The South African Revenue Service (SARS) may impose penalties on taxpayers who make errors in their tax returns, but relief is available under certain circumstances. Understatement penalties (USPs) are levied in terms of section 222(1) of the Tax Administration Act, 2011 (TAA) and provide that in the event of an understatement by a taxpayer, the taxpayer must, in addition to the tax payable, pay a USP, unless it is the consequence of a bona fideinadvertent error. A provision in theTAAfurther states that SARS must remit a penalty imposed for a substantial understatement if it is satisfied that: the taxpayer was in possession of an opinion by an independent registered tax practitioner that was issued by no later than the date the relevant return was due; the opinion was based upon full disclosure of the specific facts and circumstances of the arrangement; and the opinion confirmed that the taxpayers position is Read More …
Tax News
Another reminder that SARS bears the onus of proving understatement penalties
In the matter ofLance Dickson Construction CC v Commissioner for the South African Revenue Service, the High Court set aside the order of the Tax Court in favour of the South African Revenue Service (SARS) and upheld an appeal by Lance Dickson Construction CC (Taxpayer) with costs. The Taxpayer, in its tax return for the 2017 year of assessment, did not declare any proceeds from the disposal of certain property to a related entity, Kwali Mark Construction CC (KMC), as it believed and as stated in the agreement of sale between the Taxpayer and KMC, that capital gains tax (CGT) would be paid by the Taxpayer when the property was on-sold by KMC to an unrelated third-party and the relevant proceeds were received by the Taxpayer. Because these conditions were not fulfilled in the 2017 year of assessment, the Taxpayer did not declare proceeds on the disposal of the property Read More …
Time bars taxpayers from correcting readily apparent undisputed errors
There are provisions within the Tax Administration Act, 2011 (the TAA) that allow taxpayers to request assessment corrections without having to rely on the often protracted dispute resolution procedures provided for in the TAA, read together with the Tax Court Rules. In particular, section 93 of the TAA deals with Reduced Assessments and provides (with our emphasis) as follows: (1)SARS may make a reduced assessment if (a) the taxpayer successfully disputed the assessment under Chapter 9; (b) necessary to give effect to a settlement under Part F of Chapter 9; (c) necessary to give effect to a judgment pursuant to an appeal under Part E of Chapter 9 and there is no right of further appeal; (d)SARS is satisfied that there is a readily apparent undisputed error in the assessment by (i) SARS; or (ii)the taxpayer in a return; (e) a senior SARS official is satisfied that an assessment was Read More …
Budget 2023 – Govt is so desperate to end load shedding it’s happy to slash your taxes
Government, which is desperate to end load shedding, will reward households and businesses with tax deductions if they opt for renewables. On Wednesday, Finance Minister Enoch Godongwana, during the tabling of the Budget, announced two tax measures to support the rollout of renewables by businesses and households and thereby relieve pressure on the national grid to reduce load shedding. Individuals from 1 March 2023 will be able to claim 25% in tax deductions on the cost of solar PV panels for rooftop installations. The incentive is capped at R15 000 and is available for one year, Godongwana said. So if an individual were to purchase 10 solar panels at the cost of R40 000, their personal income tax liability would be reduced by R10 000 for the 2023/24 financial year. The condition of the tax rebate for households is that the solar panels must be purchased and installed at a Read More …
Budget 2023’s big news: Eskom debt, solar tax bonanza and tough choices
This year’s National Budget, delivered on Wednesday, was dominated by South Africa’s power woes, with Finance Minister Enoch Godongwana announcing that government will take over a large part of Eskom’s debt. In addition, major tax incentives were announced to encourage more South Africans to embrace renewables and get off the grid. The Budget confirmed that South Africa has stepped further away from a fiscal cliff that loomed in 2020, with its ballooning state debt starting to stabilise, and tax revenue larger than previously expected. But Godongwana warned of major risks ahead. State of government finances Thanks to stronger-than-expected tax revenues, South Africa enjoyed a main budget primary surplus meaning that government spending (excluding debt interest payments) is less than the revenue it received – for the first time since 2008/09. Government’s tax income was almost R94 billion more than it expected a year ago. This will help the government’s budget Read More …
Budget 2024 – Budget Speech and Tax Pocket Guides
Budget Speech by the Minister of Finance (1,697kb) Budget Highlights (148kb) Errata – 2023 Budget (Chapter 7) (170kb) Budget 2023 Presentation: Navigating an uneven economic recovery (1,069kb) 2023 Budget FAQs – Solar Panel Tax Incentive (475kb) Budget 2023 Dashboard
Budget 2023 – Tax Proposals
Government proposes tax relief totalling R13 billion in 2023/24 to support the clean energytransition, increase the electricity supply and limit the impact of consistently high fuel prices. R4 billion in relief is provided for individuals that install solar panels, and R5 billion tocompanies through an expansion of the renewable energy tax incentive. Inflation-related adjustments to the personal income tax tables, the retirement tax tables,and transfer duties are provided. Excise duties on alcohol and tobacco will increase in line with expected inflation of 4.9 percent. The rate for sparkling wine is pegged at 3.2 times that of natural unfortified wine. As in the 2022 Budget, government again proposes no changes to the general fuel levy orthe Road Accident Fund levy. To limit the impact of the energy crisis on food prices, the diesel fuel levy refund will beextended to manufacturers of foodstuffs for a period of 2 years, from 1 April Read More …
Budget 2024 – Rates of Tax for Individuals
On this page you will see Individuals tax table, as well as the Tax Rebates and Tax Thresholds scroll down. 2024 tax year (1 March 2023 29 February 2024) 22 February 2023 See changes from last year: Taxable income (R) Rates of tax (R) 1 237 100 18% of taxable income 237 101 370 500 42 678 + 26% of taxable income above 237 100 370 501 512 800 77 362 + 31% of taxable income above 370 500 512 801 673 000 121 475 + 36% of taxable income above 512 800 673 001 857 900 179 147 + 39% of taxable income above 673 000 857 901 1 817 000 251 258 + 41% of taxable income above 857 900 1 817 001 and above 644 489 + 45% of taxable income above 1 817 000 2023 tax year (1 March 2022 28 February 2023) 23 February 2022 Read More …
Mini-budget speech review October 2022
In this budget speech, a lot of questions linger, South Africans are seeking clarification on a variety of important subjects, including inflation which is evidently rising along with the rest of the world. Although inflation may have slowed down in part, it is still driving up wage demands. Will the government provide financing for Eskom and free the parastatal from its chronic predicament? Will Finance Minister Enoch Godongwana address the economic risks posed by state-owned enterprises such as Denel, Sanral, and Transnet?
What happens to your retirement annuity when you die?
A retirement annuity (RA) is a voluntary pension plan in which individuals can contribute in a tax-efficient manner to provide for their retirement years. Unlike pension and provident funds which are occupational in nature, RAs are private and, as such, an employee/employer relationship is not necessary for membership. Subject to a few exceptions, the earliest a member can retire from an RA is age 55, with no upper age limit for retirement, at which point they are required to use at least two-thirds of the fund to purchase an annuity income. But what happens if the member dies before retiring from the RA? How are the funds distributed and to whom?