The government in January published the Taxation Laws Amendment Act (TLA) and Tax Administration Laws Amendment Act (TALA). Parliament also passed into law the Rates and Monetary Amounts and Amendment of Revenue Laws Act 22 of 2020.
The significant amendments are as follows:
- Withdrawal of retirement funds upon emigration. Taxpayers will only be able to withdraw their post retirement benefits once they have been non-resident for three tax years.
- Anti-avoidance rules bolstered for trusts particularly for preference share funding at a low or no rate of return in a company owned by a trust connected to an individual.
- Reimbursing employees for business travel expenses. This has been extended to include expenses incurred on meals and other incidental costs while the employee is away on a day trip. Note: this will only apply if the employer’s policies expressly make provision for and allows such reimbursement.
- Relief for expats confirmed. Due to the travel restrictions under the Covid-19 pandemic, the days requirement for the foreign employment exemption has been reduced from 183 days in aggregate to 117 days. The relaxation only applies to the aggregate number of days and the requirement that more than 60 of the days spent outside South Africa must have been consecutive remains applicable. This amendment is not a permanent fixture.
- Employer provided bursaries. Bona fide bursaries or scholarships granted by employers to employees or their relatives are exempt. However, this cannot be part of a salary sacrifice arrangement.
- Tax treatment of doubtful debts. The doubtful debt allowance provision has been amended to bring parity between taxpayers that apply IFRS 9 and those who do not.
- Roll-over amounts claimable under the ETI. 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.
- Estimated assessments. SARS may now issue an estimated assessment where the taxpayer fails to respond to a request from SARS for relevant material.
- SARS can withhold your refund if you are under criminal investigation including one under the Tax Administration Act. As a side note we are worried that in the wrong hands this can be used to defer refunds indefinitely (or at least for a long time) particularly where the circumstance where a criminal case can be raised have been broadened.
Criminal sanctions for minor tax offences. With the new amendments, non-compliance of certain obligations will constitute a criminal offence where it is as a result of the taxpayer’s negligence. Wilfull intent on its own is no longer required; where you are non-compliant due to ignorance of your obligations, you may be found guilty of a criminal offence. These offences are subject to a fine or imprisonment of up to two years. This is a very onerous change as the vast majority of the taxpayers we deal with have very little understanding of their responsibilities.