Amendments for Value-Added-Tax (VAT), Corporate Income Tax (CIT) and tax practitioners.
This publication, being the fourth edition newsletter, follows the Medium–Term Budget Policy Statement (MTBPS) delivered by the Honorable Finance Minister Enoch Godongwana. The positive news is that it seems like South Africa has retreated from a fiscal cliff, as businesses are on the recovery trajectory. Treasury plans to provide debt relief for Eskom, in the hope of easing its current financial pressure, which will in turn benefit businesses that bear the most brunt when it comes to power cuts.
This edition focuses on amendments for Value-Added-Tax (VAT), Corporate Income Tax (CIT) and tax practitioners.
Using a non-registered tax preparer
The Tax Administration Act (2011) has been amended to require tax practitioners to register with a Recognised Controlling Body (RCB) and SARS. A tax practitioner should be properly qualified, registered and be issued with a practice number to manage your tax affairs.
These are the controlling bodies recognised by SARS:
- Chartered Institute of Management Accountants (CIMA)
- Chartered Governance Institute of Southern Africa (formerly CSSA)
- Financial Planning Institute (FPI)
- Institute of Accounting and Commerce (IAC)
- SA Institute of Chartered Accountants (SAICA)
- SA Institute of Professional Accountants (SAIPA)
- South African Institute of Taxation (SAIT)
- The Association of Chartered Certified Accountants (ACCA)
- Southern African Institute for Business Accountants (SAIBA)
Tax Practitioner registration status can be verified by SMMEs on the SARS website www.sars.gov.za. Taxpayers must click on “Tax practitioners > Confirm TP registration.
Tax Practitioners have a duty to represent taxpayers honestly and effectively, thus taxpayers must report any unprofessional conduct by Tax Practitioners.
Tax Practitioners must be reported if:
- They are not registered as a practitioner, yet operate as such;
- Their conduct is unprofessional;
- Their conduct is unlawful; and
- They do not act in the taxpayer’s interest, given that the taxpayer’s interest is reasonable and within the law.
Vat Obligations for SMMEs
A person can only register for VAT if they are running a business. Any activity carried on continuously, regularly or partly by any person in South Africa, that results in income from the supply of goods or services, is defined as an enterprise. There are two types of VAT registrations, namely:
- R1 million in sales for the last 12 months
- Will exceed R1 million – contractual obligation (effective 1 April 2014)
- R1 million for non-resident suppliers of certain electronic services and intermediaries (effective 1 April 2019)
- R 50 000 sales for the last 12 months
- Not yet made any taxable supplies, or who made less than the R50 000 threshold and is reasonably expected to meet the sales after a period of 12 months in terms of regulations (effective 1 April 2014).
NB: You are required, within 21 days, to inform the South African Revenue Service (SARS) of any changes in your registered particulars, including any change in your representative, business address, banking details, trading name or if you cease trading.
There is a new insert in Section 23 which deals with the registration of vendors, which was introduced to prevent unnecessary registrations, costs and administrative burdens to non-resident providers of electronic services, intermediaries, and SARS.
New Insertion Reads as follows, “Provided that such person shall not be liable to register where the said total value of supplies made by that person has exceeded R1 million in any consecutive 12-month period a consequence of abnormal circumstances of a temporary nature”.
- DECLARATION/ SUBMISSION AND PAYMENTS
VAT Registered SMMEs must submit a VAT Declaration (VAT201), which is a prescribed declaration form used by vendors to declare the input and output tax of the goods or services rendered during a specific tax period. Vendors are encouraged to register for eFiling, as it is an easier way to submit their VAT201 declarations and payments. If vendors continue to submit their VAT201 declarations manually, they must do so by the 25th of the month, whereas vendors who use eFiling can do so until the last business day of the month.
A vendor who has ceased trading and wishes to deregister must submit a written request to SARS by:
- Sending an email to firstname.lastname@example.org if they are Tax Practitioners, or email@example.com if they are taxpayers; or
- In person by appointment at a SARS branch.
TAX Compliance Status (TCS) Verification
The TCS online verification facility allows institutions, to verify the taxpayer’s compliance status. The service is secure and can only be accessed with the permission of the taxpayer, who is the holder of the PIN (which is provided after the application). The taxpayer gives permission to an institution to confirm his/her compliance by providing his/her tax reference number and the PIN to the institution. This allows the institution to access the secure facility, to confirm the tax compliance of the taxpayer. TCS verification can be obtained on SARS eFiling and Online Query System via the SARS website.
Corporate Income Tax (CIT)
DISCONTINUATION OF THE SUPPLEMENTARY DECLARATION FOR COMPANIES OR CLOSE CORPORATIONS (IT14SD) FORM: 16 SEPTEMBER 2022
From 16 September 2022, SARS no longer requires taxpayers to submit the Supplementary Declaration for Companies or Close Corporations (IT14SD) when identified for verification.
- This means that when a company is identified for verification, the taxpayer will be notified of the verification (the current norm), and will be requested to submit specific relevant documents based on the reason for the verification or to submit a revised ITR14 return by doing a request for correction (RFC).
- To comply, the taxpayer needs to upload the requested documents via eFiling, or any other submission channel, including the SARS Online Query system (SOQS).
- The taxpayer is still required to provide the relevant documents within 21 working days.
- If the taxpayer still does not comply with the request for relevant documents, SARS will raise a revised assessment to resolve the verification case and will add back the related expenses, dependent on the specific relevant documents requested.
- The verification of a company always requires the submission of a signed set of Annual Financial Statements (AFS), as well as a detailed Tax Computation and the underlying supporting documentation/schedules (e.g. Tax pack).
SARS has several payment options available for SMMEs to pay SARS, these include:
- At a bank, remember to quote the correct beneficiary ID and payment reference number (PRN) if using this option.
- Via eFiling. SMMEs are encouraged to set up a credit push option or use one of SARS’ complementary methods of payment. With a credit push, the payment is performed by you, the bank account holder. When you make a payment to SARS, eFiling will send a payment request to your bank, which will reflect the amount that needs to be paid on the relevant bank product. You must authorise this request normally via the applicable bank product. This forms an instruction to the bank to make the payment to SARS.
- Electronic Funds Transfer (EFT). Payment may be made via internet banking facilities by simply using the standard drop-down listing of pre-loaded beneficiary IDs provided by the bank. All SARS beneficiary IDs are prefixed with the naming convention “SARS-”. All internet payments must be appropriately referenced to ensure that SARS is able to identify your payment, and correctly allocates it to your account. You will not be able to make a payment if your reference is incorrect.
- At a SARS Customs branch. Travellers are permitted to make cash payments at Customs ports of entry and exit. Cash payments from traders are not accepted.
- Foreign Payments This payment method should only be used by foreign SMMEs where no other payment options or channels are accessible e.g. where the option to pay using eFiling, internet banking (EFT) or payment at a bank is not available.
SMMEs who are unable to make a full payment at once must immediately contact SARS to request a payment arrangement to settle their debt through instalments. In certain circumstances, a compromise may be requested on your outstanding tax debt. You will need to discuss your financial position openly with SARS.
Payment arrangements can be made via SARS eFiling, or a request to debt management on the following e-mail address Sarsdebtmanagement2@sars.gov.za
Security Update on E-Filing
SARS has rolled out additional security features due to an increase in incidents of cyber fraud cases reported to SARS.
Previously, the one-time pin (OTP) was used as a security feature for sensitive transactions such as login retrieval and resetting of passwords.
SARS extended the OTP (key updates done on the RAV01 form) to:
- Security Contact Details(individuals); and
- Bank Details (any authorised user as per RAV rules)
Available Tax Education materials
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Free tax workshops in regions are regularly published.