Authored by: Melani du Toit (CA S.A.) Senior Accountant and Christopher Renwick (LLB) Tax Attorney at Tax Consulting From the 7th of December the South African Revenue Service (SARS) will be implementing their new approach to use information supplied by the Companies and Intellectual Property Commission (CIPC) to determine which companies are not tax compliant and impose penalties accordingly. The national revenue collector issued an official notice to registered accountants and tax practitioners’ during October to confirm Fabian Murray, acting SARS chief officer’s announcement of the implementation of the new line of attack earlier this year. The notice, which is signed by acting SARS commissioner Mark Kingon, states that administrative penalties for late Corporate Income Tax (CIT) returns will be imposed on over 300 000 companies. Such penalties can range from R250 to R16 000 per month of lateness. It is a well-known public fact that SARS is short on collection, and as the Tax Administration Act determines a penalty per month of lateness, this will boost their collection. The law also looks at when a company should have been registered for tax. For instance, if you opened a company five years ago and never registered it, the minimum penalty is R250 x 12 months x 5 years = R15,000. However, this minimum penalty is only applicable in instances where a company was dormant, as the law still demands CIPC and SARS compliance. Where a company is active, depending on various factors, the Tax Administration Act will determine the level of penalties applicable. What should you do if you feel nervous The directors of companies that are found to be not tax compliant, should rightly feel uneasy, as SARS will undoubtedly come after them personally, especially where the company does not have means to pay penalties, or plainly ignores it. There are very clear company law provisions creating a personal liability against being reckless and delinquent on statutory duties. Therefore:
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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Authored by: Christopher Renwick, Attorney at Tax Consulting
More than a year after the Ombud’s rather critical report on the South African Revenue Service’s (SARS’) value-added tax (VAT) refund structure was issued, frustration among taxpayers has been intensified by the revenue service’s excessive verification demands, which seem to be driven by the aim to delay legitimate VAT refunds. The most brazen example brought to our attention, was when SARS withdrew money from a taxpayer’s bank account without following due procedure. Upon proving his case, the taxpayer was owed the funds back and a refund was due. SARS immediately requested a verification of bank details. Let me repeat that. SARS requested a verification of bank details from an account they had just drawn funds from. Holding horses Two possible conclusions can be drawn from this practise. Either, SARS officials aren’t properly equipped in their duties or the verification request was deliberate in an attempt to delay a refund. Reviewing the example above, we will let you decide. The biggest aspect of tax that seems to be subject to excessive requests for verification is the area of Value-Added Tax (VAT). The frustrations arising out of SARS’s verification process on VAT not only aggravates the taxpayer but also endangers the livelihood of the enterprise they operate. Particularly we have found that, when refunds start exceeding the R1-million amount, the process becomes somewhat further drawn out. Fraud is real It is common knowledge that SARS’ verification process is to prevent fraudulent VAT claims. In a modern world with modern criminals, fraud is a real concern. The integrity of the VAT system needs to be protected and no doubt SARS has the full support of the taxpaying community in preventing fraudulent depletion of Treasury funds through fraudulent VAT claims. No need to add to the ongoing political looting that is the talk of the town currently. Kicker What is to be done though, where SARS has no basis for a request for verification and yet persistently requests same? For those throwing their hands in the air right now, I understand your frustration. Why should your legitimate VAT refund be delayed? The short answer is, it shouldn’t. At least, that’s what the Ombud said. The Nugent Commission is likely to come to the same conclusion. Refunds are being delayed because, ultimately, SARS doesn’t want to pay them. It affects the collection figures. Probably also affects performance bonuses too? What should you do? In our experience, the easiest route is to go direct. To call SARS to order and get a response. Too many taxpayers believe that, once their refund is within the system that is SARS, there is no hope and it becomes a wait and pray type of game. How do you go direct? You use your years of experience and expertise to garner a result. If you’re short on these, contact a professional. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@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 Afric New Critical Skills List due April 2019
