Tax Season 2017 Now Open
Tax Season 2017 officially opened on Saturday, 1 July 2017 for eFilers. To assist you we have prepared some helpful information below.
Not everyone needs to file an income tax return. Taxpayers do not have to submit an income tax return if:
- Their total salary for the year before tax is not more than R350 000
- They only receive employment income from one employer for the full year of assessment
- They have no other form of income
- They don’t have any additional allowable tax deductions to claim
- Proof of income such as:
- IRP5/IT3(a) from your employer or pension fund
- Tax certificates for investment income IT3(b)
- Tax Free Investments certificate(s) IT3(s)
- Financial statements (e.g. for business income), etc.
- Proof of deductions such as:
- Medical aid contribution certificates and receipts
- Completed confirmation of diagnosis of disability form (ITR-DD) if you want to claim any disability expenses
- Retirement annuity contribution certificates
- Information relating to foreign tax credits withheld
- Travel logbook (if you receive a travel allowance or use a company car), etc.
- Non Provisional taxpayers – 24th November 2017
- Provisional taxpayers – 31 January 2018
- Manual – 22 September 2017
National Health Insurance (NHI) – Tax Credits to be forgone to fund?
Health Minister Aaron Motsolaedi recently announced that medical scheme members are likely to lose their tax credits to help pay for the first set of benefits to be rolled out under National Health Insurance. The recently gazetted white paper outlines the following funding scenarios as detailed in the table below:
Alternative tax scenarios in 2025/26 to fund a R71.9 billion (2010 prices) NHI funding shortfall
The most preferred option for revenue generation for NHI will be through Scenario B which is predominantly funded through general revenue allocations, supplemented by: (1) a payroll tax payable by employers and employees, and (2) a surcharge on individuals’ taxable income.
As the NHI evolves, the tax treatment of medical expenses and medical scheme contributions will be reviewed. It is also expected that there will be a reduction in the need for medical scheme contributions and/or the level of coverage required. The resulting saving in tax expenditure could help to reduce to proposed tax increases. With the implementation of NHI, the role of medical schemes in the health system must change. A key step in leading to this change is that the State will have to identify all the funding for medical scheme contribution subsidies and tax credits paid to various medical schemes and reallocate these funds towards the funding required for NHI.
What this essentially means is that the current tax deductions, which have a current annual tax saving of approximately R20billion per annum, will be forfeited once the NHI is implemented to fund its implementation.
We will keep you informed as this policy evolves.
Public Interest entities – Rule on Mandatory Audit Firm Rotation
On 2nd June 2017, the CEO of the Independent Regulatory Board for Auditors, Bernard Agulhas, published the rule on Mandatory Audit Firm Rotation (MAFR) for auditors of all public interest entities, as defined in section 290.25 to 290.26 of the amended IRBA Code of Professional Conduct for Registered Auditors.
The key elements are as detailed below:
- An audit firm, including a network firm as defined in the IRBA Code of Professional Conduct for Registered Auditors, shall not serve as the appointed auditor of a public interest entity for more than 10 consecutive financial years
- Thereafter, the audit firm will only be eligible for reappointment as the auditor after the expiry of at least five financial years
- The requirement is effective for financial years commencing on or after 1 April 2023. Therefore, if the audit firm has served as the appointed auditor of a public interest entity for 10 or more consecutive financial years before the financial year commencing on or after 1 April 2023, then the audit firm shall not accept re-appointment and will be required to rotate
- When the auditor determines that an audit client becomes a public interest entity, the length of time the audit firm has served the audit client as the auditor before the client becomes a public interest entity shall be included in determining the timing of audit firm rotation
- If, at the effective date, the public interest entity has appointed joint auditors and both have had audit tenure of 10 years or more, then only one audit firm is required to rotate at the effective date and the remaining audit firm will be granted an additional two years before rotation is required
- This provision will only be applicable at the effective date
Implementation of an automated Pay-As-You-Earn (PAYE) Dispute Management process
On 30 June 2017, SARS introduced an automated dispute management process for PAYE as part of their ongoing commitment to delivering a better service to taxpayers. The new automated system now enables employers to lodge disputes via eFiling and electronically at any SARS branch, manage their tax profiles better and have a consolidated view of all disputes lodged for Personal Income Tax, Corporate Income Tax, Value-Added Tax and now PAYE.
The new PAYE dispute management process has a wide range of benefits that will make managing tax affairs more efficient and these include:
- It provides the ability to lodge disputes including Request for Remission (RFR), Notice of Objection (NOO) and Notice of Appeal (NOA)
- The ability to Request for Reasons (RFRE)
- The ability to Request suspension of payment
- The ability to submit reasons for late submission of the Dispute
- All dispute correspondence can be viewed at the click of a button, and where applicable, supporting documents can be uploaded
- Employers will have a consolidated view of all disputes lodged for Personal Income Tax, Corporate Income Tax, Value-Added Tax and now PAYE.
- Outcome letters for RFRs and NOOs, Request for late submission as well as Suspension of Payment are conveniently available on the taxpayer’s profile.
- The process provides the ability to dispute multiple periods on one dispute form up to a maximum of 12 periods for VAT and PAYE.
- The ability to submit disputes will be based on user submission rights.
Should you wish to have further clarification on the dispute management process please do not hesitate to contact our offices for professional advice.