Jonty Leon, Legal Manager (Expatriate Tax) at Tax Consulting SA. 
​
The President, on 15 January 2021, assented to the Taxation Laws Amendment Act No. 23 of 2020 (“TLAA”), which was subsequently promulgated on 20 January 2021.

Despite the blow back last year on the proposed amendment to the withdrawal of retirement funding in SA based on emigration, this amendment has now been signed into law and will become effective on 1 March 2021. The consequence is that from this date retirement benefits will be locked in for a minimum period of three years.

Retirement Withdrawals Prior to 1 March 2021
The current legislation allows for a person who emigrates from South Africa and who has formalised their emigration using the “financial emigration” process to immediately upon conclusion of that process fully withdraw their retirement funds. This would include for example the withdrawal of a retirement annuity, prior to maturity of that fund.

This has been useful for many South Africans who have left or are currently leaving, as often these funds are used to set themselves up in their new home country. It also allowed for taxpayers to decide to remove their investment and invest in something more viable for their new circumstances.

South Africans who have already financially emigrated still have the opportunity to withdraw their retirement funds under the current regime. Those that have finalised financial emigration, or have their full application submitted to SARB prior to 28 February 2021, will now have the opportunity to withdraw their retirement funds under the old dispensation until 28 February 2022. Government has thus provided a one-year extension on what was previously announced, to withdraw those funds with financial emigration.

Retirement Withdrawals Post 1 March 2021
Without financial emigration, and from 1 March 2021, taxpayers will only be able to access their retirement benefits if they can prove they have been non-resident for tax purposes for an uninterrupted period of three years.

How the new system will practically work is yet to be set out, taking into consideration the policy provider’s requirements, SARS requirements, the need for documentary supporting evidence and proof of non-residency status for three consecutive years.

However, what we do know is that a more stringent verification process and risk management test are in the pipelines, if the Budget Speech in February 2020 is anything to go by. So, expect a more difficult time post 1 March 2021.   

The immediate downside for those that will not be able to withdraw these funds as soon as they need them, is self-evident. However, the longer-term downsides of a lock-in period, which come with far more uncertainty, need to be taken into account as well.

Factors to consider:
-        The 2020 Budget Speech spoke to relaxing regulations around exchange control, which comes as a stark contrast to the legislation passed, which effectively traps retirement funds in SA. If a piece of legislation like this can be passed, seemingly out of nowhere, and with such robust argument in favour of it from National Treasury, where does this take us?

There are no guarantees that Government may not decide to extend the three-year period for another three years, or perhaps indefinitely;

-        Part of the ANC agenda has focused on “prescribed assets” for retirement funds – this narrative is particularly frightening if your funds are trapped in SA. Your retirement fund manager is not allowed to invest your funds as you see best for your retirement; their investment decision is subject to Regulations. If this agenda gains traction, we could potentially find ourselves forced into investments which drives other causes than your direct personal well being. Explained differently, leave your money behind in South Africa to finance Eskom or perhaps SAA;

-        The ever-weakening Rand may diminish the worth of the retirement fund held in SA. Who knows what the Rand will look like in three years – or more;

-        The tax rate of retirement fund withdrawals has remained stagnant at a maximum rate of 36%, while the personal income tax rate has increased to 45%. Retirement fund withdrawals are a soft target and there is risk this may increase while your fund is locked in.

In Hindsight
For many years, we have seen advisors very vocally dismissing the financial emigration process as unnecessary; advising their clients to rather use “quick and easy” solutions which often left room for risk instead of following a formal and far more prudent approach. Judge Dennis Davis, in his foreword to “Expatriate Tax”, published by LexisNexis, characterises advice to do financial emigration where an individual leaves the country with permanent intention not only as sensible, but as correct.  

With the gift of hindsight, advisors who steered their clients away from financial emigration should perhaps have heeded the Judge’s words. Their clients now find themselves in a precarious position. Professionals at all levels should be held accountable for advising clients to take an approach which at the end of the day is not client-centric. The quickest solution is often not the best solution, especially in the area of tax.

