The most in demand skills in South Africa – Results from the Annual Critical Skills Survey10/9/2020  Authored by: Marisa Jacobs, Director at Xpatweb
The 2019/20 Critical Skills Survey specifically tracked the impact of immigration across various sectors within South Africa’s economy. The purpose was to highlight which skills employers find most difficult to recruit locally and as such provide input to the much-anticipated new draft critical skills list from the Department of Home Affairs which will specify which occupations will qualify for a work visa in the Critical Skills Visa category and as such directly impacting employers. When unpacking the results, we found that 89% of participants stated that their organisation struggles to recruit critically skilled individuals. Furthermore, 76% of participants indicated the need to search internationally for these skills which will assist the organisation to meet critical business objectives. When asked about the visa application process, 79% of participants indicated that the process remains a prohibitor and with only a limited number of companies managing to avoid the negative impact that the visa application system might have on their business. ICT Specialists and Engineers Remain in High Demand The results further show that ICT Specialists and Engineers continue to be one of the most sought-after skills with 19% and 21% of participants respectively indicating same. This is supported by the South African Institution of Civil Engineering (SAICE), who stated in 2019 that South Africa continues to lose hundreds of engineers year on year who emigrate with their families. This “brain drain” has created a massive skills shortage in the Engineering sector. When looking at ICT professionals, a summit hosted by the Institute of Information Technology Professionals South Africa (IITPSA) at Leaderex in 2019 revealed that South Africa is in desperate need of ICT skills, and sadly, the Education sector is just unable to produce these skills in the numbers that South Africa needs. These factors are just the tip of the iceberg that cause multinationals to search globally for the skills needed. Skilled Artisans Still Sought After The biggest jump in demand was recorded for Artisans with an increase of 60% from 2017 to 2019. This is supported by the Government’s statement in 2017 that South Africa has a shortfall of about 40,000 qualified artisans, and this gap is expected to widen as demand continues to increase. This forces industry to import skilled artisans from various countries to complete time sensitive projects. Global Competition for Skills Contrarily, whilst South Africa is seeking critically skilled individuals, recent reports have shown that the momentum of South Africans seeking opportunities abroad has increased significantly over the past 5 - 10 years due to the concern of economic growth in South Africa. It is therefore important to be reminded that skills are globally sourced for the economic benefit of those countries and South Africa has to compete for scarce skills. When viewing the results in their entirety, it remains evident that there is a continued lack of critically skilled individuals available in South Africa and key stakeholders need to address these problems collectively in an effort to reinvigorate the economy. Please click here to view the full results. https://www.xpatweb.com/2019-20-critical-skills-survey-results/ ENDS MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za ABOUT Xpatweb: HOLISTIC EXPATRIATE SOLUTIONS The Xpatweb group has been in existence for over 15 years and includes over 100 professionals, including immigration specialists, mobility practitioners, tax practitioners, attorneys, and chartered accountants. They offer holistic, client-centric, and fully compliant expatriate and work visa solutions. Clients can expect an exceptional end-to-end service that starts with an initial technical meeting to discuss any past challenges, a recommended optimal solution, and the creation of a roadmap and protocol for service delivery. They also offer an on-premises immigration audit service to confirm expatriate employees hold legally obtained, valid visas, and that their duties align with their visa conditions. In addition, their unique online immigration tracking system helps you to easily manage and track expatriate assignees across the globe, is fully customisable and dashboard-driven, and provides a secure repository for storing assignees’ documents. For more information on Xpatweb please visit: Website: http://www.xpatweb.com/ LinkedIn: https://www.linkedin.com/company/work-permit-south-africa/ Facebook:https://www.facebook.com/xpatweb/
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 “Expats who follow shady advice to deregister as taxpayers with SARS will suffer in the long run,” says Jonty Leon, Legal Manager (Expatriate Tax) at Tax Consulting SA.
