Employer’s Interim Reconciliation
The Employer Interim Reconciliation Declarations (EMP501) this year starts on 18 September 2023 and ends on 31 October 2023. During this period, all employers must reconcile their Monthly Employer Declarations (EMP201 tax returns), including the Skills Development Levy (SDL) and Unemployment Insurance Fund (UIF) contributions.
These reconciliations are based on the Monthly Employer Declarations submitted with the tax values of the interim IRP5/IT3(a)s certificates generated, accurate payroll information and employees’ tax (PAYE) payments made during the period 1 March 2023 to 31 August 2023. See more detail here in a letter to Employers.
Shared access is a function available on eFiling, which makes sure that an individual has full control/knowledge of their tax affairs, regardless of whether a Tax Practitioner completes and/or submits tax returns on their behalf.
It is important for Tax Practitioners to share eFiling access with the taxpayer to ensure that the responsibility for tax obligations remains with the taxpayer. If at any time, the taxpayer ceases to be a client of the tax practitioner, then the access can be amended accordingly without the taxpayer losing access to their own eFiling profile and related tax history.
The different functionalities available on eFiling as are follows:
- Obtain Full Shared Access means that the taxpayer, as well as the Tax Practitioner, will have full and equal access to all the information relating to the associated tax type(s). Once this type of access is asked for, immediate authorisation is given to both parties and the taxpayer and the Tax Practitioner will be able to view, fill in and send SARS tax return(s), update personal details, etc.
- Remove My Access means that the taxpayer won’t be able to manage or view their tax returns, and full access will be given to the Tax Practitioner with whom the taxpayer shared their last “Shared Access”.
- To do No Action means that the taxpayer will not be able to manage or view their tax returns and full access will stay with the Tax Practitioner with whom the profile exists. This option can only be used with the quick registration process. Should a taxpayer, during the quick registration, select this option and then have a change of heart, the taxpayer can login and change the function setup.
For more information see: Shared Access | South African Revenue Service (sars.gov.za)
Outsourcing of Overdue Debt
Beginning October 2023, SARS will outsource overdue debt that is older than five years to external third-party debt collectors, who will assist with overdue accounts where no active payment or attempts to make payment arrangements have been made.
The intervention will apply to taxpayers and traders who have been repeatedly contacted, been sent letters of demand outlining options for debt resolution, and still failed to settle their accounts or secure payment terms.
SARS will notify the affected taxpayers of its intention to hand them over while affording them the opportunity to regularise their tax affairs. The SARS debt management team will assign dedicated consultants to assist affected taxpayers with handover-related questions.
If you have debt outstanding and would like to regularise your tax affairs, please click on the link for information on how to become tax compliant: Owing SARS Money | South African Revenue Service
What happens when SARS pays a refund into an old bank account?
Before submitting an Income Tax Return, ensure that all details including banking details are updated. It is a taxpayer’s responsibility to always ensure that SARS has their correct bank details.
SARS only pays refunds into valid bank accounts. If the ‘old’ bank account is still open and valid, SARS will be unable to assist the taxpayer. The taxpayer will have to consult their bank.
However, if the account is closed, the credit will be returned by the bank and automatically reversed by SARS. This also invalidates the bank details and communication will be issued to the taxpayer.
For information on how to change banking details using eFiling, please click on the following: Adding or Changing Banking Details | South African Revenue Service (sars.gov.za).
SARS will require supporting documents, the detail of which is listed as per the enclosed: Relevant Material or Supporting Documents | South African Revenue Service (sars.gov.za)
Do not agree with the Auto Assessment?
If a taxpayer does not agree with their auto-assessment, they can complete and submit the tax return with the correct information. Auto assessed taxpayers have until 23 October 2023 to amend and file their return on eFiling or the SARS MobiApp if they do not agree with the auto assessment received.
Should a Deceased Person’s Income Tax Return be filed?
When a person dies, the Executor (an appointed person to attend to the administration of the estate of a deceased person) is required to submit a final income tax return for the deceased person, covering the period from the beginning of the tax year up to the date of death.
The tax return must include any taxable income received, as well as any property that is sold for purposes of the deemed disposal of assets for capital gains purposes at the date of death.
