Industry updates | June 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- June 2023:

TAX ADMINISTRATION

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.  

2. Interpretation Note 74: Deduction and recoupment of expenditure incurred on repairs 

On 16 May 2023, SARS published issue 3 of Interpretation Note 74 (IN 74) which provides guidance on the interpretation and application of section 11(d) of the Income Tax Act, which allows a deduction for expenditure incurred on repairs for the purposes of trade.  

Expenditure of a capital nature does not qualify as a general deduction under section 11(a). Nevertheless, section 11(d) makes provision for the deduction of expenditure incurred on repairs for the purposes of trade provided the requirements are met. For purposes of section 11(d) it is important to distinguish between a ‘repair’ and an ‘improvement’ since only expenditure incurred on repairs is deductible under section 11(d). 

3. Public officer and registered representative appointments with SARS  

A SARS registered representative is a person appointed as the primary contact for all tax matters of an entity.  

The registered representative is normally appointed as a Public Officer. 

The responsibilities of a public officer or registered representative are detailed in Chapter 19 of the Tax Administration Act, No. 28 of 2011 (hereafter the TAA). According to section 246 of the TAA, a public officer is a representative individual who must be approved by SARS and meets the following criteria: 

• They must be a person who is a senior official of the company. If no senior official resides in the Republic, the entity may appoint another suitable natural person;  

• They must be appointed by the company or by an agent or legal practitioner who has the authority to appoint such a representative for the purposes of a tax Act (in most instances, they are appointed by the directors of the entity); and  

• They must be appointed within one month after the company begins to carry on business or acquires an office in the Republic. It is imperative to note that the appointed public officer or registered presentative may be subject to penalties, in their personal capacity, and in case of any company defaults.  

The following question arises, to what extent can SARS enforce the collection of a company’s taxes against the Public Officer or registered representative? Section 155 of the TAA details the instances where a public officer or registered representative can be held personally liable.  

“A representative taxpayer is personally liable for the tax payable in the representative taxpayer’s representative capacity, if, while it remains unpaid— a) the representative taxpayer alienates, charges or disposes of amounts in respect of which the tax is chargeable; or b) the representative taxpayer disposes of or parts with funds or moneys, which are in the representative taxpayer’s possession or come to the representative taxpayer after the tax is payable if the tax could legally have been paid from or out of the funds or moneys.”  

Section 184 (1) of the TAA then permits SARS to recover the tax liability against the assets of the public officer or registered representative, who is liable under section 155 of the TAA. Having taken the above into consideration, it must be made clear that the appointment of a public officer or registered representative with SARS is not merely an administrative exercise used to transfer tax types from one eFiling profile to another. However, where liability exists, the representative may be liable. 

Registration of registered representative and eFiling  

On November 2020, SARS introduced a ‘single user’ eFiling system, where all profiles are merged into one profile. Taxpayers now have full control over their profiles, and who they want to share their profiles with. This was introduced to curb some of the abuses by tax practitioners, in particular, holding eFiling profile ransom in an attempt to recover outstanding professional fees from their clients.  

To navigate this process, a registered representative must be appointed and registered with SARS through the SARS Online Query System to allow the full functionality of the eFiling profile. In other words, should a taxpayer register a new eFiling profile, or attempt to move their profile from the existing user, the tax types will not be active until a public officer is appointed as a registered representative, and approved by SARS. 

Supporting documentation required for the registration of a registered representative  

The following documents need to be submitted on the SARS Online Query System when appointing a registered representative. It is crucial to note that all documents must be clear, visible, and not older than 3 months, otherwise, the application will not be approved by SARS.  

The following documents need to be included:  

1. Representative Appointment Letter/Power of Attorney (POA);  

2. Enterprise Notice of Incorporation;  

3. Copy of Identity Document of the representative; 

 4. Proof of residential address (both the representative and the entity); and  

5. An image taken on the day that the request is submitted, clearly showing the individual in question holding up a copy of identity document and a note that reads ‘update my details’. 

• Domonique Ramos | 09 June 2023