Decision Time
South African taxpayers who hold retirement funds in SA but are living abroad need to carefully consider their options. Time is of the essence with little over a month to exit under the current regime. With such stark amendments, and an aggressive effort from SARS to recover revenue at all costs, leaving one’s head in the sand or adopting a wait and see approach is certainly not a smart option.

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

Authored by: Jean du Toit, Head of Tax Technical at Tax Consulting SA

South African expatriates have been kept in suspense regarding a proposed law change aimed at providing relief to those who could not leave the country under lockdown. This amendment was confirmed with the promulgation of the Taxation Laws Amendment Act No. 23 of 2020 (“TLAA”) on 20 January 2021, which means these expatriates can now rest easy.

The amendment
South African resident taxpayers who earn their remuneration in respect of services rendered abroad may qualify for an exemption from income tax of up to R1.25 million. To qualify for the exemption, section 10(1)(o)(ii) of the Income Tax Act determines that taxpayers have to spend more than 183 days in aggregate outside South Africa during a twelve-month period, of which more than 60 days must be continuous.

However, due to the travel bans imposed as a result of the COVID-19 pandemic, these individuals could not travel to their countries of employment. For many, this would mean they would not have met the 183-day threshold, resulting in a massive unanticipated South African tax liability.

The TLAA reduces the 183-day threshold by 66 days, which means that taxpayers who spent more than 117 days outside South Africa may still qualify for the exemption. The 66-day reduction is based on the period that commenced on 27 March 2020 and which ended on 31 May 2020, when the country operated under COVID-19 alert levels 5 and 4.

Important caveats
The continuous period of more than 60 days remains unchanged; the concession only extends to the aggregate number of days spent outside South Africa.

Equally important, this amendment does not constitute a permanent change to the exemption. It only applies to any 12-month period in respect of any year of assessment ending on or after 29 February 2020 but on or before 28 February 2021.

Period of uncertainty
The amendment did not form part of the initial 2020 budget proposals and was only introduced when National Treasury and SARS issued their official Response Document after hearing public comments on the draft tax Bills.

After its introduction, the proposal was included in the final Taxation Laws Amendment Bill tabled in Parliament on 28 October 2020. While affected taxpayers were pleased to learn of the relief, at this point the amendment was not yet law. It would have been unprecedented if the amendment were not approved by Parliament, but taxpayers could not make any assumptions before its promulgation.

In any event, those who will benefit from the amendment can now breathe a sigh of relief.

Efficient application
It is important to understand that you can leverage the exemption over multiple tax years. This principle, which can be referred to as “double dipping”, can be difficult to apply correctly.

This will particularly be the case in the context of the amendment because it is restricted to very specific periods. But it still applies, and taxpayers must plan proactively to ensure they use the exemption correctly and to their greatest benefit. 

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

​

With COVID-19 burdening the economy and SARS seeking to increase its revenues however it can, organisations with misconceptions about how certain payroll elements should be taxed may unknowingly be exposing themselves financially.
​
Says Tanya Tosen, Tax and Remuneration Specialist at Tax Consulting South Africa: “We often come across the following top five payroll errors that organisations need to question and correct to mitigate any risks associated with them.”

Did you apply the 80/20 rule of travel?
There are two main rules for taxing an employee’s travel allowance. Either 80% of their mileage is for business purposes, and the remaining 20% is subject to tax. Or, only 20% of their travel is business related, and the remaining 80% must be taxed.

Although employees prefer the lower inclusion rate, a company that applies the wrong rate may be understating their monthly PAYE liability, thereby exposing the organisation. “Payroll must insist on an accurate log book and analyse its entries to ensure the correct inclusion percentage for tax purposes is used,” advises Tosen.

Are your company cars leased or not?
When an employee uses a company vehicle held under an operating lease, as defined in the Income Tax Act, they are taxed on its monthly lease value plus fuel provided for that vehicle every month. However, in any other case, the determined value of the vehicle should be used to calculate the fringe benefit value and the result may be substantially different.

“In practice, companies often neglect to differentiate between the use of leased and non-leased vehicles for tax purposes, and apply the wrong rule,” says Tosen. Again, this error may result in an undesired tax exposure.

