SARS GENERAL MATTERS

1. Tax Filing Season updates

   Further to updates to the tax filing season during July 2024, SARS introduced several updates to simplify compliance:

   Amendments to Deductions for Retirement Fund Contributions: Effective from 1 March 2024, changes to section 11F(2)(a) of the Income Tax Act No 58 of 1962 address the deduction caps for contributions to retirement funds when the assessment period is less than 12 months. The allowable deduction for any 12 months starting in March cannot exceed R350,000. For example, if a taxpayer ceases residency on 31 July 2024, the permissible deductions from March to July 2024 and August 2024 to February 2025 will also be reduced to R200,000 and R150,000, respectively.

   Adjustments to Tax-Free Investments Exemption: From 1 March 2024, Section 12T(4)(a) revisions modify the annual contribution limit for tax-free investments in shortened assessment periods. If contributions exceed the pro-rated limit (currently R36,000 annually), a 40% penalty applies to the excess. For example, a taxpayer contributing R50,000 over two shortened periods faces R5,600 as a penalty (40% of the surplus of R14,000). If the taxpayer ceased residency during the year the R36,000 limit will be adjusted accordingly.

   Extension for Urban Development Zone Deductions: The deadline for deductions related to the erection or improvement of buildings in urban development zones under section 13quat has been extended to 31 March 2025.

   Solar Energy Tax Credit Conclusion: A 25% deduction up to R15,000 was available for the cost of new, unused solar PV panels used from 1 March 2023 to 29 February 2024. This credit has now concluded, and deceased estates are not eligible for this incentive.

   Enhancement of Renewable Energy Production Incentives: The renewable energy tax incentive under section 12BA now includes an upfront 125% deduction for costs associated with new assets used in renewable energy production, valid until 1 March 2026. However, any deductions are fully recouped if the asset is disposed of before this date.

   Simplification of the ITR12 Form: Changes have been made to simplify the foreign employment income exemption sections and beneficial owner definitions to improve transparency and ease of filing. Practitioners are reminded to use designated fields correctly to avoid submission errors.Read Commissioner Edward Kieswetter’s address on Filing Season 2024 in this Media Release.

2. SARS Self-help channels  

   Use the available SARS self-help channels, such as eFiling, the SARS MobiApp, SARS USSD (*134*7277) and the SARS Online Query System (SOQS), to manage your taxes efficiently and effortlessly.

   With Help you eFile you can interact with a SARS agent while the agent shares the displayed view of your eFiling profile screen.

   Watch the video on the SARS YouTube channel for guidance on how to file. 

   Ensure that you have booked your appointment before you visit a SARS Branch.  

   See the Filing Season 2024 webpage for more information.

3. SARS’s new WhatsApp service

   Access personal income tax advice and handle specific queries using SARS’s new WhatsApp service. To start, send a greeting like "Hi" to the SARS WhatsApp number (0800 11 7277), saved on your mobile or accessed via desktop.

   Services available through this platform include requests for Tax Reference Numbers, Statements of Account, Return Refund Status, Audit Status, and Notices of Assessment. Ensure your mobile number is registered with SARS for successful authentication. For more information, see the Mobile Services webpage and the Guide to SARS Mobile Tax Services.

4. Bellive Branch relocated

   The new address for the SARS Bellville branch is 14 Strand Road, Bellville. For more information, see the Bellville branch webpage. Remember to make an appointment to visit a SARS branch.

5. Benoni Branch is Closed

   The SARS Benoni branch closed permanently on 5 July 2024. Virtual appointments will still be honoured. See all branches in Gauteng here.

6. Trade Statistics – June 2024

   A preliminary trade balance surplus of R24.2 billion was recorded in June 2024, with exports of R172.0 billion and imports of R147.7 billion, including trade with Botswana, Eswatini, Lesotho, and Namibia (BELN). The year-to-date preliminary trade balance surplus of R68.4 billion from January to June 2024 shows an improvement from the R14.4 billion surplus for the same period in 2023.