This follows reports that some tax advisors are directing their expatriate clients to deregister with SARS to avoid paying tax on their non-exempt foreign income. According to Leon, this dangerous advice could result in a criminal act. Background Section 10(1)(o)(ii) of the Income Tax Act provides an exemption to South African tax residents who are employees that render services outside South Africa on behalf of a South African or foreign employer for longer than 183 full days in any 12-month period, as well as a continuous period exceeding 60 full days outside the country. Previously, these expatriates where able to fully exempt their foreign income earnings from taxation, provided they met the requirements. Those who did not would have their income taxed as usual. However, the law was amended with effect from 1st March 2020. After that date, although all other provisions remain the same, only the first R1.25 million in income is exempt. Any earnings above this threshold are subject to full taxation by SARS. “Some expatriates now face a notable reduction in their earnings and are looking for solutions to reduce or nullify this tax obligation,” says Leon. Unfortunately, this makes them susceptible to questionable advice. Criminal offence Some tax advisors have directed their clients to simply deregister with SARS to avoid paying tax at all. According to the Tax Administration Act, any South African earning local or foreign income must register as a taxpayer with SARS. To not do so is a criminal offence. “If you deregister with SARS, this does not exempt you from being liable for tax. Your liability remains and you will eventually pay all outstanding tax on earnings during that period as well as penalties and interest you would have thought you had avoided,” says Leon. These taxpayers could also find themselves in court on charges of tax evasion. The right way However, advises Leon, there are two legal routes for which expatriate taxpayers may qualify. One is financial emigration, which terminates their tax residency in South Africa if their situation meets the thresholds under the tax residency tests in South Africa to be considered non-resident. Those who become non-residents for tax purposes do not pay tax on their foreign income in SA. The other is a Double Taxation Agreement. Expats working in one of the various foreign jurisdictions with which South Africa has a tax agreement may qualify for exemption from South African tax. However, there merely being a DTA in place does not automatically exempt one from being taxable in SA – very specific requirements must be met and provable. “Either of these options can not only reduce one’s tax burden; they are also both legal,” says Leon. Good advice Leon offers three tips to help taxpayers remain on the right side of the law. First, apply common sense: if the solution sounds too good to be true, it probably is. Seek a second opinion. Second, have your tax consultant give some form of guarantee. The quality of their advice will increase dramatically with their level of accountability. Third, choose a tax practice with a strong legal component. One or more tax attorneys on site suggests its solutions are based on correct interpretation of South Africa’s complex tax laws. “Above all, do not deregister for tax,” says Leon. “It will be cheaper in the end to find a better tax advisor.” ENDS MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za ABOUT Tax Consulting SA: Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance. For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook: Tax Consulting South Africa  Xpatweb recently conducted an extensive Africa Permit Risk Survey on 70 multinational employers across Africa to understand the impact of travel restrictions due to COVID-19 on their projects and employees.
Survey results show that 44% of respondents urgently require employees who cannot return to job sites due to travel restrictions, and 31% of these expatriates’ passports have expired. Tarissa Wareley, an immigration expert at Xpatweb, says that immigration departments will need to streamline their approach to processing permits and visas’ backlog. Employers as well as workers are also encouraged to start their visa renewal and application processes far ahead of borders reopening. “The process of getting the required work permit renewals isn’t necessarily as complex, but many African countries’ immigration departments will need to make provisions for workers who have been out of the country and therefore had documents that expired due to COVID-19 lockdowns. Instead of having everyone start from scratch with the application process, immigration departments will benefit from creating a streamlined process to assist these foreign workers in getting back to their job sites as soon as lockdowns are lifted. Some countries have lead times of 2 – 3 months to process work permits and visa applications. “We advise companies and workers to start their application processes early and for immigration departments to see where they can start assisting foreign workers who were unable to renew their visas due to the pandemic,” says Wareley. Foreign work visa applications likely to receive more scrutiny According to survey results, 48% of employers have new assignees that need permits to enter. Kenya, DRC, Mozambique, Tanzania, and Botswana were among the top five countries that require the entry of new expats. “Employers who have identified critical personnel need to apply for the permits now as these applications will likely receive a larger amount of scrutiny to prove that a local cannot do the job due to many of these countries suffering job losses as a result of COVID-19. Employers may also need to start considering how they will transfer those skills to a local ahead of the permit being granted as these applications may need to be additionally motivated,” says