In a recent statement by President Cyril Ramaphosa on economic stimulus and recovery plan for South Africa, he said that Government is decisively and rapidly accelerating the implementation of key reforms that will unlock greater investment in important growth sectors. Following the President’s address, the Minister of Home Affairs, Malusi Gigaba, briefed the media on the amendments to the visa regulations. While some of the changes, such as the visa requirements for highly skilled foreigners being revised, was well-received news, some of the reportedly “new” changes were implemented in South Africa years ago. “Foreigners studying to pursue a critical skill qualification in South Africa have been able to apply for permanent residency since 2016. Similarly, business people from BRICS countries have been able to obtain business visas that are valid for up to 10 years since 2014. These directives work well, but they are not new,” Marisa Jacobs, Director and Head of Immigration and Mobility at Xpatweb, points out. New critical skills list Arguably the most welcome visa regulation revision to promote foreign investment and encourage migration is the changes that are being planned to the critical skills list. Gigaba announced that the Department is currently engaging with respective Government Departments and business sectors for their input. The new critical skills list is expected to be released in April 2019. “Businesses have the opportunity to provide input on the critical skills list. As such, HR professionals, recruiters and business owners are encouraged to ensure they take this opportunity to provide input on the skills that they are most struggling to source locally. This will allow organisations to attract foreign workers to South Africa and compete for talent,” says Jacobs. To aid local businesses and provide a platform for business to collectively give their input to the Department, Xpatweb has launched the 2018 Critical Skills Survey which takes less than 5 minutes to complete. The results will be submitted to Home Affairs and Parliament concerning the White Paper on International Migration and the Department of Higher Education and Training’s National List of Occupations in High Demand. “Now is the time for the private sector to make sure the skills they need are on the list and make use of the opportunity shape law,” adds Jacobs. Some of the skills that Jacobs expects to either stay on the current critical skills list or to be added include highly skilled senior finance executives such as CFO’s, C-suite senior executives as well as a variety of skills in the ICT sector. The Corporate General Manager category is expected to be removed and replaced with more defined roles. “There is a skills shortage in South Africa and we are competing globally for these skills. For the economic stimulus and recovery plan to work, South Africa needs to attract critical skills more easily. Revising the critical skills list, coupled with revised visa requirements for highly skilled foreigners is a vital step to attract knowledgeable and experienced resources to our country,” concludes Jacobs. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za For more information on Xpatweb please visit: Website: http://www.xpatweb.com/ Authored by: Jean du Toit, Attorney at Tax Consulting SA
Despite the promising initiatives implemented under the South African Revenue Service’s (SARS) acting Commissioner Mark Kingon, its tribulations in meeting its collection targets have not yet waned, with payroll audits falling under its enhanced collection efforts to make up the shortfall. The simple reason behind SARS’s targeting of payroll when it needs extra taxes, is purely because of its tendency to contain errors. Not only are there many instances where mistakes can occur, but such mistakes are magnified by the size of a company’s payroll. In the case of a large payroll with many employees, even the smallest errors can leave a company with a large tax exposure, as these errors are proliferated across the employee base. In other instances, inexperienced payroll administrators simply do not know the law, which results in glaring errors such as failing to tax fringe benefits or paying lump sums without getting tax directives. The truth is that SARS will find something, and most employers only become fully compliant once they have gone through the ordeal of a payroll audit conducted by SARS. Rising Trend As if the challenges of a payroll audit are not daunting enough, a new trend has become apparent that makes it increasingly difficult to get a clean bill of health from the SARS audit team. Rather than identifying specific items that were inaccurately treated on payroll, SARS has now turned its gaze to the financial statement aspect of payroll. These statements are assessed by SARS for an understatement or short payment of employees’ tax purely on the basis that there is a discrepancy between the company’s payroll reconciliation and the cost of employment as reflected in the company’s annual financial statements. This is despite SARS’ awareness that not all amounts reflected in the annual financial statements under cost of employment should be processed to the payroll. Nevertheless, the onus is placed on companies to dispute this and to explain why the amounts making up the difference is either exempt or not taxable. SARS is using this to get around the prescription periods to raise audits going back more than five years, maintaining that there is an element of fraud or misrepresentation when the taxpayer declared its employees’ tax to SARS. Unblemished payroll Given the ease with which SARS can collect revenue by targeting payroll taxes, a head-in-the sand approach is ill-advised and will end in calamity. SARS will come knocking and the best defense is to ensure that your company’s payroll is unblemished and, if there are any issues, to submit a voluntary disclosure programme application before SARS institutes an audit. There is no escaping an audit, the best course of action therefore, would be to ensure that your company’s payroll is independently audited before SARS undertakes to do so. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@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 After becoming aware of an increase in payroll deductions in the past years, the South African Reserve Bank (SARB) and National Treasury have engaged in discussions with stakeholders on the creation of a regulatory framework to govern payroll deductions. The proposal was open for public comment until 30 April 2018.
