National Treasury, last week, released the provisional financing figures which showed that tax collections for the first eight months of the 2009/10 fiscal year, were R26 billion lower than the same period in the previous year. The South African fiscal gap could widen further after the finance ministry figures indicated that government expenditure had increased, while tax collections were much lower compared to last year.

Finance Minister Pravin Gordhan has already indicated in the MTBP that tax revenue for the 2009/10 fiscal year would likely undershoot the target by about R70 billion. In October, the Treasury forecasted a record budget deficit of 7.6 percent of gross domestic product in the 2009/10 fiscal year, although analysts predicted that it could be higher.

While the South African economy experiences a mild recovery, the recovery is likely to be slow and will put pressure on government’s revenue for some time. In addition, the R26 billion reflects the pressure on the government coffers, given that households and companies continue to feel the impact of the recession.

From the above, it is clear that there is a risk to the upside in terms of the Minister revising the budget deficit up in the budget speech on 17 February. In all probability we may see an increase in tax rates in the budget speech...

Yours truly,
Stiaan Klue

Pressure is building on Finance Minister Pravin Gordhan to raise taxes in his national budget next month to finance an expanded budget deficit, which most economists believe will reach a level higher than in the pre-democracy period.

The objection and appeal procedure to contest an assessment and the remedies provided by the Constitution, including the Promotion of Administrative Justice Act, are the major weapons in the taxpayer’s armoury in disputes with SARS.

The decision in City of Tshwane Metropolitan Municipality v Cable City (Pty) Ltd [2009] ZACC 34 involved an application to the constitutional court for leave to bring an appeal to that court in a matter concerning liability for a regional services levy imposed by a municipality.

The emergence of the virtual marketplace has changed the way in which the traditional business model operates. What does this mean for the country’s tax base? Are South Africa’s tax laws still applicable to transactions taking place in the cyber world?

Durban tourism operator Shamaman Bundoo's appeal for a non-custodial sentence against his income tax convictions was refused by the Pietermaritzburg High Court on Friday.

The SAIT Technical Department will be submitting comment to SARS on the draft Bill 26 February 2010. Members and tax professionals can submit comments to kpietersen@thesait.or.za for inclusion into the SAIT main submission.

With effect from 7 December 2009, SARS will no longer accept current Notice of Objection forms for Personal Income Tax objections. Existing Alternate Dispute Resolution (ADR) forms will also be made redundant for Personal Income Tax objections.