Government Notice no. 451 was issued by the Commissioner on 28 June 2013. Its purpose is to give notice to furnish returns in respect of the 2013 year of assessment. The returns that the notice refer to are of course the ones required for the assessment of normal tax. This alert will deal with the content of the Notice.
It is important to note that the “2013 year of assessment” referred to in the Notice means:
|In the case of:||The 2012 year of assessment is:|
|a company||the financial year of that company ending during the 2013 calendar year|
|any other person||the year of assessment ending 29 February 2012|
Periods during which the returns must be furnished
The next important thing to note in the notice is the periods during which the returns must be furnished.
|The taxpayer:||When the return must be furnished:|
|in the case of a company (see the note below)||within 12 months from the date on which the company’s financial year ends;|
|all other persons (see the note below) – a trust is specifically included here||
Notes (to be read with the table above):
A company is as defined in section 1 of the Income Tax Act and includes, amongst others, any co-operative, any association formed in the RSA and a close corporation.
The Notice states that the phrase “all other persons” includes natural persons, trusts and other juristic persons, such as institutions, boards or bodies. It seems like a bit of a contradiction as a juristic person may well also be an association as envisaged in the definition of company referred to above.
The persons that must furnish an income tax return
Companies, trusts or other juristic persons
In the case of a company, the return must be submitted electronically by using the Sars eFiling platform.
A company must furnish an income tax return (the IT14) if one of following three instances applies:
1. the company, trust or other juristic person is a resident (of the RSA);
2. if the company, trust or other juristic person, is not a resident, but
a. carried on a trade through a permanent establishment in the RSA; or
b. derived any capital gain from a source in the RSA;
3. the company was incorporated, established or formed in the RSA and is not a resident (of the RSA) as a result of the application of any agreement entered into with the Government of any other country for the avoidance of double taxation.
We will first deal with the instance where a natural person is not required to furnish a return. The following circumstances must be present:
a. the gross income of that person consisted solely of gross income described in one or more of the following subparagraphs:
i. remuneration – it must not exceed R250 000, for the full year of assessment (all 12 months) from one single source and employees’ tax must have been deducted or withheld in terms of the deduction tables prescribed by Sars. The remuneration must also not include an allowance or advance paid or granted as described in section 8(1)(a) of the Income Tax Act;
ii. interest income from a source in the RSA not exceeding R22 800 in the case of a natural person below the age of 65 years; or R33 000 in the case of a natural person aged 65 years or older.
If the taxpayer (natural person) meets all these requirements a return is not required. It is clear that the person will have to file a return if the person is entitled to deductions, for instance medical contributions (or expenses) and contributions to a retirement annuity fund.
The instances where a natural person must furnish a return are the following:
1. the natural person carried on any trade in the RSA (other than solely in his or her capacity as an employee);
2. an allowance or advance was paid or granted to the natural person as described in section 8(1)(a) of the Act (other than an amount reimbursed or advanced as described in section 8(1)(a)(ii)) and whose gross income exceeded the thresholds set out above – see the Tax Suite guide on allowances in this regard;
3. the natural person had capital gains or capital losses exceeding R30,000;
4. a natural person who is a resident (of the RSA) must submit a return in one (or more) of the following instances:
a. if the natural person held any funds in foreign currency or owned any assets outside the RSA, if the total value of those funds and assets exceeded R100 000 at any stage during the 2013 year of assessment;
b. if any income or capital gains could be attributed to the natural person from funds in foreign currency or assets outside the RSA;
c. if the natural person held any participation rights, as referred to in section 72A of the Act, in a controlled foreign company;
d. if an income tax return was issued to or the natural person is requested by Sars in writing to furnish a return, irrespective of the amount of income of that person.
5. the natural person derived gross income of more than certain fixed amounts. The Notice lists these amounts as:
|A person who was, at the end of the year of assessment,||And whose gross income does not exceed:|
|under the age of 65||R63 556|
|65 years or older (but under the age of 75)||R99 056|
|75 years or older||R110 889|
Note, the Notice refers to “gross income” and not taxable income and these amounts must therefore not be confused with the tax threshold amounts.
6. It is important to remember that every representative taxpayer of any person referred to above will have to furnish an income tax return.
The Notice also deals with where the returns can be obtained and how they may be filed. It also reminds persons of the penalties if the returns are filed late (or not at all). A taxpayer who knowingly and willfully makes any false statement in a return or evades or attempts to evade taxation, or a person who assists a taxpayer to do so, is liable on conviction to a fine or to imprisonment for a period of up to five years.