The SARB and National Treasury want to implement a stable and effective payroll deduction regulatory framework that aims to benefit employees by protecting them from unfair lending practices, affords them the opportunity to access financing at reasonable rates, promotes savings and productive credit and minimises the risk of conflicts of interest. The regulatory framework further aims to be transparent, safe and efficient to sufficiently protect employees. The Options The SARB and National Treasury have proposed three options which will form the base of the proposed regulatory framework for payroll deductions. Option 1: Employers will have no access to voluntary payroll deductions. Only statutory, court order, collective agreement and arbitration award deductions will be allowed. “This is the least complicated option and the playing field will be levelled as no preferential treatment can be given to certain creditors or institutions,” says Craig Rocher from Tax Consulting South Africa. Employees will also be protected against unauthorised deductions. This option may however affect employee benefit programs where employers are providing employees with financial assistance and employees may lose the cost-effective advantage of paying through payroll. Option 2: Employers will have limited access to voluntary deductions, meaning that only a set of approved voluntary deductions will be permitted. According to Rocher “this option allows for deductions that are beneficial to employees, such as their mortgage payments, savings and retirement annuities.” This will however require adjustments to payroll systems and certain financial institutions may feel disadvantaged when their deductions are not allowed. Option 3: Employers will have unrestricted access to voluntary payroll deductions, meaning an unregulated payroll deduction system. Under this option all parties will have equal right to deduct from an employee’s salary and there will also be improvements in employees honouring their financial obligations. Employees will have a choice in who gets paid from payroll and who doesn’t. “Collection preferences may occur under this option as the employer will then need to decide the hierarchy of payments” according to Rocher. Employees may also be exposed to unfavourable contractual terms and it may be difficult for them to stop or dispute payroll deductions. How will it affect employees? Employees will be affected no matter which of the options is chosen in the end. “They may be subject to additional bank charges should voluntary deductions no longer be allowed, and it should be considered that many employees don’t have access to internet banking to make their monthly payments, there for creating a lot of additional administration for them” says Rocher. The benefits should however not be disregarded, as many employees are subject to unfair lending terms and unreasonable interest rates, leaving them with almost no nett pay to take home. The way forward The SARB and National Treasury will be taking the public comments received in April under consideration and the preferred regulatory option will be communicated to stakeholders. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za 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: Darren Britz, Attorney at Tax Consulting
With the wave of anti-SARS sentiment currently washing over South Africa, paying historical value-added tax (VAT) may be a hard pill to swallow. This has resulted in many companies understating or underpaying their VAT and subsequently incurring colossal penalties in addition to the tax payable. However, paying historical VAT remains the most sensible course of action for any business with longevity and reputation in mind. It is at this point where SARS’ Voluntary Disclosure Programme (VDP) comes in, affording the opportunity to any taxpayers with unpaid taxes, including income tax, pay as you earn (PAYE) and most importantly VAT. The blinding spot light In the tax realm, two topics continue to dominate the media spot light; namely SARS’ systemic delay of VAT refunds and the Nugent Commission’s airing of SARS’ dirty laundry. It is perhaps not difficult to understand why tax morality in South Africa is at an all-time low, and why businesses continue to underpay on their VAT liabilities to SARS. To add insult to injury, the Tax Ombud earlier this month announced a fresh investigation into claims that SARS are not playing fair in how they handle taxpayer’s disputes. Undoubtedly, this will add to the already slippery and sharply steep slope that is taxpayer morality. While the sentiment is well shared, there is a broader consideration which is continually left out of the conversation. I am referring to the end game: eventually, SARS comes out on top. Remember, it is a criminal offence for a company to fail to pay its VAT and directors also face risk of being held accountable. At the same time, no SARS officials have been held to account for their handling of taxpayer dispute and refunds. Not yet anyway. Collecting with determination Tax collections and SARS enforcement measures are by no means comparable with other facets of South African life, such as perhaps the collection of e-tolls payments and speeding fines, which everyday seem to be losing more traction. The collection mechanisms at SARS continue to operate, with varying tactics, including tough audits, quick court judgments and taking money directly from taxpayers’ bank accounts. In that regard, SARS has hit the accelerator in its VAT collections and has gone far beyond their denying taxpayers VAT refunds, albeit that the latter was confirmed by