   Year-on-year, export flows for June 2024 were 4.2% higher than June 2023, while imports decreased by 12.2%. Month-on-month, exports decreased by R6.1 billion (-3.4%) and imports declined by R10.4 billion (-6.5%). Revisions adjusted the preliminary trade balance surplus for May 2024 from R20.1 billion to a final figure of R20.0 billion.

   For additional insights, visit the Trade Statistics webpage or read the full media release.

7. Tax Workshops and Mobile Tax Unit Schedules

   See the August 2024 SARS tax workshop schedule for:

   Gauteng in Ashlea Gardens, Doringkloof and Pretoria CBD and

   North West in Klerksdorp, Mmabatho and Rustenburg

   Mobile tax units / pop-up branches will be available from August 2024 in the Eastern Cape, Free State and Northern Cape, KwaZulu-Natal, Mpumalanga, Northwest and Western Cape. Access the detailed schedules here.

   Click here to see the services and documents you need to take.

8. New Scam alerts

   The latest SARS scam is an email asking you to click on a link, seemingly from www.sars.gov.za but linking to a fraudulent website.

   DO NOT OPEN the links and delete the emails immediately.

   Watch the short tutorial video on how to spot scams.

   Examples of these scams were published on the Scams & Phishing webpage.

   LEGAL MATTERS

9. Binding General Ruling (BGR) 20 - Defining ‘substantially the whole’

   The Ruling provides detailed guidance on the interpretation of the phrase "substantially the whole" as used in various tax exemptions and regulations affecting Public Benefit Organisations (PBOs), recreational clubs, small business funding entities (SBFEs), and associations.

   The term "substantially the whole" can be interpreted to mean that at least 90% of an entity’s activities or funds must be directed towards its principal or exempt purposes.

   This threshold, while set at 90%, will accept no less than 85% due to the unpredictable environment these entities operate, allowing for some flexibility in planning and operations. The ruling affects various sections of the Income Tax and Transfer Duty Acts, emphasising cost recovery in operations not competing with taxable entities. This BGR remains effective until any changes in legislation or the ruling itself.

10. Private Binding Ruling (PBR) 406: Treaty Relief for Supplementary Pension Fund Payments

    A Binding Private Ruling (BPR) is a response to an application clarifying how the Commissioner would interpret and apply the relevant tax laws to a specific proposed transaction.

    A recent Binding Private Ruling clarifies that Belgium has taxing rights over payments received by South African residents under Belgium's supplementary pensions system. This ruling applies to South African consultants working with Belgian companies who will receive lump-sum payments from the Belgian Pension Plan upon retirement. These payments will be taxed at a rate of 17.655% in Belgium and will not be subject to South African tax under section 10(1)(gC) of the Act or Paragraph 2 of Article 18 of the Treaty.

    This ruling is effective for six years from the date of issue.

11. Private Binding Ruling 404 (PBR 404)- Expenditure incurred in respect of environmental conservation

    The key issues addressed in the Binding Private Ruling (BPR 404) involve the Applicant's plan to develop its trade premises while mitigating environmental impact by creating a wetland offset on newly acquired land, some of which will be declared a nature reserve. The ruling seeks to clarify the tax treatment for expenditures related to this land acquisition and improvements, including how costs should be apportioned between development and conservation efforts and the conditions under which these costs become tax-deductible according to sections 37C and 37D of the Income Tax Act.

    The ruling clarifies that significant tax benefits can be realised through the deductibility of costs associated with environmental conservation activities:

    Expenditure related to the acquisition of the portion of the property to be declared a nature reserve is deductible under section 37D(2) of the Income Tax Act. This deduction is applicable from the year the land is officially declared as a nature reserve.

    Expenditure on historic and future improvements (excluding borrowing and financing costs) on the portion to be declared a nature reserve is also deductible under section 37D(2), starting from the year the declaration is made.

    Costs associated with environmental conservation and maintenance undertaken according to an agreement under the provisions of the National Environmental Management: Biodiversity Act (NEMBA) are deductible under section 37C(1). These costs pertain specifically to the maintenance of the declared nature reserve.

