Following an increase in individual tax rates in the 2015 Budget and in light of the current economic circumstances which include lower estimated tax revenues, it was highly anticipated that the Minister would announce an increase in personal income tax rates in the 2016 Budget. Expectations varied between an increase in the maximum marginal rate of tax of 1% to 4%, bringing the maximum marginal rate of tax within the 42% to 45% range. It is thus with great surprise that the 2016 Budget introduces adjustments to the bottom three personal income tax brackets which effectively relieves the impact of inflation on lower- and middle-income earners. No amendments to the marginal tax rates were proposed.
Category: Tax Returns
SARS’s investigative powers – a possible backstage pass to matters pending before court?
Author: Yashika Govind (Associate at CLiffe Dekker Hofmeyr). Chapter 5 of the Tax Administration Act, No 28 of 2011 (TAA) confers a broad range of information-gathering powers on the South African Revenue Service (SARS). Taxpayers are often assessed for more than one tax period at a time, however, the waters become muddied when there are parallel processes carried on in which the issues being investigated by SARS, overlap with disputes pending before the Tax Court. The taxpayer is then saddled with defending itself in respect of a tax period before court while simultaneously sourcing and providing relevant material pertaining to the same legal issues for an audit of a later tax period. In these circumstances, there is often an overlap of facts, law and witnesses which will ultimately be presented in court, thus rendering the information gathering process questionable.
Tax administration: SARS’ constitutional obligations and taxpayers’ rights
Author: Andries Myburgh (Tax Director at ENSafrica). Given recent media coverage of the various Constitutional Court challenges involving government institutions and the Presidency; the perceived power struggle between the Commissioner for the South African Revenue Service (“SARS”) and the Minister of Finance; as well as SARS’ continued pressure to collect revenue in difficult economic times that see corporate taxpayers endure declining revenues and increasing costs; it is useful to remind taxpayers and their shareholders of their constitutional rights and SARS’ constitutional obligations when it performs its functions in administering various taxation legislation. This topic is very complex and, accordingly, what follows is a very broad overview of these issues. Taxpayers and their shareholders are encouraged to obtain specialised legal advice or assistance when confronted with potential investigations or audits by SARS.
Extent of tax fraud unknown – SARS
Author: Amanda Visser (IOL). The South African Revenue Service (SARS) still does not know the full extent of tax evasion, despite its work probing foreign bank accounts held by South African residents. It has been a year since SARS confirmed some account holders had been using their offshore accounts to evade their tax obligations, both locally and internationally. SARS received the damming information through international exchange of information agreements with foreign financial institutions.
Is tax advice given by an accountant covered by legal professional privilege?
Author: PwC South Africa. Does SARS have the power, in investigating a taxpayer’s affairs or in the context of a disputed tax assessment, to demand that it be allowed to scrutinise documents generated by his professional advisers that record tax advice that was sought and given? This depends on whether those documents are privileged in the legal sense of the word, for neither SARS, nor a court, nor any other person, has the right (unless a court order determines otherwise) to be given sight of another person’s documents that are covered by legal professional privilege.
SARS targets tax dodgers
Author: Lyse Comins (IOL). SARS must shift focus to small businesses and clamp down on rampant tax dodgers in Durban, tax experts said in reaction to the taxman’s announcement of a blitz on cash stores countrywide on Wednesday. The South African Revenue Service (SARS) Commissioner, Tom Moyane, announced the launch of random, on-site inspections of cash businesses and called on taxpayers to voluntarily disclose any unpaid taxes or face penalties or criminal prosecution.
SARS continues crack down on non-compliance in cash ‘n carry sector
South African Revenue Service (SARS) Commissioner, Tom Moyane, today announced the launch of random on-site inspections targeted at Cash & Carry businesses. This effort is part of the new focused approach, launched in December 2015, to combat non-compliance in several high-risk sectors, starting with the Cash & Carry sector. On-site inspectors will perform compliance checks to identify registration, filing non-compliance and thus flag any suspicious businesses.
Changes to corrections of tax assessments
Cape Town – In future the SA Revenue Service (Sars) will not be permitted to entertain so-called “requests for correction” of tax assessments, except if it is satisfied that there is a “readily apparent” undisputed error in the assessment. This is according to the Tax Administration Laws Amendment Act of 2015, which was promulgated on January 8 2016. In the view of David Warneke, director and head of tax technical international audit, tax and advisory services company BDO South Africa, it is likely that taxpayers will be severely discriminated against by this amendment.
The duty to exhaust internal remedies before applying to the High Court for a review
The duty to exhaust internal remedies before applying to the High Court for a review of a SARS decision in terms of the Promotion of Administrative Justice Act One of the most significant developments in South Africa’s fiscal law since its birth, some hundred years ago, has been the coming into existence of a constitutional right (as distinct from a very limited antecedent common law right) to administrative justice. This is one of the rights enshrined in the Constitutional Bill of Rights. It finds detailed expression in the Promotion of Administrative Justice Act 3 of 2000 (‘PAJA’).
South African Tax Tables 2012 to 2016 – rates of tax for individuals
2016 tax year (1 March 2015 – 29 February 2016) ?Taxable income (R) ?Rates of tax (R) ?0 – 181 900 ?18% of each R1 ?181 901 – 284 100 ?32 742 + 26% of the amount above 181 900 ?284 101 – 393 200 ?59 314 + 31% of the amount above 284 100 ?393 201 – 550 100 ?93 135 + 36% of the amount above 393 200 ?550 101 – 701 300 ?149 619 + 39% of the amount above 550 100 ?701 301 and above ?208 587 + 41% of the amount above 701 300