SARS dou­bles up on re­quire­ments from 2013

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW - Beric Croome

In­sti­tu­tions now re­quired to sub­mit in­for­ma­tion to the com­mis­sioner bi-an­nu­ally with ef­fect from the 2013 year of as­sess­ment

SEC­TION 69 of the In­come Tax Act, 1962 (“the act”) im­poses an obli­ga­tion on cer­tain per­sons, if re­quired by the Com­mis­sioner for the South African Rev­enue Ser­vice, to fur­nish in­for­ma­tion or re­turns within the time pe­riod as pre­scribed by the com­mis­sioner.

These should re­flect, among other things, in­ter­est earned by tax­pay­ers, rent re­ceived by tax­pay­ers or other spe­cific in­for­ma­tion set out in sec­tion 69(1) of the act.

On Fe­bru­ary 29 2012, Gov­ern­ment No­tice No 173 ap­peared in Gov­ern­ment Gazette No 35090, im­pos­ing an obli­ga­tion on in­sti­tu­tions to sub­mit in­for­ma­tion to the com­mis­sioner bi-an­nu­ally with ef­fect from the 2013 year of as­sess­ment in terms of Sec­tion 69. His­tor­i­cally, the com­mis­sioner re­quired cer­tain in­sti­tu­tions to sub­mit re­turns and in­for­ma­tion re­flect­ing in­ter­est de­rived by tax­pay­ers in re­spect of the tax year on an an­nual ba­sis.

The com­mis­sioner has now de­cided that the in­for­ma­tion must be sub­mit­ted bi-an­nu­ally and that re­port­ing in­sti­tu­tions are re­quired to sub­mit re­turns of monies in­vested with, loaned to and de­posited with those in­sti­tu­tions and in re­spect of in­ter­est re­ceived by or ac­crued to or in favour of any per­son from the re­port­ing in­sti­tu­tion or from any other busi­ness car­ried on by the re­port­ing in­sti­tu­tion in SA for the pe­riod from March 1 2012 to Fe­bru­ary 28 2013.

The gov­ern­ment no­tice de­fines re­port­ing in­sti­tu­tions as fol­lows:

Banks reg­u­lated by the Regis­trar of Banks;

Co-op­er­a­tive banks reg­u­lated by the Co-op­er­a­tive Banks De­vel­op­ment Agency;

The South African Post Bank Limited (Post Bank;)

Fi­nan­cial in­sti­tu­tions reg­u­lated by of­fi­cials of the Fi­nan­cial Ser­vices Board;

Com­pa­nies listed on the JSE and con­nected per­sons in re­la­tion to the com­pa­nies that is­sue bonds, deben­tures or sim­i­lar fi­nan­cial in­stru­ments;

State-owned com­pa­nies that is­sue bonds, deben­tures or sim­i­lar fi­nan­cial in­stru­ments; and

Or­gans of state, as de­fined in Sec­tion 239 of the con­sti­tu­tion, that is­sue bonds or sim­i­lar fi­nan­cial in­stru­ments.

The re­port­ing in­sti­tu­tions are re­quired to sub­mit the re­turns to the com­mis­sioner by Oc­to­ber 31 2012 in re­spect of in­ter­est de­rived for the pe­riod March 1 2012 to Au­gust 31 2012, or by May 31 2013 in re­spect of the pe­riod March 1 2012 to Fe­bru­ary 28 2013.

Pre­vi­ously re­port­ing in­sti­tu­tions were only re­quired to sub­mit re­turns cov­er­ing the tax year that is gen­er­ally from March 1 2012 to Fe­bru­ary 28 2013. Af­fected in­sti­tu­tions will need to up­grade their sys­tems so that they can sup­ply the in­for­ma­tion re­quired bi-an­nu­ally and com­ply with the pro­vi­sions of Sec­tion 69 of the act and the gov­ern­ment no­tice. It must be noted that the com­mis­sioner re­quires that the re­turns are filed elec­tron­i­cally with SARS.

The gov­ern­ment no­tice also pre­scribes the in­for­ma­tion to be dis­closed in the re­turns sub­mit­ted to SARS in re­spect of nat­u­ral per­sons and per­sons other than nat­u­ral per­sons. In the case of nat­u­ral per­sons, the re­port­ing in­sti­tu­tion is re­quired to sub­mit de­tails of the per­son’s sur­name, ad­dress, iden­tity num­ber and tax ref­er­ence num­ber, as well as cer­tain other par­tic­u­lars per­tain­ing to the in­vest­ment held by the per­son with the in­sti­tu­tion and the in­ter­est earned.

Re­port­ing in­sti­tu­tions are also re­quired to in­di­cate the ac­count ver­i­fi­ca­tion sta­tus of the in­vest­ment in terms of the Fi­nan­cial In­tel­li­gence Cen­tre Act. The in­sti­tu­tion must also re­port the monthly to­tals of all cred­its and deb­its to the ac­count as well as the clos­ing bal­ance of ac­counts at the end of the re­turn pe­riod. In ad­di­tion, SARS must be ad­vised of the date on which the ac­count was opened and the date on which it was closed.

Much of the in­for­ma­tion now re­quired was not called for be­fore and did not ap­pear on IT3(B) cer­tifi­cates is­sued by banks to their clients. The re­quire­ment to dis­close the monthly to­tals of all cred­its and deb­its to the ac­count will en­able SARS to iden­tify tax­pay­ers who should be sub­ject to a tax au­dit.

In the case of com­pa­nies or other per­sons, the reg­is­tra­tion num­ber or ref­er­ence num­ber is­sued by the reg­u­la­tory au­thor­ity con­cerned must be sub­mit­ted to­gether with the tax ref­er­ence num­ber as well as in­ter­est de­rived by the tax­payer, and other in­for­ma­tion per­tain­ing to the move­ments on the ac­counts. The other in­for­ma­tion which is re­quired for nat­u­ral per­sons must also be sub­mit­ted for other per­sons.

SARS and a re­port­ing in­sti­tu­tion may agree to dif­fer­ent pe­ri­ods and dates for the sub­mis­sion of re­turns for per­sons whose fi­nan­cial years do not end on the last day of Fe­bru­ary of each year.

The ex­tent of the in­for­ma­tion re­quired from re­port­ing in­sti­tu­tions is oner­ous and it is go­ing to be im­por­tant that in­sti­tu­tions amend their sys­tems so that they can com­ply with the re­port­ing obli­ga­tions now im­posed in terms of sec­tion 69.

It re­mains to be seen if SARS will it­self is­sue no­tices to tax­pay­ers in re­spect of in­ter­est de­rived from the over-pay­ment of tax, which used to be done his­tor­i­cally, but does not ap­pear to be the case cur­rently. This does cre­ate dif­fi­cul­ties for tax­pay­ers, as it is of­ten un­clear as to the amount of in­ter­est re­ceived from SARS as a re­sult of the over­pay­ment of in­come tax or value-added tax, and, more im­por­tantly, the date on which that in­ter­est ac­crued in favour of the tax­payer.

Dr Beric Croome is a tax ex­ec­u­tive at ENS.

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