Industry updates | April 2024
Please take note of the following industry updates that may be relevant to you and your business.
COMPLIANCE AND ADMINISTRATION
Due dates for reporting and payments- April 2024:
TAX ADMINISTRATION
1. Key tax changes affecting individuals in South Africa have been recently implemented, and they carry significant implications for taxpayers.
Personal income tax (PIT) remains a substantial contributor to the country's total tax collections. Recent adjustments have seen an inflationary increase in PIT brackets and rebates, providing relief of R15.7 billion. Notably, the primary rebate change has raised the tax-free threshold for individuals under 65 years old from R91,250 to R95,750.
The exemption for interest and dividend income remains unchanged, with annual limits set at R23,800 and R34,500 for individuals below and above 65 years old, respectively. Similarly, the annual contribution limit to tax-free investments stays at R36,000.
To encourage investment in rooftop solar panels for electricity generation, a proposed incentive offers a 25% tax rebate on the cost of new solar PV panels, capped at R15,000 per individual. However, concerns have been raised regarding limitations and the short availability period.
Legislative amendments to the retirement system introduce a two-pot system, allowing pre-retirement access to a portion of retirement assets while preserving the rest. Proposed changes aim to clarify investment contribution limitations and retirement fund deductions.
Proposed amendments also aim to clarify anti-avoidance rules regarding low-interest or interest-free loans to trusts, and adjustments to transfer duties and retirement fund benefits are made to compensate for inflation.
Moving to corporate tax, new amendments provide tax relief for suppliers using lay-by agreements, aligning income recognition with cash receipt. Practice notes related to tax deductions are under review, aiming to align with legislative changes.
The Coronation Case highlights the importance of understanding the economic substance of foreign subsidiaries in tax matters, particularly regarding outsourcing practices.
The diesel refund system is extended to foodstuff manufacturers to mitigate the impact of fuel prices on food items due to the ongoing electricity crisis.
Refinements to the R&D tax incentive and UDZ incentive extension are proposed, alongside adjustments to royalty rates for oil and gas companies.
In summary, these tax changes demand the attention of both individuals and corporations, requiring a thorough understanding by tax professionals to navigate the evolving tax landscape effectively.
2. VAT Enhancements for Estimated Assessments
SARS has implemented the estimated-assessment functionality for VAT. If a vendor does not provide the relevant material requested by SARS during the VAT verification process, SARS may raise an estimated assessment in terms of section 95(1)(c) of the Tax Administration Act.
The details of the estimated assessment appear on the notice (VAT217) issued to the vendor.
A Request for Correction will not be allowed if SARS has raised an estimated assessment for VAT in the same period.
Vendors who do not agree with the estimated assessment must submit the material requested by SARS within 40 business days from the date of the VAT217 notice issued.
The vendor can submit the outstanding relevant material on eFiling, at a SARS branch, or through the SARS Online Query System.
Vendors can submit a Request for Extension if they cannot submit the material within 40 business days.
If SARS approves the Request for Extension, the vendor will have up to the date of extension, or five years plus 40 business days to submit the relevant material.
The vendor can submit a Request for Suspension of Payment if the estimated assessment results in an amount payable for the period stipulated in the VAT217 notice issued.
The vendor cannot submit a Notice of Objection because an estimated assessment issued in terms of Section 95(1)(c) cannot be disputed.
3. Local Assets at Market Value Declared on the ITR12 Return
From the 2023 year of assessment, taxpayers must complete the section for “Local Assets (at Market Value)” on the Individual Income Tax Return (ITR12) if the value of their local assets is worth more than R50 million. Many taxpayers have contacted SARS to ask if the asset value declared on the ITR12 return should be supported by a professional valuation.
It is not compulsory to obtain professional valuations to complete the market value of the local assets. SARS will accept a market value that is a reasonable best estimate. In other words, the estimate should be as close as possible to the market value of the particular asset.
4. Employer Reconciliation for 2024- EMP501s & IRP5’s
Filling season has opened for all Employers and Third-Party Institutions to submit the EMP501 Reconciliations and IRP5’s/ IT3b’s etc for the 2024 tax year and will run until the 31st of May. Please ensure timely submission. SARS will issue penalties and interest for non- submission.
Domonique Ramos | 05 April 2024