Industry updates | Nov 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- Nov 2024:
TAX ADMINISTRATION
Finance Minister delivers the Medium-Term Budget Policy Statement:
On October 30, 2024, Finance Minister Enoch Godongwana presented the Medium-Term Budget Policy Statement (MTBPS), outlining the government’s policy objectives, macroeconomic forecasts, and fiscal projections, including estimated spending and revenue. Key highlights include:
- Revised Tax Revenue: The net tax revenue estimate, initially set at R1 863.0 billion in February’s Budget, was revised down to R1 840.8 billion.
- Revenue Performance as of September 30, 2024: SARS reported gross revenue collections of R1 070.4 billion, yielding a net revenue of R846.2 billion after R224.3 billion in refunds. The revenue boost was mainly due to stronger Corporate Income Tax (CIT) collections and fewer-than-expected VAT and Personal Income Tax (PIT) refunds.
- Adjusted Forecasts:
- Wage Bill: Revised downward from an estimated 8.4% in the 2024 Budget to 5.5% due to lower-than-expected salary adjustments.
- Capital Projects: Anticipated growth in capital formation has been reduced from 9.5% to 5.2%, reflecting slower progress across government and private sectors.
- Exports and Imports: Nominal exports and imports have been revised down, with exports expected to grow by 3.5% and imports by 3.8%, both lower than previously projected.
- PAYE Collections: Year-to-date PAYE collections totalled R340.0 billion as of September, falling short of projections by R12.0 billion but still reflecting a 10.0% increase over the previous year.
- Fuel Levy: Fuel consumption contracted by 3.9% year-on-year, creating a R7.2 billion shortfall. Factors include reduced loadshedding and a shift towards alternative energy sources, with 1.3 billion fewer litres of fuel consumed.
- Trade Taxes: Imports, initially projected to grow by 1.9%, have instead declined by 5.1% year-to-date. Total trade flows dropped by R39.2 billion (-2.0%) compared to last year, impacted by lower import volumes of electrical machinery and vehicles.
- CIT Provisional Collections: Provisional CIT collections of R150.2 billion showed a surplus of R8.8 billion (6.2%) and a year-on-year growth of R3.9 billion (2.7%), largely from the finance, electricity, and manufacturing sectors. The mining sector, however, faces challenges from volatile commodity prices affecting platinum group metals, coal, and iron ore, as well as logistical and transport issues.
- SARS Debt Compliance: Although SARS resolved 1.3 million debt cases—nearly 290% more than last year—debt compliance yields were lower year-on-year by R9.3 billion (a 23.6% contraction). Increasing hardship among taxpayers has led to more deferred payment arrangements, requests for payment suspensions, and final demands, reflecting the financial strain on taxpayers.
This MTBPS reflects ongoing adjustments in government priorities and a focus on addressing economic challenges across key sectors.
2. Immense delays experienced with the finalisation of banking detail verification cases at SARS:
With Filing Season 2024 closed for non-provisional taxpayers, many are still awaiting their personal income tax refunds, despite the promised 72-hour turnaround. This delay is unusual for taxpayers who have historically received refunds in the bank accounts listed as "valid" on their Registration, Amendments, and Verification (RAV01) form.
In many cases, although banking details have not changed, taxpayers are asked to submit additional documents to verify these details on SARS’ system before refunds are processed. While the exact reason for these verification requests is unclear, it is likely that any discrepancy between the banking information on the RAV01 form and that on the ITR12 return or IRP5 certificate may trigger SARS’ risk algorithms, flagging these cases for further review.
There have also been reports of refunds being paid into bank accounts listed on the ITR12 form rather than those on the RAV01, causing significant frustration for taxpayers, as recovering these funds can be difficult.
While SARS lists a 21-business-day turnaround time for resolving banking verification cases, many cases remain pending since July 2024. Efforts are being made to expedite these cases through relevant regional channels, with additional steps being considered to address these delays and improve turnaround times.
3. Reminder: Publication of Binding General Rulings 27 (Issue 2) and Interpretation Note 83 (Issue 3)
Sections 20(4) and (5) of the VAT Act require specific details on tax invoices, credit notes, and debit notes. However, the Commissioner may permit deviations under certain conditions (section 21(5) of the VAT Act).
Binding General Ruling (BGR) 27 (Issue 2) clarifies situations where vendors:
- Do not need to issue tax invoices, credit, or debit notes, or
- May present required details in an alternative format.
Applicable Circumstances:
1. Instalment credit agreements for certain movable goods or machinery,
2. Rental agreements,
3. Royalty agreements, and
4. Short-term insurance.
Vendors who meet BGR 27 criteria do not need prior approval for these deviations. However, vendors unsure of compliance should not request confirmation rulings, as this is a factual matter, not a legal one. If vendors cannot meet BGR 27 requirements, they may apply for a written decision via VATrulings@sars.gov.za, including a VAT 301 form in compliance with section 79 of the TAA.
For full details, vendors are encouraged to review BGR 27 (Issue 2).
4. Reminder for Provisional Taxpayers:
Individuals who are regarded as provisional taxpayers are required to submit their 2024 income tax return by the 20th of January. 2025.
To make this process as smooth as possible, log onto our Stratfinn Simple website and explore our range of tax services designed to meet diverse needs. Whether you need comprehensive assistance or a quick submission, you can easily select the tax product that best suits your requirements and ensure you stay compliant with Stratfinn Simple.
Domonique Ramos | 06 November 2024