Visit the national COVID-19 Online Resource and News Portal at www.sacoronavirus.co.za or see SARS COVID-19 news items and tax relief measures here.

Tax Practitioner Connect Issue 27 (25 November 2021)

SARS extends filing season deadline

SARS would like to thank taxpayers who have filed their returns for responding to our strategic intent of promoting a culture of voluntary compliance. However, to afford other taxpayers the opportunity to comply, SARS has extended the filing season deadline for non-provisional individual taxpayers from 23 November 2021 to 2 December 2021.

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.

We urge taxpayers to use our convenient digital channels, namely, eFiling, SARS MobiApp, as well as the SMS service on 47277. By sending an SMS to this number, taxpayers can book an appointment at a SARS branch, check if they need to file a return and 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 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 amongst taxpayers.

 

SARS ‘encouraged’ by results of new direction

The Commissioner of the South African Revenue Service (SARS), Mr Edward Kieswetter, told Parliament on 9 November that SARS was encouraged by the measured progress in rebuilding SARS as an institution and transforming itself into a SMART Modern SARS.

SARS has collected more than R1.55 trillion which comprises of a net of R1.25 trillion of the revenue estimate and is R38 billion more than the revised estimate. Refunds paid amounted to R300.6 billion, which is R20 billion more than 2019/2020.

“Our specific compliance interventions to detect and deter non-compliance yielded R172 billion, which shows room to improve compliance levels across all tax types,” he said. This dovetails with SARS’ strategic objective of making it costly for those who are wilfully non-compliant.

In addition, R38.9 billion had been granted in Covid-19 relief measures and trade to the value of R2.6 trillion had been facilitated in accordance with the SARS mandate.

He confirmed that tax compliance levels were under strain, with a composite compliance level of 62.61%, compared to the previous year of 65.05%. The Public Confidence Survey pointed to favourable preference of tax morality, but that has not seen an appreciable rise in compliance.

He said the tax base was broadening with 1.6 million taxpayers added to the SARS tax register that resulted in R4.6 billion added to the net collections for the year under review. The Commissioner warned however that the impact and prevalence of corruption and waste was not helpful in enhancing tax morale within society.

“Our strategic objective to make it easy and simple for taxpayers to comply, has also yielded impressive results: 86.3% of SARS interactions were done through digital channels such as eFiling and the MobiApp.

“The effectiveness of these channels are also indicated by the fact that R1.55 trillion was collected via eFiling.”  

“In addition, 83.2% of standard taxpayers (3.4 million taxpayers) had received auto-assessments based on third party data available to SARS. All taxpayers needed to do was to click accept or edit.”

The SARS Commissioner said that in the Customs space the Accredited Economic Operator (AEO) programme granted 132 participants Preferred Trader status.

“Frontline interventions for Preferred Traders dropped by 22% in this period; 5.6 million Customs declarations were processed under 10 seconds which is 95% of declarations; while inspection times were reduced from 109 hours to 44 hours. Customs seizures amounted to R2.7 billion.”

SARS’ enforcement efforts were also yielding results in a difficult and challenging terrain. These efforts recovered R147 million from PPE fraud and there was a conviction rate of 96% through collaboration with the NPA. The organisation is also working with all other enforcement agencies as well as other government agencies.

The newly launched High Wealth Individual Segment has written 1400 direct letters to wealthy individuals and 275 have already been reviewed. Equally, SARS has also detected 26 000 unregistered taxpayers who have financial assets with economic activity in excess of R1m.

In addition, compliance levels of tax products such as PAYE, CIT has been a concern, and SARS has embarked on focused programmes to address this.

The Commissioner said “in order to deliver on its comprehensive programme and despite the financial constraints, SARS is investing 3% of its budgeted resources in its modernisation programme so that it can remain abreast in a fast changing technology space”.

He also apologised to taxpayers who may have been unable to transact with the organisation due to system challenges.


New penalty rule for non-compliant taxpayers
 

In line with the SARS strategic objective of making non-compliance hard and costly, it is imperative that SARS enhances its ability to impose administrative penalties in a more responsive manner.

Accordingly, legislation, which becomes operative on 1 December 2021, now allows SARS to levy penalties where one or more returns are outstanding. Before the change to the legislation, SARS could only levy a late submission of return penalty where two or more returns were outstanding. As a transitional measure for the first year, the “one tax return or more” rule will only apply to the 2021 tax return. The older rule will remain in place for one more year for 2020 and earlier returns.

