Tax Practitioner Connect Issue 5 (July 2016)

Welcome to the latest edition of Tax Practitioner Connect, the electronic newsletter for tax practitioners that keeps you up to date with the tax matters that affect you.

To read our newsletter below, click on each heading to expand the corresponding article.



Tax Season is in full swing. Taxpayers can now submit their Income Tax Returns for Individuals (ITR12) to SARS.  To make filing easier this Tax Season, we would like to remind you of a few details as well as the changes introduced.

 ITR12s for the 2016 year of assessment must be submitted within the following periods:

  • In the case of any company, within 12 months from the date on which its financial year ends; or
  • In the case of all other persons (which include natural persons, trusts and other juristic persons, such as institutions, boards or bodies)—
    • On or before 23 September 2016 if the return is submitted manually;
    • On or before 25 November 2016 if the return is submitted on eFiling or electronically through the assistance of a SARS official at a SARS branch
    • On or before 31 January 2017 if the return relates to a provisional taxpayer and is submitted via eFiling.

Although a taxpayer still has to register for Income Tax he/she may elect to not submit a return for the 2016 year of assessment if all of the following conditions are met:

Where the gross income consists solely of remuneration and:

  • It does not exceed R350 000
  • Is paid or payable from one single source (e.g. one employer)
  • Is for a full year of assessment (i.e. all 12 months)
  • No allowance was paid (e.g. travel allowance)
  • Employees’ tax (i.e. PAYE) has been deducted or withheld
  • The taxpayer is not claiming tax related deductions (e.g. medical expenses, retirement annuity contributions, travel expenses etc.).
If a taxpayer was unemployed for any period during the year of assessment, the following information must be provided on the return:
  • For how many unbroken periods he/she was unemployed; and
  • The ‘unemployed from date’ and the ‘unemployed to date’ for each unbroken period.

Each continuous period of unemployment during the year of assessment is considered as one unbroken period.

Additional fields were added to the ITR12 to make provision for more detailed information on farming expenses and local rental income from fixed property. Please take note of all the added fields as we are highlighting only a few of them here.
  • Income from Local Farming Operations (IT48):
    From the 2016 year of assessment the farming section has been enhanced to cater for  detailed farming expenses to be captured. The following sections have been added for local  farming operations:
    • “Details of farming expenses (IT48)”
    • “Capital improvements incurred during the year of assessment (Paragraph 12(1) of  the First Schedule) IT48”
    • “Details of farming expenses (IT48V)” – this is applicable to local partnership farming operations
    • “Capital improvements incurred during the year of assessment (Paragraph 12(1) of the First Schedule) IT48V” – this is applicable to local partnership farming operations.

  • Local Rental Income from the Letting of Fixed Property:

    From the 2016 year of assessment and onwards, a new section has been added to declare rental income from the letting of fixed property. Each rental activity must be captured separately (a maximum of 20 is allowed).
    For all years prior to 2016, rental income must be completed in the section ‘Local  Business, Trade and Professional Income (Including Rental Income)’.

Contributions made to any retirement fund on or after 1 March 2015 that were not allowed as a deduction in terms of the Second Schedule of the Estate Duty Act or exemption in terms of section 10C should be included in the dutiable part of the estate for estate duty purposes.

The carry-over balance on deductions that were not allowed for contributions made on or after 1 March 2015 can be requested for taxpayers who died on or after 1 January 2016. The excess contribution(s) must be included in the estate only if the date of death is on or after 1 January 2016. If the date of death is before 1 January 2016 the excess fund contribution should not be included in the taxpayer’s estate.

Only the excess contributions calculated due to contributions made from 1 March 2015 must be included in the taxpayer’s estate.

In terms of paragraph 20(2A), late submission of a final Return for Payment of Provisional Tax (IRP6) i.e. after 28/29 February 2017 will not be deemed to be a nil estimate if the final IRP6 is submitted before or by the next payment date i.e. 30 September 2017. Where the IRP6 is still outstanding after the extension period, a nil assessment will be raised and an underestimation penalty will be raised.

These changes do not affect the payment of provisional tax. The due date still remains 28/29 February 2017. Where the provisional tax payment has been made after the due date a penalty will be raised.

Individual taxpayers are no longer able to change or update incorrect Employee Tax Certificate (IRP5/IT3(a) details which are pre-populated on their ITR12. This improvement will enhance the quality and correctness of taxpayer data submitted by employers. Please take note of the following:

  • Taxpayers can add additional IRP5s but not change those filed by their employers.
  • Where an employer has provided incorrect employee information, the affected employee will have to revert to the employer who will need to make changes on the IRP5 certificate and then re-submit it to SARS.
  • Should an employer or service provider revise a taxpayer’s IRP5 data after an ITR12 has been declared and assessed, the taxpayer has the ability to file a Request for Correction (RFC) or SARS has the ability to do a Revised Declaration (RD) and send a revised assessment (ITA34) to the taxpayer.

Take care when completing your clients’ tax return to ensure that you declare all the income they have received and not to misrepresent their allowable deductions. This can lead to penalties or prosecution by law.  Make sure you are completely honest when completing your clients’ returns.

Report any non-registered tax practitioners still continuing to practice in that capacity by downloading the Reporting of a Tax Practitioner (RTP001) form, complete and submit to SARS. The process is completely anonymous.

See Tax Season 2016 for more information.

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