2021 Emergency Tax Relief measures
On 25 July 2021, President Cyril Ramaphosa announced emergency tax measures in response to the continuing COVID-19 pandemic and recent unrest in the country that resulted in the disruption and destruction of businesses. The National Treasury provided more details of the proposed measures on 28 July 2021 and they are noted below:
- Introduction of a tax subsidy of up to R750 per month for the next four months for private sector employers who have employees earning below R6 500. This subsidy will be provided under the current Employment Tax Incentive.
- Tax compliant businesses with a gross income of up to R100 million will be allowed to delay 35% of their Pay As You Earn (PAYE) liabilities over the next three months, without incurring penalties or interest.
- Tax compliant businesses in the alcohol sector can apply to SARS for deferrals of up to three months for excise duty payments.
Click here to access a SARS publication to simplify and detail the above.
Please be aware that tax compliance is a prerequisite for qualifying for these tax relief measures
To qualify an individual/entity must be tax compliant. This means that you:
- Are registered for all required taxes;
- Have no outstanding returns for any taxes you are registered for;
- Have no outstanding debt for any taxes you are registered for, excluding;
o Instalment payment arrangements;
o Compromise of tax debt;
o Payment of tax suspended pending objection or appeal.
Sheriff attaches assets of company for PAYE and VAT debt
The assets of GladAfrica Management Services were attached by the sheriff after SARS obtained a civil judgment and writ of execution against the company after it submitted PAYE and VAT returns.
The company had tax debt of R88 million and was escalated to the SARS PAYE Rapid Response Team that had a series of engagements with the taxpayer between May and August of 2021, which did not result in payments due to SARS. A writ of execution was issued on 10 August this year, which allowed the Sherriff to attach the taxpayer’s assets.
Commissioner Edward Kieswetter reiterated that one of SARS’ strategic objectives was to make it hard and costly for taxpayers who do not comply with their tax obligations, no matter who the taxpayer is.
“SARS is becoming increasingly aware of the tendency by companies to submit returns without making the corresponding payments. Such non-compliance will not be tolerated as it is a serious threat to the revenue collection mandate of SARS.
“Companies and their directors must note that SARS will take all action legally possible to ensure compliance and ensure that VAT and PAYE payments are made. As per third party agreement, PAYE is collected from employees on behalf of SARS and is not for the benefit of the company. To then utilise collected tax for other purposes than pay it over to SARS, is a criminal offence,” the Commissioner said.
Company director ordered to pay back money to SARS
The director of a company found guilty of submitting nil VAT returns though his company was actively trading, was ordered by the Bloemfontein Regional Court to pay SARS R400 853.00
Lefa Tsaoane, director of Above Limits Trading CC was convicted on ten counts of fraud on 17 August, and sentenced to five years imprisonment, wholly suspended for five years. In addition the taxpayer was ordered to pay SARS R200 426.00 on or before 28 February 2024 and the balance owed in respect of the tax debt on or before 31 August 2026. The director was also sentenced on a separate count to 6 months imprisonment, wholly suspended for 2 years.
The company was sentenced to a fine of R500 000 suspended for 5 years, and an additional R10 000 suspended for 2 years, on a separate count.
SARS Commissioner Edward Kieswetter said the organisation is working tirelessly to make it easy to comply by providing clarity and certainty to taxpayers to meet their obligations. Where non-compliant taxpayers engage in fraud, the organization will ensure that they are prosecuted to the full extent of the law. This will make it hard and costly for tax evaders.
“We cannot afford such leakage in revenue at any time, but especially now when the country is in economic recovery and facing the effects of the devastating Covid-19 pandemic. This kind of behaviour is also particularly inexcusable when government is actually providing relief to companies affected by violence and the pandemic,” Mr Kieswetter said.
How to Claim the donations made to the Solidarity Fund: Individual, Companies and Trusts
The COVID-19 pandemic has led to the establishment of the Solidarity Fund, which is mandated to support the national health response, contribute to humanitarian relief efforts and mobilise South Africans in the fight against the pandemic. The Solidarity Fund is an approved Public Benefit Organisation that has also been approved under section 18A of the Income Tax Act. Special provisions were contained in the Disaster Management Tax Relief Administration Act and Disaster Management Tax Relief Act that created a special dispensation for a specific period for tax-deductible donations made to the Fund by taxpayers.