If the deceased person is not registered for income tax, has no taxable income, and does not own property to be sold for capital gains purposes at the date of death, the income tax return in the year of death is not required.
The return that must be completed for the deceased person is the same as the personal income tax return used for individuals which is an ITR12.
How to file a tax return on behalf of a deceased person?
An income tax return can be completed and submitted for a deceased person through any of the following channels: eFiling, SARS MobiApp, or at a SARS branch by first making an appointment.To learn more about tax compliance and obligation post-death, please visit our Estates website page.
When sending supporting documents to SARS, please take the time to rename the documents so that the documents required by SARS can be easily extracted. SARS has experienced that taxpayers send in multiple documents all of which are named, “Supporting Documents.”
When trying to find a particular document, the lack of naming requires SARS to peruse the whole list of “supporting documents” to find the specific document required. It would be helpful and less time consuming, if taxpayers name the documents according to their type e.g., IRP 5 certificate, RAF Contributions, Schedule of Rental Activities, Death Certificate, Liquidation and Distribution Account, Identify Document, Proof of address etc. before uploading.
Webinar on Traders Rights
The Taxpayer and Trader Education Unit, together with the SMME, Taxpayer and Trader Segment, hosted a webinar on Traders Rights, in collaboration with the Office of the Tax Ombud and the Border Management Agency. The aim of the webinar was to educate Small, Micro, and Medium Enterprises (SMMEs) customs cross-border traders about their rights, and the channels to follow when their rights have not been upheld.
Examples of challenges that may infringe SMME traders’ rights can be unfair penalties, being asked for bribes and instances where SARS Customs officials do not adhere to the SARS Service Charter turnaround times. Other challenges may include the inability of female traders to conduct their business without sexual harassment and victimisation. The webinar can be accessed on the SARS YouTube TV Channel. To view the presentation click here.
Webinar on Provisional Tax
SARS hosted a webinar on 24 August 2023 on Provisional Tax. Provisional Tax is a method of paying the income tax liability in advance so that the taxpayer does not have a large tax debt on assessment.
The following topics were covered:
- Calculating the Base Cost
- Calculation of Taxable income
- Determining the tax credits on the Provisional tax.
- Accessing the Provisional Tax Return on eFiling
- Completion of the Provisional tax on eFiling
If you missed this webinar, the recording can be accessed on the SARSTV YouTube channel by clicking here.
Supporting documents for Tax Compliance Status for foreign investment allowance
When you apply for a Tax Compliance Status (TCS) in respect of foreign investment allowance for individuals, you are required to submit supporting documents. Where bank statements are required for the approval of International Transfers (AIT), it has now been specified that it must be issued no longer than 14 days before the date that the AIT application is submitted, reflecting the relevant amount.
For more information, see the Supporting documents for the approval of International Transfers webpage and the updated Guide to the Tax Compliance Status functionality on eFiling.
Tax Directive system enhancements scheduled for September 2023
Enhancements to the Tax Directives system will be implemented during September 2023. Please familiarise yourself with the following anticipated changes:
Paragraph (b)(xii)(bb) of the definition of “retirement annuity fund” in section 1(1):
A member with more than one contract / policy in a retirement annuity fund can transfer one or more of these contracts / policies to another approved retirement annuity fund, subject to certain conditions. When transferring a contract / policy, the Fund Administrator must ensure that the value of the individual contract / policy in the retirement annuity fund being transferred to another retirement annuity fund is R371 250 and above, and that if an amount remains in the fund, the remaining value in the retirement annuity fund after the transfer, is at least R371 250. If the member’s total interest (all contracts / policies combined) in the retirement annuity fund is being transferred to one other retirement annuity fund, the monetary restriction on the value per transferring contract or policy is not applicable, and the member’s total interest can be transferred from one retirement annuity fund to another. Please note that this change is only applicable to transfers prior to retirement that take place from one retirement annuity fund to another retirement annuity fund.
Deemed retirement from a Provident Fund Par4(3) of the 2nd Schedule:
Fund administrators must note that the reason “Provident Fund deemed retirement” cannot be used if the date of accrual is on or after 1 March 2023.
Paragraph 2(1)(c) of the Second Schedule:
A retirement benefit, in respect of a member who has reached retirement age, that was transferred to a Preservation Fund, cannot be accessed as a once-off withdrawal benefit, prior to retirement.