12. Private Binding Ruling (PBR) 409

    This ruling is crucial for accountants managing public benefit organisations (PBO), clarifying tax obligations when handling forfeited shares from incentive schemes. In this case, Trust A (a PBO) acquires forfeited shares from an employee share incentive scheme. The ruling specifies that:

    • Tax Exemption: Trust A's acquisition of the forfeited shares is exempt from normal tax under section 10(1)(cN) of the Income Tax Act.

    • Capital Gains: Any capital gains realised by Trust A upon the disposal of these shares are disregarded under paragraph 63A of the Eighth Schedule to the Act.

    • Securities Transfer Tax: The transfer of the forfeited shares to Trust A is exempt from securities transfer tax as per section 8(1)(d) of the Securities Transfer Tax Act.

    The ruling is valid for five years starting from 23 April 2024.

13. Supreme Court Appeal (SCA) - Recovery of tax debt from third party 

    Christoffel Hendrik Wiese and Others v CSARS 

    The Supreme Court of Appeal (SCA) confirmed a decision against Christoffel Hendrik Wiese and others, ruling that they unlawfully helped move assets out of Energy Africa to avoid paying taxes totalling R216.6 million. The main issues in the case were whether evidence from a previous tax inquiry could be used in court and how "tax debt" is defined for the purposes of section 183 of the Tax Administration Act when assets are moved to avoid taxes. The court decided that the taxes in question were indeed legitimate debts at the time the assets were moved and that the evidence from the earlier tax inquiry was valid for use in this court case. This decision underscores the legal responsibilities accountants must be aware of when handling asset transfers that might be seen as attempts to evade tax obligations.

14. Supreme Court Appeal (SCA) – Refund for fuel levy and excise duty

    Commissioner for SARS v Tunica Trading 59 (Pty) Ltd

    Tunica Trading 59 (Pty) Ltd, a licensed fuel distributor, purchased diesel intended for a foreign naval vessel from Masana Petroleum Solutions, which in turn sourced it from BP Southern Africa, a licensee of a customs and excise manufacturing warehouse. Tunica sought a refund for excise duty and fuel levy as the diesel was supplied to a foreign naval vessel. SARS denied the refund as Tunica purchased the fuel through an intermediary and not directly from the licensee of a customs and excise manufacturing warehouse, as mandated by the Customs and Excise Act.

    Tunica argued that despite not buying directly from the licensee (BP), their purchase through an intermediary (Masana) should qualify for a refund.

    The SCA overturned the decision of the Full Court denying the refund stating that the fuel must be obtained directly from the licensee’s inventory at a customs and excise manufacturing warehouse.

    NEW AND UPDATED GUIDES

15. Updated Guide To Complaints Functionality

    The Guide to Complaints functionality on eFiling was updated to include the latest list of Recognised Controlling Bodies (RCB’s) on page 10.

16. Draft Guide for Comment: Income Tax Benefits in Special Economic Zones

    This guide provides a general overview of the income tax benefits available to a qualifying company that carries on a trade in a special economic zone and discusses the qualifying criteria under section 12R and section 12S.

    Comments on the draft guide are due by 30 August 2024.

17. Interpretation Note 95 (IN 95): Deduction for energy efficiency savings

    IN 95 clarifies the deduction available under Section 12L of the Income Tax Act for energy efficiency savings, aiming to incentivise businesses to reduce their energy usage through a tax benefit for verified savings achieved in trade operations. Key points include:

    Taxpayers must be registered with the South African National Energy Development Institute (SANEDI) and meet specific criteria for their energy-saving activities to qualify.

    A measurement and verification professional must certify the energy savings, which must be documented in a report submitted to SANEDI.

    As of March 2015, the deduction is calculated at 95 cents per kilowatt hour or equivalent energy savings.

    To claim the deduction, obtaining a certificate from SANEDI is mandatory, which details the baseline energy use, the reporting period's energy use, and the calculated energy savings.

    Relevant documents must be retained for audit purposes as specified by tax regulations.

    This note is crucial for accountants handling clients in industries where significant energy usage can be optimised, allowing for potential tax savings while promoting energy efficiency.

