FAQ - 26 February 2015
24 February 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
1. Who will be responsible for deducting the 40% penalty if the tax-free investment limit?
Q: The annual contribution limit for tax-free investments is R30 000. A 40 per cent penalty is levied by SARS on the excess above the annual limit. Who must withhold or deduct this penalty? What if the individual invested in different companies? Or will the penalty be payable on assessment? What if the taxpayer is below the tax threshold?
A: The newly introduced section 12T(7) Income Tax Act provides that 40% of the amount contributed in excess of either the R30 000 annual threshold or the R500 000 life time threshold will be deemed to be an amount of normal tax payable by that person in respect of that year of assessment. In our view the non-compliance would be determined on assessment and would then be added as normal tax payable in the assessment, therefore no withholding of the deemed normal tax amount would apply.
2. What are the VAT consequences of a company reimbursing an employee for company expenses?
Q: My client is employed by a company. He invoices the company for all company expenses he incurs. When the company reimburses that employee, must the invoiced amount include VAT? If not, is the invoice reflected as income?
A: Where an employee as agent incurs expenditure on behalf of the employer, in principle, as VAT is levied on such supply by the supplying vendor, the invoice can be made out to either the agent employee or the principal employer in terms of section 54(2) of the VAT Act.
The employer as principal is then in terms of section 16(2)(e)of the VAT Act entitled to claim an input on such invoice subject to the supply meeting all the other requirements. Please note that section 54(3) of the VAT Act imposes an obligation on the employee to maintain certain records and that the employer is provided with the relevant invoice and a written statement with 21 days with the specified particulars of the supply before the employer may claim the input tax. We are however unsure how SARS enforces the latter requirement in relation to employee supplies as agent of the employer as principal.
3. Should UIF be deducted from the salaries of foreign employees working in SA?
Q: I am responsible for the accounts of a school of teachers from Uganda, Zimbabwe and Ghana. I am not deducting UIF for them. I am only deducting tax as per the statutory tables and the owner of the school thinks I must not deduct even the PAYE. Can you deduct UIF from the salaries of foreign employees working in SA?
A: Section 4(1)(d) UIF Contributions Act 4 of 2002 does exclude certain foreign employees from contributing where they enter SA for a contract of service, apprenticeship or learnership of fixed duration and on termination of such service or learnership must return to their home country by law or per the contract. If there is no legal or contractual obligation on the employer to repatriate the employee to his home country on termination of the contract, then the exclusion will not apply and contributions would have to be paid.
As to the claiming of benefits, the UIF Act does not specifically exclude non-residents in section 14 and the benefits seems to apply to all "contributors” in section 12 and 16 who comply with the provisions of the UIF Act. A "contributor” merely being defined in section 1 as a natural person, who is or was employed, to who the Act applies and who have made contributions. It is our view that exclusion can only be in terms of the prescribed requirements in section 16, however we know of no legislative prohibition for permanently employed foreign nationals who have a passport, relevant working permits and are UIF contributors to claim UIF benefits.
4. How do I complete an IT14SD?
Q: I need some help with submitting an IT14SD. I am not sure how to complete the VAT reconciliation schedule.
Total output VAT as per VAT201 tax periods (field 13)
My periods for VAT are Feb/Mar, Apr/May and so on, so what figure do I put in?
A: Please see the SARS guide on the link below. It will show you how to complete an IT14SD.
5. How can one obtain a tax clearance certificate for a deceased estate?
Q: I have a client who has been made the executor of her mother’s estate by the Master of the High Court. The client has been informed that she needs to get a tax clearance certificate from SARS for her mother as well as proof that her mother’s income tax number is active. I have suggested that she appoint a qualified co-executor but she is hesitant to do so.Do you know how my client can go about getting the relevant documents? I have tried to look this up on the SARS site but to no avail.
A: In our view the "representative taxpayer” per section 153 Tax Administration Act will be allowed by SARS to exercise the relevant authority on behalf of the estate to request the relevant document and information from SARS. A "representative taxpayer” by definition in section 1 of the Income Tax Act includes an executor of an estate.The executor will have to take with his or her ID and a certified copy of the appointment by the Master of the High Court as executor. Where a person other than the executor will be requesting such information, such person would require a relevant power of attorney from the executor, a certified copy of the executors ID, the executor’s appointment letter and that person ID.
Disclaimer: Nothing in these queries and answers should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answers, SAIT do not accept any responsibility for consequences of decisions taken based on these queries and answers. It remains your own responsibility to consult the relevant primary resources when taking a decision.