Donations made to the Solidarity Fund during the 2020/2021 tax year of assessment could have been made through two different channels:
- Direct payment to the Solidarity Fund; or
- Through “payroll giving” by employers on behalf of employees.
Claiming a section 18A deduction for these donations depends on how the donation was made to the fund.
The donations made directly to the Solidarity Fund are tax-deductible and the limit was increased to 20 percent. The tax deduction will be determined by SARS as follows:
- Donations in the period1 April 2020 to 30 September 2020: limited to 20% of the taxable income before the section 18A deduction (special tax treatment); and
- Donations in the period 1 October 2020 to 28 February 2021: limited to 10% of the taxable income before the section 18A deduction (normal tax treatment).
Any donations made to the Solidarity Fund that are over the limits as stated above, during the 2020/2021 tax year will be carried forward and deemed to be a donation made in the succeeding years of assessment (e.g. 2021/2022) and will be subject to the 10% limitation in each year, until the rollover has been exhausted.
Taxpayers wishing to claim deductions for donations made to the Solidarity Fund and are in possession of a valid section 18A certificate are advised to use the following containers on their tax returns to claim the deduction:
- Code 4055 (special container): donations made from 1 April 2020 to 30 September 2020 and subject to the special relief measures;
- Code 4011 (general container): donations made from 1 October to 28 February 2021
Taxpayers must ensure that they use the correct container on the tax return as indicated above and, must always indicate the Solidarity Fund’s exemption reference number (commonly referred to as the “PBO number”) and the value of donations on the returns.
Where donations were made to the Solidarity Fund through an employer, employees would have already enjoyed a reduction on their monthly Pay-As-You-Earn. Therefore, donations made between April and September 2020 will reflect under code 4055 on the IRP5 certificates on their returns, as the employers would have already submitted this information to SARS, and employees are not required to complete this information on their returns.
Donations made outside of this period will reflect under code 4030 on the IRP5 certificates obtained from the employer. The amount on the certificate must be completed under code 4030 on the return. For all payroll donations, the employee does not need to be in possession of a section 18A receipt, as the IRP5 certificate will be accepted as proof.
A third party data verification has been established to ensure ease of compliance for taxpayers claiming their contributions and to validate the claims made. In the instance of payroll giving, the S18A receipt is issued by the Solidarity Fund to the employer upon request. This will be utilised by the employer for payroll reconciliations and verification processes and act as proof that an employer has paid over the contributions its employees made to the Fund.
SARS wishes to draw the attention of tax practitioners to a number of important informational documents on the Tax Exempt Institution, Section 18A donations and Solidarity Fund donations that will facilitate seamless management of tax Section 18A applications and deductions for donations during this year’s Filing Season.
- Click here for more information on the Solidarity Fund process on how to obtain your Section 18A receipt.
Interim Dispute Process and Dispute Resolution for PAYE penalties
Penalties for late filing of Pay As You Earn (PAYE) returns was introduced this year. SARS is in the process of enhancing our Dispute Resolution process to allow for this penalty to be disputed separately from a PAYE late payment penalty.
Should you receive another PAYE penalty for the same tax period, you will not yet be able to complete a Request for Remission or lodge an Objection against the added penalty on eFiling if your prior Request for Remission or Dispute has already been finalised.
Our enhancements to the Dispute Resolution process should be ready soon, but in the event that you wish to do a Request for Remission or Dispute in relation to such an added penalty, SARS will, as an interim measure, accept a written Request for Remission or ADR1/ ADR2 forms in relation to the added PAYE penalty depending where in the process the matter is.
To use the interim process to submit a Request for Remission, Notice of Objection or Notice of Appeal, please follow these steps:
Step 1: Check on eFiling that the penalty amount for which you wish to request remission, object or appeal against is blocked and cannot be submitted. If eFiling blocks you then proceed to Step 2.
Step 2: Type or write a Request for Remission, and make sure that you include the reason for your request as well as the PAYE reconciliation period or transaction numbers of the penalties incurred or the EMP201 periods. Before you do all of this, please visit the Request for Remission of Administrative Non-compliance penalty webpage to understand the legislative requirements.
