Tag: tax

Get ahead on 2022 taxes

By Colin Timmis, general country manager and professional accountant, Xero South Africa

The South African Revenue Service (SARS) 2020 revenue outcome highlighted the severe economic impact of COVID‐19 on a struggling economy. As a result, expectations of tax base growth have deteriorated since the 2020 Budget.

Effective tax collection and expanding the tax-payer base are key ingredients to fostering economic growth. That’s why it’s more important than ever for SMBs to file their taxes correctly and on time to avoid a nasty fine.

The secret to successful filing is not leaving things to the last minute. As tax deadlines approach, SARS becomes busier and waiting times get longer. That’s why now is the perfect time to start laying the groundwork for your company’s 2022 taxes. Here are a few simple steps you can start taking now:

Get smart about eFiling taxes

Tax was one of the nine areas we outlined in our Time to Rebuild Manifesto, which set out recommendations for the government. One of these was making the tax process more streamlined and encouraging tech adoption to close the tax gap. Xero research shows that 27 percent of SMBs find submitting tax returns to be one of the top challenges they face.

The good news is that the process is already improving for small businesses. The introduction of eFiling options and integrations with popular technology solutions have made filing taxes with SARS simpler than ever. Most businesses – 81.2 percent in the 2019-20 financial year – have already adopted eFiling (according to SARS), but if yours hasn’t, now is a great time to make the switch.

We’ve integrated VAT eFiling directly into Xero so that SMBs can create, store and submit returns in a few simple steps. Learn how.

Organise what you can now

Get ahead of the crowd by ensuring that you have all your registration details correct now. SARS issues penalties for incorrect details, but it only takes a few minutes to check that everything is in order. Businesses that eFile can check their details online on the SARS website.

Keep your accountant or tax expert close

Our research shows that the pandemic has caused almost half of small businesses – 49 percent – to value their accountant as a business advisor, not just a number cruncher.

Almost a quarter of SMBs, 23 percent, have received a penalty fine because they did not understand the tax rules. Accountants are a valuable resource when it comes to understanding regulation and avoiding fines, and small business owners should use their knowledge to ensure they remain compliant. Your accountant can help you to maintain a healthy relationship with SARS and ensure that you’re confident about which exemptions apply.

Automate painful processes with technology

Constant engagement with finances isn’t just about taxes. There’s significant value to adopting an accounting system that takes in data at regular intervals and provides a deep understanding of how your business is doing throughout the year.

That’s why many businesses choose to adopt cloud accounting software, which can automatically share data through bank feeds. Bank feeds automatically and securely import your banking transactions into your accounting software each day.

This ensures that you can maintain a clear view of your financial position in the lead up to tax season and beyond. This will save you hours of time manually reconciling transactions at the last minute.

Go paperless

Technology can also free you from mountains of paperwork. The age of boxes of receipts, expense paperwork and invoices is over. Managing lots of paper documents is inefficient and introduces opportunities for human error, but fortunately there are plenty of tools that enable businesses of all sizes to go digital.

Modern accounting software, for instance, enables business owners and employees to simply take a picture of a receipt and upload it directly to their accounting platform. This will then automatically pull across all the information ready for efficient tax filing.

Stay informed

As we all know, circumstances can change quickly and nobody knows what’s around the corner. That’s why it’s important to listen out for updates from SARS and tips from the small business community.

SARS extends filing deadline

By Martin Hesse Time for IOL

The South African Revenue Service (SARS) has extended the filing deadline for non-provisional taxpayers. The deadline, which was today, Tuesday November 23, has been extended to December 2.

In a statement released today, SARS says it is pleased with the overwhelming response it has received from taxpayers who have submitted their personal income tax returns since 1 July this year.

“SARS would like to thank these taxpayers for responding to our strategic intent of promoting a culture of voluntary compliance.

“However, to afford other taxpayers the opportunity to comply with their legal requirements, SARS will extend the filing season deadline for non-provisional individual taxpayers from November 23 to December 2.

“SARS is acutely aware of the systemic issues the organisation has experienced, as well as the impact of load-shedding on taxpayers which made it difficult for taxpayers to file their returns.

“As a result, the date for levying of penalties on taxpayers that have not filed their return will be extended and implemented in January 2022,” SARS says.

