Tag Archives: sars

How will the expat tax changes affect you?

How will the expat tax changes affect you?Legislation has been passed that will remove the current tax exemption available to South Africans employed abroad. Despite intensive lobbying, there can be no doubt that the tax authorities intend to push ahead with this tax. The tax comes into effect from 1 March 2020.

“A fine is a tax for doing wrong. A tax is a fine for doing well.” (Ecard humour)
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What You Need to Know about Tax Season 2017

“Giving money and power to government is like giving whiskey and car keys to teenage boys” (P.J. O’Rourke)

Once again tax season has opened for individuals, and whilst we can chuckle at jokes about the pain of paying taxes, they remain of course an integral part of life.

By now you should have already gathered all your supporting documentation. This is an important task as not getting your tax 100% correct can lead to queries and audits from SARS, which is clearly something to avoid. Whilst you won’t have to submit this with your tax return, you need to keep it available, for five years, in case SARS asks for it. Once an audit is open or if you must prove the item you need to retain documents for longer.

However, if you are going to do your return at a SARS branch, then bring all your documentation and your I.D. with you.

Documentation you will need is…
– Your IRP5. If you changed jobs during the year, you will have at least one other IRP 5. If you get any retirement funding, the relevant institution will send you an IRP 3 (a).

– IRP 3 (b) for any investment income received.

– Medical certificates from your medical aid plus any medical expenses incurred not covered by medical aid.

– A logbook if you receive a car allowance.

– Any retirement funding certificates received.

Any other documentation that will affect your return e.g. if you had a capital gain or loss during the tax year.
Check that the tax certificates you receive are correct and if you find an error, go back to whoever sent you the documentation and get them to issue a corrected certificate. SARS populate your tax return with information received from third parties (IRP5, IRP 3 etc) and the only way to change the populated data on your tax return is to get the tax certificates re-issued. This can be a very cumbersome process.

Read more news in our latest CA(SA)DotNews Newsletter.

You and Budget 2017

TAX INCREASES ARE NOW THE ORDER OF THE DAY

This budget is one of the most anticipated for many years with many questions still needing answers:

  • How will the expected tax increases pan out?
  • Will the Minister of Finance and his deputy keep their jobs?
  • Will the budget incorporate “radical economic transformation” which has become the President’s mantra in the past few months?
  • How will the ratings agencies view the budget and do we now face a ratings downgrade?

The tax increases

The Minister needed to raise R28 billion in additional revenue which will come from:

  • Increasing the marginal income tax rate from 41% to 45%. The maximum threshold will be reached when your taxable income exceeds R1.5 million. This will affect just over 100,000 taxpayers and is expected to add R4.4 billion to tax collections
  • Bracket creep will add R12.1 billion to tax revenue. “Bracket creep” means increasing marginal tax bands by less than inflation, thus giving the Treasury additional revenue and costing taxpayers more
  • Increasing dividend tax from 15% to 20% – adding R6.8 billion tax revenue
  • Increase in “sin” taxes and fuel levies – another R5.1 billion
  • “Sugar tax” will be introduced sometime in 2017 depending on when the legislation is passed by Parliament. The proposed rate of tax has been reduced from 20% to approximately 11%
  • Carbon tax has been on the cards for a while but looks unlikely to become effective until 2018.

In addition, the Voluntary Disclosure Program runs to 31 August. So far almost R4 billion in offshore assets has been disclosed and this will bring R600 million to the fiscus.

These increases should bring in more than R28 billion but Treasury is now nervous about the ability of SARS to continue to deliver increased revenue as it has done for years. In 2016/17 revenue collections are estimated to fall R27 billion short of target. Some ascribe this to the ructions in SARS which has seen the bulk of senior management departing but it is not possible to indefinitely increase revenue targets, particularly when the news is filled with stories about corruption. At some stage reality kicks in and that is happening now.

Treasury will now carefully need to rethink tax policy and that taxes like a VAT increase cannot be deferred much longer. Already consideration is being given to adding VAT to the fuel price (it is currently zero-rated).

Read more news in our latest CA(SA)DotNews Newsletter.