Step 3: If you already submitted a Request for Remission but you remain aggrieved by the outcome then use the ADR1 form in the case of an objection. If you already objected and the objection was dismissed, and you wish to appeal, then use the ADR2 form. The ADR1 and ADR2 forms can be downloaded here https://www.sars.gov.za/find-a-form/.
Step 4: Submit your Request for Remission, ADR1 or ADR2 to mailto: [email protected] or [email protected] You will receive a case number, which must be used in any future correspondence with SARS relating to this matter.
Step 5: Once we have considered the request for remission, objection or appeal, SARS will notify you by way of a letter addressed to your preferred channel of communication.
Click here to read the guide on How to submit a Dispute via eFiling.
Turn-around times for verifications
One of the questions SARS hears most often is; “When will I get my refund?”
Note that the refund amount (if any) and refund payment date can be seen on the ‘Income Tax Statement of Account’ (ITSA).
SARS reminds tax practitioners that taxpayers can expect a refund (if it is due) within three business days.
If an assessment is selected for verification, the process is generally concluded within 21 business days from the date that all the required supporting documents are received by SARS.
Provided the bank details are in order, once a taxpayer receives a “completion notification” from SARS, she/he can expect the refund within three business days.
Tips for submitting supporting documents via eFiling and the SARS MobiApp
When SARS verifies your return or banking details, and you are requested to submit supporting documents, you may use the following online channels:
- eFiling and the MobiApp
- SARS Online Query System, or
- Send an email to [email protected]
It is important take note of the technical specifications that supporting documents have to adhere to before you can send them through.
- Only .pdf, .doc, .docx, .xls, .xlsx, .jpg and .gif files will be accepted
- The maximum document size per upload may not exceed 5MB
- A maximum of 20 files for eFiling, and a maximum of 20 files for the SARS MobiApp may be uploaded.
- Try to scan your documents in batches so that each file is not larger than 5MB
- Set the image setting on your scanner to 300dpi or less for optimal scanning quality
- Your scanner must also be set to black and white (not colour).
- Once you click “Submit return to SARS”, you will not be able to submit additional documents, as the supporting document link will no longer be available after declaring that you have submitted all your supporting documents.
It is of key importance that you upload your documents via eFiling; MobiApp or the SARS Online Query System, and that your documents are not password protected.
Risks of using unregistered individuals posing as tax practitioners
As we are aware, Section 240(1) of the Tax Administration Act requires that “Every natural person who
- Provides advice to another person with respect to the application of a Tax Act, or
(b) Completes or assists in completing a return by another person”,
must be registered with both a Recognised Controlling Body (RCB) and with SARS as a tax practitioner.
Further, Section 234(c) states that a person who wilfully and without just cause, fails or neglects to register as a tax practitioner is guilty of an offence, and upon conviction, is subject to a fine or to imprisonment for a period not exceeding two years.
Section 240(2) provides that section 240(1) does not apply in respect of a person who only— provides the advice or completes or assists in completing a return —
- to or in respect of the employer by whom that person is employed on a fulltime basis or to or in respect of the employer and connected persons in relation to the employer or;
- under the supervision of a registered tax practitioner who has assigned or approved the assignment of those functions to the person.
Despite the above, SARS is aware that there are still individuals who continue to act as tax practitioners but are not registered in terms of the law stated above.
This is concerning as the taxpayer, who may not be aware of risks of using unregistered tax practitioners, could be exploited. The risks for using unregistered individuals are that they:
- may not have technical competency, which may lead to them misrepresenting / misleading taxpayers. They do not have to meet Continuous Professional Development (CPD) requirements, may not be aware of new developments regarding any tax Act; and
- are not bound by the code of conduct of any RCB and cannot be held accountable for their actions.
SARS has noticed that these individuals tend to charge contingency fees that registered tax practitioners are not allowed to charge. This creates an unequal playing field and allows those that flout the law to benefit.
SARS is intensifying its campaign to make taxpayers aware that they should not share their eFiling profiles and login details with these individuals as we have found that unregistered individuals tend to use this route to access SARS systems.
As a tax practitioner, you may come across taxpayers who prefer to use these unregistered individuals for different reasons. It is in the interest of taxpayers and your profession to make taxpayers aware of the risks involved.
Should you have details about any unregistered individuals doing the work of a registered tax practitioner, you are encouraged to report this to SARS, by clicking on Reporting the unprofessional conduct of a Tax Practitioner (Section 241).