Wareley. How border closures have affected industries and projects 62% of survey respondents indicated that they had to postpone the start date of their critical projects due to the lockdown. The most affected sectors are oil and gas (14%), mining (15%), and construction (18%). The countries that have been most impacted by projects that have not been able to start due to lockdowns are Kenya, Ethiopia, Mozambique, Madagascar, DRC, Botswana, Zimbabwe, Ghana, and Nigeria. “With immigration departments still working despite travel restrictions, immigration processes should continue to be processed while we wait for borders to open. Processes are layered and complex, often taking several weeks to be adjudicated before someone can enter a country. Get your documents in place so that work can resume as soon as possible after border restrictions are lifted,” concludes Wareley. ENDS MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za ABOUT Xpatweb: HOLISTIC EXPATRIATE SOLUTIONS The Xpatweb group has been in existence for over 15 years and includes over 100 professionals, including immigration specialists, mobility practitioners, tax practitioners, attorneys, and chartered accountants. They offer holistic, client-centric, and fully compliant expatriate and work visa solutions. Clients can expect an exceptional end-to-end service that starts with an initial technical meeting to discuss any past challenges, a recommended optimal solution, and the creation of a roadmap and protocol for service delivery. They also offer an on-premises immigration audit service to confirm expatriate employees hold legally obtained, valid visas, and that their duties align with their visa conditions. In addition, their unique online immigration tracking system helps you to easily manage and track expatriate assignees across the globe, is fully customisable and dashboard-driven, and provides a secure repository for storing assignees’ documents. For more information on Xpatweb please visit: Website: http://www.xpatweb.com/ LinkedIn: https://www.linkedin.com/company/work-permit-south-africa/ Facebook:https://www.facebook.com/xpatweb/  The most in-demand skills per DHET draft list and skilled Saffers leaving the country fuels the skills gap
The Department of Higher Education and Training released the draft list of Occupations in High Demand on 17 August 2020. The list is currently open for public comment until 7 September 2020. The list will serve as the basis for the Department of Home Affairs’ (DHA) updated Critical Skills list, which was originally expected earlier this year. “The new Critical Skills list was expected to be released in April 2020, but the COVID-19 pandemic delayed this process,” says Xpatweb’s Marisa Jacobs. “The Occupations in High Demand list is now available for public commentary, submissions must be made by Monday, 7 September. The significance of the list is that it will form the basis for the updated Critical Skills list by the DHA which contains all the skills deemed in short supply in South Africa. Thus, any person who fits the criteria contained therein may qualify for a Work Visa, under the Critical Skills Visa category, as per the Immigration Act.” Xpatweb is running its fourth annual critical skills survey among local businesses, including JSE-listed companies and large multinational groups. Companies are encouraged to submit their inputs before 4 September on the skills they struggle to recruit locally. “It is important that employers are represented with a submission and inputs on any occupations not included on the list and the survey results will form the basis of this submission. It’s a tight deadline, but the response has been very positive. Survey respondents grew by 30% last year and we’re expecting an even greater spike this year as the local business community – across all sectors – are eager to give input on the government gazette that will determine which foreign skills local businesses can employ under the Critical Skills visa category,” says Jacobs. As skilled Saffers immigrate, local companies need to recruit internationally for these critical skills There is a growing concern among many South Africans that skilled people are leaving the country in droves, choosing to relocate to New Zealand, Canada, the UK, Australia and Mauritius to name a few. Any discussion about emigration numbers is complicated by the fact that there is no official bureau in South Africa that collects emigration data. Resources from Stats SA, the United Nations International Migrant Stock database, and National statistics offices (NSOs) of foreign nations, however, suggest that upwards of 23,000 people per year are emigrating from South Africa. “People who are emigrating are often skilled and experienced, which is why they can find work abroad. Therefore, it is important to be reminded that skills are globally sourced for the economic benefit of those countries and South Africa has to compete for scarce skills,” says Jacobs. The Critical Skills List update is long overdue The latest Critical Skills List by the Department of Home Affairs was published in 2014. According to Xpatweb’s annual survey, several occupations that corporate South Africa needs are not on the latest DHET Occupations in High Demand list, including several categories of ICT specialists and engineers, and foreign language speakers. Occupations included range from chef, wine maker, tobacco grader and tour guide to nurse, rigger, actuary and software engineer “There is a continued lack of critically skilled individuals available in South Africa and thanks to survey participants, we are able to guide the government’s critical skills list and help shape the decisions that will help local businesses reinvigorate the economy,” concludes Jacobs. ENDS MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za ABOUT Xpatweb: HOLISTIC EXPATRIATE