Recognition of Transfer
To assist the Fund Administrators / Long-Term Insurers to understand the Recognition of Transfer (ROT) decline reasons, SARS has enhanced the response messages to be more meaningful to ensure that the recipients understand what needs to be corrected before attempting to resubmit the ROT.
Fund administrators / Long-term Insurers are reminded that when a retirement benefit is successfully transferred or there was a purchase of annuity on retirement, the receiving fund / Long-term Insurer must, submit a ROT to SARS. This is to confirm that the member’s benefit, as indicated on the tax directive, was received. SARS sends a notification to the receiving fund if the ROT has not been submitted to SARS after 21 working days. Where a ROT remains outstanding after 21 working days, the taxpayer will receive a notification. Should the ROT not be received from either the fund or the taxpayer after 21 working days may result in the taxpayer’s return being rejected and the transfer / POA will be treated as a withdrawal benefit and will be subject to tax as such.
SARS introduces document encryption to protect taxpayer confidentiality
SARS is commencing the journey to protect documents with passwords so that only the intended recipient can access the information. The first document that will have this encryption applied is the Notice of Registration (IT150). Once a taxpayer receives this document from SARS, they will be required to use their ID/ Passport/ Permit number to open their Notice of Registration.
Trade Facilitation Index Survey
SARS is conducting a mid-year survey to measure your experience with Trade Facilitation Indicators (TFIs) that are administered by the Customs and Excise Division. The survey is sent to a sample of selected enterprises. The survey runs from 6 – 20 September 2023. Click here for the letter to stakeholders. To see if a survey from SARS is legitimate, see our Current surveys, emails and SMSs webpage.
Use of the SARS Logo
SARS has observed that tax practitioners are using the SARS logo in their personal correspondence, including email signatures. Facebook accounts are also being created using the SARS Logo.
We would like to remind all tax practitioners that only SARS is allowed to use the SARS logo. Our SARS logos (including eFiling and e@syFile) are registered trademarks in the name of SARS, and any unauthorised use thereof would therefore constitute trademark infringement in terms of the Trademarks Act, 1993.
The use of our logos is also a contravention of Section 30 of the SARS Act, which prohibits any third party from claiming an association, or representing a connection with SARS.
Roodepoort man sentenced for fraudulent tax refunds
SARS salutes the heroic work of the Criminal Investigation Unit that successfully secured the direct imprisonment of Mr. Anwar Gaffor who had defrauded SARS of millions. The Palm Ridge Specialised Commercial Crimes Court sentenced 41-year-old Gaffor to 45 years direct imprisonment on three counts of fraud. The court ordered that the sentences imposed on counts two and three must run concurrently with the sentence on count one, resulting in an effective imprisonment term of 15 years.
Gaffor and his company, Ceiling and Partitioner Installers (PTY) Ltd, were charged with three counts of fraud. In 2019, the accused submitted fictitious Value Added Tax (VAT) 201 returns to the South African Revenue Service (SARS). He unduly benefitted from VAT refunds worth over R2.9 million.
Any person who carries on any enterprise is compelled under certain conditions to register for VAT with SARS. Once registered, the entity is referred to as a VAT Vendor and required to charge VAT on supplies of goods or services made (output tax). Due to VAT being a self-assessment system, the output tax collected may be reduced by the input tax paid. Thereafter, the net amount is payable to, or refundable by SARS. The self-assessment returns are due regularly within prescribed tax periods. SARS relies on the integrity and honesty of each VAT Vendor when it comes to administering the amount payable to SARS or refundable to the VAT Vendor. Gaffor used false or fictitious tax invoices, purported to be from different entities, to substantiate or support the claims for VAT refunds.
The sentence sends a clear message that the abuse of the tax system will not be tolerated, and offenders will face serious criminal consequences. This successful resolution is a powerful example of our unwavering commitment to maintaining a fair and just tax environment where all individuals and businesses are held accountable for their actions.
Given this outcome, we underscore the significance of fostering public trust and confidence in our tax administration system. The resolution of this case has been a critical step towards strengthening the public’s belief in the fairness and integrity of our taxation processes.