The Minister of Finance, Mr. Enoch Godongwana, tabled his budget review on 21st February 2024. While tax revenue performed well in 2021/22 and 2022/23 due to high commodity prices, revenue for 2023/24 is now expected to fall short by R56.1 billion. Government has proposed tax increases totalling R15 billion in 2024/25 to alleviate immediate fiscal pressures, while limiting the impact on economic growth. The following were the key tax proposals:
Extract from an article by Lucinda Steenkamp, senior legal advisor CIPC.
Finance Minister Pravin Gordhan has unveiled a sweeping plan to overhaul the governance and management of state-owned companies, which he said have been plagued by corruption, inefficiency and poor performance. The plan, which was announced in his medium-term budget policy statement on Wednesday, aims to restore the financial viability and strategic relevance of the entities, which collectively have more than R1 trillion in assets and employ over 300 000 people.
The SARS PIT/PAYE journey to end state is to replace the current employees’ tax, provisional tax and assessment filing seasons for employers and individuals by a modern, fully automated process of near real-time tax liability estimation, withholding and paying to SARS of the correct tax due. This will be underpinned by a taxpayer account that reflects taxable events and 3rd party data in real time (or close to real-time), in a manner that allows SARS to transition all their value chain activities (like verification & disputes) to real-time.
The Companies First Amendment and Second Amendment Bill were tabled in Parliament on the 28 August 2023, and have been published. [The initial draft of the Companies Amendment Bill was published in 2018, followed by a revised draft Bill in 2021, both of which have undergone extensive public consultation and engagement].
The South African Revenue Service (SARS) has embarked on a digital transformation journey to modernise and enhance its tax administration capabilities. The aim is to improve service delivery, compliance, efficiency and effectiveness, as well as to combat tax evasion and fraud. Some of the key initiatives that SARS has implemented or is planning to implement include:
Employer Interim Reconciliation is part of the Filing Season. This year, the Employer Interim Reconciliation for Employers filing season starts on 18 September 2023 until 31 October 2023. During this period, all employers in both private and public enterprises must reconcile their Monthly Employer Declarations (EMP201). These reconciliations are based on the Monthly Employer Declarations (EMP201) submitted with the tax values of the interim IRP5/IT3(a)s certificates generated, accurate payroll information and employees’ tax (PAYE) payments made during the period 1 March 2023 – 31 August 2023. Thereafter, employers can submit an Employer’s Reconciliation Declaration (EMP501) to SARS.
In terms of the Companies Act, the business and affairs of a company must be managed by or under the direction of its board, which has the authority to exercise all of the powers and perform any of the functions of the company.
A living will is not the same as a last will and testament. A living will is a document that lets you express your preferences for medical care in case you become unable to communicate them yourself. A living will can help you avoid unwanted or unnecessary interventions, such as life support, resuscitation, or tube feeding, that may prolong your suffering or go against your values. A living will can also help your family and doctors make difficult decisions on your behalf, and reduce the potential for conflicts or disputes. A living will should be prepared separately from your last will and testament. Your last will and testament only takes effect after your death, while your living will takes effect while you are still alive but incapacitated.
SARS has increased the reporting requirements for trustees of resident trusts. As from the 1 September 2023, trustees, as representative taxpayers for a trust, are required to submit an IT3(t) form to SARS electronically – relating to the trust for which he or she acts as trustee. The IT3(t) will be due on the 30th September of each year in which the trust’s tax year ends. Trustees will be required to supply information about all distributions made from the trust to beneficiaries or other persons (in respect of any amount vested in a beneficiary including income (net of expenditure), capital gains and capital amounts distributed by 30 September during the preceding tax year of assessment, which ended at the end of February of the same year. In addition to the information about distributions, demographic information about the trust and beneficiaries will also be required to be submitted.
