Administrative Issues and Other Taxes
- It has been announced that increased focus will be placed on cross-border cooperation during 2012/13.
- Furthermore, National Treasury have indicated that high net-worth individuals (HNWIs) remain a focus area in the current year, with attention being given to an improvement in service levels offered to this segment as well as to compliance.
Focus by the Revenue authorities will undoubtedly be on compliance. The estimated R48bn in tax revenue owed by 9 300 delinquent HNWIs identified by SARS recently, will provide welcome relief to the Treasury coffers, once collected. The 70 top-end chartered accountants, which SARS is seeking to employ to jack up investigations, will certainly be very busy.
- During 2012, SARS will establish a dedicated ombud for tax matters. The office is intended to provide taxpayers with a low-cost mechanism to address administrative difficulties that cannot be resolved by SARS.
- The Tax Administration Bill has been approved by Parliament. National Treasury feels it incorporates the common administrative elements of current tax law into one piece of legislation, and makes further improvements in this area. The bill is expected to be promulgated shortly and most of its provisions will be brought into force in 2012.
- Over the past few years, modernisation efforts have been conducted in the Customs arena. These modernisation efforts will now shift to corporate income tax.
Funding options for National Health Insurance (NIH) scheme
- The Minister confirmed that National Treasury has identified the following as possible sources of funding for the NIH: an increase in the VAT rate, a payroll tax on employers, a surcharge on the taxable income of individuals, or some combination of the above.
Revised gambling tax
- The 2011 Budget proposed a withholding tax on gambling winnings above R25 000. After broader consultation, it is proposed that a national gambling tax based on gross gambling revenue will be introduced. This tax, effective from 1 April 2013, will take the form of an additional 1 per cent national levy on a uniform provincial gambling tax base. A similar tax base will be used to tax the national lottery.
Electricity levy increase
- It was announced that the electricity levy generated from non-renewable sources will be increased by 1c/kWh to 3.5c/kWh. The additional revenue will be used to fund energy-efficiency initiatives such as the solar water heater programme. This arrangement will replace the current funding mechanism that is incorporated into Eskom’s annual tariff application. National Treasury feels it will enhance transparency and enable government to use alternative agencies to deliver on energy-efficiency initiatives. The net impact on electricity tariffs is expected to be neutral.
Turnover tax for micro businesses (annual turnover below R1 million)
- Building on reforms announced in 2011, micro businesses will be given the option of making payments for turnover tax, VAT and employees’ tax at twice-yearly intervals from 1 March 2012.
- It is further envisaged that a single combined return will be filed on a twice-yearly basis from 1 March 2013. The number of returns required for these taxes will fall from about 18 per year to only two per year in 2013.
Small business corporations (gross income up to R14 million)
- To encourage the growth of small incorporated businesses, government proposes to increase the tax-free annual threshold for such organisations from R59 750 to R63 556. Taxable income of up to R300 000 is currently taxed at 10 per cent; this threshold is now increased to R350 000 and the applicable rate is reduced to 7 per cent. For taxable income above R350 000, the normal corporate tax rate of 28 per cent applies.
- These amendments will come into effect for years of assessment ending on or after 1 April 2012.
Securities transfer tax
- An exemption from securities transfer tax currently applies to brokers who acquire shares for their own benefit. It is proposed that the current blanket exemption for brokers be abolished and that broker transactions, where the beneficial ownership rests with the broker, be taxed at an appropriate lower rate. This reduced rate will also cover the purchase of shares utilised in support of derivative hedging.
- These amendments will come into effect on 1 April 2013.
Tax policy research projects
It was announced that the following tax policy research projects will be undertaken or completed during 2012/13:
- Reforms to the primary, secondary and tertiary rebates in the context of a review of means testing for the old age grant and with the intention to introduce a child and/or dependant tax rebate/credit.
- Taxation of financial instruments (including derivatives).
- Long-term insurance companies – review of the taxation, accounting and regulatory practices of the four fund system.
- Taxation of income from capital (interest income, dividends, capital gains, rental) to be reviewed to ensure greater equity and minimise opportunities for tax arbitrage.
- VAT treatment of public passenger transport.
- The implementation and importance of user charges and other fees.
- Taxation of transport fuels – review to determine the equitable treatment of all transport fuels based on their environmental characteristics (for example, CO2 emissions) and energy content.