Did you change the tax treatment to your PHI?
In the past, employees were afforded a tax deduction against their disability benefit contributions. If they became disabled, the payout was then taxed when paid out to an employee.

From 1 March 2015, however, new legislation required that monthly disability benefit premiums be taxed as a fringe benefit in the hands of the employee. If that employee then becomes disabled, their payout now becomes tax free in their hands.

“We continue to discover companies that have still not implemented this significant change on their payroll, and therefore are not withholding the tax they should, and are putting their organisations at risk with SARS,” says Tosen.

Are your retirement and risk benefits Approved or Unapproved?
The Retirement Reform that came into effect on 1 March 2016 now considers all company contributions to an employee’s retirement and risk benefits as a fringe benefit and should be fully taxed on payroll.

However, the main proviso is to differentiate between Approved and Unapproved benefits which will determine whether a corresponding tax deduction can be applied on payroll subject to certain limits.

Whether a retirement benefit is Approved or Unapproved is determined by the way its associated fund is administered as well as the rules of the fund, which will also dictate its tax treatment. Employers can easily obtain this information from their broker.

Unfortunately, many are still unaware of this distinction and have yet to update their payroll systems accordingly.
“In that case, a substantial PAYE deficit could already have accumulated against them,” says Tosen.

Are you wary of changing remuneration models?
A big misconception among employers is that changing their company’s remuneration model would also require a major adjustment to calculating their tax obligation. This is not true.

South African organisations generally favour either a Basic Plus or Cost-to-Company structure. Regardless of which they choose, tax is applied to individual payroll elements. Changes to any element will determine whether an employee pays more tax or less in either model.

“Because the tax treatment ultimately stays the same, companies should not hesitate to move to a remuneration structure more appropriate to their needs,” says Tosen, who recommends a Cost-to-Company with Flexible Benefits structure during COVID-19.

Getting payroll right
Tosen encourages organisations to ensure a thorough independent audit of their payroll function is carried out regularly. This will allow them to identify and correct faults like those encountered above.

“Where a company finds they are non-compliant, they can apply for leniency under SARS’ Voluntary Disclosure Programme (VDP), but they must act swiftly to avoid further complications which may have detrimental financial repercussions,” she says.


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

Authored by: Jean du Toit, Head of Tax Technical at Tax Consulting SA
​
The President has given effect to the 2020 tax proposals by signing three tax Acts into law. On 15 January 2021, the President gave his assent to the Rates and Monetary Amounts and Amendment of Revenue Laws Act No. 22 of 2020 (“Rates Act”), the Taxation Laws Amendment Act No. 23 of 2020 (“TLAA”) and the Tax Administration Laws Amendment Act No. 24 of 2020 (“TALAA”). These Acts were promulgated on 20 January 2021.

The Rates Act gives effect to changes in tax rates and certain monetary thresholds, whereas the TLAA and the TALAA contain more profound technical and administrative changes. Highlighted below are 10 key changes taxpayers need to know.  

1.Withdrawal of retirement funds upon emigration
From 1 March 2021, taxpayers will no longer be able to access their retirement benefits upon completion of the emigration process through the South African Reserve Bank, commonly referred to as “financial emigration”. After this date, taxpayers will only be able to access their retirement benefits if they can prove they have been non-resident for tax purposes for an uninterrupted period of three years. Importantly, taxpayers can still access their retirement benefits under the old dispensation if they file their financial emigration application on or before 28 February 2021. If you miss this deadline, your retirement benefits will be locked in for a period of at least three years

2.Anti-avoidance rules bolstered for trusts
The anti-avoidance rules aimed at curbing tax-free transfers of wealth to trusts have been strengthened to prevent persisting loopholes. The amendment is directed at structures where individuals subscribe for preference shares with no or a low rate of return in a company owned by a trust connected to the individual. Ongoing changes to these rules again bring into question the thinking that trust structures are tax efficient.

3.Reimbursing employees for business travel expenses
Employees are not subject to tax on an amount paid by their employer as an advance or reimbursement in respect of meals and incidental costs where the employee is obliged to spend a night away from home for business purposes, provided it does not exceed the amount published in the Government Gazette. The TLAA includes an amendment which extends the treatment to expenses incurred on meals and other incidental costs while the employee is away on a day trip. It is important to note that this will only apply if the employer’s policies expressly make provision for and allows such reimbursement.

