Finance Minister Tito Mboweni delivered his third annual budget address on 24 February 2021. Below we highlight some of the significant proposals, which will likely be contained in the Draft Taxation Laws Amendment Bill to be published for public comment in June or July 2021.
Applying tax on withdrawals of retirement interest when an individual ceases to be a tax resident
When an individual ceases to be a South African tax resident, retirement funds are not always subject to withdrawal tax in terms of the Act. At issue is the tax treatment of retirement interest when an individual ceases to be a South African tax resident but retains his/her investment in a South African retirement fund and only withdraws from the retirement fund when he/she dies or retires from employment.
When the individual ceases to be a South African tax resident, the retirement fund interest will form part of the assets that are subject to retirement withdrawal tax. The individual will be deemed to have withdrawn from the fund on the day before he/she ceases to be a South African tax resident.
Curbing abuse in the employment tax incentive
The employment tax incentive (ETI) is aimed at reducing the cost of hiring youth between the ages of 18 and 29 years old. It allows employers to reduce their pay-as-you-earn (PAYE) tax payments to the South African Revenue Service (SARS) for the first two years in which they employ qualifying employees with a monthly remuneration of less than R6 500, subject to certain limitations. Some taxpayers have devised certain schemes using training institutions to claim the ETI for students. To counter this abuse, it is proposed that the definition of an “employee” be changed in the Employment Tax Incentive Act (2013) to specify that work must be performed in terms of an employment contract that adheres to record-keeping provisions in accordance with the Basic Conditions of Employment Act (1997). These amendments will take effect from 1 March 2021.
Reviewing tax provisions for travel and working from home
In light of the large-scale migration to working at home over the past year, the National Treasury will review current travel and home office allowances to investigate their efficacy, equity in application, simplicity of use, certainty for taxpayers, and compatibility with environmental objectives. In recognition of the potential effect on salary structuring, this will be a multi-year project, starting with consultations during 2021/22.
The information required by law in the receipts issued for tax‐deductible donations is limited and entities issuing the receipts are not required to provide third‐party data on the donations to SARS on a systematic basis. SARS has detected that receipts are being issued by entities that are not approved to do so. To ensure that only valid donations are claimed and to enhance SARS’ ability to pre‐populate individuals’ returns, it is proposed that the information required in the receipts and third-party reporting be extended in future to cover the receipts issued.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your adviser for specific and detailed advice. Errors and omissions excepted (E&OE).
CA(SA) Registered Auditor – Director
Mike is the director of RDL Chartered Accountants Inc. and as a Registered Auditor has the knowledge and ability to comply with the latest auditing standards and financial reporting requirements and he completes all the statutory audits required by our clients.
Chris, studying for his Chartered Certified Accountant [ACCA] qualification joined the practice in February 2016 and maintains a portfolio of clients attending to the write up of client general ledgers to trial balance, completion and submission of client statutory returns and management accounts. Chris holds a Diploma in Accounting and Business from ACCA and is a registered Business Accountant with SAIBA.
Hendrietta has been with LDC since 2004 and oversees the entire statutory function of LDC. She communicates regularly with the Regulator – CIPC and ensures that all of our clients are in good standing in respect of annual returns, company registers, share registers and directors and officers registers. She also attends to all new company incorporations, director appointments, share transfers and minutes of meetings.
Lisa, a Certified Bookkeeper joined LDC in 2008 and oversees the bookkeeping role of all LDC clients. She has extensive Pastel Accounting and Payroll experience and prepares all client files for year end annual financial statements. She also ensures all statutory returns are completed and submitted to the various governmental departments.
Teresa has a B Com Accounting and an LLB (University of Johannesburg), and is in process of completing her Diploma in Advanced Taxation (UNISA). She specialises in Corporate & Individual taxation & manages the tax base from preparation to assessment. Teresa is a Registered General Tax Practitioner with the South Africa Institute of Tax Practitioners (SAIT).
CA(SA) – Director – Accounting
Paddy completed his CTA at the University of the Witwatersrand and articles at Aiken and Carter (now KPMG) where he qualified as a chartered accountant. Prior to joining LDC in June 2017 he was employed as Financial Manager and Company Secretary in manufacturing and wholesale distribution companies, most recently as Financial Director of a leading international kitchen appliance distributor. Paddy oversees the full accounting function of LDC
FCG(CS) FCIBM Professional Accountant (SA) – Managing Director
Bob started the practice in September 1991 and is the Chairman and Managing Director in overall charge of LDC Accounting and Tax Consultants Inc. He has three professional business qualifications and holds practicing certificates issued by Chartered Secretaries Southern Africa and South African Institute of Professional Accountants and for many years served on Committees and the Board of Chartered Secretaries Southern Africa and the International Council of the Institute from 2006 and as a vice president from 2009 to 2011.