Author: Nyasha Musviba

by Jerome Brink. One of the greatest challenges faced by South Africa is the high unemployment rate, which especially impacts the youth. High levels of unemployment have a profound impact on the socio-economic fabric of South Africa as a society. Chapter 4 of the Budget Review Documents states that youth unemployment in South Africa was at 56,2% for 20 to 29-year-olds in the third quarter of 2021. Even by emerging market economy standards, that figure is staggeringly high. SHARE PAGE Given the high unemployment rates in South Africa, Government introduced the Employment Tax Incentive (ETI) in January 2014 as one of the tools to try increase employment. The preamble to the Employment Tax Incentive Act 26 of 2013 (ETI Act) sets out the key reasons why it was introduced: “Since the unemployment rate in the Republic is of concern to Government; And since Government recognises the need to share the costs of Read More …

by Keshen Govindsamy. In 2013, section 7B was introduced to the Income Tax Act 58 of 1962. At its essence, it is a timing provision whose purpose is to match the timing between the accrual with the payment of various forms of variable remuneration. Variable remuneration amounts paid by an employer to an employee need to be reflected on the employee’s IRP5 certificate issued by the employer. However, in many instances, these payments are only made after year end due to the fact that these variable remuneration amounts can only be correctly determined after work has been completed or targets achieved. SHARE PAGE The section provides that the timing of accrual of variable remuneration must be on the payment basis and will only be included in the employee’s income (and be taken into account for employees’ tax purposes) on the date of the actual payment. The same will apply for employers claiming Read More …

by Tsanga Mukumba. Revenue collections for 2021/22 reached approximately R1,55 trillion, beating projections by 24%. To encourage economic stabilisation the Minister of Finance announced in the 2022 Budget Speech that South African individual taxpayers would benefit from R5,2 billion worth of tax relief, through a 4,5% upward adjustment to the personal income tax brackets, income tax rebates and thresholds. The upward adjustment of personal income tax brackets has avoided a phenomenon known as “bracket creep”. This occurs where not adjusting the income tax brackets leads to higher tax collected due to inflationary increases in people’s income, as people either move into higher brackets or earn more above the taxing threshold in their current bracket. The personal income brackets for the 2022/23 tax year are as follows: The income tax rebates have been increased to the following amounts: Primary: R16,425 Secondary: R9,000 Tertiary: R2,997 The income tax thresholds are as follows: Below Read More …

by Louis Botha. It was announced in the 2021 Budget that the South African Revenue Service (SARS) would set up a specialised unit to improve compliance of individuals with wealth and complex financial arrangements (HNWIs). The High Wealth Individuals Unit (HWI Unit) was established in 2021 with Ms Natasha Singh appointed as its director in October 2021. At the time of her appointment, SARS indicated that the HWI Unit had initially selected about 1,500 wealthy individuals and their related entities to be investigated for compliance purposes, but that it would extend its reach to include more individuals and families. SHARE PAGE In the 2022 Budget Speech, it was announced that the HWI Unit was taking shape, as part of the rebuilding of SARS. In addition, further proposals have been made that appear to be aimed at ensuring compliance by HNWIs. Currently, provisional taxpayers with business interests are required to declare their assets Read More …

by Stephan Spamer and Howmera Parak. The Minister of Finance has announced various proposed amendments to the taxation regime of retirement funds which we discuss below. Clarification on the transfer of total interest in a retirement annuity fund Under a current reading of the Income Tax Act 58 of 1962, the transfer by members of their retirement interest from one retirement fund to another is permitted, subject to certain conditions that include, inter alia, transfer to a similar type of retirement fund or a fund that imposes more restrictions than the current one. The Minister of Finance (Minister) has expressed recognition of the fact that these conditions may result in retirement annuity fund members with more than one contract in a particular fund being constrained in their ability to transfer one or more contracts from one retirement annuity fund to another. Preservation funds are, however, not restricted on the proportion of their retirement interest Read More …