SOLUTIONS The Xpatweb group has been in existence for over 15 years and includes over 100 professionals, including immigration specialists, mobility practitioners, tax practitioners, attorneys, and chartered accountants. They offer holistic, client-centric, and fully compliant expatriate and work visa solutions. Clients can expect an exceptional end-to-end service that starts with an initial technical meeting to discuss any past challenges, a recommended optimal solution, and the creation of a roadmap and protocol for service delivery. They also offer an on-premises immigration audit service to confirm expatriate employees hold legally obtained, valid visas, and that their duties align with their visa conditions. In addition, their unique online immigration tracking system helps you to easily manage and track expatriate assignees across the globe, is fully customisable and dashboard-driven, and provides a secure repository for storing assignees’ documents. For more information on Xpatweb please visit: Website: http://www.xpatweb.com/ LinkedIn: https://www.linkedin.com/company/work-permit-south-africa/ Facebook:https://www.facebook.com/xpatweb/  Mauritius has been a popular holiday destination for South Africans for many years, but the government’s recent concessions have made it more accessible and affordable for South Africans to retire, live and work than ever before. In June 2020, the Mauritian government’s changes to investment thresholds, the extension of work, residence, retirement permits, and attractive property acquisition options, led to renewed interest from South Africans, says Marisa Jacobs, Director at Xpatweb.
“Skilled professionals and business owners with families in South Africa are taking note of Finance Minister Renganaden Padayachy’s changes and adjustments for foreigners. It is now easier to buy property, work, as well as retire on the island, which is appealing for many, including business owners, corporates and families in South Africa who are looking for a new place to call home,” says Jacobs. Extending retirement permits and lowering investment requirements In the past, South African retirees were only able to obtain a three-year permit for Mauritius. This has been extended to ten years, with the requirement that the individual earns a recurring income of $1,500 per month. The amount can be paid annually, quarterly, or monthly, as long as it works out to $1,500 per month. “The extension from three to ten years gives retirees more certainty about their future in the country. Mauritius’ Permanent Residence and Work Permits have been combined into a single permit and extended from ten to twenty years,” says Jacobs. The minimum investment to obtain an Occupational Permit (OP) has also been halved from $100,000 to $50,000. The parents of an OP holder may now obtain a dependent permit to live in Mauritius. Professionals who are working as independent contractors can qualify for the self-employment permit. The requirement for this permit is a deposit of $35,000 into their Mauritian bank account, and this permit is also valid for ten years. “Working professionals and self-employed individuals who want to move their spouse and aging parents find these concessions favourable, especially if their dependents are no longer working,” says Jacobs. Property acquisition Buying property is still a popular route of entry for those looking to move to Mauritius. In the past, foreign nationals were required to invest $500,000 in the property. This number has now been reduced to $375,000. “The dispensation for owning property in Mauritius is far more flexible than in most other African countries. In Mauritius, a South African is allowed to purchase a property as a freehold, or through a 99-year lease agreement with the option of renewal,” says Jacobs. The island boasts excellent private schools, reputable banking systems, regulatory certainty, technology-driven government systems, as well as an efficient and linear tax system. “The effective tax rate of 15% for individuals are well below those applicable to South Africa and other countries. A significant difference is that Mauritian residents are only taxed to the extent of the money that they bring into the country. These financial incentives, combined with the close proximity to South Africa, will likely see more people moving to Mauritius in the future. ENDS MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za ABOUT Xpatweb: HOLISTIC EXPATRIATE SOLUTIONS The Xpatweb group has been in existence for over 15 years and includes over 100 professionals, including immigration specialists, mobility practitioners, tax practitioners, attorneys, and chartered accountants. They offer holistic, client-centric, and fully compliant expatriate and work visa solutions. Clients can expect an exceptional end-to-end service that starts with an initial technical meeting to discuss any past challenges, a recommended optimal solution, and the creation of a roadmap and protocol for service delivery. They also offer an on-premises immigration audit service to confirm expatriate employees hold legally obtained, valid visas, and that their duties align with their visa conditions. In addition, their unique online immigration tracking system helps you to easily manage and track expatriate assignees across the globe, is fully customisable and dashboard-driven, and provides a secure repository for storing assignees’ documents. For more information on Xpatweb please visit: Website: http://www.xpatweb.com/ LinkedIn: https://www.linkedin.com/company/work-permit-south-africa/ Facebook: https://www.facebook.com/xpatweb/  While expats are allowed to return to South Africa, many are reluctant to do so due to the stringent requirements that need to be met to get permission from the Department of Home Affairs, says Leetasha Govender, Immigration Specialist at Xpatweb.
