Many people and businesses may be unaware that on 15 January 2021, the President approved the Rates and Monetary Amounts and Amendment of Revenue Laws Act No.22 of 2020, the Taxation Laws Amendment Act No. 23 of 2020 and the Tax Administration Laws Amendment Act No.24 of 2020. These Acts were all promulgated on 20 January 2021 and bring about profound administrative changes as well as changes in tax rates and certain monetary thresholds. But what does it all mean for you as a business or individual taxpayer? Here are 5 important things you need to know.
- Tax-free meals are on the table for day trips
Employees are not subject to tax on an amount paid by their employer as an advancement or reimbursement with respect to meals and incidental costs if they are having to spend a night away for business reasons – provided the amount does not exceed the amount published in the Government Gazette. The Taxation Laws Amendment Act no 23 of 2020 includes an amendment which extends this treatment to meals and incidental costs if the employee is away on a day trip. This will only apply if the employer’s polices make provision for and allow this type of reimbursement.
2. Loop-holes tightened for trusts
Tax-free transfers of wealth to trusts have been significantly curbed. The new amendment directly targets structures where a person subscribes for preference shares with no or a low rate of return in a company owned by a trust connected to the individual. Ongoing scrutiny of trusts and changes like these, are eroding the thinking that trust structures are tax-efficient vehicles.
3. Estimated assessments given more power
SARS has been given more power with regard to the terms in which they may issue a tax assessment. SARS may now issue an estimated tax estimate if a taxpayer fails to respond to a request from SARS to provide relevant material. The new amendment also prevents the taxpayer from lodging an objection against the estimate until they respond to the request to supply the missing material.
4. Retirement funds restricted for expats
If you are planning to emigrate, it’s important to know that from 1 March 2021, taxpayers will no longer be able to access their retirement benefits once they have completed their “financial emigration” through the South African Reserve Bank. After this date, they will only be able to access their retirement benefits if they can prove they have been non-resident for tax purposes for an uninterrupted period of three years.
5. Minor tax offences given criminal sanctions
Previously a taxpayer could only be found guilty if they “willfully” failed to comply with their tax obligations. Under the new amendments this has changed, and “intent” is no longer required. A non-complying individual may be found guilty of a criminal offence as a result of ignorance of their obligations or negligence with regard to their obligations These offences are subject to a fine or imprisonment of up to two years. Other tax “mistakes” that can also result in two years of imprisonment include:
- Failure to register your details with SARS or to notify them of any changes to your details;
- Failure to appoint a representative taxpayer or to notify SARS of such appointment or a change in representative taxpayer;
- You receive compensation for assisting someone with their taxes and you fail to register with SARS as a tax practitioner;
- Failure to submit a return when required to do so;
- Failure to retain all relevant substantiating records;
- Failure to provide any information as and when requested by SARS to do so;
- Failure to appear and comply when you are requested by SARS to attend a meeting or a hearing in order to give evidence;
- You are issued with a directive or instruction by SARS and you fail to comply with it;
- You fail to disclose any material information to SARS or you fail to provide SARS with any notification as required under any tax Act;
- You are notified by SARS to pay an amount on another taxpayer’s behalf in settlement of a tax debt and you fail to do so; or
- You have a withholding obligation and you fail to withhold or deduct the tax correctly and pay it over to SARS.
If in doubt, consult a tax specialist
Taxpayers are now being strongly tasked by the government to take ownership of their personal or business tax. For expert assistance, contact our tax team today