TAX

Accountancy SA,  Feb 2006  

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MEETING WITH SARS HEAD OFFICE

SAICA participates in regular stakeholder meetings with SARS Head Office to address operational problems with SARS. Some of the issues discussed in recent meetings are as follows:

* Procedure for dealing with complaints.

* Tax clearance certificates.

* Refunds.

* Medical expenses.

* VAT registrations.

* CIPRO link.

* Statements of account.

* Registration of tax practitioners.

* Provisional tax returns.

* Deregistration of dormant companies.

* Alternate Dispute Resolution.

The minutes are available on SAICA's Tax Page under Meetings with SARS/National/SARS Operations Task Team.

SARS POLICY DOCUMENTS

SARS has added a new link on their website which provides access to policies and procedures documents, most of which have been prepared as a result of matters raised in meetings between SAICA and SARS. To access these documents on the SARS home page (www.sars.gov. za), under foxes, select Correspondence.

The following documents are currently available:

* Penalties and interest, which explains how and when interest and penalties are levied or imposed.

* VAT and PAYE registration, which explains the requirements and process to register for VAT and PAYE.

* Labour brokers, which explains the procedure to obtain an IRP30 exemption certificate.

* Changes in financial year end, which explains the procedure to be followed when a change in a company's year end results in two years of assessment falling within one calendar year.

* Medical expenses. This is a copy of a directive issued to the SARS offices clarifying the requirements with regard to medical expenses, following many complaints that SARS had disallowed the deduction of medical expenses where the taxpayers did not submit proof of expenditure with their tax returns.

* Exemption from the payment of the Skills Development Levy (SDL).

National Tax Committee

SAICA's National Tax Committee met on 26 October 2005. The minutes of this meeting are available on SAICA's Tax Page under Whatcan we do for you? / National Tax Committee.

SARS Service Charter

SARS launched their Service Charter in Cape Town on 19 October 2005. The Service Charter, which is to be phased in over a two-year period, is available on SARS' website under About us / SARS Charters.

REVENUE LAWS AMENDMENT BILLS, 2005

At the time of writing, the Revenue Laws Amendment Bill and the Revenue Laws second Amendment Bill had been approved by the Parliament Select Committee on Finance and were expected to be promulgated before the end of 2005. The Bills contain numerous amendments to, amongst others, the Income Tax Act, the Estate Duty Act, the Transfer Duty Act, the Customs and Excise Act, the Value-Added Tax Act and the Stamp Duties Act. Some of the more wide-reaching amendments to the Income Tax Act are as follows:

* Amendments to sections 8B and 8C to address practical issues which have arisen since the provisions were introduced in 2004.

* Various amendments have been made to the controlled foreign company provisions in section 9D.

* Amendments to section 10(1)(cN) to enable Public Benefit Organisations (PBOs) to carry on trading activities without losing their tax-exempts status. Amendments affecting PBOs have also been made to section 18A.

* Section 18 has been amended to replace the 5% limit on the deduction of qualifying medical expenses with a fixed limit of R500 each for the taxpayer and first dependant and R300 for each additional dependant, and to delete the R500 de minimus amount for handicapped persons.

* Where medical aid contributions are paid by the employer, the tax-free portion will be R500 each for the employee and first dependant and R300 for each additional dependant, instead of the two-thirds tax-free limit that applied previously.

* Section 23(m) has been amended to allow the deduction of home office expenses in certain circumtances.

* The film alowances provisions in section 24F have been revised.

* The foreign currency translation rules in section 25D have been revised, with the reintroduction of the spot rate.

* Various amendments have been made to the corporate rules in Part III of the Act.

* New provisions have been inserted into thr Act to introduce a withholding tax on payments to visiting entertainers and sportspersons.

* Certain medical services provided by an employer to employees and their families will be exempt from tax.

* The time-apportionment base cost formula in paragraph 30 of the Eighth Schedule has been amended.

OBTAINING INCOME TAX NUMBERS FROM SARS

SARS has advised that the procedure for applying for tax numbers of new clients is as follows:

Option 1

The client faxes an IT77 together with a copy of their ID and the call centre receives it from the various fax numbers. An agent at the call centre captures the information on the New Income Tax System and advises the taxpayer of his reference number. The agent assigns the Service Request to the Internal Helpline that in turn assigns the Service Request to Portfolio Maintenance to open a file and file the correspondence. The Call Centre turnaround time is 48 hours.