“Expats are ready to return home, but the hoops they need to jump through are too cumbersome for some to book the flight,” says Govender. One of the categories of expats that is now considered for return is called “exceptional need to return,” and it applies to long-term visa holders who are returning to conduct work that is in line with the economic growth and/or development of South Africa. “If a long-term visa holder wants to return to South Africa, they will be considered depending on their positions and the reputation of their employer. The likelihood of a South African employee within the company being able to temporarily fill the role until border-lockdown has been lifted is also one of the DHA’s considerations,” says Govender. Your job must be of national interest to SA In addition to the above, DHA will further only consider applications within industries that the Department of Trade and Industry (DTI) considers to be in the national interest of the country. These industries include green industries, advanced manufacturing, resource-based services such as BPO, oil and gas, ship building and repairs, manufacturing or such other industries that may be deemed important or of national interest. Govender says that family reunion and study are among the other categories of travel which are considered by the DHA for retuning expats. “Sufficient proof must be submitted to support an application for family reunion or study. The expat must have resided in South Africa for more than six months and have a valid temporary residence visa to apply under this category,” says Govender. Exemptions and applications Certain categories of expatriates remain excluded from entering the Republic. These include expatriates who are travelling from visa-exempt countries for short-term visits or business trips, as well as those from high-risk countries. “Should you need to enter South Africa due to exceptional circumstances, and are unsure whether you may be eligible for consideration, contact us at travel@xpatweb.com or leetasha@xpatweb.com for an assessment,” concludes Govender. ENDS MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za ABOUT Xpatweb: HOLISTIC EXPATRIATE SOLUTIONS The Xpatweb group has been in existence for over 14 years and includes over 90 professionals, including immigration specialists, mobility practitioners, tax practitioners, attorneys, and chartered accountants. They offer holistic, client-centric, and fully compliant expatriate and work visa solutions. Clients can expect an exceptional end-to-end service that starts with an initial technical meeting to discuss any past challenges, a recommended optimal solution, and the creation of a roadmap and protocol for service delivery. They also offer an on-premises immigration audit service to confirm expatriate employees hold legally obtained, valid visas, and that their duties align with their visa conditions. In addition, their unique online immigration tracking system helps you to easily manage and track expatriate assignees across the globe, is fully customisable and dashboard-driven, and provides a secure repository for storing assignees’ documents. For more information on Xpatweb please visit: Website: http://www.xpatweb.com/ LinkedIn: https://www.linkedin.com/company/work-permit-south-africa/ Facebook:https://www.facebook.com/xpatweb/  The first period for provisional tax ends on 31st August. Provisional taxpayers must therefore have submitted their initial IRP6 return and settled any payments due by that date.
