New tax proposals have been signed into law by President Cyril Ramaphosa on 15 January 2021. There are a number of key changes taxpayers need to know, the most significant being that it is non-compliance is now a criminal offence. In the past, taxpayers would be guilty of a criminal offence if they “wilfully” failed to comply with tax obligations. Under the new Tax Administration Act, non-compliance as a result of ignorance is subject to a fine or imprisonment of up to two years.
More key changes:
– Your retirement benefits will be locked in for a period of at least three years if you fail to file for financial emigration by 28 February 2021. As of 1 March 2021, taxpayers emigrating from South Africa will no longer be able to access their retirement benefits, unless they can prove they have been non-resident for tax purposes for an uninterrupted period of three years.
– Tax-free transfers of wealth to trusts are controlled by strengthening anti-avoidance rules. Additional provisions relating to preference shares are now included.
– If an employer’s policies allow for reimbursement in respect of meals and incidental costs in the instance where an employee has to travel for business purposes, then the employee will not be subjected to tax on the amount paid, depending on employer remuneration policies.
– The Covid-19 pandemic has brought some relief for expats due to subsequent travel restrictions. The days required for foreign employment exemption has been reduced from 183 days in aggregate to 117 days. The requirement that more than 60 days spent outside South Africa must have been consecutive, remains in place.
– The exemption of bona fide bursaries or scholarships granted by employers to employees or their relatives, will no longer apply where the employee’s remuneration package is subject to an element of salary sacrifice.
– The doubtful debt allowance provision has been amended to bring parity between taxpayers that apply IFRS 9 and those who do not.
– 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.
– The terms under which SARS by issue an estimate has been updated. The amendment also bars the taxpayer from lodging an objection against the estimated assessment until the taxpayer responds to the request for material.
– SARS can withhold your refund if you are under criminal investigation, pending the outcome.
– Non-compliance under the tax administration act will now constitute an criminal offence even when as a result of taxpayer negligence. Thus intent is not longer required. If you are found to be non-compliant with tax obligations, even as a result of your own ignorance, you may be found guilty of an offence.
For more information and assistance if you are affected by the above regulations, contact firstname.lastname@example.org
We urge not only individuals, but all directors of companies, public officers and persons in fiduciary capacity toward entities to ensure they know their compliance status, and familiarise themselves with information related to their tax affairs.