4.Relief for expats confirmed
Due to the travel restrictions under the Covid-19 pandemic, the days requirement for the foreign employment exemption has been reduced from 183 days in aggregate to 117 days. The relaxation only applies to the aggregate number of days and the requirement that more than 60 of the days spent outside South Africa must have been consecutive remains applicable. This amendment is not a permanent fixture and will only apply to any 12-month period for the years of assessment ending from 29 February 2020 to 28 February 2021.

5.Employer provided bursaries
The Income Tax Act makes provision for the exemption of bona fide bursaries or scholarships granted by employers to employees or their relatives. Historically, employees used this exemption as a mechanism to structure their remuneration package to reduce their tax liability. The exemption will no longer apply where the employee’s remuneration package is subject to an element of salary sacrifice; that is where any portion of their remuneration is reduced or forfeited as a result of the grant of such a bursary or scholarship. 

6.Tax treatment of doubtful debts
The doubtful debt allowance provision has been amended to bring parity between taxpayers that apply IFRS 9 and those who do not. Where the taxpayer does not apply IFRS 9, the amount of the allowance is calculated after taking into account any security that is available in respect of that debt.

7.Roll-over amounts claimable under the ETI
The Employment Tax Incentive Act has been amended to encourage tax compliance. The amendment determines that excess ETI claims of employers that are non-compliant from a tax perspective will no longer be rolled over to the end of the PAYE reconciliation period.

8.Estimated assessments
The terms under which SARS may issue an assessment based on an estimate has been expanded. SARS may now issue an estimated assessment where the taxpayer fails to respond to a request from SARS for relevant material. The amendment also bars the taxpayer from lodging an objection against the estimated assessment until the taxpayer responds to the request for material.

9.SARS can withhold your refund if you are under criminal investigation
In terms of the Tax Administration Act, SARS is entitled to withhold refunds owed to taxpayers in certain circumstances. The TALAA expands these provisions to determine that if you are subject to a criminal investigation in terms of the Tax Administration Act, SARS is entitled to withhold any refund it owes you, pending the outcome of the investigation. 

10.Criminal sanctions for minor tax offences
Previously, a taxpayer would only be guilty of a criminal offence for non-compliance under the Tax Administration Act if they “wilfully” failed to comply with their tax obligations. With the new amendments, non-compliance will constitute a criminal offence where it is as a result of the taxpayer’s negligence. In other words, intent is no longer required; where you are non-compliant as a result of ignorance of your obligations, you may be found guilty of a criminal offence. These offences are subject to a fine or imprisonment of up to two years.

Final comments
Taxpayers need to speak to their advisors to understand these changes and special heed must be paid to the administrative changes that are now law. The most important change that applies to all taxpayers is the one that criminalises negligent non-compliance. This and other administrative changes mean that taxpayers will be held to a higher standard, which serves as a cue for everyone to take ownership of their tax affairs.
​
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

South Africans living or working abroad can no longer avoid the long arm of SARS. Under pressure to meet its revenue quotas, the tax authority has started auditing the country’s non-compliant expatriates in earnest.

“We have been warning expatriates that this was coming and now that it’s here, the time for hiding one’s head in the sand is over,” says Jonty Leon, Legal Manager (Expatriate Tax) at Tax Consulting SA.         

He advises those intending to relocate to another country to follow the formal exit procedures and, most importantly, ensure their tax affairs are in order beforehand. He also advises that those that have already left permanently, should ensure that they have done so in a compliant manner, and have had themselves noted as non-resident for tax purposes.

Gone, but not forgotten
Whether a South African must declare their worldwide income and pay tax on it to SARS is determined by their tax residency status, not their physical location or period outside the country. Leon states, “Tax residency of South Africa is not determined solely on the amount of time spent in the Republic, this is a far more complex issue which must be technically dealt with in terms of the law.”