“In addition, COVID-19 relief allowances make the calculation of estimated tax all the more complicated,” warns Thamsanqa Msiza, Head of Individual Tax Returns at Tax Consulting SA. He advises those who wish to take advantage of this relief to act promptly to beat the deadline. If not, they could incur stiff penalties on late submissions and interest on outstanding amounts. The same applies for underestimation of their taxable income. They should review the following to ensure they remain compliant. Check your registration Typically, anyone who earns income above the tax threshold from sources other than employment must register with SARS as a provisional taxpayer and pay provisional tax, even if they are employed full-time. Companies are automatically provisional taxpayers. However, some parties are excluded if they meet certain conditions so it’s best to check personally or through a tax professional familiar with current requirements. To be safe, they should also check their registration status directly with SARS. Understand COVID-19 relief While many provisional taxpayers qualify for COVID-19 relief, some do not, such as those whose tax affairs are non-compliant. The ones who do qualify may defer a portion of their first and second period tax payments, offering an immediate relief to cash strapped taxpayers Normally, they would pay 50% of their total tax liability in the first period and the balance in the second period. In the 2020/21 year, they can pay just 15% of their total tax liability in the first period, 65% in the second, and the remaining 35% in a third payment period. Provided all amounts are paid off by the end of the third period, they will not be subjected to penalties or interest. “It’s important to understand that the tax obligation is only deferred and must be settled within the allowed timeframe,” says Msiza. Check your calculation This standard advice is doubly important with COVID-19 relief. Provisional taxpayers should note that the tax calculated is for the first half of the year, not the entire year. However, the percentage of payment due is calculated against the entire year and not the current period. “For those with sophisticated streams of income, the shift in percentages could lead to a gross miscalculation, resulting in unnecessary losses,” says Darren Britz, Head of Legal at Tax Consulting SA. Such parties should not attempt to make last-minute submissions without the assistance of a qualified tax professional. Check your income Even those with firm control of their finances may misunderstand how certain income is viewed under law. For example, cryptocurrency is not immune to taxation and will be treated in accordance with how it is acquired or disposed of. Paid as income, it is taxed as income; won in a competition, it is taxed as a windfall; disposed of as an asset, it may attract capital gains tax; and so on. “However, there are other complex financial instruments and arrangements whose resultant value may manifest as provisional tax,” says Britz. Again, he encourages those earners to approach their tax practitioner or tax attorney to avoid being penalised for evasion. “With only a few days until the deadline, they must act now,” he concludes. ENDS MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@atthatpoint.co.za, www.atthatpoint.co.za ABOUT Tax Consulting SA: Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance. For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook:Tax Consulting South Africa  Authored by: Jerry Botha, Managing Partner & Jean Du Toit Head of Tax Technical at Tax Consulting South Africa.
The draft Taxation Laws Amendment Bill (“TLAB”) was published on 31 July 2020. As announced in the Budget Speech, any South African leaving in future will be subject to a much stricter process from 1 March 2021 onwards. But there was also a surprise 3-year lockup announcement for anyone with a South African pension fund, seeking to leave South Africa. This appears a sign of things to come for private pensions in South Africa. Anyone with a proper pension, ideas to move abroad or just not trusting governments plans with your pension money; needs to “read the room” and make careful decisions. Current position under law Under the current dispensation, the definitions of “pension preservation fund”, “provident preservation fund” and “retirement annuity fund” in section 1 of the Income Tax Act No. 58 of 1962 (“the Act”) contain a proviso that entitles a person to withdraw their retirement benefits before retirement age. This applies where that person “is or was a resident who emigrated from the Republic and that emigration is recognised by the South African Reserve Bank for purposes of exchange control”. In essence, this proviso, which reads the same for each of these definitions, permits a person to withdraw their retirement benefit upon completion of a process of emigration through the South African Reserve Bank. Proposed amendment The proposed amendment follows the February Budget Speech, where the government made its intentions clear to overhaul this process as part of the modernisation of our exchange control system, as stated in Annexure C to the Budget Review: “As a result of the exchange control announcements in Annexure E, the concept of emigration as recognised by the Reserve Bank will be phased out. It is proposed that the trigger for individuals to withdraw these funds be reviewed”. The TLAB, specifically paragraphs (h), (k) and (m) of section 2(1), gives effect to this decision, by amending the proviso to the aforementioned definitions in section 1 as follows: “is a person who is [or was] not a resident [who emigrated from the Republic and that emigration