SARS urges taxpayers to use its convenient digital channels: eFiling, SARS MobiApp, as well as the SMS service, which has the number 47277. By sending an SMS to this number, you can book an appointment at a SARS branch, check if you need to file a return and be helped with other services.

The SARS website has also been upgraded to allow for more digital services to taxpayers. For more information on these services, visit www.sars.gov.za

SARS says it remains committed “to make it simple and easy for taxpayers to meet their legal obligations and hopes that the extension of the filing season deadline will encourage greater compliance among taxpayers”.

MultiChoice denies R33bn Nigerian tax bill

Source: News24

MultiChoice has disputed reports that it was ordered by a Nigerian appeal tribunal to pay 50% of a 1.8 trillion naira (R66 billion) disputed tax backlog imposed on it by Nigerian authorities.

MultiChoice had to pay the R33 billion as a deposit and condition of the pay-TV company’s case being heard, the Federal Inland Revenue Service (FIRS) says in an emailed statement on Wednesday. Bloomberg reported that the case has been adjourned for hearing on September 23.

But MultiChoice Nigeria said in a statement that the direction issued by the tribunal does not compel Multichoice Nigeria to make payment of 50% of 1.8 trillion naira, being half of the disputed tax assessment which is under appeal.

“The direction issued by the TAT in accordance with paragraph 15(7) of the Fifth Schedule to the FIRS Establishment Act requires Multichoice Nigeria to deposit with FIRS an amount equal to the tax paid by Multichoice Nigeria in the preceding year of assessment or one half of the disputed tax assessment under appeal, whichever is the lesser amount plus 10%.

“The lesser amount is the tax paid by Multichoice Nigeria in the previous assessed year which is substantially less than the disputed assessment.”

The company said it continues to engage with FIRS in an attempt to resolve the issue.

Last month, Nigerian authorities ordered local banks to freeze Multichoice’s accounts the unpaid tax. FIRS executive chairman Muhammad Nami said the decision to freeze the accounts was as a result of the group’s under-remittance of taxes and continued refusal to grant FIRS access to its servers for audit.


Source: Tech Financials

The judgment again serves as a cautionary tale where contracts are drafted without an understanding of the tax implications, which can make for a nasty surprise down the line.

On 21 May 2021, the Constitutional Court handed victory to SARS in a decision that may have sweeping ramifications for retailers who operate loyalty plans similar to the Clicks ClubCard loyalty programme.

What was at stake for Clicks and other retailers?
The matter of Clicks Retailers (Pty) Limited v Commissioner for the South African Revenue Service [2021] ZACC 11 involved the application of section 24C of the Income Tax Act No. 58 of 1962 to its loyalty programme.

Section 24C allows taxpayers to defer paying tax on income if it accrues in terms of a contract and that income will also be used to finance future expenditure. The taxpayer may then, in terms of section 24C, claim a deduction in respect of such future expenditure, provided the income and the obligation to incur the future expenditure arise from the same contract.

In this case, Clicks sought to utilise this provision on the basis that its ClubCard loyalty programme creates an obligation to incur future expenditure when cardholders earn loyalty points by making purchases at Clicks stores. The loyalty points awarded translate to a cost that Clicks will incur on the merchandise provided to customers upon redemption of cashback vouchers. In other words, when Clicks makes a sale for which it receives income, an obligation is created at the same time to incur a cost at a future date.

Clicks return 2% of the value of all qualifying purchases to customers and its inability to deduct this cost will have a significant impact on its cash flow. The import of the judgment, however, extends well beyond the interests of Clicks. The court acknowledged that other retailers such as Pick ‘n Pay, Dischem, Ster Kinekor and Exclusive Books, to name a few, will also be impacted by the court’s decision.

The dispute
SARS maintained that Clicks is not eligible for the section 24C deduction, as the income it receives and the obligation to incur the future expenditure arise from separate contracts.

Clicks succeeded in the Tax Court, which concluded that the income-earning contract and that which gives rise to the obligation (the ClubCard contract), are inextricably linked. SARS appealed to the Supreme Court of Appeal (“SCA”). It is important to note that Clicks’ appeal was heard shortly after the SCA handed down judgment in Commissioner, South African Revenue Service v Big G Restaurants (Pty) Ltd [2018] ZASCA 179; 2019 (3) SA 90 (SCA) (“Big G”), which dealt with the same issue.