    CUSTOMS AND EXCISE NEWS

18. Tariff Amendments

    The following tariff amendments were made effective from 19 July 2024:

    Wheat and Wheaten Flour: Customs duty on wheat and wheaten flour has been increased from duty-free to 17.63c/kg and 26.45c/kg, respectively, under tariff subheadings 1001.91, 1001.99, 1101.00.10, 1101.00.20, 1101.00.30, and 1101.00.90 (GG 50969, R.5054).

    Sugar: The rate of customs duty on sugar is reduced from 140.91c/kg to 109.36c/kg for tariff subheadings 1701.12, 1701.13, 1701.14, 1701.91, and 1701.99 (GG 50969, R.5053).

    Lead Acid Batteries: Customs duty increased from 15% to 30% for lead acid batteries under tariff subheadings 8507.10.91 and 8507.10.99 (GG 50969, R.5055).

    Hot-Rolled Steel Products: Provisional payments related to safeguard duties against increased imports are imposed, covering a wide range of hot-rolled steel products under various tariff subheadings, effective from 5 July 2024 up to and including 20 January 2025 (GG 50904, R.5026).

19. Environmental Levy on Electricity Generation

    The Excise Environmental Levy on Electricity Generation is a policy that applies to licensed producers of electricity. It is self-assessed monthly based on their excise accounts and must be paid to the South African Revenue Service (SARS).

    The Excise Environmental Levy on Electricity Generation policy was updated with changes to the Customs & Excise Tariffs.

    The Environmental Levy on Electricity Generation External Guide has been converted from a manual.

20. Policy Updates on Traditional African Beer and Alcohol Powder Products

    The policies and documents related to Traditional African Beer (TAB) have been updated to incorporate alcohol powder products. Consequently, there is a change in the naming of the documents to "Traditional African Beer and Alcohol Powder Products." Specific updates include the revision of the Vis Major losses and its exclusionary items. Additionally, the "Accounting Period and Submission Rules" external annexure has been modified to reflect the inclusion of alcohol powder products in the naming convention. Relevant updated documents are:

    SE-TAB-02 – Traditional African Beer and Alcohol Powder Products – External Policy 

    SE-ACC-04-A01 – Accounting Period and Submission Rules – External Annexure 

21. Customs – Delivery and collection of bonds

    The delivery and collection of bonds changed from Alberton to the SARS Head Office in Pretoria with immediate effect. The address for the delivery and collection of bonds is:

    Revenue Accounting
    Block D Ground Floor
    Lehae La SARS
    299 Bronkhorst Street
    Brooklyn
    Pretoria

    Arrangements for delivery/collection of bonds must be made via the following email address: bondvalidations@sars.gov.za.

22. SARS Tariff Determination Enhancement project

    The SARS Tariff Determination Enhancement project is rolling out in two phases to improve how tariff determinations are processed and published. The first phase, already underway since May 2024, enables only internal users to process and publish new applications online, without including previously finalised cases. However, traders cannot yet submit applications electronically. This functionality will be introduced in the second phase, scheduled for September 2024.

    Currently, accountants and traders can view abridged versions of finalised tariff determinations through the SARS search engine.

23. Updated Excise Wine and Vermouth policy

    The updated policy now indicates the following:

    Exclusions in terms of rebate item 624.50.

    Clarification in terms of Schedule 6 Part 1 C of rebate items 620.22 and 620.33.

    Requirements for licensing an excise OS warehouse.

    Requirements when applying for an extension of a licensed SVM warehouse.

    UPCOMING DEADLINES

24. Filing season 2024

    The dates for the 2024 Filing Season are:·        

    • Individual taxpayers (non-provisional): 15 July 2024 to 21 October 2024

    • Auto-assessment notices: 1 – 14 July 2024

    • Provisional taxpayers: 15 July 2024 to 20 January 2025

    • Trusts: 16 September 2024 to 20 January 202

For more information visit the Filing Season webpage.

First provisional tax payments due for the 2025 tax year on 30 August 2024

Third-party data submissions: The closing date for IT3(t) submissions is 30 September 2024.

Employers: The Interim (for the period 1 March to 31 August) Employers Filing Season for EMP501 reconciliations runs from 1 September to 31 October 2024.

Corporate taxes: The 2024 ITR14 form for companies reflecting the latest amendments will be accessible from 16 September 2024.