By Gerhard Badenhorst, Varusha Moodaley and Tersia van Schalkwyk. Despite much speculation regarding another increase in the value-added tax (VAT) rate as well as the introduction of a higher VAT rate for luxury goods, the VAT rate will remain unchanged and no higher VAT rate for luxury goods has been introduced. No further significant VAT amendments were announced; however, we discuss the two proposals that were announced below. VAT on electronic services Revised regulations Revised regulations to prescribe and clarify the extent of electronic services (e-services) supplied by foreign suppliers to South African consumers which are subject to VAT were proposed in 2018. These regulations significantly broadened the scope of e-services. In the 2019 Budget Review the Minister of Finance then announced that further amendments would be made to the e-services regulations to broaden the scope of e-services that would be subject to VAT in line with the Organisation for Economic Co-operation and Read More …

Changes in carbon tax rates In terms of section 5 of the Carbon Tax Act 15 of 2019 (Carbon Tax Act), the carbon tax rate must increase annually by the change in the November consumer price index as determined by Statistics South Africa, compared with the November consumer price index that falls within the tax period, plus 2%. Pursuant to this, it was announced that the carbon tax rate for the 2022 tax year (January to December) would increase from R134 per tonne CO2e, to R144 per tonne CO2e. As a result of this increase in the carbon tax rate, the carbon fuel levy, which is administered under the fuel levy regime will also increase by the same percentage. The carbon fuel levy for 2022 will increase by 1c to 9c/l for petrol and by 1c to 10c/l for diesel from 6 April 2022. It must be appreciated that this Read More …

South Africa introduced the concept of business rescue in the (new) Companies Act 71 of 2008 with the intention of including a mechanism for the rehabilitation of financially distressed companies. Once a company is placed under business rescue, temporary supervision and management of the company is handed to a business rescue practitioner. The aim is to rescue the company from its financial distress by, for example, reducing cost overheads and positioning the company to continue offering its products or services. As with all businesses, customers and suppliers expect the businesses that they transact with to be tax compliant. Section 256 of the Tax Administration Act 28 of 2011 (TAA) deals with the tax compliance status (TCS) of taxpayers. Specifically, section 256(3) states that a taxpayer’s TCS may only be marked as “compliant” if the taxpayer is: registered for tax; does not have any outstanding tax debt (excluding a tax debt Read More …

​​​Webber Wentzel’s Tax Team welcomed a balanced National Budget presented by Minister of Finance Enoch Godongwana on Wednesday. Notable tax aspects which bring much-needed relief include the following. A cut in the corporate tax rate from 28% to 27% for years of assessment ending on or after 31 March 2023. A 4.5% inflationary adjustment to all personal income tax brackets, rebates and medical tax credits. There is also no increase to the personal income tax rates. No increase in the fuel levy or the Road Accident Fund levy this year – this is the first time since 1990 there has been no increase. The enhanced employment tax incentive (ETI), from ZAR500/pm to ZAR1 500/pm for the first year, and from ZAR 500/pm to ZAR 750/pm for the second year. Small businesses will also find it easier to qualify for ETI relief. The extension of the R&D incentive to end-2023 is Read More …

The Tax Administration Act, 2011 (“TAA”) allows a taxpayer to approach the South African Revenue Service (“SARS”) to “come clean”, provided all the relevant requirements are met. In particular, the requirements for a valid application in terms of the “voluntary disclosure programme” (“VDP”) in terms of section 227 of the TAA are that the disclosure must: be voluntary; involve a “default” that has not occurred within five years of the disclosure of a similar “default” by, inter alia, the applicant; be full and complete in all material respects; involve certain behaviours referred to in the understatement penalty provisions; not result in a refund due by SARS; and be made in the “prescribed form and manner.” In a recent Supreme Court of Appeal (“SCA”) case, Purveyors South Africa Mine Services (Pty) Ltd v Commissioner for the South African Revenue Services (Pty) Ltd, an appeal against the decision of the Tax Court was dismissed, upholding Read More …