Tax Practitioner Connect Issue 41 (March 2023)

Employer Annual Declaration opened on 1 April and closes on 31 May 2023

During this period, employers are required to submit their annual reconciliation declarations (EMP501) that reflect accurate and the latest payroll information about their employees, monthly employer declarations (EMP201) for PAYE, UIF and SDL; payments made (excluding penalties and interest paid); and employee tax certificates (IRP5/IT3(a)s generated, covering the full tax year from 1 March 2022 to 28 February 2023. For more information on how we will help you to comply, submission channels, enhancements to e@syFile ™ Employer and more, see our letter to stakeholders.

Changes to the Auto Assessment Function

For the 2021/2022 filing season, SARS introduced changes to the auto assessment process. Information on this can be found at: How does Auto-Assessment work | South African Revenue Service (sars.gov.za).

To assist taxpayers who were auto-assessed and wish to make corrections to the auto-assessed returns, SARS provided the following guidance:

If a taxpayer is not in agreement with the assessment, he/she can access the tax return via eFiling or SARS MobiApp, complete the return, and file it within 40 business days from the date that SARS issued the assessment.
SARS can extend the 40 business days if we receive the request for extension before the expiry of the 40 business days, together with reasonable grounds. SARS can also extend the 40 business days after the expiry of the 40 business days if the taxpayer’s request is submitted to SARS within 21 business days after the expiry of the 40 business days, and if accompanied by reasonable grounds. SARS can also extend the 40 business days after the expiry of the 40 business days if a taxpayer’s request is submitted to SARS within 3 years after the expiry of the 40 business days, and if accompanied by exceptional circumstances.

However, there were taxpayers who did not meet the above-mentioned timelines or their requests for extension was not approved by SARS. These taxpayers were unable to submit their original return after estimate or object the auto assessment. After careful consideration, SARS decided to provide leniency to this group of taxpayers by reviewing the auto assessment process and system rules. The changes to the auto assessment process and system are as follows:

Conditionally reinstate the “Request for Extension” option in instances where a return was rejected with reason “40 days lapsed” whereby the taxpayer did not request extension nor the extension was granted, and SARS subsequently issued a Reassessment Rejection letter.
Enable identified taxpayers to file their return even though their original return was submitted after the estimate was not assessed or processed.

To effect this change, SARS will:

Establish and identify the number of taxpayers whose assessment requests were not processed due to the returns being submitted after 40 business days since the estimated assessments were raised by SARS, without requesting extension and the granting of extension.
In the instance that SARS rejected to issue a Reduced Assessment in terms of section 95(6) (post 40 business days), and the rejection letter was issued to the taxpayer on the basis that the return was submitted after 40 business days, the taxpayers will be provided with the ability to Request an Extension after the rejection letter has been issued.
Communicate the changes with the identified taxpayers.

Importance of ensuring correct registered particulars

We often receive complaints about SARS communication (e.g., requests for supporting documents or SARS audit queries) being issued to incorrect contact details. We would like to remind tax practitioners and taxpayers that SARS uses the details on record. Therefore, it is critical that tax practitioners and taxpayers update their details with SARS within the period prescribed in section 23 of the Tax Administration Act.

Section 23 of the Tax Administration Act (the Act) states: A person who has been registered under section 22 of the Act must communicate to SARS within 21 business days any change that relates to—

postal address;
physical address;
representative taxpayer;
banking particulars used for transactions with SARS;
electronic address used for communication with SARS; or
such other details as the Commissioner may require by public notice.

These changes are to be communicated to SARS via completion of the RAV01 (Registration Amendments and Verification form) which can be accessed on eFiling. These changes cannot be amended via email or discussion with a SARS employee. Tax practitioners are required to acquaint themselves with the process for updating their registered particulars and also educate their clients on this matter.

New USSD service launched

USSD or quick codes as it is known, is a new feature available to taxpayers. Taxpayers can now request specific Personal Income Tax related services by typing in a USSD string *134*7277# into their mobile devices. The benefits are that it is free of charge and you don’t need to have smart phone or internet connectivity.

The following additional tax related services are offered to taxpayers via the USSD channel:

What’s my Tax number?
Account balance
Do I need to file a tax return?
eBooking.

Visit the SARS Mobile Tax Services webpage for more information and a link to the online Guide.

