The South African Revenue Service (SARS) on Thursday announced details for the 2008
Tax Season that, for the first time, placed specific emphasis on the central
role of employers in the Personal Income Tax (PIT) system.
In announcing improvements to the filing process for 2008, SARS stated that it
has made a commitment to continually improve service to taxpayers whilst strengthening
the overall integrity of the tax system.
In 2007, enhancements were made that sought to provide better service to taxpayers
and improve SARS’s ability to detect non-compliant behaviour earlier.
For 2008 further changes will be introduced that will focus on the legal obligation
of employers who administer payroll taxes – PAYE, SITE, UIF and SDL.
These
changes will affect the way in which employers submit their annual PAYE declarations
to SARS which must reflect deductions made from the salary of employees and
whether these have been paid to SARS on behalf of employees.
It will also affect the way companies issue IRP5 certificates to employees
for a particular tax year and the traditional way in which individuals receive,
complete and submit their annual tax returns to SARS.
SARS says that these changes will be introduced to make filing a tax return
easier for individuals, and to provide companies with free, convenient software
for automated payroll reconciliations as well as technical assistance.
SARS implemented the first phase of the PIT reform programme in 2007 with changes
to the income tax return process:
- The tax return was redesigned, simplified and reduced to 2 pages;
- Taxpayers did not have to submit supporting documents to the return;
- SARS applied electronic 3rd party data verification of information the
taxpayer provided;
- Returns were scanned and assessed through an automated process for faster
turnaround times;
- A sophisticated risk engine was developed to detect non-compliance.
The changes for 2008 and the focus on employers are the second phase of SARS’s
PIT reform programme. It also contributes to the important policy objective
announced by the government, to expand social assistance through the introduction of a
wage subsidy and social security to all working South Africans.
The ultimate aim for SARS remains to present the majority of individual taxpayers
with a pre-populated tax return by transforming the PIT process.
The eventual
goal is to switch to a return-free system for the majority of salaried individual
taxpayers, in which their tax liability is calculated using electronic data supplied
directly to SARS by 3rd parties and is reflected in a tax account sent to the
taxpayer.
For employers, these changes will mean that they will have more time - until
30th June, 2008 - to prepare for these changes. Companies then have a 60 day
window period – 1st July 2008 to 29th August 2008 - to submit employer
PAYE deductions to SARS.
Employees cannot receive or submit their tax returns
to SARS until employers complete their PAYE declarations to SARS.
SARS will provide all employers or companies with computer software that can
reconcile the deductions they made from employees’ and what companies
paid to SARS, free of charge.
The payroll information from employers to SARS
will allow SARS to issue the majority of taxpayers with a pre-populated return
that already contains the income they have earned. However, SARS warned employers
that do not comply by 29th August, 2008, that they will face "strong penalties."
For individuals, the filing period for returns will open on 1st September,
2008. Individuals must request a return from SARS from this date. The deadline
for paper returns will be 21st November, 2008, and for electronically filed
returns 23rd January, 2009.
Certain individuals with income below SAR120,000
per year year and who have a single employer and source of income, and who meet
certain criteria will not have to complete and submit a tax return to SARS,
as their details and income stream will be automatically captured by the new
process.
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