They say the only certainty in life is death and taxes. Today, I would revise that statement. The tax landscape in South Africa at the moment is anything but certain. New legislation and amendments before Parliament have thrown our industry into a state of slight confusion.

As we enter tax season, CRS has focused our thoughts on this and we hope you find the following information valuable.

To start, let’s establish how South Africa fares as a taxpaying nation.

According to PwC’s fourth annual Total Tax Contribution (TTC) survey the average TTC (being total taxes borne plus total taxes collected) as a percentage of total turnover for participants in 2010 was 15.06%, down from 15.57% in 2009. The TTC as a percentage of turnover provides a measure of how much of companies’ turnover is used for purposes of paying their total tax bill.

The average Total Tax Rate (‘TTR’) for participants in the recent survey was 33.24% (2009: 32.53%). The TTR is a measure of all business taxes borne, against profit before all such taxes.

Companies operating in South Africa during the fiscal year ended 31 March 2010 were subject to a total of 22 business-related taxes, compared to 20 in the previous year.

Total taxes collected increased by 15.19%. Personal income tax was government’s largest source of tax revenue in 2010 and a significant portion of this comes from the collection of PAYE.

However, comparing South Africa to other developed regions we can see that we are still fairly far behind.

Comparing South Africa with other PwC country-specific TTC surveys, Japan has a Total Tax Rate of 58.3% (SA: 33.2%). Belgium has 92 types of taxes in total (SA: 22), and a company in this country would, on average, bear 12 taxes (SA: 7) and collect 5 (SA: 3). TTC as a percentage of turnover is 20.7% on average in the UK (SA: 15.06%).

CRS has been speaking to its partners who specialise in all things tax related and the overwhelming response is that there is a fundamental policy shift coming down the line.

Two pieces of legislation under discussion this month have been the Draft Taxation Laws Amendment Bill and the Tax Administration Bill.

According to Finance Minister, Pravin Gordhan, the Tax Administration Bill (TAB) is an attempt to simplify, and to provide greater certainty and better coherence in South African tax administrative law.

Gordhan said it is one part of the rewrite of fiscal legislation in South Africa that is currently under way.

He said that in parallel to this bill, the rewrite of customs aspects in the Customs and Excise Act, was at an advanced stage.

The Bill is aimed at facilitating tax compliance, providing consistency in the application of tax law and to further improve the levels of tax compliance in South Africa.

What isn’t immediately apparent is that this new Bill gives a SARS ‘senior official’ the right to authorise immediate search and seizure without a court order.

Further concern rests around the amendment Bill before Parliament. Noticeably absent from this piece of legislation is any mention of retirement reform, so again companies are waiting for clarity.

CRS is watching this space very carefully and as soon as we have any clarity we will share this with you. For now though, please read on and find out more about certain changes that we have picked up and that you should be aware of.

As always, we encourage you to share your thoughts with us. It is only through collaborative debate that we can hope to find true clarity.

Until next time

James McKerrell

Tax Season Looms!

Tax return requirements  – all registered tax payers eligible

Please note that all registered taxpayers must complete their tax return for the 2011 year of assessment, regardless of what they earn as envisaged by Section 66. In the past, it had been announced that an individual would not be required to submit a return if they earn less than R120 000 per annum, however the Commissioner did not include this in last year’s Notice 580. Any non compliance will of course result in penalties.

Individuals and Trusts

Be sure to make a note of these submission dates:

  • Submission period opens for all taxpayers: 1 July 2011
  • Manual submission deadline for all taxpayers: 30 September 2011
  • Electronic submission deadline for non-provisional taxpayers: 25 November 2011
  • Electronic submission deadline for provisional taxpayers: 31 January 2012

The Draft Taxation Laws Amendment Bill

The Draft Taxation Laws Amendment Bill, 2011 (TLAB) was released by National Treasury on 2 June 2011 for public comment. The TLAB includes some of the most significant and far ranging amendments to the Tax Act of recent years, with a strong focus on tax avoidance and tax planning, particularly in the finance sector. A media statement released at the same time signals that significant attention will be given to further legislation to combat perceived avoidance. Between the media release and the TLAB, a considerable focus has been devoted to the taxation of company distributions in the form of returns of capital, dividends and the deductibility of interest. Certain of these changes will have an immediate impact on corporate and finance transactions.

Click here to read the full article by Moneyweb Tax.

Client Surveys

CRS Technologies has recently carried out client surveys, an exercise that allows us to keep improving our offering, service and standards. Our thanks to those clients who have participated so far – your input is greatly appreciated and both the negative and positive issues that have been highlighted are being assessed.

Training Modules

We continue to offer a selection of training on our modules. Please click here for the dates and venues.