When a parcel is a pasela for the taxman
Gift allowance regulation a nasty surprise
WHEN your friends and family send you a present from overseas, they could also be giving an unintentional “gift” to the taxman.
Thanks to widespread ignorance about South Africa’s fairly low duty-free gift value limit of R1 400, many South Africans suffer gift shock at post office counters.
A gift with a declared foreign currency value of more than R1 400 is regarded as a commercial transaction, so forfeits its “tax-free” status. All online purchases are deemed to be commercial transactions, so attract customs duties and VAT.
Durbanite Mary Chantal Ntibasame learnt this the hard way.
Her daughter, Lilianne Basesekaza, who lives in Georgia in the US, sent her a surprise parcel of bags and other items in January. But when Ntibasame went to collect it from the Marine Parade post office, she was told she had to pay R4 125 before it would be released to her.
“I went mad because I was not expecting that,” she said. “It’s a gift which my daughter paid $137 [R1 825] in postage to send to me.”
Basesekaza said she informed the US post office “and they were extremely shocked because I had clearly indicated that the parcel was a gift, and I was told that receivers are never charged for receiving gifts”.
“I paid a huge amount of money to send the parcel.”
Basesekaza declared the value of the parcel as $525 — the equivalent of just under R7 000, exactly five times the maximum gift allowance of R1 400 — which resulted in a massive customs and VAT fee.
To make matters worse, she couldn’t find out why such a fee was being demanded.
“I called about seven SARS offices and none of them answered. And only one of the many post office branches I called could help me,” she said.
Ntibasame’s shock could have been even greater, because until around the middle of last year, the foreign gift value limit was the rand equivalent of just R400. That limit was set in 1993, when the exchange rate was about R4/$. The rate now is above R13/$.
Before the limit was raised, a gift sent from the US, for example, with a declared value of just $28 — the price of a T-shirt — was not regarded as a gift, so it attracted customs fees and VAT.
The limit is the responsibility of the International Trade Administration Commission of South Africa, which falls under the Department of Economic Development. SARS enforces the limit.
Asked what the post office was doing to raise awareness, head of operations Mark van Rensburg said the information was on its website.
“We will move it to a more prominent position so that customers can easily spot it. We will also do awareness training among our tellers so that they can inform customers,” he said.
Arlene Beukes of Pretoria North was shocked when she went to collect a small parcel from her local post office last August.
It contained some postcards and a small notebook with a declared value of à33 (R470). Despite it being marked as a gift, Beukes was made to pay R283 in customs fees and VAT. The Sunday Times took up the case with the post office and Beukes has since received an apology and a refund.
Asked what would happen to a gift with a declared value of more than the equivalent of R1 400 if the recipient was unable to pay the fees demanded, Martin Coetsee of the post office’s retail operations said the parcel would be returned to the sender.
Consumers who felt the tax was excessive could request an assessment, Coetsee said.
“However, the discretion to reduce a correctly assessed amount lies with SARS and not with the post office,” he said.