SARS MobiApp enhanced
The SARS MobiApp has been enhanced. You can now request your Tax Compliance Status on the MobiApp, and request an eBooking appointment with SARS without having to login first.
For more details, see the updated Guide to the SARS MobiApp
SARS implements a new self-help SMS service for taxpayers
Taxpayers can now request specific Personal Income Tax related services by sending an SMS to SARS at 47277. The services can be accessed with or without data/airtime.
This means taxpayers can now request, via their mobile device:
- A Tax Reference Number
- An Account Balance, and
- A Return Confirmation request.
The new free SMS service can also be used to book an appointment to speak to a SARS agent or visit a branch.
It is important to note that this service was developed to assist taxpayers. Tax practitioners are excluded from making use of the service on behalf of a client, i.e. if a tax practitioner attempts to capture a client’s ID number via her/his own phone. The service will not be accessible when a taxpayer’s identification number (ID) and cell phone number do not match SARS’s records.
This means tax practitioners can only make use of this service in their capacity as taxpayers.
Tax practitioners are also excluded from using the SMS for an eBooking service. Tax practitioners, may however, make use of the eBooking service via the SARS website.
For more detail, see the Guide to SARS Mobile Tax Services.
Click here to watch a video on what you can do via the new SMS service.
Add company to existing eFiling profile
SARS has created a video that shows the steps to follow when adding a company to your existing eFiling profile and requesting the transfer of your Corporate Inc.
Click here to watch the video
Latest guides published by SARS Legal Counsel
SARS’ Legal Counsel Division recently published new guides. These guides are neither “official publications” as defined in the Act, nor are they binding on SARS. They are merely intended to assist taxpayers in the practical interpretation and application of the requirements set by law and are categorised per tax type, for ease of reference. The guides listed below, were published between 1 July and 10 August:
Capital Gains Tax
1 July: ABC of Capital Gains Tax for Individuals (Issue 12)
1 July: ABC of Capital Gains Tax for Companies (Issue 10)
28 July: Guide on Valuation of Assets for Capital Gains Tax Purposes (Issue 5)
30 July: Customs Clearance and Valuation of Banknotes
30 July: Export Duty on Scrap Metal (Note that frequently asked questions are published on the Export Duty on Scrap Metals webpage.
9 July: Guide to the Tax Compliance Status functionality on eFiling.
16 July: How to complete the Income Tax Return ITR14 for Companies.
28 July: Guide to the Urban Development Zone (UDZ) Allowance (Issue 8)
6 August: Basic Guide to Income Tax Exemption for Public Benefit Organisations (Issue 3)
11 August How to Register for eFiling and Manage Your User Profile (updated)
Kindly note that an updated FAQ was published for:
28 July: VAT Quick Reference Guide for Non-executive Directors
28 July: Guide to the Urban Development Zone (UDZ) Allowance (Issue 8)
Click here to see the latest Interpretation Notes, which are intended to provide guidelines to stakeholders on the interpretation and application of the provisions of the legislation administered by the Commissioner of SARS.
Beware of Scams
Taxpayers may receive random communication that appears to be from SARS but d are in fact fraudulent emails aimed at enticing unsuspecting taxpayers to part with personal information such as their bank account access details.
Examples include emails that appear to be from [email protected] or [email protected] indicating that taxpayers are eligible to receive tax refunds. If you come across these scams, please alert SARS.
SARS recently added two new scams to our Scams & Phishing webpage .
Read about them by accessing the links below:
Tips to recognise scams:
Taxpayers should take note of the following:
- Do not open or respond to emails from unknown sources.
- Beware of emails that ask for personal, tax, banking and eFiling details (login credentials, passwords, pins, credit / debit card information, etc.).
- SARS will never request your banking details in any communication that you receive via post, email, or SMS. However, for the purpose of telephonic engagement and authentication purposes, SARS will verify your personal details. Importantly, SARS will not send you any hyperlinks to other websites – even those of banks.
- Beware of false SMSs.
- SARS does not send *.htm or *.html attachments.
- SARS will never ask for your credit card details.
To report or to get more information on phishing, please send an email to [email protected] or call the Fraud and Anti-Corruption Hotline on 0800 00 2870.