Industry updates | May 2022
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- May 2022:
TAX ADMINISTRATION
1. 2022 Annual Reconciliation Season
The 2022 Annual Reconciliation Season commenced on 1 April 2022 and will end on 31 May 2022. All employers are required to submit their annual reconciliation declarations covering the full tax year from 1 March 2021 to 28 February 2022.
The EMP501 must reflect accurate and up-to-date payroll information about your employees, employees’ tax (PAYE) payments made and tax certificates (IRP5/IT3(a)s) generated.
Accuracy and on-time filing are critical. Administrative penalties will be charged for late submission: 1% of the year’s PAYE liability, increasing each month by 1% up to 10% of the year’s PAYE liability. An employer who wilfully or negligently fails to submit an EMP201 or EMP501 return to SARS is guilty of an offence and is liable, upon conviction, to a fine or imprisonment for a period of up to two years.
2. Devastation in KZN and EC
In light of the devastation caused by floods in KwaZulu-Natal and the Eastern Cape provinces, the Solidarity Fund has resolved to support and augment the National Government’s response. The Solidarity Fund is a public benefit organisation (PBO) with a mandate to support the national health response and contribute to humanitarian relief efforts.
A separate bank account specifically for the purpose of addressing the flood devastation in KZN and the EC has been opened and will run separately to the COVID-19 fund. The Solidarity Fund has been granted an income tax exemption and donations to the fund qualify for a section 18A income tax deduction.
3. Legislative changes to the Tax Directives process have been implemented.
The following information is important for Fund Administrators, Insurers, Tax Practitioners, Advisors and taxpayers.
Taxpayers who are members of a pension preservation or provident preservation fund, who have reached retirement age and are 55 years and older are now allowed to transfer the retirement benefit to another preservation fund or a retirement annuity fund tax neutral on a Form A&D – reason Transfer before Retirement [par 2(1)(c)]
Taxpayers can now, on retirement, elect to use two thirds (⅔) or more of the total value of the retirement interest in the fund to provide a pension and / or annuity or purchase a living annuity and / or a guaranteed annuity from an Insurer. Alternatively, they can elect to keep a portion of the retirement interest in the fund which will provide a pension and / or annuity and use a portion to purchase a living annuity and / or a guaranteed annuity from an Insurer. However, it is important to note that the condition placed on a purchase of an annuity is that the value of each annuity (living and / or guaranteed and / or remaining in the fund) must be R165 000 and above, respectively.
4. 2022 Revenue collection targets exceeded
On 1 April 2022, the SARS Commission, Mr Edward Kieswetter announced the 2022 preliminary tax return collection outcomes covering the periods 1 April 2021 to 31 March 2022. Although the preliminary results will still be subject to detailed financial reconciliation and a final audit, SARS is pleased with the gross amount of R1 563.8 billion collected for the abovementioned period.
SARS indicated that the economic activities in the 2021/22 financial year rebounded strongly after the easing of the COVID-19 lockdown regulations resulting in gradual improvements in the overall tax compliance levels.
The main sources of revenue that contributed to the R1 563.8 billion collected were Personal Income Tax (PIT), which contributed R555.8 billion (35.5%), Value-Added Tax (VAT) contributing R390.7 billion (25.0%), Company Income Tax (CIT), which contributed R323.6 billion (20.7%) and Customs duties contributed R58 billion (3.7%).
- Domonique Ramos | 02 May 2022