the Tax Ombud. VAT audits are occurring more frequently and with harsher outcomes for repeat offenders or in respect of significant tax liabilities which extends over several years. Penalties aren’t optional It should come as no surprise that outstanding VAT debts will accrue both interests, roughly 10 – 11% per annum as well as percentage-based penalties. While a standard 10% VAT penalty is more often imposed, a worst-case scenario, where SARS finds evidence of deliberate tax avoidance, will permit the imposition of a penalty up to 200% of the VAT payable. Of course, nothing prevents SARS from making the allegation of tax avoidance, so the cards in SARS’ deck are well stacked. It also goes without saying that audit findings and penalty impositions remain on your tax record and therefore there is a risk of remaining on SARS’ radar for future audits. Once a SARS auditor has smelled blood, expect a difficult, agenda driven audit. VDP Relief If we push through the anti-SARS, anti-taxpaying mania and consider the possible solutions open to taxpayers, SARS VDP is at the forefront. The relief afforded includes:
A successful VDP, in most cases, allows for full remission of penalties. This leaves then just the tax and interest payable which, while leaving a sting, permits a total regularisation of tax affairs and avoidance of criminal prosecution. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@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 Author: Christopher Renwick, Attorney with Tax Consulting South Africa
By now, most people know what Bitcoin, or cryptocurrency, is. Some have even bought and sold a few and more impressively, some have found out how to turn cryptocurrencies into a business. Then, there are the “miners”. Following a process that involves no actual hard labour or rock breaking, crypto miners can generate cryptocurrencies by performing very complex calculations with the help of large amounts of computing power and specialised equipment. For many miners, once the cryptocurrency is “minted”, the question of “sale or hold” arises. In other words, do they sell what they have minted, or do they simply retain it for the purposes of generating a long-term value? Of course, these decisions have a myriad of consequences, some of which go unconsidered. Paying Your Dues One of the more serious and often forgotten consequences of mining (and distributing) cryptocurrencies is the tax aspect and arising liability. More importantly however is that, where cryptocurrencies are concerned, the advice being given to miners, traders and holders of crypto’s is inconsistent, inaccurate and potentially damaging for the recipient of such advice. Predominantly, most tax professionals giving advice hereon appear to have taken the stance that all crypto sales result in a generation of revenue and therefore income tax is payable. Whether this is owing to extreme conservatism or a lack of understanding, the principle that all crypto sales lead to revenue is, often, incorrect. Long-standing Debate The test for whether proceeds received from cryptocurrency sales comes down to the much debated and heavily adjudicated argument of ‘capital versus revenue. Without digging into the debate and adding a voice to what is possibly the most saturated contestation in tax law, one quite simply cannot apply a blanket approach to all crypto disposals. SARS’ own website provides a differentiation between Capital and Revenue by stating: “Whilst not constituting cash, cryptocurrencies can be valued to ascertain an amount received or accrued as envisaged in the definition of “gross income” in the Act. Following normal income tax rules, income received or accrued from cryptocurrency transactions can be taxed on revenue account under “gross income”. Alternatively, such gains may be regarded as capital in nature, as spelt out in the Eighth Schedule to the Act for taxation under the CGT paradigm.” All factors need to be considered and specifically, the factors around crypto miners need special attention. Crossing the Rubicon There are those miners that sell upon minting crypto’s and those that hold them for lengthy periods. However, the advice being given to these miners is a complete blanket approach. Tax practitioners seem to be opting for the easiest route of advising clients that all proceeds being generated from crypto disposals are revenue in nature, effectively implying that every crypto transaction is part of a profit-making scheme. Only Caesar would benefit from such an approach. As a tax professional it is not reasonable to simply advise that all crypto-traders, miners and sellers should be subject to the same taxation standards. There are too many factors to consider with everyone to make a blanket judgement call. Consider the implications of advising a capital asset holder of the need to pay income tax on a disposal. The monetary difference alone is enough to raise the hair on the back of your neck. Not to mention the professional negligence. For those involved in the crypto sphere, it is necessary to make sure that the advice you are being given is both sound and informed. Consult two tax professionals or better yet, consult ten. Alternatively, save yourself all that run around and ask the right tax professional. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@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 Afric If we are to meet President Ramaphosa’s goal of boosting foreign investment and attracting skilled people to our country, we urgently need to optimise South Africa’s current visa application process, urges Marisa Jacobs, Immigration Specialist at Xpatweb.
