The Minister of Finance, Enoch Godongwana, tabled the 2022/23 National Budget before Parliament in Cape Town on 23 February 2022. His inaugural budget speech was underpinned by the need to strike a critical balance between saving lives and livelihoods, while supporting inclusive growth. “This budget presents this balance,” he said.
The widely welcomed budget included a proposal of R5.2 billion in tax relief “to help support the economic, recovery provide some respite from fuel tax increases and boost incentives for youth employment”. Some of the highlights were no increases in taxes, no increase in the fuel levy or Road Accident Fund, and a reduction of one percentage point in corporate tax. Also widely welcomed was the decision to reduce the fiscal deficit and stabilise debt.
The Minister noted that tax collections have been much stronger than expected since the Medium-Term Budget Policy Statement (MTBPS), allowing for an estimate tax revenue for 2021/22 of R1.55 trillion. This is R62 billion higher than the estimates of four months ago, and R182 billion higher than the estimates from last year’s budget.
The Minister congratulated SARS for enabling the “good news” budget, thanks to the unexpected `windfall` of an extra RI80 billion in tax collections.
For more information on the 2022/23 Budget, including the tax rates, visit SARS’ Budget webpage. Information on this page includes a tax pocket guide that provides a synopsis of the most important tax, duty and levy related information for 2022/23. Click on the link to access the Budget Tax Guide for 2022 (for the 2023 year of assessment: 1 March 2022 – 28 February 2023). You will also find a link to a handy booklet that sets out the major highlights of the Budget a nutshell, compiled by National Treasury (NT). Click here to access the Budget Highlights.
To read Minister Godongwana’s complete Budget Speech, click here
SARS welcomes the revised revenue estimate
SARS Commissioner Edward Kieswetter welcomed the upwardly revised revenue collection estimate announced by the Minister of Finance. He increased the revenue estimate to R1 547.07 billion from the February 2021 budget estimate of R1 365.1billion in the 2022 Budget Review speech. The 2021/22 revenue yield is expected to result in the tax-to-GDP ratio reaching 24.7%, which is higher than pre-COVID level and that indicates that the extraction rate is on a positive trajectory.
New business specifications for PAYE employer reconciliation released
The Business Requirements Specification (BRS): PAYE Employer Reconciliation for the 2023 interim Filing Season has been released.
The BRS specifies the requirements for the generation of an import tax file for the yearly as well as the interim submission. The requirements, as defined in this version of the BRS, becomes effective from September 2022, until replaced by an updated version.
As part of its drive for better service, SARS has been modernising tax processes since 2007. Changes introduced are therefore a vital part of SARS’ long-term vision to have a more accurate reconciliation process.
Amongst others, the document has been updated with new source codes, amended validation rules for source codes, and amended descriptions for certain source codes.
SARS collaboration with SALGA – Induction of new Councillors
SARS is conducting training as part of the SALGA Induction for newly elected councillors. The objective is to provide a guide for councillors on their responsibilities to encourage and ensure tax compliance as part of their oversight role. The training is expected to advise and alert them, as they assume their duties, of the vital need for compliance at local government where SARS has experienced challenges. The training is being undertaken nationally and is expected to further the SARS view that Government is the first fiscal citizen in the country and should be fully compliant.
New guide for Tax Rates/Duties/Levies published
A new guide for tax rates, duties and levies has been published (Guide for Tax Rates/Duties/Levies (Issue 15).
The guide provides a current and historical view of the rates of various taxes, duties and levies collected by SARS. While care has been taken to ensure that the rates published are correct at the date of publication, it is advisable to verify the applicable rates by consulting the legislation pertaining to a particular rate, should there be any doubt. The rates recorded “to date” are the rates as at date of publication of this guide on 17 February 2022.
In this guide references to sections are to sections of the Income Tax Act 58 of 1962 (the Act) and paragraphs are to paragraphs of Schedules to the Act unless indicated otherwise.
This guide has been updated to include the provisions of the Taxation Laws Amendment Act 23 of 2020, the Tax Administration Laws Amendment Act 24 of 2020 and the Rates and Monetary Amounts and Amendment of Revenue Laws Act 22 of 2020, all promulgated on 20 January 2021.
