Government Connect Issue 11 (July 2023)

2023 Filing season for Individuals and Trusts

Filing Season for individuals (provisional and non-provisional taxpayers) and Trusts commenced on Friday 7 July. For information on the changes  for this Filing Season, please visit: Tax Season | South African Revenue Service (sars.gov.za)

Briefly, the changes that have been introduced pertain to:

• Aligning the 40 business days rule to the Filing Season end date
• Payment due dates
• Statement of Assets and Liabilities
• Foreign income disclosure
• Spouses married in community of property
• Section 93 reduced assessment

Check if you have been auto-assessed

Personal Income Tax taxpayers who qualify for this year’s Filing Season 2023 auto-assessment can now check whether they have been auto-assessed via the SARS Online Query Service functionality, click here.

Updated Confirmation of Disability Diagnosis (ITR-DD) form

For updated information on how to claim physical impairment or disability expenditure please visit: Tax and Disability | South African Revenue Service (sars.gov.za)

Tax implications if married in community of property

Taxpayers who are married in community of property are taxed on half of their interest, dividends, rental income, and capital gains. SARS has retrieved “Married in community of property” status from the taxpayer’s previous declaration and collaborated with the Department of Home Affairs to confirm marital status.

Where a match between SARS and Home Affairs is confirmed, the spouses will be linked as follows:

• If investment income is identified for a taxpayer based on third party data received (e.g. IT3(b) certificate for interested earned), the third-party data will also be prepopulated on the spouse’s return if the spouses are linked on the SARS system.
• The investment income will be apportioned accordingly and will reflect on the notice of assessment (ITA34) issued to each spouse, upon assessment.
• Note: Where applicable, the spouse who is not registered for tax may be routed for Auto Registration.

Taxpayers married in community of property may opt to exclude certain income from the communal estate. In previous tax years, one communal estate indicator was displayed per applicable container/subsection of the return and if the taxpayer selected the indicator it applied to the whole income amount declared in that part of the return (e.g. total local interest or total foreign dividends)

From the 2023 year of assessment, the taxpayer can select the communal estate indicator on a transactional level (i.e. for each institution from which the income was received). This change applies to the following containers/subsections of the return:

• Local interest
• Foreign interest
• Foreign tax credits on foreign interest
• Gross foreign dividends subject to SA normal tax
• Foreign tax credits on foreign dividends
• Distributions from a Real Estate Investment Trusts (REIT) /Taxable Local Dividends
• Capital Gain/Loss
• Local Rental Income

We have developed the following FAQs for the Married in Community Spousal Assessment and published this on the Filing Season 2023 webpage:

• What are the tax implications if I am married in community of property?
• What does POPI act say about the communication around the ‘Married in Community Spousal Assessment’?
• Where does the amounts found on my return come from?
• What should I do if I am separated from my spouse?
• What should I do if I am divorced from my spouse?
• What should I do if I want to exclude my spouse from communal estate due to a legal contract?
• Could this have a destabilising effect on families where the taxpayer is Married in Community of Property?
• Will SARS inform the primary spouse?
• Can the secondary spouse object to the ‘Married in Community Spousal Assessment’?

Updated Guides for Filing Season 2023

The following guides were updated for Filing Season 2023:

• Guide to submit a dispute via eFiling
• Guide to submit your Individual Income Tax Return (ITR12)via eFiling
• Guide to complete the Company Income Tax Return (ITR14) eFiling
• Guide to the Individual (ITR12) Return for Deceased and Insolvent Estates
• Comprehensive Guide to the ITR12 Income Tax Return for Individuals
• Submit Request for Reduced Assessment (RRA01) via eFiling
• Guide for Provisional Tax

For more guides and information, visit the Filing Season 2023 webpage.

Corporate Income Tax (CIT) – Form and system changes

The Income Tax Return for Companies (ITR14) and Notice of Assessment for Companies (ITA34C) have been updated from 23 June 2022. See the prototype here.

The following are the highlights of legal amendments that informed the changes to the ITR14 and ITA34C, and to SARS systems and work processes:

• An update to the SARS core systems to accommodate the assessed loss calculations in terms of Section 20
• An update to the ITR14 to identify paragraph 13(1)(a) and 13(1)(b) deductions for purposes of extending the prescription period on disputes
• Removal of the Solidarity Fund donations (excl. any other donations) container on the ITR14 to align with the new Section 18A requirements
• The Public Benefit Organisations (PBO) number(s) declared on the return when claiming donations will be validated against the SARS’s PBO register for validity
• A Share Register will be added to the ITR14 return which will enable the capturing of the classes of shares, and the details of the holders of shares per class of share
• The “Taxable Distribution(s) from all Trusts(s)” container will be enhanced to enable the taxpayer to declare the details of each distribution received from a Trust
• An update to source code descriptions where applicable.

Scam alert

SARS has identified the following scams.

• Be on the alert for a scam circulated through text messagestalking about Income Tax and VAT Returns.
• The SARS IT security team identified the following fraudulent email addresses spamming taxpayers. If you receive an email from one of these email addresses, please delete or ignore:
• ITR Service <[email protected]>
• ITR Audit <[email protected]>
• ITR Pay <[email protected]>
• Tax audit <[email protected]>
• An email titled ‘eFiling Credit Request’, is asking the email recipient to click on a link to view the amount.
• An email titled ‘Statement of Account request’, is asking the email recipient to download a statement of account.
• An email titled ‘Debt Management – Final Demand’, is asking the email recipient to download a statement of account.
• The PayFast SMS scamis requesting taxpayers to click on a link to receive their refund.
• An email titled ‘Internal Communication’ from a fake DIRCO email domain is sent, asking the email recipient to click on a fraudulent link to verify their identity for SARS purposes.

Please do not click on any suspicious links and delete these messages. If in doubt, always visit our Scams & Phishing webpage, where an example of this latest scam is published.

Training Intervention for Municipalities conducted by SARS and National Treasury

SARS and the National Treasury have commenced with a VAT training programme for Municipalities. The training is aligned to MFMA Circular No 2 which deals with Cost Containment Measures. The first session was held in Limpopo on the following topics:

1. Housing programme (Rented housing, Maintenance costs)
2. Principle / Agent Considerations (Library services)
3. VAT on conditional grants
4. VAT treatment on Foreign Donor Funds Projects
5. Treatment of Electronic Services
6. Completion of VAT returns
7. Tax invoices
8. Denial of Input Tax
9. Municipal Standard Chart of Accounts (mSCOA)

The training will be rolled out on a national basis with next session taking place in Northwest Province.