She adds that South Africa needs to prioritise creating a more holistic evaluation process for skilled foreign workers and has to make sure their visa applications run smooth and seamless. “There are specific immigration and business challenges that exist for foreign groups within South Africa and I believe these challenges are hampering investment into the country. The long turnaround times and costs related to obtaining work visas for foreign nationals has been raised as a key area of concern for international companies looking to grow their footprints within South Africa, an issue that could have many positive consequences for our economy and people,” says Jacobs. Should foreign workers be forced to surrender their passports? The costs involved in securing employment visas to work in South Africa is high, particularly in certain visa classes that require the application to be made in the applicant’s home country. The costs of obtaining employment visas is further exasperated by the South African Embassy requiring foreign nationals to surrender their passports for the duration of the processing period. “When workers are forced to surrender their passports, they are rendered without a passport for the period that the South African High Commission takes to process the application. These applicants are then unable to travel during this period, which can impede their work commitments or personal travel needs,” explains Jacobs. Visa applicants not only wait long periods for their work visas, but the waiver and appeal application processes that they may need to pursue also regularly lead to prolonged waiting periods. “When comparing the waiting period as well as the requirements for work visas in South Africa to other countries, ours are considered onerous and burdensome. Besides the long waiting periods, visa applicants become frustrated with inconsistencies encountered when dealing with the various foreign embassies,” says Jacobs. Inefficient visa applications deter skilled foreigners Besides impeding foreign investment, these issues also extend to local companies who are looking to hire skilled workers from overseas. South Africa is currently competing with a myriad of other countries to attract and retain critical skills in sectors such as ICT, engineering,skilled trades, executives and medical professions to name a few. Burdensome visa processes could potentially deter skilled workers from taking up a work opportunity in the country. “When the Department of Home Affairs adjudicate visas for foreign nationals who are applying for critical skills positions in South Africa, they in many cases place too much emphasis on qualifications as opposed to experience even though the Act makes a clear distinction” says Jacobs. A person with 30 or 40 years’ experience in a profession may be overlooked if they don’t have the related qualification, which leads to local companies losing out on highly knowledgeable people. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za For more information on Xpatweb please visit http://www.xpatweb.com/ Author: Nicolas Botha, Tax Diagnostic and Financial Emigration Specialist at Financial Emigration Incorrect information and advice from tax practitioners, or in some cases South African Revenue Service (SARS) officials, has resulted in the misunderstanding of complex South African expatriate tax legislation, which has landed many South African in deep water with SARS. This has led to many expats being under the incorrect impression that their tax affairs are in order, as a tax practitioner is handling their financial matters. However, often further investigation reveals that tax submissions are in many cases incorrect, or at least partially so. This could lead to serious legal implications with SARS, should this not be rectified. Common Misconceptions Many expats are informed that should they meet a simple days-test (183-61 days) they are no longer required to file tax returns or do not need to declare their foreign income in South Africa. Many expats have therefor been incorrectly filling returns showing only South African sourced income; zero returns or in severe cases not filling returns at all. If you are a South African working abroad and have not formally ceased your tax residency you are legally required to submit tax returns every year declaring your worldwide income. Should you then meet the requirements of section 10(1)(o)(ii) of the Income Tax Act No.58 of 1962 you will be able to exempt tax on your foreign earnings. This section states: • 10(1) There shall be an exemption from normal tax- • (o) on any form of remuneration- • (ii) received or accrued to an employee during any year of assessment by way of any salary; leave pay; wage; overtime pay; bonus; gratuity; commission; fee; emolument or allowance, including any amount referred to in paragraph (i) of the definition of gross income in section 1 or an amount referred to in section 8, 8B or 8C in respect of services rendered outside the Republic by that employee or on behalf of any employer, if that employee was outside of the republic- • (aa) for a period or periods exceeding 183 full days in aggregate during any period of 12 months; and • (bb) for a continuous period exceeding 60 full days during that period of 12 months • And those services were rendered during that period or periods Meeting these requirements will afford you a full exemption on all foreign earned income during this period. However, as of the 1st of March 2020, an amendment made to section 10(1)(o)(ii) comes into effect, this places a R1-million cap per annum on the exemption. Thus, foreign income earned exceeding this cap will now be subject to tax in South Africa. SARS Won’t Find Out As of June 2017, South Africa