Progress reported in government and business partnership, with commitment to further accelerate key actions
The government and business leaders have announced the progress made in their partnership to address the most pressing challenges facing the country. The partnership, which was launched last year, aims to foster collaboration and innovation across sectors and regions, and to leverage the strengths and opportunities of both public and private actors. Some of the key achievements of the partnership include inter alia:
Knowledge of and compliance with both the common law and legislation is essential for good governance. Not only do directors need to make sure that they are maintaining the highest standard in respect of their duties, but they must also ensure that they are complying with the administrative provisions of other legislation, such as the Income Tax Act. In addition, it is important that directors have a working knowledge of the guidance provided in King IV ™.
The global economy showed signs of recovery in July 2023, as the effects of the COVID-19 pandemic and the trade tensions between the US and China eased. According to the International Monetary Fund (IMF), the world output grew by 4.5% year-on-year, compared to 3.8% in June. The IMF also revised its forecast for the global growth in 2023 from 5.2% to 5.6%, citing the improved vaccination rates, fiscal stimulus, and consumer confidence.
The Ministry of Finance has published the draft legislation for the "two pot" retirement system for comment. The draft legislation aims to implement the reform of the pension system that was agreed upon by the government and social partners in 2020. The "two pot" system consists of a mandatory basic pension that covers the minimum subsistence level, and a voluntary supplementary pension that allows individuals to save more for their retirement. The draft legislation also introduces incentives for longer working lives, such as a gradual increase in the retirement age and a bonus for working beyond the statutory retirement age. The Ministry of Finance invites all interested parties to submit their comments and suggestions on the draft legislation by August 31, 2023.
One of the duties of trustees is to maintain accurate and up-to-date records of the beneficial owners of the trusts they administer. Beneficial owners are those who have a direct or indirect interest in the trust property or who exercise control over the trust. The information that must be kept by trustees in relation to beneficial owners includes:
Taxpayers who have a dispute with the South African Revenue Service (SARS) can now benefit from new rules that aim to simplify and expedite the resolution process. The new rules, which came into effect on 1 July 2023, replace the previous dispute resolution rules that were in place since 2003.
Ms Yanga Mputa has been appointed as the new Chief Director of Tax Policy at the Ministry of Finance. Ms Mputa has a wealth of experience in tax administration and policy, having served as a senior manager at the South African Revenue Service (SARS) and as a tax consultant at PwC. She holds a Master of Commerce degree in Taxation from the University of Cape Town and a Bachelor of Accounting Science degree from the University of South Africa.
Since the establishment of Operation Vulindlela in October 2020, government implemented structural reforms to stabilise South Africa’s energy supply, establish a competitive logistics network, reduce the cost and improve the quality of digital communications and reform the visa regime to enable businesses to attract the skills they need to grow, and to make it easier for tourists to experience a world-class African destination.
In South Africa, idiosyncratic factors continued to weigh on domestic financial sector resilience and overall economic growth prospects. The most notable country-specific vulnerability is the increasingly detrimental and widespread ramifications of an insufficient and unreliable electricity supply, while concerns over the deteriorating South African rail and port infrastructure networks also continue to grow.
Filing of Beneficial Owner information is required by the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022. The Act amended the Companies Act and gave the Commission (CIPC) a mandate to request companies to file and update Beneficial Owner information. The Minister of Trade, Industry and Competition together with the Companies and Intellectual Property Commission (CIPC) have published Companies Amendment Regulations under Government Notice 48648 on the 24th of May 2023.
The General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act (no. 22 of 2022) came into force on 1 April 2023, and amends the Trust Property Control Act [as well as the Nonprofit Organisations Act (no.71 of 1997), the Financial Intelligence Centre Act (no.38 of 2001), and the Companies Act (no.71 of 2008)]. It is hereinafter referred to as “the Amendment Act”.
The tax implications for the leasing of property can be complex. For your information, we set out the basic TAX implications for the leasing of property.
When you apply for a Tax Compliance Status (TCS) in respect of foreign investment allowance for individuals, you are required to submit the following supporting documents: