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25 November 2013 – Preliminary Outcome of the 2013 Tax Season

25 November 2013 – Preliminary Outcome of the 2013 Tax Season

More than 6 million returns submitted

Highlights:
  • 6.09 million returns submitted for 2013 – 7.7% increase from 2012
  • 91.5% of eligible taxpayers submitted returns on time
  • 1.55 million outstanding returns submitted from previous years
  • SARS received R674 million in penalties from defaulting taxpayers
  • 99.86 % of returns were submitted electronically
  • 94.83% of returns were assessed within 3 seconds
  • 95.0% of refunds were paid in 72 hours
  • Over R14.2 billion in tax refunds were paid to 2 million taxpayers

Pretoria, 25 November 2013 –
The South African Revenue Service (SARS) has again recorded remarkable growth in the levels of tax compliance in the country with 6.09 million income tax returns submitted for the 2013 Tax Season.

This means that 91.5% of taxpayers who were eligible to submit a tax return this year did so on-time, an increase of 5.5% from 2012.

The total number of returns received by the deadline of 22 November 2013 is 7.7% higher than in 2012, despite the fact the threshold to submit a tax return was substantially increased by the Minister of Finance in the 2013 Budget.

Effectively, the threshold adjustment removed the administrative obligation for thousands of taxpayers to submit a return if they earned income below R250 000 a year and did not submit any claims for a tax refund.

“The growth in the number of tax returns filed despite an increase in the threshold for submitting a return from R120 000 to R250 000 shows the continued growth in tax compliance by fellow South Africans. The ability to collect tax revenue from individual and corporate citizens to finance the provision of public services and the provision of socio-economic infrastructure has been one of the cornerstones of our democracy these past 20 years. On behalf of government I thank all our taxpayers for submitting their tax returns on time – you make SA proud!” the Minister of Finance, Mr Pravin Gordhan, said.

Administrative penalties

As part of the total submissions, SARS also received 1.55 million outstanding returns from previous years which is 13.3% (182 000) higher than the 1.4 million outstanding returns, submitted by the 2012 deadline. This is a very encouraging indicator that the administrative penalties that SARS impose for outstanding returns are having the desired effect of improving compliance levels.

Of the 1.55 million outstanding returns received from previous years, defaulting taxpayers paid a SARS total of R674 million in penalties. SARS will continue to impose penalties against taxpayers who do not submit their returns.


Contributing to the Personal Income Tax System
The annual Tax Season represents one of the biggest, direct engagements between a public institution of the South African Government and a growing body of millions of economically active citizens in the country. It also serves as a key indicator of the levels of compliance with the laws of the country amongst ordinary citizens.

Anyone who was formally employed during 2012/13 was required to be registered with SARS whether they were liable for income tax or not. Employers deduct PAYE from all taxpayers who are formally employed if they earn more than the tax threshold. PAYE deductions are then paid to SARS by the employer.

On 31 March 2013 there were 15.3 million individuals who were registered for Personal Income Tax. Although almost 9 million were likely to have earned less than the tax threshold they also contributed to revenue collection, through consumption taxes like VAT.


The benefits of automation and electronic filing

Seven years into the modernisation journey of the income tax system the migration from paper or manual returns to electronic submission – via eFiling or at a SARS branch office – is almost absolute with 99.86% of all returns submitted electronically (98.86% in 2012).

Only 6 471 manual or paper returns were submitted this year.

In addition, SARS assisted many millions of taxpayers at branch offices to submit 2.7 million returns electronically, an increase of 6.1% compared to 2012.
Returns submitted on eFiling by taxpayers themselves totalled 3.3 million, 7.7% higher than in 2012.

The adoption of electronic submissions has enabled SARS to further improve its turnaround times and 94.83% of all returns submitted were assessed within 3 seconds!

Other than in previous years, better management of queues at branch offices through an electronic ticket system substantially reduced the queues and waiting periods at the biggest SARS branch offices.


Combating Fraud and Abuse of the Tax System

So far this year SARS, working with the SAPS in combating fraud, has arrested 38 individuals who are alleged to have submitted fraudulent claims for tax refunds. The cases are at various stages of criminal prosecution before the courts. SARS is in the process of recovering about R29.2 million that have been fraudulently claimed as tax refunds.

The alleged perpetrators presented themselves as tax practitioners to unsuspecting taxpayers. They allegedly promised taxpayers a bigger refund in exchange for a commission and effectively have committed tax fraud in the name of unsuspecting taxpayers. Public sector employees were specifically targeted.

SARS will continue to combat such abuse of the tax system and must caution all taxpayers not to disclose personal information – ID number, tax number, banking details, eFiling log-on details and password – to any third party who promises them a tax refund.
Tax Refunds

Faster turn-around times in assessing returns have enabled SARS to pay income tax refunds much quicker.
  • Since the start of the Tax Season on 1 July 2013, refunds of R14.26 billion were paid to 2 million taxpayers, which is R1.4 billion higher than the 2012 figure.
  • From 1 July this year SARS paid 94.9% of all refunds within 72 hours
Tax refunds are a direct contribution to the domestic economy and household incomes.
Payments from taxpayers this year amounted to R4.7 billion which is R1 billion (27.4%) more than the R3.69 billion paid in 2012.
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