The safest route to remove ambiguity on tax residency status is to follow the formal financial emigration process. This process is being changed and a new more stringent regime will be implemented from 1 March 2021.  

This may come as a shock to those who believe that, once they set foot on foreign soil, they are free from any further tax obligation to South Africa. More so for those who left the country without settling their tax debt, even if they have been gone for decades.

“With stricter legislation to back its efforts and an emerging system of global financial data sharing as wind in its sails, SARS is more than capable of detecting taxpayers who historically flew under its radar,” says Leon.

The warning signs
According to Leon, several warning signs arose over the past year.

The first was changes to the expatriate tax laws that came into effect on 1 March 2020, soon after SARS launched its dedicated Foreign Employment Unit, which is focused on South Africans working abroad.

The second warning was the announcement that the current financial emigration law would be amended, which in the past has been successful in confirming with SARS and SARB one’s non-resident status. The change will inherently make it more difficult to cease tax residency and with a new and, as yet, undisclosed replacement process on the horizon, there has been a massive influx of applications to beat the deadline. 

The third sign was the removal of the term “wilfully” from the Tax Administration Act when dealing with non-compliance, giving SARS greater leverage to prosecute anyone claiming negligence when failing to meet their tax obligations. This is in line with the reasoning for the change in the expatriate tax legislation previously, where the rife tax non-compliance of South Africans abroad was noted during Parliamentary sessions in August 2017.

Lastly, SARS has begun a two-pronged attack strategy:
-          Firstly, through audits calling for individual expatriates to prove they are non-residents and justify their intentions – some audits calling for proof that the taxpayer had obtained an Emigration Tax Clearance Certificate when leaving South Africa; and
-          Secondly, by audits on offshore income revealed through the common reporting standard (CRS). According to Leon, this comes as no surprise, as SARS is targeting those who have historically been able to “hide” assets and funds, but which will no longer be possible due to the exchange of information between jurisdictions.

Options
Leon says South African expatriates and those wishing to emigrate still have several options available to them.

For one, they can urgently apply for financial emigration until March 2021. “National Treasury confirmed that applications submitted prior to that date will be processed under current legislation,” he says.

They can also take advantage of any double tax agreement between their chosen country and South Africa. As the tax implications of such agreements vary between jurisdictions and the fact that these agreements do not apply automatically to the taxpayer, they should seek advice from an expatriate tax expert.

Above all, if an expatriate is not tax compliant, they can approach SARS under the Voluntary Disclosure Programme to pay their back taxes along with interest and penalties but without prosecution. This process must also be undertaken very carefully, as specific requirements must be met.

“SARS has the advantage now, so waiting to see what happens is a course of action I do not recommend,” says Leon.

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

The Department of Higher Education and Training (DHET) has submitted its preliminary Critical Skills List to the Department of Home Affairs (DHA) for review.

“The list is publicly available from the DHET’s website and companies should start reviewing it in anticipation of a round of public commentary before it is finalised,” says Marisa Jacobs, Managing Director at Xpatweb.

Jacobs confirmed that Xpatweb’s own research was used as a refence of input for the DHET Occupations in High Demand (OHID) report and, subsequently, informed the preliminary Critical Skills List by the DHET.

Availability
The current Critical Skills List was published in 2014. Significant macroeconomic events have affected the country’s foreign skills demand since then, like the advent of the Fourth Industrial Revolution and the impact of COVID-19. This makes the new list vital to enabling the recruitment of emerging business-critical talent internationally to promote economic growth.

Jacobs anticipates that, with the recent publishing of the OIHD report from the same research base, the momentum of that work will carry forward to the finalisation of the new Critical Skills List.
“The new List is likely to be published in early 2021,” reports Jacobs.

Exclusions
Notably, several occupations on the current Critical Skills List have been excluded from the preliminary list. These include corporate general manager; risk assessor; certain ICT designations; electrical and chemical engineer; toolmaker; pressure welder; boilermaker; certain trades, such as millwright, pipefitter, double-coded welder and rigger; foreign language speaker; and business analyst.

This may concern employers who have difficulty sourcing these skills locally. Visas for foreign nationals listed on the Critical Skills List are typically processed two to six months faster. This puts companies who urgently need to replace scarce workers not on the List at a disadvantage.

