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FAQ - 8 August 2017

08 August 2017   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

1. Do amounts less than R100 affect the issue of Tax Clearance Certificate?

Q: We have a client who recently checked his Tax Compliance Status on e-filing. On his TCS dashboard it showed as non-compliant due to an outstanding STC amount of less than R20. Will this affect the issuing of a tax clearance certificate as we understand that amounts less than R100 will not hinder a TCS application?

A: We agree with you.  The relevant part of the Act is found in section 256 of the Tax Administration Act.  We copied that here, for ease of reference:

(3) A senior SARS official may provide a taxpayer with confirmation of the taxpayer’s tax compliance status as compliant only if satisfied that the taxpayer is registered for tax and does not have any—

(a) outstanding tax debt, excluding a tax debt contemplated in section 167 or 204 or a tax debt that has been suspended under section 164 or does not exceed the amount referred to in section 169(4); or

(b) outstanding return unless an arrangement acceptable to the SARS official has been made for the submission of the return. 

So, section 256(3) specifically provides that the confirmation of tax compliance status can be issued in your case (as the tax debt is less than R100).  You should escalate the matter to a more senior SARS official at the SARS office.  

2. Is there a double tax agreement between South Africa and the UK?

Q: I have a client whose sister has a company in the UK, she is an employee of this company in the UK and gets taxed in the UK however she lives here in SA. Does she need to declare her income here in SA or is that not classed as double taxation?

A: From the information provided we accept that the individual is a person who is (or was) deemed to be exclusively a resident of the RSA for purposes of the application of any agreement entered into between the governments of the RSA and the United Kingdom for the avoidance of double taxation. 

Article 14 deals with income from employment and provides, subject to the provisions of Articles 15, 17 and 18 of the Convention, that “salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State.  If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.”  Accounting for this in the tax return will then depend on whether the section 10(1)(o)(ii) exemption applies.  From the information provided it appears it does not. 

As a resident of the RSA she will then declare the income on her return of income (IRT12).  She will then get a rebate for any tax suffered in the UK in respect of the salary. 

3. What amount should be disclosed under code 4582 on an IRP 5?

Q: Let’s use an example - Travel allowance (3701) for the year R24 000. If the employer did not elect to include 20% of the travel allowance the amount under code 4582 will be R19 200. If the employer did elect to use the 20% criteria, would the amount be R4 800?

A: Code 4582 is only valid from the 2017 year of assessment.  Code 4582 is mandatory if the sum of codes 3701, 3702, 3802 and 3816 is greater than zero; Code 4582 must not be greater than the sum of codes 3701, 3702, 3802 and 3816. 

According to the SARS guide

Value of ‘remuneration’ included in the following allowances and benefits, but limited to: 

  • The portion (80 or 20%) of the allowance and benefit which is subject to PAYE –

o   Travel allowance (3701/3751),

o   Value of the Use of motor vehicle acquired by employer NOT via an Operating Lease (3802/3852)

o   Value of the Use of motor vehicle acquired by employer via an Operating Lease (3816/3866)

  • The portion (80 or 20%) of the reimbursive travel allowance (only 3702/3752 and NOT 3703/3753) – although employers are not required to withhold PAYE from this reimbursement, that portion which represents ‘remuneration’ (80 or 20%) must be included in code 4582.

Note: The value of this code represents the total of the amounts reflected under each of the above codes which are ‘remuneration’ for the purposes of the allowable deduction i.r.o. pension, provident and retirement fund contributions [section 11(k) of the Income Tax Act].  

We agree with your examples.  Remember that it is only where the employer is satisfied that at least 80 per cent of the use of the motor vehicle for a year of assessment was for business purposes, when only 20% of the amount of an allowance or advance must be included.  In all other instances it is 80%.

Disclaimer: Nothing in this query and answer 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 answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.


 

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