Once-off administrative penalties for Personal Income Tax non-compliance
A once-off admin penalty will be imposed on the following two populations of taxpayers:
- Taxpayers who were selected for auto assessment but failed to accept, decline, or edit and then file their return after SARS issued an original assessment based on estimated return (auto).
- All provisional and non-provisional taxpayers who were not auto assessed and submitted a return post filing season and pre-imposition of the recurring administrative penalty.
Just like the Personal Income Tax (PIT) outstanding return recurring administrative penalty, the PIT once-off administrative penalty can be adjusted or cancelled.
Adjustment of Once-Off Administrative Penalty Amount
As part of the administrative penalty process, SARS will adjust the administrative penalty amount if there’s any change to the taxable income where a Once-Off administrative penalty was already imposed.
- The change in the taxable income may be because of a revised declaration, a dispute (NOO/NOA) against the rejected or edited return and is allowed or partially allowed leading to the taxable income being different to the initial taxable income utilised to determine the once-off admin penalty amount.
- A penalty adjustment letter will be issued to the taxpayer to inform the taxpayer of the admin penalty adjustment.
Cancellation of the once-off administrative penalty
If it has been determined that SARS has erroneously imposed the once-off administrative penalty on taxpayers, SARS will cancel the administrative penalty transactions and related debt and update the taxpayer’s administrative penalty account.
Assets of diagnostic radiologists attached over tax debt of R52-million
Assets belonging to the practice of two diagnostic radiologists have been attached by the Sheriff of the High Court over outstanding returns and a tax debt of R52-million owed to the South African Revenue Service (SARS). The directors of the practice at Louis Pasteur Hospital in Pretoria, Drs Mkhabele and Indunah Diaganostic Radiologists Inc, and Dr Mevis Ponde.
The taxpayer applied to SARS for a compromise which was declined. The letter of decline was sent to the taxpayer together with a new final demand letter. The taxpayer did not respond to both the final demand and decline letter. The debt emanates from the submission of various returns to SARS, including company income tax, Pay-As-You-Earn (PAYE) and Value-Added Tax (VAT) returns, without payments over a three-year period.
In another matter the Sheriff auctioned the assets of Edison Power Gauteng Pty Ltd, an electrical contracting company, after the company submitted returns without payment.
The assets, attached in September last year, are estimated to be R20-million. Edison’s non-compliance took place over a two-year period. SARS Commissioner Edward Kieswetter said the organisation has adopted a clear strategic objective to make compliance easy and simple for taxpayers, while providing clarity and certainty about their compliance obligations.
In other enforcement activity earlier this month, a scrap metal exporter was found guilty of lying to Customs. The company, Scrapmania, and its director, Joseph Daniel Hurling, pleaded guilty on a charge of making a false declaration to Customs and both were fined R500 000, with Mr Hurling fined an additional R100 000 in the Durban Regional Court. On 23 September 2021, Mirage Shipping processed an export declaration for ten containers of “polymers and ethylene” on behalf of Scrapmania. The shipment made its way from Cape Town to Durban Harbour, where it was detained for inspection on arrival, after it was flagged on the Customs system.
On 12 October 2021, it was inspected and found to contain scrap metal, which requires an International Trade Administration Commission (ITAC) permit and is liable for export duties. A criminal case was then registered with the SAPS for contravention of the Customs and Excise Act and the ITAC Act. The scrap metal industry is a multi-billion rands industry and contributes an estimated R15 billion annually to South Africa’s gross domestic product.
In 2017, a scrap metal company lost a case in the Constitutional Court to challenge the State’s scrap metal export provisions, known as the price preference system, as well as ITAC’s decision to refuse to issue export permits to the company, in accordance with the price preference system. This followed almost four years of litigation over the lawfulness of the price preference system.
Read SARS’ statement here.
How to submit your individual Income Tax return via the SARS MobiApp
A new external guide on how to submit the Income Tax return via the SARS MobiApp has been published. This guide details amongst others how to respond to an auto assessment and how to respond to an estimation assessment submitted for you by SARS. Additionally, it is now possible to submit the previous year of assessment (ITR12) return via the SARS MobiApp.