For more information in this regard please refer to Government Notice 1461 in Government Gazette No 45396 dated 29 October 2021, which is available on the SARS website at sars.gov.za.

Kindly take note that due to the extension of the filing season deadline from 23 November to 2 December 2021, the date for levying of penalties on taxpayers that have not filed their return, will be extended and implemented in January 2022.

Auto-assessment

During the month of July, SARS used data received from employers and other third-party data providers to issue simulated assessments to a significant number of non-provisional individual taxpayers. As part of the auto-assessment process, SARS requests taxpayers to either accept or edit the simulated assessment via eFiling or the SARS MobiApp, which is then followed by an original assessment issued by SARS. A large number of taxpayers have already either accepted or edited their simulated assessments and received an original assessment from SARS.

Taxpayers in the auto-assessment population, who neither accepted nor edited and submitted their simulated assessments by the deadline, will receive an original assessment based on an estimate in accordance with section 95 of the Tax Administration Act, 2011. This assessment is not subject to objection and appeal.

However, a taxpayer who is not in agreement with his or her assessment may file a complete and accurate tax return within 40 business days of the assessment date. Such a return will be late, which means that normal late submission penalties and interest (where applicable) will apply.


Debt management automation

The new Deferment Payment Arrangement MobiApp project is currently in a test phase and will be implemented on 3 December 2021. Note that the new payment arrangement functionality will be limited to deferment payment arrangements for Personal Income Tax (PIT). Tax practitioners have been invited to participate in post-implementation testing, starting on 4 December 2021 and planned for a period of 30 days. Please send your feedback on your experience of the testing process to [email protected].

This service will not be available to tax practitioners to make payment arrangements for their clients.

 

Registration of tax practitioners as public officers

It has come to SARS’ attention that some tax practitioners have been registering themselves as the public officers of companies that they represent. The question arises as to what the law prescribes in this regard. Note that section 246 of the Tax Administration Act (TAA) requires a senior official of the company to be the public officer. In other words, the public officer must be an employee in a senior position such as the managing director, director, company secretary, and the like. It is only if no senior official resides in the Republic, that the TAA allows the public officer to be another suitable person.

A public officer is responsible for all acts and matters that the company is responsible for in terms of a tax Act. In case of default, the public officer is subject to penalties for the company’s defaults.

SARS is of the view that tax practitioners are not generally suited to being the public officer of their clients’ companies. Although the Act does not completely bar the possibility, tax practitioners are reminded to apply the requirements of section 246 strictly and take note of the consequences for being public officers.

 

Commissioner prescribes physical impairment or disability expenditure

The Commissioner of SARS is permitted by law, to publish a list of qualifying medical expenditure that is necessarily incurred and paid by a person during a year of assessment as a result of any physical impairment or disability suffered by the person or any dependant of the person (Disability List).

The Disability List was updated after an extended public consultation process and published with effect from 1 March 2020 (“the 2020 Disability List”). From the latter part of 2020, SARS noted public concerns regarding the change in the method of calculating the qualifying medical expenses relating to school fees.

It is for this reason, and after much deliberation, that SARS has taken the decision to revert to the method of calculating the qualifying medical expenses for school fees as set out in the 2012 Disability List. This change will be effective retrospectively from 1 March 2020. 

See SARS’ full media statement here.

 

What’s new?

eBooking services

eBooking services has been extended to include additional service platforms, namely the Mobile Tax Units and the pop-up branches. Up to now, taxpayers and representatives have been required to upload a copy of their ID document for all eBooking services rendered. This is no longer a requirement for the following services:

  • Request for Profile Information
  • Request for Case Follow up (where the case number is known)
  • Request for Service
  • Request for Tax Clearance Status (TCS)
  • Request for Statement of Account (SOA)
  • Request for E-Filing password reset
  • Queries related to the submission of the Income Tax (ITR12) return
  • Queries related to submitted/filed Income Tax returns.

 Notice of Registration functionality enhanced on eFiling

The Notice of Registration functionality on eFiling has been enhanced. The current Notice of Registration functionality for PIT and VAT has now been extended to include CIT, PAYE and Trusts. E-Filers can now access their Notices of Registration for all tax types online. Follow these easy steps:

For organisations:

Step 1 – Login to http://www.sarsefiling.co.za/

Step 2 – Go to the Organizations main menu

Step 3 – Click SARS Registered details on the side menu

Step 4 – Select Notice of Registration

Step 5 – Select the relevant tax type: VAT or CIT or PAYE or Trusts

For Individuals:

Step 1 – Login to http://www.sarsefiling.co.za/

Step 2 – Click on the Notice of Registration icon on the top right side of the screen

Step 3 – Click on Request new or View

For more information on eFiling features, see our eFiling system webpage.