joined the Common Reporting Standard (CRS), this was created to combat tax evasion and is the sharing of tax and financial information on a global scale. Currently there are 97 countries who have already joined the CRS, which includes the European Union; United Kingdom; Australia; Canada; China; Kuwait; New Zealand; Qatar; Saudi Arabia and the United Arab Emirates. Thus, all your global earnings are now being shared from various financial institutions and revenue authorities globally. This includes: • Names, addresses, tax numbers and identification numbers relevant to place of birth. • Bank account numbers. • Account balances for the relevant calendar year. • Any capital gains acquired from the sale of properties or investments. Therefore, when SARS cross references the information they are receiving from the CRS with what you have declared on your tax returns and the two do not align, expats could face implications ranging from penalties to criminal prosecution for tax evasion. Solutions Be prudent in your approach to your tax affairs, explore your options and don’t take any information at face value as ignorance is not a valid or legal defence. Seek professional advice from experts in the field of expatriate tax law and ensure that you understand the requirements that affect you. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za For more information on Financial Emigration please visit http://www.financialemigration.co.za/ Author: Christopher Renwick, Attorney at Tax Consulting SA
A trend of increased delays and frustration with the South African Revenue Service’s (SARS’) dispute resolution process, are becoming apparent among taxpayers and tax practitioners alike. The reasons for this appear to be numerous. The common, albeit perhaps slightly misplaced, view is that SARS is operating unfairly, however in my experience, often the frustrations come down to taxpayers being unfamiliar with the dispute resolution process and creating their own difficulties. However, as experts in the field, we have experienced several SARS officials dragging their feet. Don’t get me wrong. This is not the case across the board, that would not be fair to say. However, smoke and fire do go hand in hand. What should you do? What would be fair to say, or rather ask, is, what options you have if your matter stagnates, for whatever reason? The problem perhaps lies in the fact that SARS presides over its own process, and there are no cost implications for SARS if your matter crawls along. Do you continue to bash your head against the proverbial wall, approach the Ombudsman or cut your losses and run? For some, it would come as a surprise that an alternate option exists. Consider the Motion Court. The Motion Court The Motion court (for those not in the legal sphere) is a court held at the High Court of South Africa (ignoring the magistrates court for now) that follows court procedure and is presided over by a High Court Judge. Not only does the Motion court come with a highly skilled Judge, but also the added benefit of expediency. Where a trial date may be 18 months after application (in the Johannesburg High Court 2 years) a “motion date” may be less than 3 months from date of application. For those legal minded professionals reading closely, you are probably jumping on your chair and emphatically listing the differences between opposed and unopposed motions, the timing thereof and cost implications etc. While there are differences between the two, the principles of expediency, cost and judicial approach remain the same. It is important to add that, whilst you may be left powerless under the dispute resolution process, the High Court is bestowed with inherent discretionary power to grant you any appropriate relief that will solve your problem. An added sweetener is the fact that SARS may have to pay your legal costs as well. This all sounds picturesque and perhaps a little too good to be true? A Big Win Well, it would be if we had not just been successful in this very process. Without divulging any confidential information, we had the pleasure of assisting a taxpayer whose matter had been dragging for over a year. An information gap existed in the determination of the taxpayer’s tax liability and the information that was sought. However, SARS were not forthcoming with the information. On behalf of the taxpayer, we approached the Motion Court with two alternate prayers. The first prayer was a request that SARS issue the taxpayer with all the necessary information to allow the taxpayer to fully understand the exact origin of the liability raised against the taxpayer. I should probably mention the liability was sufficient for the client to consider the amount material enough to take action. The second (or alternate, for my legal colleagues) prayer was for the expulsion of the liability given that no grounds could be given to the taxpayer for the origin of the liability. Remember that information gap? In Closing Leaving the finer details of the motion and its ensuing arguments aside, the taxpayer came out on top and the alternate prayer was made an order of court. This means that the taxpayer’s liability was expunged. The cherry on top was that SARS was ordered to pay the taxpayer’s costs. What a victory for this taxpayer and with lessons perhaps, for all taxpayers burdened with stagnant matters that are suffering frustration. An alternative avenue for dispute resolution has presented itself to the tax paying community. Just make sure you take an attorney down the path with you. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@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 taxpayers 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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