is recognised by the South African Reserve Bank for purposes of exchange control] for an uninterruptedperiod of three years or longer” (emphasis added) In other words, reference to the emigration process is substituted with a new test that requires a person to prove they have been non-resident for tax purposes for an unbroken period of at least three years. This new test will apply from 1 March 2021. How this must be proved other than ‘financial emigration’ remains unclear at this stage. Practically, after the effective date, your retirement benefits will be locked in South Africa for at least three years. The proposed amendment signals a big policy shift from a fiscal perspective, but this is one piece to a bigger puzzle that should have those who seek to emigrate on high alert. The bigger picture The ANC’s 2019 Election Manifesto expressly states that the party will “Investigate the introduction of prescribed assets on financial institutions’ funds to unlock resources for investments in social and economic development.” The discussion on “prescribed assets” has also been mentioned by President Cyril Ramaphosa and it effectively involves compelling retirement funds to invest in government-backed assets or invest directly in government infrastructure projects. The government’s intent to push this initiative was confirmed in the ANC Economic Transformation Committee’s discussion document, published on 8 July 2020 and which states that “Changes should be made to Regulation 28 under the Pension Funds Act to enable cheaper access to finance for development.” This is critical because Regulation 28 under the Pension Funds Act No. 24 of 1956 is the main hurdle that prevents government from imposing the prescribed assets policy, as it requires funds to act in the best interest of its members. It would be very difficult to reconcile the prescribed assets policy with Regulation 28 in its current form, especially where it means investing in State-Owned Enterprises such as SAA, Eskom and the SABC. This appears to explain the move to amend it. What does this mean for your retirement fund? The amendment may be argued as only a draft proposal written into law or a simple by-product of a shift in exchange control policy; but do you risk your retirement life savings on assumptions of governments good intentions? This change forces the following categories into immediately making some tough decisions on their retirement. Even leaving your status quo means you have decided to subject yourself to a 3 year lock-up, retirement funding investments being subject to a “new” Regulation 28 which services “cheaper access to finance” as opposed to maximising your retirement. Who are most impacted? Our daily interaction with employers, executives and expatriates indicate that the following categories should give this careful consideration –
MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@atthatpoint.co.za, www.atthatpoint.co.za ABOUT Tax Consulting SA: Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance. For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook:Tax Consulting South Africa  Author: André Daniels, Tax Attorney at Tax Consulting SA
The South African Revenue Service (SARS) has undertaken to make the filing of annual tax returns for the 2020 filing season as seamless as possible for individuals who diligently fulfil their tax obligations. At the same time, SARS wants to make it as difficult and as costly as possible for non-compliant taxpayers and criminals who abuse the system. At Tax Consulting, we welcome the media statement of 30 July 2020 by Commissioner Edward Kieswetter. If the statement is in fact a commitment to name and shame those convicted of criminal offences, and is implemented, it will certainly act as a deterrent, supporting SARS’ efforts to curb the decline in tax morality. However, we encourage taxpayers who have made errors or who have omitted certain income in prior year’s tax returns, for whatever reason, to take up the opportunity to regularise their affairs through the Voluntary Disclosure Programme (VDP). The income areas typically undeclared includes foreign interest income, foreign/local rental income and employment income where an employer does not provide their employee with an IRP5. The VDP was designed to encourage taxpayers to approach SARS before their non-compliance is detected. Voluntariness is one of the requirements as contained in the Tax Administration Act, which regulates the VDP. Process for non-disclosure Taxpayers who have already attracted the attention of SARS due to non-compliance, by being selected for an audit, or who have already received a final letter of demand, will unfortunately not be able to participate in the VDP. They will have to go through the normal processes by correcting their errors which will attract penalties and interest in addition to the outstanding tax liabilities. They may even expose themselves to criminal prosecution. A major benefit of relief sought through the VDP, is that it covers all tax types (income tax, employees’ taxes such as Pay-as-You-Earn, Unemployment Insurance Fund contributions and the Skills Development Levy, as well as Value-Added-Tax). The only taxes that are not covered are customs and excise duties. When a taxpayer is granted relief under the VDP, penalties are waived, and the applicant receives amnesty from criminal prosecution. The taxpayer will only be liable for the outstanding tax liability as well as the interest levied thereon. Be aware of your world-wide income Many a time, the reason for the non-disclosure of foreign income is due to the fact that taxpayers are unaware of their true tax liability, and which jurisdiction