Industry updates | July 2023
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- July 2023:
1. 2023 Tax Season
Tax season for the 2023 (March 2022 to February 2023) tax year kicks off on the 7th of July.
Non- provisional taxpayers are required to submit their tax returns to SARS between the 7th of July and the 24th of October 2023.
Provisional taxpayers are required to submit their tax returns to SARS between the 7th of July and the 24th of January 2024.
To taxpayers receiving auto assessments from SARS, please ensure the accuracy of the information pre-populated on your assessment/ IT12.
2. SARS pushing forward with its modernisation drive
In line with its sixth strategic objective, SARS is modernising its systems to provide additional digital services and streamline online services. In the past week, SARS announced two key enhancements to its systems and are discussed below:
2.1 Migration of the Section 93 request to eFiling:
Historically, no formal process existed for the request of a Section 93 revision. Taxpayers who met the criteria and wished to make such submission to SARS needed to write a letter and send it via email to pcc@sars.gov.za or contactus@sars.gov. za. In some instances, the request would not be assigned a case number for weeks, thus preventing the taxpayer or tax practitioner from following up or escalating these cases. On 20 June 2023, SARS announced that the Request 93 revision request process had been changed. The new process will use a form called RRA01, which the taxpayer will be able to complete and submit it on eFiling. SARS believes that this new process will be more efficient and reduce costs for taxpayers.
2.2 Interface with the Department of Home Affairs to verify a taxpayer’s marital status:
In late 2022, SARS informed various stakeholders that they were in the process of testing an interface with the Department of Home Affairs, which would enable SARS to get real-time data directly from the Department of Home Affairs.
On 20 June 2023, SARS announced the rollout of the first phase of this project. In the first phase, in or out of community of property. Where a taxpayer is married in community of property, the interest income received for the 2023 year of assessment will be pre-populated on both spouses’ income tax returns and appropriated 50/50 per spouse upon assessment. At present, the third-party data will not appear on the ‘Third Party Data Certificate Search’ function on eFiling and will be limited to the pre-population on the personal income tax return (ITR12).
2.3 Other initiatives on the way:
On 27 June 2023, SARS informed recognised controlling bodies (RCBs) of their future intentions of collecting accounting data directly from the various accounting systems. This would allow for the collection of real-time transactional information and realise the possibility of having VAT returns automatically captured based on the information collected from the accounting systems. This would also form part of the ‘Tax Administration 3.0’ regime that SARS is trying to achieve.
3. Big changes in the pipeline for Trusts Income Tax, Personal Income Tax and PAYE penalties
On 19 June 2023, SARS announced several changes to be implemented at the end of June 2023. These changes will affect trusts income tax returns (ITR12T), personal income tax and PAYE penalties. Trustees, employers, individual taxpayers and tax practitioners are advised to take note of the following changes or enhancements:
Trusts Income Tax Return Enhancements
Updates to the wizard on the Trust return:
Additional questions will be included 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 section 7 of the Income Tax Act during the 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 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’ has been added under both sides of ‘Special Allowances not claimed in the Income Statement and Allowances/Deductions’.
Beneficial Ownership Declaration page will be added 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 into the individual containers (e.g. distributions received from 5 other Trusts, 5 containers will automatically be opened). Supporting documents to be submitted with the ITR12T:
All mandatory supporting documents must be uploaded and submitted with the trust return. This includes, amongst others, the Trust instrument, Annual Financial Statements and resolutions/minutes of trustee meetings. The requirements will vary according to the type of trust. Enhancements to eFiling:
A pop-up notification 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.
Personal Income Tax enhancements
Statement of Assets and Liabilities:
Provisional taxpayers with business interests are required to declare their assets and liabilities (based on cost) in their tax returns each year. Taxpayers who fall within this category, and with assets above R50 million, are required to declare specified assets at market value on their 2023 tax returns.
Foreign Income Disclosure:
SARS introduced a foreign income container on the return for taxpayers who must declare worldwide foreign income. However, it was noted that taxpayers who must declare income sourced from a foreign employer while working in South Africa and/ or abroad did not have an appropriate source code to declare remuneration for foreign service rendered income.
The following three new fields will now apply:
Income received from foreign employment services not reflected on a South African IRP5/IT3(a) certificate, subject to tax outside RSA and the s10(1)(o)(ii) exemption does not apply’.
Income received from foreign employment services not reflected on a South African IRP5/IT3(a) certificate, subject to tax outside RSA and the s10(1)(o)(i) exemption applies.’
Income received from foreign employment services not reflected on a South 11 African IRP5/IT3(a) certificate, subject to tax outside RSA and the s10(1)(o)(i) exemption does not apply.’ Spouses married in community of property assessment:
Taxpayers who are married in community of property are taxed on half of their interest, dividends, rental income, and capital gains. For Filing Season 2023, SARS has retrieved “Married in community of property” status from taxpayer’s previous declaration and collaborated with the Department of Home Affairs to confirm marital status. Where the spouses are successfully matched and have interest investments, SARS will replicate the interest investment certificate on both spouses’ return where they will be taxed 50% upon assessment.
Pay-as-you-earn (PAYE) underestimation penalties Admin Penalty Imposition:
According to paragraph 14(7) to the Fourth Schedule of the Income Tax Act, if the total amount of employees’ tax deducted or withheld, or which should have been deducted or withheld for the period is unknown, the Commissioner may estimate the total amount based on information readily available and impose the penalty under subparagraph (6) on the amount so estimated.
The penalty under subparagraph (6) would be a monthly penalty of 10% of the total estimated employees’ tax amount.
Admin Penalty Adjustment: Paragraph 14(8) further states that where, upon determining the actual employees’ tax of the person in respect of whom the penalty was imposed under subparagraph (7), it appears that the total amount of employees’ tax was incorrectly estimated under subparagraph (7), the penalty must be adjusted in accordance with the correct amount of employees’ tax with effect from the date of the imposition of the penalty under subparagraph (6).
- Domonique Ramos | 03 July 2023