Industry updates | September 2021
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 2021:
TAX ADMINISTRATION
1. Delays in the processing of VAT201 Returns
Delays in the processing of VAT201 returns due to consistency checks are being experienced. As a result of these delays, VAT vendors are viewed as noncompliant on the SARS system (e-filing) and VAT refunds are not being processed. SARS are currently investigating the reasons for the processing delays.
2. 2021 Income Tax filing season
Income Tax Filing Season 2021 dates:
· For non-provisional taxpayers- 1 July 2021 to 23 November 2021
· For provisional taxpayers- 1 July 2021 to 31 January 2022
3. Provisional Taxes
The due date for the first provisional tax returns (IRP6) and payments for the 2022 year of assessment for individuals, trusts, and companies with a February year-end was 31 August 2021. Provisional taxpayers who made use of the COVID-19 provisional tax relief measures for the 2021 year of assessment are reminded that the deferred amount must be included in the third provisional tax payment due by 30 September 2021.
4. EMP501 interim reconciliations
The Bi-annual August 2021 PAYE reconciliation period is from the 15th of September to the 31st of October. All employers must prepare and submit their declaration (EMP501) and employees’ IRP5s to SARS reconciling the PAYE, SDL, and UIF paid during the period 1 March 2021 to 31 August 2021.
Late submission of the EMP501 return and submission of omitted information and incomplete IRP5 certificates will result in SARS levying penalties and interest.
5. Proposed changes to rules on utilisation of assessed losses
The Draft Taxation Laws Amendment Bill 2021 (released 28 July 2021) includes proposed changed to the rules relating to the utilisation of assessed losses by companies.
Background
The carryforward of assessed losses by a company is regulated by section 20 of the Income Tax Act 58 of 1962. Currently, a company is allowed to carry forward assessed losses indefinitely subject only to the requirement that the company continues to carry on a trade. When the assessed loss carried forward in a particular year of assessment exceeds the taxable income (before set-off of the loss) for the year, the taxable income can be set off in full against the assessed loss.
Proposed changes
As part of the measures to broaden the corporate income tax base, the draft legislation proposes changes to the Act.
In terms of the proposals, companies would only be permitted to set off the balance of an assessed loss carried forward to the extent that the set-off does not exceed 80% of the taxable income determined for that year (before taking into account the assessed loss).
The proposal would result in taxpayers being subject to tax on a minimum of 20% of their taxable income calculated for any year—regardless of the quantum of any assessed loss brought forward.
The proposed effective date for the amendment is 1 April 2022, with the amendment being applicable for years of assessment commencing on or after that date.
The limitation would apply to assessed losses generated prior to the effective date as well as those arising after 1 April 2022.
The balance of any unused assessed loss would remain available to be carried forward, subject to the 80% restriction in future years. Taxpayers would be able to add any current year loss to the balance of assessed loss. However, as soon as a company has taxable income in any particular year, tax would be payable on 20% of that taxable income with only 80% of the taxable income capable of being set off against any available assessed loss.
The introduction of the proposed amendment would be accompanied by a reduction in the corporate income tax rate from 28% to 27%.
Domonique Ramos | 6 September 2021