Industry updates | September 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- September 2023:
TAX ADMINISTRATION
1. 2023 Tax Season
Tax season for the 2023 (March 2022 to February 2023) tax year kicked 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.
As we are two months into the 2023 tax season, we have now had a chance to receive feedback from SARS on taxpayers who were selected for audit on the submission of their 2023 income tax return.
Taxpayers declaring rental income and expenses, sole proprietors, freelancers, independent contractors and all taxpayers that are claiming deductions other than medical aid tax credits and retirement fund contributions, need to ensure that their supporting documentation that is supplied to SARS for review/audit is ACCURATE AND EXTREMELY DETAILED. If minimal and basic information or supporting documentation is supplied if SARS are not happy with the information received OR if they choose to be difficult and buy time to bolster their cash flow, they will request additional detailed information. This delays refund payouts by a further 21 working days from the time additional information is supplied to them.
The additional requests we have seen coming in from SARS over the last two weeks are nothing short of ludicrous and time-consuming.
2. EMP501 interim reconciliation deadline
The 2024 interim reconciliation and third-party data submission deadline has officially been announced by SARS.
The SARS Third Party Data Bi-Annual Submissions process for the period 1 March – 31 August 2023 will open 1 September 2023 and close at midnight on 31 October 2023.
An updated e@ syFile™ Employer BETA version with enhanced features was released on 14 August 2023. Employers are advised to ensure that they have downloaded the latest e@syFile version before making their interim submissions.
On 4 August 2023, SARS published the fourth PAYE Business Requirements Specifications (BRS) for employer reconciliation for 2023. The PAYE BRS specifies the requirements for the generation of an import tax file for the yearly and interim submissions. The requirements as defined in this version of the BRS will become effective from 1 March 2023 for Payroll Suppliers until replaced by an updated version.
For the first time, and as per Public Notice 3631 (Government Gazette 48867) issued on 30 June 2023, Public Benefit Organisations (PBOs) will now be required to submit IT3(d) files.
For guidance on how to submit these files, access the Business Requirement Specifications: IT3 Data Submission.
3. Working abroad but South Africa is still my real home: The impact of Section 10(1)(o)(ii)
Many South Africans seek overseas employment for lucrative foreign currencies. However, working abroad can have tax implications in South Africa, particularly regarding tax residency.
In South African tax law, there are two types of natural person residents: those ordinarily resident in South Africa and those physically present in South Africa for a specified period. The physical presence test applies to non-ordinarily resident individuals. Citizenship is distinct from tax residency.
Ordinarily, the resident is not explicitly defined in the law, but legal precedent suggests it's the individual's most settled residence, their "real home." SARS Interpretation Note 3 offers factors to consider for determining ordinary residency, including intention, nationality, primary residence, time spent, status, belongings, family and social ties, and visit frequency.
If a person is deemed ordinarily resident in South Africa, they are considered a resident and taxed on global income. This underscores the importance of substantiating foreign residency to affect South African tax obligations.
Section 10(1)(o)(ii) of the Income Tax Act provides an exemption of up to R1.25 million for foreign employment income, such as salaries, bonuses, and allowances. However, this exemption applies only to income earned under an employee-employer relationship, excluding business income earned abroad. To qualify, the taxpayer must meet specific criteria, including staying outside South Africa for over 183 full days in a 12-month period, with a continuous period of at least 60 full days outside the country.
In conclusion, individuals considering working abroad should carefully assess the potential tax implications, especially regarding their tax residency status in South Africa. Even when working abroad, they might remain ordinarily resident for tax purposes, emphasizing the need for tax planning and compliance.
- Domonique Ramos | 06 September 2023