Tax News

Commissioner for the South African Revenue Service v Medtronic International Trading S.A.R.L (Case no 456/2021) [2023] ZASCA 20 (03 March 2023)

The Supreme Court of Appeal (SCA) dismissed an appeal from the Gauteng Division of the High Court, Pretoria. This appeal concerned itself with whether certain provisions of the Tax Administration Act 28 of 2011 (TAA) precluded remission of interest levied on late payment of value added tax (VAT), as provided for in the Value Added Tax Act 89 of 1991 (VAT Act).

New tax dispute resolution rules come into effect immediately

New tax dispute resolution rules provide for, amongst others, 80 days to submit an objection and more independence of an ADR facilitator. On 10 March 2023, the Minister of Finance published new dispute resolution rules in the Government Gazette in terms of the Tax Administration Act (TAA). These rules describe the procedures for objections and appeals, for the alternative dispute resolution (ADR) mechanism and for the conduct and hearing of appeals before a Tax Board or Tax Court.

Foreign employers will be required to register with SARS

National Treasury proposed in the February 2023 Budget that it intends to align the obligations on South African and foreign employers, which creates certain practical issues   The global trend of remote working, which has surged since the Covid-19 lockdowns, allows employers at one end of the world to employ South Africans (SA) whom they may never have met face-to-face.   These arrangements benefit both employers (because they may be able to employ highly skilled workers more cheaply than in their own countries) and employees (who may broaden their opportunities to earn income).

Skirting the Tax Court is not a quick-fix solution to a tax dispute

The road to finalising a dispute against an additional assessment or a SARS decision can be a “protracted slog” to the Tax Court. Recent case law suggests that relief in the High Court is only available in exceptional circumstances. The TAA process Chapter 9 of the Tax Administration Act (TAA) and the dispute resolution rules (Rules) provide for aggrieved taxpayers to dispute assessments and SARS decisions using the objection and appeal procedures.

South Africans bask in solar power tax breaks

Authors: Joon Chong & Chetan Vanmali, Partners at Webber Wentzel. The demand for solar power installations in South Africa is likely to heat up considerably this year after new incentives were announced in the February 2023 Budget. Responding with glacial speed to years of escalating load shedding, National Treasury has provided new incentives for installing solar PV systems to help expand the countrys available power generation.

SARS additional disclosure requirements for tax clearance in respect of transferring funds abroad

SARS has introduced an enhanced compliance system change in relation to the current tax clearance status (TCS) required for the transfer of funds by a taxpayer intending to make use of their foreign investment allowance (FIA) of up to R10 million per calendar year. It has been noted the effective date of this change is24 April 2023. The enhanced changes to the TCS system require additional information on the approval of an International Transfer (AIT) Application, to aid SARS in ensuring that all required tax payable has been duly reported by the taxpayer. It is further noted that this would only apply for amounts in excess of R1 million. No TCS is required for transfers up to R1million per calendar year.

VAT registrations: SARS announces more stringent requirements with immediate effect

An important objective and design principle of SARSs administrative platform is to balance the ease of VAT registration with the potential risk of abuse that this could give rise to: persons merely seeking to obtain a VAT number in order to claim fraudulent VAT refunds. In aMedia Releaseissued by SARS on 11 May 2023, it noted concern following a trend of suspicious VAT registrations during the month of April. In particular, SARS noted that its sophisticated risk system indicated that there was a significant increase in the number of VAT registrations during April. Upon further analysis by SARS it appears that a large number of such VAT registrations were, in their view, created with the intention of defrauding SARS.

What to do if you receive income from two sources?

Taxpayers who receive income from more than one source of employment are reminded that the employees tax (PAYE) deducted by the respective employers may not be enough to cover their final tax liability on assessment. The reason for this is the manner in which a taxpayers tax liability is calculated on assessment. The South African tax system is based on the principle of adding together all sources of income of a taxpayer into a single sum, and applying a progressive tax rate table to determine the final tax liability of the taxpayer on assessment. A progressive tax rate system means that the more income is earned, the higher is the marginal tax rate and more tax is paid on assessment.

Guidelines for SARS Third Party Appointments (AA88)

What is it? The Commissioner for the South African Revenue Service (SARS) has the power to appoint any person (referred to as an agent) to pay any outstanding tax, which is due by a taxpayer, out of any money that is held on behalf of the taxpayer. More information: If a taxpayer has outstanding tax debts (this includes penalties), the Tax Administration Act empowers the Commissioner for the South African Revenue Service (SARS) to appoint a third party to recover money held by third parties on behalf of the taxpayer, or owed by the third party to the taxpayer. Third parties could be an employer or a bank, etc.

IRP5/IT3(a) Certificate Validation Process

From the 2020 year of assessment, SARS is performing additional validations on the IRP5/IT3(a) certificates. These validations check if the: IRP5/IT3(a) certificates was already assessed on the Income Tax System; Income Tax Reference number on the IRP5/IT3(a) certificate is not duplicated for multiple individuals; Income Tax Reference number on the IRP5/IT3(a) certificate is the registered Income Tax Reference number for the individual; Directive information on the IRP5/IT3(a) certificate corresponds with the directive information on the SARS Directive System; Correct amount of PAYE or SDL was deducted from employee/declared on the IRP5/IT3(a) certificate by employer.