate was 22.5% compared to 21.6% in the previous tax year;
  • Income from salaries, wages and other remuneration, as well as pension, overtime and annuities, accounted for 77.6% of total taxable income;
  • Out of the 780,480 companies assessed as at the end of July 2020 for tax year 2018, 25.2% had positive taxable income;
  • 46.6% had taxable income equal to zero and the remaining 28.2% reported an assessed loss.

 

Negligent taxpayers could face jail-time in SA

Source: Supermarket & Retailer

With Government’s draft response being released in the Parliamentary Debate on 13 October 2020, non-compliant taxpayers, be it intentionally or negligently, may soon be facing some serious jail-time.

The draft response proposes a strict, no nonsense approach from the South African Revenue Service (SARS) when it comes to the taxpayer’s compliance, shifting the burden of proof to fall more heavily on the taxpayer than ever before.

SARS-Treasury team-up

Under the current tax regime, a key element of any offence is that it is committed “willfully and without just cause” by the taxpayer, with negligence resulting in a mere wrap on the knuckles in most instances.

The July 2020 Draft TALAB (Tax Administration Laws Amendment Bill) proposes to change this entirely, by the removal of the term “willfully” from the legislation, taking away one more line of defense to taxpayers across the country. This proposed amendment was met with fierce resistance by tax practitioners and taxpayers alike, opposing the opening of this particular can of worms.

In last week’s proceedings, National Treasury and SARS took the opportunity to shoot their shot, proposing this amendment to the Standing Committee on Finance.

Although some leniencies were permitted, the two authorities held their ground on the need for a change in law, more specifically the standards used to measure taxpayers’ behaviour, to enable easier convictions for tax related offences.

Enabling legislative amendments

Although the proposed amendments will have no impact on the existing sanctions for non-compliance, they will widen the net for SARS to catch taxpayers off-guard, and impose these sanctions, for what could be something as simple as a typographical error when completing a return, or any of the other 100 mistakes which may be committed due to human error, which may be viewed as negligent on the part of the taxpayer.

It must be noted that “intent” was not entirely done away with, but rather drawn in to permit more severe sanctions in this instance as these acts are borderline tax evasion, where the “intent” is to defraud SARS.

Strategically speaking, this is a bold yet brilliant move from the SARS-Treasury team, as the inclusion of “negligence”, and retaining of “intent” allows the non-compliance net to be cast wide enough to catch even the smallest fish.

The split

The existing offences are proposed to be split into two categories, being that which requires “intent”, where the heavier burden of proof falls on SARS, and that which either “intent” or “negligence” will suffice, shifting the weight of the burden more on to the taxpayer than ever before.

The existing sanctions, including some serious jail-time and/or a financial fatality in the form of a fine, will remain unchanged, with the case-appropriate sanction being left to the discretion of either SARS (for minor offences) or the National Prosecuting Authority (“NPA”) (in the instance of more severe offences).

First-mover advantage

In order to protect yourself from SARS, it remains the best strategy that you always ensure compliance. Where you find yourself on the wrong side of SARS, there is a first mover advantage in seeking the appropriate tax advisory, ensuring the necessary steps are taken to protect both yourself and your bank balance from paying the price for what could be the smallest of mistakes.

However, where things do go wrong, SARS must be engaged legally, and we generally find them utmost agreeable where a correct tax strategy is followed.

As a rule of thumb, any and all correspondence received from SARS should be immediately addressed, by a qualified tax specialist or tax attorney, which will not only serve to safeguard the taxpayer against SARS implementing collection measures, but also being specialists in their own right, the taxpayer will be correctly advised on the most appropriate solution to ensure their tax compliance.

 

Source: MyBroadband, ESET

It’s time to file that tax return at SARS! Whilst many of us cannot wait for our refunds, this is also a time of the year where cybercriminals are waiting to attack. Sadly, with the tax season comes tax scams with cybercriminals seeking to steal your tax refund.

Carey van Vlaanderen, CEO at ESET South Africa explained: “Whilst we like to think we have become wiser to email spams and scams, cybercriminals are often in the perfect position to “fine tune” their attacks. If one attack doesn’t work, they simply adapt and improve, and then spam it out again.”

ESET offers the following tips to stay safe during the tax return season:

1. Are you worried you’re being phished? Look at the bait
Always look at who the email is from. It’s possible to fake any email address, but not all phishers are this clever – they may use a random email address that gives the game away. “Check the link that you’re supposed to click by hovering your mouse over it to display a pop-up message with the real link in it. Look closely. Does the address make sense? If any alarm bells start to ring, don’t click,” said van Vlaanderen.

2. Tax returns, invoices, wedding invitations – cybercriminals use them all
To a cybercriminal, nothing is sacred – wedding invitations, invoices and tax returns are all commonly used tactics. Always think hard before opening any attachment – even ones that seem to come from friends. It’s unlikely that SARS are asking you to refile your tax returns so please do not click.

3. Be extra careful around short URLs
If there isn’t a cap on the number of letters, why has someone shortened the link? You cannot take it for granted that URL shortening services are redirecting you to trustworthy websites.

4. Telephone numbers are not a guarantee an email is real
Do not trust professional looking emails where there is a phone contact number – this is often another cybercriminal trick. The number may work, but you will be connected to a scammer who will attempt to fool you into handing over further details.

5. Don’t auto-load images
Leave your email messages so your images aren’t automatically downloaded – otherwise you could be sending a signal to spammers. Images are often stored on the spammer’s servers and can be unique to your email. By turning on pictures in an email your computer downloads the images from the spammer’s servers, showing that you exist.

6. Is SARS really calling?
“It’s doubtful SARS will be calling you and they definitely are not going to offer any sort of gift card for filing early. If you get weird emails or phone calls, ignore them, or hang up. Always follow your gut.”

7. Encryption is the only way to go
If you file online look for encrypted websites. Make sure the website your visiting has HTTPS in front of the URL. Typically, it will have a green or grey lock showing it’s a secure connection. The last thing you want to do is share your extremely private information associated with taxes unless you’re on an encrypted website.

8. Did someone beat you to filing your tax return?
Identity theft is growing. In the USA alone, almost 60 million people have been affected – that is more than 1 in every 6 Americans. Cybercriminals will use any opportunity to monetise the effort they have taken to steal an identity, and at this time of year it’s probably tax identity theft for the purposes of tax refund fraud.

The cybercriminal’s target is not only the individual but also the tax professionals who prepare and file taxes for many clients potentially providing a single place for a cybercriminal to gain all the necessary data to file returns for many individuals.

It’s important that good data security practices and technology are in place for both individuals and tax professionals and are reviewed for effectiveness on a frequent basis.

“The next time a person or website requests personal data, ask some questions – do they really need it, how long will they store it, will it be protected, do I trust them to secure it?” said Van Vlaanderen. “The collection of personal data is, for some, a business that provides great rewards – as consumers we need to engage in the protection of our identity by being less willing to hand over our data to just about anyone who requests it.”

In a nutshell, to protect yourself, use up-to-date security software as offered by ESET, strong and unique passwords or passphrases, and encryption; and avoiding phishing scams by checking links and following your gut.

Reporting scams to the relevant authorities allows them to ascertain the scale of the issue and potentially track down the perpetrators and bring them to justice.

To find out more about ESET online security offerings, pleas click here. For more information on ESET, please visit their website, or follow them on Instagram and Facebook for updates and news.

SA to miss tax target by over R300bn

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.

South Africans may see tax increases soon

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

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