Strategic Insights: The Latest from the SARS-RCB National Operations Meeting
The Chartered Institute for Business Accountants (CIBA) is a member of the Recognised Controlling Bodies (RCB) Forum consisting of all professional bodies that are approved by South African Revenue Service (SARS) to register tax practitioners. Below is a summary of key matters discussed during the recent National Operations meeting between SARS and the RCB Forum, held on 01 August 2024.
Detailed Discussion Points
VAT Registration Delays
SARS acknowledged the delays and confirmed the following:
Not all VAT registrations are flagged for review.
The turnaround time for reviews is still 21 days, counting from the moment all required supporting documents are loaded by the applicant for review, not from the time of application.
Delays are often noted due to incomplete document submissions and a risk-based review process, causing a standard 21-day wait.
Note: Delays are often caused by applicants not supplying all required documents. Make sure that you include all the necessary information for the application and the review. Visit the SARS website to learn how to register for VAT.
When acquiring a business as a going concern where the current applicant has no recorded turnover, proof of turnover must be obtained from the seller's financial records.
A current internal audit is ongoing aiming to streamline these processes, although the risk-based evaluation will remain stringent.
2. VAT Assessments
The objections button was sometimes unavailable in the e-filing system, complicating dispute resolution. SARS has tasked system engineers to investigate and resolve the issue. Recent updates should improve the interface and process clarity.
VAT 217 is adjusted for free text up to 3000 characters but there is a need for feedback to see if there is appropriate use.
3. eFiling Profile Hijacking:
Although the eFiling hijackings have occurred less frequently recently, there is continued concern over security and unauthorised access.
NB! SARS strongly recommends against sharing login passwords and has urged users to activate two-factor authentication on their profiles.
Blocked profiles can be the result of high-risk assessments. The following should be noted:
Employers who fail to submit their EMP201 forms but do submit their EMP501s are classified as high-risk, which can lead to their profiles being blocked. Such high-risk profiles require additional validation.
Tax practitioners have also experienced blocked profiles. Ongoing investigations are focused on identifying any fraudulent activities, with stringent consequences anticipated for confirmed violations.
Blocked profiles should be reported to SARS via the query system.
4. Challenges with Approval for Automated International Transfers (AIT):
Backlogs are caused by high volumes of AIT requests, especially for large transfers that require additional compliance checks.
SARS is implementing cryptocurrency processes to expedite handling and has established urgent escalation contacts. They are also addressing potential abuses of breaking up transactions to avoid checks.
Note: SARS identified cases where transfers were broken up i.e. into under R10 million to avoid additional checks. Be aware that this practice is not in line with regulations.
5. Premature or Erroneous Final Demand Letters issued.
SARS fixed the system errors in early July and is working to ensure more accurate and timely communication regarding tax obligations. If this occurs again please report it to CIBA’s technical team via email: technical@myciba.org.
6. Access to Returns Older Than 5 Years
Practitioners and taxpayers faced issues accessing older returns. Refunds were not paid due to outstanding returns which could not be filed. This issue has been addressed by SARS.
7. Directive for Retirement Withdrawal Post-Residency Cessation
SARS requires the resubmission of comprehensive information for verifying the cessation of residency that took place years before. The reason for this is that SARS has only been responsible for overseeing this process since 2021.
SARS is reviewing the process and plans amendments to the Reserve Bank's exchange control guide to streamline verifications.
8. SARS' Use of Artificial Intelligence in Risk Engines
The risk engine identifies intra-account transfers as taxable income. This is due to AI-driven risk assessments. SARS is continuously reviewing its AI methodologies to ensure accurate tax assessments and encourages taxpayers to provide context for large transfers to aid in proper income classification.
9. Delays in Finalising Manual Interventions
Manual interventions in rejected returns have created significant backlogs. SARS is aware of the issue and prioritising regions with the most significant delays. System enhancements are underway to improve service management and case handling.
10. SARS applying debt equalisation
The issue raised was regarding the delay in some cases where a VAT refund was reserved due to provisional tax remaining unpaid. The refund can take a long time once the provisional tax is paid.
SARS is committed to investigating these situations individually to ensure that debt equalisation is applied correctly. System inconsistencies may be contributing to these issues. Specific examples of problems related to the debt equalisation process can be sent to technical@myciba.org.
12. RAV01 Form Issues
There was previously no option to indicate the date on which one became a South African tax resident on the RAV01 form. This issue has been resolved by SARS.
The recommendation for the RAV01 form is to include both taxpayers' and tax practitioners' contact details, ensuring that all correspondence is sent to both parties. SARS is reviewing the RAV01 form to enhance relationship management and is considering including preferred contact details, although no specific timelines have been set for these changes.
13. IT144 Donation Tax Return Issues
There is ongoing discussion regarding when the IT144 donation tax return is required, particularly in cases where exemptions apply. The discussions focus on the activities and associated risks, including considerations around the R100,000 limit for spouses and other specifics for donation tax purposes.
14. Independent contractors treated as nonprovisional taxpayers
The RCB Forum pointed out that independent contractors should be treated as provisional taxpayers. SARS to take this point for further action.
15. Legislative changes made to the ITR14 forms
The RCB Forum requested that SARS make a list available of the updates made to the ITR14 form to be issued on 13 September. This is to inform practitioners and enable them to make decisions on whether to complete the return before that date. CIBA will notify its members when this information becomes available.
The CIBA Technical Unit is here to help you!
Do you have a technical query or want to provide feedback on SARS processes? Email the CIBA Technical Unit sending your query or provide feedback via email to technical@myciba.org.
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