“To make their needs heard, organisations must provide feedback proactively as the opportunity to comment becomes available,” says Jacobs. This will ensure the finalised list aligns with actual national business requirements.

Input
As the only private company invited to present its findings in an interdepartmental session to develop the OIHD, Xpatweb provided research from its own Critical Skills Survey, taken annually over the last five years. This research is also incorporated into the DHET’s preliminary Critical Skills List.

Jacobs believes Xpatweb’s participation can be attributed to the quality of its Survey data. “Of the 32 occupations listed in our report, 24 were already included in the preliminary List, so there was a significant complementary overlap in the research” she says.

The Survey provides a channel for organisations to pre-emptively participate in initiatives like the development of the national Critical Skills List. “Instead of waiting for the public comment process, they can contribute to the early stages of policy formulation,” says Jacobs.

Conclusion
Jacobs urges organisations to become active players in the final Critical Skills List. “This will help ease immigration constraints that may limit access to occupations essential to economic growth,” she says.

She also commends the DHET and DHA for their outstanding work and for openly engaging the private sector.

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/

​

Authored by: Jean du Toit, Head of Tax Technical at Tax Consulting SA

The days where SARS shuts its eyes to taxpayers’ offshore holdings are thing of the past. SARS is finally utilising the Automatic Exchange of Information regime to pin down taxpayers who have not disclosed their offshore interests and numerous taxpayers have already received some alarming notices to this effect.

The notice
The notice informs the taxpayer that SARS intends to initiate a review of their tax affairs, based on information it received from 87 foreign jurisdictions through the Automatic Exchange of Information, regarding the offshore holdings of South African taxpayers.

After recovering from the shock of the introductory words of the notice, SARS extends an olive branch and states that it wishes to engage with the taxpayer first, in the interests of administrative justice. The consolation is short-lived though because SARS then proceeds to direct a detailed and onerous information request at the taxpayer.

This starts off with a request to confirm that you have offshore holdings and then requires detailed information regarding the amount invested, the nature of the investment and the location thereof. The final question asks the taxpayer to explain why this was not disclosed on their tax return.

As if SARS knows your next move, the notice asks the taxpayer to inform them in the response if they intend to file an application under the SARS Voluntary Disclosure Programme (“VDP”).

The notice signs off by reminding the taxpayer that they have 21 working days to respond to this Gordian knot of a request and reminds you that a failure to do so constitutes a criminal offence.

What to do next
It is perplexing that SARS almost invites taxpayers to do a VDP, even after they have received this notice. It is critical to note that a VDP application must be “voluntary”, otherwise it does not meet the requirements of a valid VDP application under section 227 of the Tax Administration Act.

Technically, if the SARS notice prompts the taxpayer to come forth and file a VDP application, it may not be considered “voluntary”. It is not clear if SARS is making a concession on this aspect, but it would be very interesting to see if the VDP Unit will accept an application if it was filed pursuant to this notice.

In any event, it is important to note that the SARS notice does not give you the option to either respond or to file a VDP; it just asks you to confirm your intention. You are still very much obliged to respond to SARS’ queries. If you have received such a notice, you would be well-advised to speak to a professional, before you respond, especially if you have not disclosed your offshore interests to SARS.

First-mover advantage
If you have undisclosed offshore interests and you have not yet received this notice, then you have a small window to file a VDP application in the ordinary course. A timeous VDP application may avoid the unpleasant information gathering process initiated in terms of this SARS notice and provides you with amnesty from criminal prosecution and understatement penalties.

If you have an ounce of wisdom, this will be your immediate course of action. Be warned though, the VDP process may be the path of lesser resistance in this instance, but it should not be undertaken without the help of a professional.

deally, you should speak to an attorney who offers legal professional privilege and who is well-versed in this process.

Take away
For those with undisclosed offshore holdings, this should serve as a wake-up call. SARS now has the means and the guile to uncover your interests and, with prevailing budget constraints, SARS has no choice but to turn to untapped pools of revenue. It is no longer a question of if SARS will come knocking, but when.

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