In Big G, the SCA rejected the notion that section 24C applies where the contracts are “inextricably linked” – the income and the obligation must emanate from the same contract. The SCA, therefore, set aside the Tax Court’s decision. But Big G took the matter to the Constitutional Court, where the interpretation of section 24C was widened, albeit slightly. The Constitutional Court confirmed section 24C may apply where there is more than one contract, provided they are so inextricably linked that they satisfy the requirement of “sameness”.

Big G lost the appeal, but it gave Clicks another bite at the cherry. Clicks filed its appeal to the Constitutional Court, which accepted that there is significant factual overlap and an inextricable link between the ClubCard contract that imposes the obligation to incur a future expenditure and the contract of sale. However, it is not sufficient for the two contracts to be inextricably linked; the link must be of such a nature that they give rise to a “sameness”.

In the present matter, the Constitutional Court found that the link between the two contracts do not render either dependent on the other for its existence; they operate together but they do not meet the requirement of contractual sameness. The upshot is that section 24C does not apply to Click’s ClubCard loyalty programme and the retailer incorrectly claimed these deductions.

While the matter does not involve a constitutional question, the Constitutional Court accepted, as with Big G, that Clicks should be granted leave to engage its jurisdiction on the basis that the matter involved an arguable point of law which is of general public importance. The court held that this is evidenced by the divergent approaches taken by the Tax Court and the SCA, and the importance to the general public lies in the potential impact for other operators of such loyalty programmes.

The decision to entertain the matter must be welcomed, as it allowed the court to shed some light on the application of section 24C, by giving definition to the sameness test where two or more contracts are involved.

What does the judgment mean for other retailers?
Other entities that similarly sought to claim the section 24C allowance must carefully study the judgment against the operation of their own loyalty programmes. But with a model that is hardly unique, it is difficult to see how their fate would be any different and it is possible that they might inadvertently find themselves in a position of non-compliance.

The judgment again serves as a cautionary tale where contracts are drafted without an understanding of the tax implications, which can make for a nasty surprise down the line.



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.”


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.


By Moira Kloppers for Sakeliga

A new Sakeliga poll shows that lockdown and corruption is pushing businesses’ willingness to pay tax off a cliff.

  • 95% of respondents in a Sakeliga poll this week said that lockdown decreased their willingness to pay tax
  • Nine out of 10 indicated an inclination to delay tax payments for as long as legally possible
  • Six out of 10 would even consider illegally withholding tax if encouraged to do so and if it could end lockdown quicker

Piet le Roux, Sakeliga CEO says that a new normal in tax willingness is rapidly taking hold. “The new normal for tax willingness is going to be much lower than before. We recommend that government and analysts compensate for this trend in their estimations of future fiscal deficits. Businesses are becoming unusually motivated to decrease their tax payments.”

Le Roux says that, from participants’ comments and the state of the country, evidently lockdown, corruption, mismanagement, and generally harmful government policies have created a perfect storm.

“A senior executive at one of South Africa’s iconic companies recently put it to me that he considers paying tax in South Africa a possible violation of the American Foreign Corrupt Practices Act, since the money largely funds harm, mismanagement and corruption. While this interpretation is probably, legally speaking, incorrect, it is morally striking. This moral dilemma is weighing with increasing burden on businesspeople in South Africa: they consider it their duty to serve and fund the common good, yet they increasingly view tax as detrimental to society because of how it funds mismanagement, corruption, and harmful policies,” says Le Roux.

Further highlights from the poll include:

  • 84% said government handled the Covid-19 outbreak badly, 14% were ambivalent, and 2% said government handled it well
  • 61% of businesses suffered big financial losses, 29% significant, with only 10% seeing their income unaffected or increased
  • 94% scored the fairness of government’s Covid-19 relief measures as either “Very bad” (78%) or “Bad” (16%)
  • 883 people participated in the self-selecting poll, conducted among more than 40 000 individuals in Sakeliga’s membership and network
  • Most participants responded via an email link, and around 10% contributed through links accessed on social media


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.

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