Draft document for public comment on Voluntary Disclosure Programme (VDP) published

SARS has published a draft guide to the VDP. The due date for public comment is 10 December 2021. Click here to read the draft guide.

Guide on submission of disputes updated

The guide on How to submit a dispute via eFiling has been updated with the extension of Covid-19 PAYE and Employment Tax Incentive (ETI) information.

New version of [email protected]™ Employer released

An upgraded [email protected]™ Employer version 7.1.9 has been released. The changes are an enhancement of the import validation process to include warnings when duplicate certificate numbers are used for different employees. It also includes an updated EMP501 PDF form (to include and display the reason provided for over- or understatement), and adjustment to calculations on the EMP501 declaration page to include cents in amount fields. 

See the full release notes here.

To download the latest version of [email protected], click here.

SARS Annual Report published

The SARS Annual Report for 2020–2021 h published. Click on the link to read the SARS Annual Report 2020 – 2021.

Scam alert

There is a new scam purporting to be from SARS, deceiving taxpayers about possible refunds. Do not open the link because it takes one to a phishing site. Click on this link to view an example of the fake email.

Some large commercial companies responsible for 60% of illicit financial flows

Some large commercial companies are responsible for 60 percent of illicit financial flows from African countries, as opposed to 30 percent due to criminal activities and 10 percent due to corruption.

Mr Patrick Moeng, Executive: Customs Investigative Unit (Criminal and Illicit Economy), disclosed these figures from an earlier report of the High-Level Panel on Illicit Financial Flows, at a recent SARS webinar. The webinar focused on the negative impact of illicit trade and counterfeit procedures, on the economy and revenue.

Mr Moeng said criminals use different methods to facilitate illicit financial crimes. Examples are circumventing excise duties and indirect taxes on the sale or use of specific products; or generating significant profits by selling a high volume of illicit excise goods at a very low cost. These practices create revenue risks for countries around the world.

The World Trade Organisation (WTO) defines illicit trade as any commercial practice or transaction related to the production, acquisition, sale, purchase, shipment, movement, transfer, receipt, possession or distribution of:

(i) any illicit product defined as such by international law; or

(ii) any licit product for non-licit purposes as defined by international law, and

(iii) any conduct intended to facilitate such activities.

It manifests among others in infringements of intellectual Property Rights (IPR); revenue risks, including leakage, through the smuggling of highly taxed goods such as tobacco, alcohol and motor spirits; commercial fraud activities such as under-valuation, misuse of origin and preferential duties, misclassification and drawback fraud; and security risks, including terrorism, proliferation of weapons of mass destruction, trafficking of small arms and explosives, and diversion of dual-use goods.

Illicit finances in particular, take place through three ways:

  • Falsification of prices (trade mispricing)
  • Misrepresentation of quantities and qualities of traded goods
  • Transfer pricing, profit shifting, tax evasion and tax incentives

Over and above revenue loss for the fiscus, the negative impact of illicit trade on the economies of countries are extensive. These include circumvention of support put in place by government for local industries; the erosion of productive capacity in a country; job losses, particularly in the manufacturing sector, lower company profits, and unfair competition for legitimate trade. It also undermines government’s efforts to curb corruption.

According to the report of the High-Level Panel on Illicit Financial Flows, Africa has lost in excess of $1-trillion in illicit financial flows over the past 50 years.

Counterfeit procedures

Counterfeit goods are phony or pseudo products offered for sale and distributed within the trade supply chain as authentic goods. Counterfeit procedures have evolved from a localised industry concentrated on copying high-end designer goods, to a sophisticated global business involving the mass production and sale of a vast array of fake goods.

South Africa, as a global player, is directly affected by this scourge. During the 2019/2020 financial year, SARS performed 1 301 counterfeit goods seizures to the value of R1,1billion.

Counterfeit goods find their way into and out of the country through the same trade supply chain used to carry legally traded goods. SARS’ Customs and Excise Division intercepts counterfeit goods that have a potential of bringing harm to the economy and threaten the security, health and safety of South Africans.

According to Mr Moeng, the challenge is best addressed through a multi-pronged strategy involving internal strengths such as risk management, heightened enforcement activities at the ports, and strategic partnerships with, business and civic groups, international role-players and other law enforcement agencies.

Click here to watch the webinar on the SARS TV channel.

Table of Contents

Last Updated:

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on email
Email
Share on print
Print