Budget 2022/23
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 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.
Tax revenue
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.
Budget webpage
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 welcomes the upwardly revised revenue collection estimate announced by the Minister of Finance, Mr Enoch Godongwana, SARS Commissioner Edward Kieswetter said in a statement.
The Minister increased the revenue estimate to R1 547.07 billion from the February 2021 budget estimate of R1 365.1billion in his 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.
See the full media statement here.
SARS presentation to Standing Committee on Finance in Parliament
On Friday 4 March 2022, Commissioner Kieswetter presented the SARS Response to the Public Hearing on Budget 2022 to the Parliamentary joint committees Standing Committee on Finance (SCOF) and Select Committee on Finance (SeCOF) . He noted that as SARS “we remind ourselves constantly that we do privileged work, informed by the higher purpose of enabling the building of a capable state to improve the wellbeing of all South Africans.”
He emphasised the SARS commitment towards developing a Tax & Customs system based on voluntary compliance through achievement of the nine SARS strategic objectives.
The presentation included the current picture of the tax practitioner community and their overall compliance in the last year:
- 25 000 tax practitioners on Register
- 47 tax practitioners were deregistered due to non-compliance
Tax Compliance
- R1.13 billion outstanding debt from 3905 tax practitioners
- 3762 outstanding returns
- Filing:
- 77% file on time
- 21% file late
- 2% don’t file at all
- Payment:
- 89% pay on time
- 6% pay late
- 5% don’t pay at all.
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 Matabele and Indunah Diaganostic Radiologists Inc, are Dr Zulu Mkhabele 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 has 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.
Customs non-compliance
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 multibillion-rand 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.
Trade Statistics for January 2022
SARS released trade statistics for January 2022, recording a preliminary trade balance surplus of R3.55 billion. These statistics include trade data with Botswana, Eswatini, Lesotho and Namibia (BELN). The year-to-date (01 January to 31 January 2022) preliminary trade balance surplus of R3.55 billion is a deterioration from the R12.98 billion trade balance surplus for the comparable period in 2021. Exports increased by 17.6% year-on-year whilst imports increased by 29.6% over the same period.
The R3.55 billion preliminary trade balance surplus for January 2022 is attributable to exports of R130.12 billion and imports of R126.57 billion. Exports decreased by R25.04 billion (16.1%) between December 2021 and January 2022 and imports increased by R0.43 billion (0.3%) over the same period.
See the full media statement here.
Visit the Trade Statistics webpage.
Once-off administrative penalties for Personal Income Tax non-compliance
A once-off administrative penalty will be imposed on the following two populations of taxpayers:
- Taxpayers that 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 that 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.
Remission of administrative penalties
A taxpayer can request the remission of the penalty if there are grounds to do so using RFR form on eFiling.
Update on “Cease to be a SA Tax Resident”
In February, SARS added an additional channel on eFiling to assist clients who want to inform SARS when they are no longer a tax resident of South Africa.
A taxpayer must inform SARS through one of the following two channels:
- Through the Registration, Amendments and Verification Form (RAV01) on eFiling by capturing the date on which the taxpayer ceased to be a tax resident. The form can be obtained on eFiling or a SARS branch by making appointment. A case will be created whereby the taxpayer will receive a letter from SARS to submit supporting documents.
- By capturing the effective date on the ITR12 tax return.
Supporting documents:
- If the declaration is made on the income tax return (ITR12), you will receive a request for supporting documents to substantiate the declaration you have made. The relevant information that must be supplied to SARS will depend on the basis on which you have ceased to be a tax resident.
- If the declaration is made via the RAV01 form on eFiling, the Declaration Form must be completed and be submitted with the relevant supporting documentation through eFiling or SOQS.
* (To open the Declaration Form, download the PDF form and then open it from your documents.)
Taxpayers who submit their individual Income Tax return via the SARS MobiApp, will also receive correspondence on their application to change residency status via SARS MobiApp.
For more information, see our Cease to be a Resident webpage.
Updates on Deceased/Insolvent Estates
- Public Benefit Organisations (PBO) numbers declared on ITR12 returns for deceased an insolvent estates to be validated in future
The Guide to the Individual ITR12 Return for Deceased and Insolvent Estates has been updated to indicate that a Public Benefit Organisation (PBO) number declared on the ITR12 return will be validated to determine if it was active and applicable for that particular year of assessment. If the PBO number does not pass the validation, the deduction will be disallowed, and the applicable reason will display on the notice of assessment (ITA34).
Click on this link to access the guide: Guide to the Individual ITR12 Return for Deceased and Insolvent Estates
FAQs relating to insolvent estates of individuals published
SARS’ Leveraged Legal Products division has published a document with Frequently Asked Questions (FAQs) to provide clarity on certain practical and technical aspects relating to Insolvent Estates of Individuals. It has been compiled on the basis of questions that executors, trustees and the public at large have about the tax treatment of insolvent estates of individuals in terms of the Income Tax Act, 1962.
Note that FAQs are drafted purely to assist stakeholders and facilitate consistency on certain practical and technical aspects relating to the insolvent estate of an individual and is not intended to be used as legal reference. Click here to access Frequently Asked Questions: Insolvent Estates of Individuals.
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.
Corporate Income Tax External Guide updated
Corporate Income Tax (CIT) undergoes form and tax system changes yearly to ensure that it remains aligned with the CIT legislation, enabling taxpayers to file their returns with ease and accuracy. To enhance compliance, SARS provides clear guidance on completing the form and the processes to follow when various scenarios occur in order to ensure that taxpayers understand and are able to comply with their responsibilities.
The CIT External Guide has been updated to indicate how a taxpayer should complete the ITR14 return when a financial year end change results in more than one period ending in the same calendar year. The guide also provides guidance on the financial statement(s) required for submission when this occurs.
The updated External Guide can be accessed via the SARS website. Click on the link to access the guide: IT-GEN-04-G01 – How to complete the Income Tax Return ITR14 for companies – External Guide
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.
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.
Employment Tax Incentive (ETI) Values from 1 March 2022
The Minister of Finance announced an increase in the Employment Tax Incentive values which came effective 1 March 2022. This information was published in the draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill of 23 February 2022.
For more information see the Employment Tax Incentive webpage.
Scams
Beware of the latest scams that are sent to taxpayers via email and SMS:
To see more examples of scams, please visit the Scams and Phishing webpage.
Third Party Data Annual Submissions
The SARS Third Party Data Annual Submissions process for the period 1 March 2021 – 28 February 2022 opens on 01 April 2022 and will close on 31 May 2022. For more information, please visit the Third Party Data Submission Platform webpage.
Applying for a Financial Year End (FYE) change – Corporate Income Tax (ITR14) return
Taxpayers can apply for a Financial Year End (FYE) change of their Corporate Income Tax (ITR14) return. The webpage, Keeping my business details up to date, provides the relevant steps for different types of companies.