has a taxing right. The South African tax system changed from a source-based system to residency-based system in 2001 – meaning that South African tax residents are taxed on their world-wide income. However, many South Africans with property abroad have been oblivious of this change and have not included foreign interest income or foreign rental income in their tax returns for many years. We advise taxpayers who have become aware of any non-disclosure of income to come forward and apply for relief through the VDP. It is important that documentation evidencing the income to be disclosed is used to support the VDP application to quantify amounts, especially during the last five years, in order to satisfy the record-keeping requirement. It is understandable that many will lack the necessary documentation in order to quantify the undisclosed income and therefore calculate the outstanding tax liability, due to the fact that undeclared income may span all the way back to 2001, when the tax law was amended. SARS will allow the submission of reasonable estimates, based on more recent documentation, if it proves impossible to obtain older documentation. Once the taxpayer has satisfied SARS that they have made a full and complete disclosure, and complying with all other legislative requirements, the VDP process will be finalised. A look to the future of VDP applications We have, in recent times, seen a marked improvement in the finalisation of VDP applications. In the past, it was not uncommon to wait up to two years after having submitted a VDP application for the appointment of an evaluator. Recent applications submitted by Tax Consulting have been finalised within two to three months. It should be noted that if a taxpayer has been granted relief under the VDP, they will only be able to apply for VDP relief in respect of a similar offence in five years’ time. This is to prevent taxpayers abusing the system to have their penalties waived. ENDS MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za ABOUT Tax Consulting SA: Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance. For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook:Tax Consulting South Africa  SARS’ announcement that it has started auto-assessing certain taxpayers may lead some people to believe they no longer need to worry about their tax submissions.
This is not the case, according to Thamsanqa Msiza, Head of Individual Tax Returns at Tax Consulting South Africa. “The onus still lies with the taxpayer to ensure all information submitted to SARS is complete and correct,” he says. So before accepting the precompiled assessment, they should take the time to check that all relevant data is present and accurate. Neglecting to do so may be seen by the tax authority as a deliberate attempt to evade tax and could result in stiff penalties. What is a SARS auto-assessment? With modern digital technologies at its disposal, SARS is able to collect electronic tax data from employers, financial institutions, medical schemes, retirement annuity fund administrators and other 3rd party data providers. As such, it can compile and assess tax submissions with little input from the taxpayer. SARS announced that, during August, it will assess a large number of taxpayers automatically in this way, reportedly around 3.1 million. They will be notified by SMS and can access the precompiled assessment through eFiling or SARS’ MobiApp. Here, they can review the assessment and click an Accept button to accept the figures, or click an Edit button to amend the information. “Apart from this being a new system and therefore prone to teething problems, there are several other reasons why the precompiled information may be inaccurate,” warns Msiza. What to watch out for Even those who are employed may earn extra on the side from gigs, property rentals or other sources of income. Similarly, individuals who are self-employed and have received taxable earnings exceeding R83,100 in the 2019/2020 tax year, will be considered Provisional Taxpayers and must declare this income as SARS will have no record of it. Other instances highlighted by Msiza include an investment tax certificate, for example, appearing on the assessment although the taxpayer holds no such investment. Or an employer may fail to submit a copy of the employee’s IRP5. There may also be outstanding deductions, like log book mileage against one’s travel allowance, that can only be captured from an employee’s own records. Or donations for which no tax certificate has been loaded on the return. “In cases like these, the taxpayer must approach the issuer to correct the data and resubmit it to SARS promptly,” says Msiza A convenience, not a pass A SARS auto-assessment will be a welcome convenience for many. However, it doesn’t take all the work out of tax submissions and does not release the taxpayer from the responsibility of declaring all their earnings accurately. “If you receive an SMS notifying you that you have been auto-assessed, take the time to check the preloaded information carefully against your own tax certificates,” advises Msiza. Those with complex tax affairs should be particularly cautious and should seek direction from their tax attorney or tax practitioner. This way, they will avoid unpleasant surprises later on and assure themselves that they have made effective use of any tax relief to which they are legally entitled. ENDS MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za ABOUT Tax Consulting SA: Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance. For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook:Tax Consulting South Africa |
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