For this system to work well, your registered particulars must be correct with SARS and the number you use must match the details on the SARS system. If your cell phone number and/or information used does not match, contact details can be updated via either of the following channels:

Deregistration of Tax Types

In the November 2022 issue of TPC, we shared information on the deregistration of tax types. We are still encountering instances where tax practitioners are experiencing difficulty with this process, and we encourage you to please refer to that newsletter. Tax Practitioner Connect Issue 38 (November 2022) | South African Revenue Service (sars.gov.za)

In addition, a presentation has been prepared on this topic and can be accessed on the following link: Deregistration of Tax Types | South African Revenue Service (sars.gov.za)

Disputes relating to Trusts

If you intend lodging a dispute on behalf of a trust, delivery of the relevant document (including the ADR1 (Notice of Objection) and/or ADR2 (Notice of Appeal), notice or request must be made to [email protected] (for Trusts not represented by Tax Practitioners) or [email protected] (for Trusts represented by Tax Practitioners).

Connect Newsletters

SARS produces various newsletters in addition to the TPC. Please visit Newsletters | South African Revenue Service (sars.gov.za) for information pertinent to VAT, Government Institutions, Tax Exempt Institutions and SMMEs.

Become an Authorised Economic Operator (AEO) and enjoy the benefits

An Authorised Economic Operator (AEO) is a company involved in the international movement of goods and approved by SARS Customs as complying with World Customs Organisation (WCO) or equivalent compliance and supply chain security standards. AEOs may include manufacturers, importers, exporters, brokers, carriers, consolidators, intermediaries, ports, airports, terminal operators, integrated operators, warehouses, distributors and freight forwarders. Once your application is successful, you become an accredited AEO with immediate access to benefits including substantial discounts on security.

Apply today:

Step 1: Contact the AEO team on [email protected]

Step 2: Client Relationship Manager engages with the prospective client

Step 3: Complete and submit application and self-assessment forms

Step 4: Documentary review and Client Relationship Manager contacts you

Step 5: Validation audits conducted

Step 6: Accreditation Committee considers application

Step 7: If approved, client awarded AEO and access to range of benefits.

For more information, see the Authorised Economic Operator (AEO) webpage.

Tax compliance statement issued by SARS on Phala Phala

A tax compliance statement issued by SARS indicates that the $4 million sale of the game at President Cyril Ramaphosa’s Phala Phala farm in 2020 has been declared. South African Revenue Services Commissioner, Edward Kieswetter, says all high-profile political office bearers should agree to make their tax affairs public as evidence of a commitment to transparency. Watch the interview where Commissioner Edward Kieswetter discussed this topic with a television news channel.

In this regard and mindful of the considerable public interest and concern in the affairs of the taxpayers Mr Matamela Cyril Ramaphosa, Ntaba Nyoni Estate and Ntaba Nyoni Feedlot, SARS received the consent of the taxpayers, in terms of section 69 (6) of the Tax Administration Act no 28 of 2011 (TAA), to make a public statement. Without the express written consent of the taxpayer and the Public Officers in terms of section 69(6) of the TAA, SARS would be prohibited by law from making this statement. The companies’ consent was provided by the Public Officer for each of the companies respectively appointed in terms of section 246 of the TAA, 2011 and responsible for all acts and matters of a company for tax purposes. See the full media statement here.

Scam alert

Beware of the latest email scam saying that a letter of demand which requires your attention has been issued and asks you to click on a link to open the letter. Please ignore and don’t click on any links. If in doubt, please send an email to [email protected]. See the latest scam here –Scam-Letter of demand-10 March 2023.

Webinar on SARS Administered Incentives

SARS held a webinar for Small, Micro, and Medium Enterprises (SMMEs) about various domestic and cross border incentives available to help them grow their businesses. The webinar touched on revenue compliance obligations to help traders understand their responsibilities before the SARS financial year end. Recent surveys conducted by SARS on SMME traders revealed that 82.2% are unaware of available Customs & Excise incentives and do not take advantage of them, while 78,6% lacked confidence in their understanding of policies, systems and legislation which can influence their general compliance behaviour. To view the presentation click here.

Tax Directives

Section 1.1, Paragraph (b) (xii)(bb) of the definition of “retirement annuity fund” (RAF) in section 1(1) of the Income Tax Act. Section 1.1, Paragraph (b) (xii)(bb) of the definition of “retirement annuity fund” in section 1(1) of the Income Tax Act has been amended to allow for transfers between Retirement Annuity Funds (RAF).

The effect of the amendment is that the word “total” is deleted, and the following conditions are inserted –

The value of each policy/contract being transferred from one retirement annuity fund to another retirement annuity fund must exceed R371 250 (see highlighted portion blue above); and
The value remaining in the retirement annuity fund after the transfer must exceed R371 250.

However, there is no monetary restriction on the transfer value if the full/total value of the retirement annuity fund is transferred to another retirement annuity fund (i.e., there is no amount remaining in the retirement annuity fund after the transfer).

Where a taxpayer opts to transfer one or more policies/contracts to a new RAF, a separate tax directive application for each transfer must be completed.

See the enclosed link for a webinar that SARS held recently on tax directives. Tax Directive Webinar – YouTube