Tax Practitioner Connect Issue 44 (July 2023)

2023 Filing season for Individuals and Trusts

Filing Season for individuals (provisional and non-provisional taxpayers) and Trusts commenced on Friday 7 July. For information on the changes for this Filing Season, please visit: Tax Season | South African Revenue Service (sars.gov.za)

Briefly, the changes that have been introduced pertain to:

Aligning the 40 business days rule to the Filing Season end date
Payment due dates
Statement of Assets and Liabilities
Foreign income disclosure
Spouses married in community of property
Section 93 reduced assessment

Check if you have been auto-assessed

Personal Income Tax taxpayers who qualify for this year’s Filing Season 2023 auto-assessment can now check whether they have been auto-assessed via the SARS Online Query Service functionality, click here.

Updated Confirmation of Disability Diagnosis (ITR-DD) form

For updated information on how to claim physical impairment or disability expenditure please visit: Tax and Disability | South African Revenue Service (sars.gov.za)

Tax implications if married in community of property

Taxpayers who are married in community of property are taxed on half of their interest, dividends, rental income, and capital gains. SARS has retrieved “Married in community of property” status from the taxpayer’s previous declaration and collaborated with the Department of Home Affairs to confirm marital status.

Where a match between SARS and Home Affairs is confirmed, the spouses will be linked as follows:

If investment income is identified for a taxpayer based on third party data received (e.g. IT3(b) certificate for interested earned), the third-party data will also be prepopulated on the spouse’s return if the spouses are linked on the SARS system.
The investment income will be apportioned accordingly and will reflect on the notice of assessment (ITA34) issued to each spouse, upon assessment.
Note: Where applicable, the spouse who is not registered for tax may be routed for Auto Registration.

Taxpayers married in community of property may opt to exclude certain income from the communal estate. In previous tax years, one communal estate indicator was displayed per applicable container/subsection of the return and if the taxpayer selected the indicator it applied to the whole income amount declared in that part of the return (e.g. total local interest or total foreign dividends)

From the 2023 year of assessment, the taxpayer can select the communal estate indicator on a transactional level (i.e. for each institution from which the income was received). This change applies to the following containers/subsections of the return:

Local interest
Foreign interest
Foreign tax credits on foreign interest
Gross foreign dividends subject to SA normal tax
Foreign tax credits on foreign dividends
Distributions from a Real Estate Investment Trusts (REIT) /Taxable Local Dividends
Capital Gain/Loss
Local Rental Income

We have developed the following FAQs for the Married in Community Spousal Assessment and published this on the Filing Season 2023 webpage:

Updated Guides for Filing Season 2023

The following guides were updated for Filing Season 2023:

For more guides and information, visit the Filing Season 2023 webpage.

Corporate Income Tax (CIT) – Form and system changes

The Income Tax Return for Companies (ITR14) and Notice of Assessment for Companies (ITA34C) have been updated from 23 June 2022. See the prototype here.

The following are the highlights of legal amendments that informed the changes to the ITR14 and ITA34C, and to SARS systems and work processes:

An update to the SARS core systems to accommodate the assessed loss calculations in terms of Section 20
An update to the ITR14 to identify paragraph 13(1)(a) and 13(1)(b) deductions for purposes of extending the prescription period on disputes
Removal of the Solidarity Fund donations (excl. any other donations) container on the ITR14 to align with the new Section 18A requirements
The Public Benefit Organisations (PBO) number(s) declared on the return when claiming donations will be validated against the SARS’s PBO register for validity
A Share Register will be added to the ITR14 return which will enable the capturing of the classes of shares, and the details of the holders of shares per class of share
The “Taxable Distribution(s) from all Trusts(s)” container will be enhanced to enable the taxpayer to declare the details of each distribution received from a Trust
An update to source code descriptions where applicable.

Trust changes for Filing Season 2023

The filing periods for Trusts are as follows:

Trusts that are not liable for Provisional Tax: from 7 July – 23 October
Trusts that are liable for Provisional Tax: from 7 July – 24 January 2024.

The annual notice, issued by the Commissioner, requires ALL Trusts to submit a Trust return. It is thus imperative that all representative taxpayers of Trusts (trustees) ensure compliance in this regard.

With effect from 23 June 2023, SARS has introduced changes to the Income Tax Return for Trusts (ITR12T). See the ITR12T prototype form here.

The changes being introduced include:

Updates to the wizard on the Trust return
- Additional questions to determine if any Local or Foreign amount(s) were vested in the Trust as a beneficiary of another Trust or deemed to have accrued in terms of s7 during this year of assessment; and the number of Trusts from where these amounts were received.
A simplified return for Passive Trusts
- To provide for a less cumbersome return, where limited Trust specific activities occurred during the year of assessment. The wizard and guide will provide guidance in this regard. The taxpayer must ensure that the correct “type” of return is selected on the first page of the tax return (Income Tax Return Wizard).
Other enhancements to the Trust Return (ITR12T)
- A new field for credit agreements and debtors’ allowance “Lay Byes” (S24) has been added under both sides of Special Allowances not claimed in the Income Statement and Allowances/Deductions.
- Beneficial Ownership Declaration page to record all beneficial owners and those who may gain financially from the proceeds of the taxpayer.
- Based on the wizard question above (relating to distributions received from other Trusts), the required number of containers for these distributions will be opened in the return. This will allow taxpayers to provide the detail of the distributions received from other Trusts (e.g. distributions received from five other Trusts, five containers will automatically be opened).
Supporting documents to be submitted with the ITR12T
- Mandatory supporting documents are to be uploaded and submitted with the Trust return. These include: the Trust instrument (document that created the trust), Annual Financial Statements, Letters of Authority (LoA) and resolutions/minutes of trustee meetings. The requirements will vary according to the Trust type. (Use the drop-down menu on eFiling to check the required supporting documents).
Enhancements to eFiling
- A pop-up notification will be seen when the return type is selected. Should the taxpayer select an incorrect tax type based on their registration, this pop-up notification will alert the taxpayer to select the correct return.

Managing Tax Compliance Matters

Trusts are included in the definition of a “person” in terms of the Income Tax Act, 1962 (ITA), and as such, the representative taxpayer (trustee/s) has a responsibility to register all Trusts for income tax purposes.

Note that the representative taxpayer (the trustee/s of a Trust) or the appointed tax practitioner MUST file an income tax return for the Trust on an annual basis in terms of the annual notice and during the Trust return filing period.

We have made it easier for you:

The quick and convenient way to obtain and file a Trust Return (ITR12T) is to register as an eFiler on SARS eFiling, request the return, and then customise it by completing the questions on the first page (wizard) of the return.
To register a new Trust for income tax and submit supporting documents, use our online platforms on the SARS website at sars.gov.za in the SARS Online Trust Registration link.

Importance of Managing Updated Registration Information across all Tax Products

SARS would like to provide clarity on the article titled “Failure to de-register for tax types may lead to de-registering of tax practitioners” that appeared in the June Tax Practitioner Connect Newsletter (No 43). We have realised that the article may have created confusion.

The purpose of the article was to highlight to tax practitioners, the importance of managing their registration across all tax types. When SARS reviews tax compliance, this is performed across all tax types that are active. Tax practitioners who are non-compliant in their own tax matters (across all tax types that they are registered for) may be deregistered as a tax practitioner. This is in terms of section 240(3)(d) of the Tax Administration Act.

Section 240(3)(d) of the Act permits SARS to deregister a registered tax practitioner if:

During the preceding 12 months, the tax practitioner has for an aggregate period of at least six months not been tax compliant (across all tax types) to the extent referred to in section 256(3) of the Act
The tax practitioner failed to remedy the non-compliance within the period specified in a notice by SARS.

The process to deregister non-compliant tax practitioners is as follows:

Non-compliant tax practitioners are identified in terms of section 240(3)(d).
The non-compliance of the tax practitioner is verified across all tax types.
A letter of intention to deregister the non-compliant tax practitioner is sent to the tax practitioner in question and s/he is provided 21 business days to regularise her/his tax affairs. The letter is sent via email.
If the non-compliance is not corrected or addressed within the stipulated period, a case is taken to the relevant governance committee for the approval of the deregistration.
If approved, the practitioner is deregistered on the SARS system, and the relevant RCB is notified to deregister such tax practitioner on the RCB’s system.

Deregistered tax practitioners will only be permitted to re-register as tax practitioners once they have demonstrated more than six months of tax compliance in the preceding 12 months and have complied with all registration requirements.

After the “Intention to Deregister” letter is issued, some tax practitioners write back to us to advise that the non-compliance that we referred to, is for a tax type that they no longer use. For example, they no longer use the PAYE number. In this instance, we advise tax practitioners, that unless they attend to all outstanding tax obligations for that tax type and have requested SARS to deregister that tax type, we will be proceeding with the intention to deregister.

As such, we would like to remind tax practitioners that if they are registered for a tax type that is no longer required, they should take the steps to deregister that tax type immediately.

Tax Practitioners may refer to the following links to ensure that they know how and when to deregister for tax types:

Tax Practitioner Connect Issue 38 (November 2022)

View the presentation which outlines the relevant procedures to be followed when a taxpayer applies for a de-registration of a tax type.

Scam alert

SARS has identified the following scams.

Be on the alert for a scam circulated through text messagestalking about Income Tax and VAT Returns.
The SARS IT security team identified the following fraudulent email addresses spamming taxpayers. If you receive an email from one of these email addresses, please delete or ignore.
ITR Service <[email protected]>
ITR Audit <[email protected]>
ITR Pay <[email protected]>
Tax audit <[email protected]>
An email titled ‘eFiling Credit Request’, is asking the email recipient to click on a link to view the amount.
An email titled ‘Statement of Account request’, is asking the email recipient to download a statement of account.
An email titled ‘Debt Management – Final Demand’, is asking the email recipient to download a statement of account.
The PayFast SMS scamis requesting taxpayers to click on a link to receive their refund.
An email titled ‘Internal Communication’ from a fake DIRCO email domain is sent, asking the email recipient to click on a fraudulent link to verify their identity for SARS purposes.

Please do not click on any suspicious links and delete these messages. If in doubt, always visit our Scams & Phishing webpage, where an example of this latest scam is published.