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Explore insights on key tax matters presented by Mr. Job Kabochi, Mr. Lesedi Seforo, and Mr. Erich Bell of SAIT. The implications, proposed changes, and concerns regarding Agricultural Zero-rate termination, Import VAT Timing, Electronic Services Enterprise, and Small Business Corporations are elaborated. Get a thorough understanding of the impact on revenue collection, cash flow, compliance rebates, and more. Stay informed on the future implications for taxpayers and tax administration.
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SAIT Comments on the Draft TLAB and TALAB 2014 Presenters: Mr Job Kabochi Mr Lesedi Seforo Mr Erich Bell
Introduction • Largest tax association in SA – more than 11 000 members ‘specialising’ in taxation. • Comprehensive written submission developed by SAIT technical department, our members and 5 specialist committees. • Submission ScoF focused on technical matters. • Policy and other considerations require further review in relation to impact on economy, social challenges and National Development Plan.
Termination of Agricultural Zero-rate • Revenue collection vs. cash-flow impact for small farmers • Our views • Proposal be deleted in favor of stronger enforcement • Retain ZAR 1.5m threshold test for qualifying farmers • ‘Category D’ registration be amended allow earlier VAT refunds
Import VAT Timing • Proof of payment = customs receipt; clarity welcome • Our concerns • Delayed input tax credits = adverse cash-flow • Financial vs VAT accounting disparity • In our view risk to fiscus mitigated by: • SARS’s clearing agent vetting process • Agents’ guarantees paid to SARS • VAT credits be allowed if payment made by return filing date
Electronic Services Enterprise • Multiple-proxy test welcome • Clarity required: • Origination of payment from South African bank • Invoice delivery address - physical vs electronic address • Future consideration - B2C vs B2B
Relevant Material Current definition Any information, document or thing that is foreseeably relevant for the administration of a tax Act… What is the administration of a tax Act? • It basically means anything that may affect the amount of tax that a person owes SARS Proposed definition Any information, document or thing that in the opinion of SARSis foreseeably relevant for the administration of a tax Act… Why the change?
Change to the definition Concerns • It has been left to SARS’ discretion to determine what is relevant • No obligation on SARS to explain how the material is relevant. • No mechanisms available for the taxpayer to object.
Small business corporations • Current incentives • Accelerated write offs (manufacturing assets in full in YOA brought into use whilst for non-manufacturing assets election between a 50/30/20 or section 11(e) allowance. • Taxed according to a sliding scale:
Small business corporations (continued) • Proposed changes • Small business corporations to be taxed in the same manner as all other companies (28 per cent tax rate from the first Rand). • If tax compliant in terms of tax returns and liabilities, the small business corporation would receive a refundable compliance rebate of R15 000 per YOA. • Nothing mentioned in TLAB 2014 about the accelerated write off clauses. • Concerns regarding proposed changes • Internal compliance costs for a small business entity is over R60 000 per year of assessment. • The only small business corporations that stand to benefit is small business corporations with a taxable income of below R53 574 (a SBC with a taxable income of R550 000 stands to loose R79 298 in taxes should the proposal be implemented).
Small business corporations (continued) • Conclusion • It is proposed that incentive be provided according to a sliding scale starting at R15 000 and moving up to the range of R 100 000 for your larger small business corporations. • Currently incentive is aimed at incentivising micro type of enterprises at the cost of flourishing small businesses.
