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.
What does this mean for tax professionals and their clients?
When is the financial information going to be collected and reported to tax authorities?
South Africa will be exchanging the financial data collected with the relevant tax authorities in September 2017. The first data collected will span the financial year from 1 March 2016 to 28 February 2017.
What information is reported?
The financial information includes interest, dividends, account balances, income from certain insurance products, sales proceeds from financial assets and other income generated with respect to assets held in the account or payments made with respect to the account. The information the tax authorities will receive will include name and address, a reference to the financial account and details about the financial institution.
Who is involved in reporting this information?
A broad range of financial institutions are covered by the CRS including custodial institutions, depository institutions, investment entities, specified insurance companies such as banks, insurers, wealth and asset managers, family trusts and fund managers.
Will people be contacted by financial institutions about their data?
Financial institutions may contact their clients to seek details to confirm their tax residency but it remains the responsibility of the client/taxpayer to contact their relevant financial institution, tax practitioner etc. to ensure that their tax affairs are in order.
Are you still not sure about what to do?
SARS will offer assistance to individuals and companies for queries relating to the implementation of CRS, send us an email on: 3rd Party Data Support [email protected].
- For the year of assessment (YOA) commencing on or after 1 January 2016, foreign tax credits cannot be claimed as a rebate in terms of section 6quin due to the fact that this section has been repealed. However, taxpayers can now claim this type of foreign tax credit as a deduction in terms of section 6quat (1C).
- As from 1 March 2016, all qualifying companies operating within a Special Economic Zone (SEZ) will be taxed at a rate of 15% which is lower than the current corporate tax rate of 28%.
- Dormant companies: The “Dormant Company Details” container now makes provision for dormant companies carrying on the activities of a nominee to declare taxable passive income received or accrued. Please note that it is a legal requirement to submit a tax return even if the company is dormant.
- The ITR14 return now has an option to indicate if the financial year end of the company changed during the relevant year of assessment.
- The containers for Local and Foreign Capital Gains and Losses now make provision for a new line item with a new source code for the “claw back” provisions in terms of section 45(5).
- A new field has been added to the “Non-Residency” container to indicate the date on which the company ceased to be a resident if applicable.
Verification of details
Submission on time
Deceased Estates – section 25(1) of the Income Tax Act no. 58 of 1962
Currently, for deaths prior to 1 March 2016, income other than Capital Gains Tax (CGT) accrued after date of death, is taxed in the hands of the beneficiaries. CGT however, is taxed by way of a Special Trust Type A. With the implementation of the legislative changes, all income including CGT will be taxed in the hands of the deceased estate. The deceased estates for deaths on or after 1 March 2016 will no longer be required to register for Special Trusts Type A.
Second Income Tax Registration
The executor (registered representative) requesting the second income tax reference number must be the same as the executor on record at SARS in respect of the taxpayer’s income tax reference number to date of death. The application for the second income tax reference number can be processed via eFiling or at a SARS branch. If the executor was replaced after the taxpayer records were marked as a “Deceased Estate”, a letter of appointment must be provided in order to change the representative details.
The banking details for the “to date of death” and “post date of death” registrations must be the banking details of the deceased estate provided by the executor and must not be the banking details of the deceased taxpayer. Where the banking details used in the first registration differs from those in the second registration, the representative must provide and meet all FICA requirements to change the banking details of the deceased estate.
A list of supporting documents required for the second registration can be accessed on