Industry updates | August 2021

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 - August 2021:

TAX ADMINISTRATION

1. Administrative penalties for non-submission of tax returns

In terms of section 210 of the Tax Administration Act, No. 28 of 2011, the SARS Commissioner may levy a fixed amount penalty for incidences of non-compliance. On 28 July 2021, SARS published a draft notice detailing the incidences of non-compliance subject to the fixed amount penalty. Previously, the fixed amount penalty would be levied where a taxpayer has two or more outstanding income tax returns. As of 1 March 2020, SARS may levy the fixed amount penalty where one or more income tax returns are outstanding. If a taxpayer is aggrieved by the penalty imposed, a request for remission of penalties must be submitted and the taxpayer must detail the reasons for their non-compliance.

2. 2021 Income Tax filing season

Income Tax Filing Season 2021 dates:

·       For non-provisional taxpayers - 1 July 2021 to 23 November 2021

·       For provisional taxpayers - 1 July 2021 to 31 January 2022

3. Submission of Provisional tax returns

The first provisional (2022) submissions and payments for individuals, trusts and companies with a February year-end are due to SARS by the 31st of August. Penalties and interest will be levied for late or non-submission.

4. SASRIA insurance payouts

The recent looting and attacks on buildings in South Africa has resulted in a range of types of destruction, from buildings being somewhat damaged to being completely destroyed. The insurance payouts may be made by insurance companies on behalf of the state-owned insurer Sasria. The tax implications of such transactions remain the same as ordinary insurance payouts.

• If a business is registered for value-added tax (Vat), the insurance payout will result in a deemed output Vat.

• If the insurance payout is greater than the base cost or acquisition cost of the building, this will be regarded as a capital gain.

• If building allowances had been claimed as tax deductions by the owner or by the enterprise that owned the building, the insurance payout may have to be included in income (a ‘recoupment’) for that year of assessment in the case of an owner or the financial year in the case of an enterprise. Amounts incurred for repairs in the same year using the insurance payout would then be claimed as deductions.

• Where the insurance payout is used to rebuild or purchase replacement assets within 12 months, the owner could elect to spread any recoupment or capital gain over the new write-off period, if the assets were brought into use within three years and the payout is greater than the base costs of the assets.

A further article will be published within the next week to further detail the tax complexities surrounding damages and recoupments.

Domonique Ramos | 11 August 2021