The Minister of Finance is releasing the draft Taxation Laws Amendment Bills, 2008, today for public comment. The draft Bills may be obtained from the National Treasury (www.treasury.gov.za) or SARS (www.sars.gov.za) web sites. This legislation, together with the Revenue Laws Amendment Bills (due later in 2008), will give effect to the tax proposals presented by the Minister of Finance in the 2008 National Budget as tabled in Parliament on 20 February 2008. This set of Bills deals with the rates, thresholds, urgent policy and administrative matters as well as technical corrections. The more complex policy proposals announced will be addressed in the Revenue Laws Amendment Bills after further consultation.
Rates and thresholds: The main purpose of the Bills is to give effect to the rates and thresholds so these items can formally go into effect as soon as possible in accordance with the mandate provided in the 2008 Budget Review. The full list of rates and threshold changes involving the Income Tax and Value-Added Tax Acts are attached as an Annexure for easy reference.
Pensions: The proposed legislation clarifies pension tax administration by codifying and clarifying key pension practices and interpretations within the Income Tax Act. The legislation also paves the way for much of the regime to be shifted to the Pensions Act so that regulation is mainly handled by the Financial Services Board (rather than dual oversight by the Financial Services Board and the South African Revenue Service).
Skilled expatriates: Relief is granted to skilled expatriates working temporarily in South Africa. These expatriates can now receive employer-provided accommodation for a period of two years without being subject to fringe benefits tax. This exemption is subject to a ceiling equal to the lesser of 25 per cent of salary or R25 000 per month.
Anti-avoidance: The proposed legislation closes certain pressing domestic and cross-border restructuring schemes. This aspect of the legislation is addressed in another simultaneous media release called "Taxation Laws Amendment Bills, 2008: Company Restructuring Measures."
The current penalty system does not appropriately cater for less serious procedural and administrative non-compliance. The legislation will provide an enabling framework for a more objective penalty system to be introduced with certain criteria to be determined by regulation.
In line with international practice several amendments are proposed to underpin the simplification of individual income tax returns. These include the removal of legislative requirements for the attachment of supporting documentation to returns, greater flexibility with respect to employee tax returns and the introduction of a penalty for the failure to submit annual reconciliations of employees' tax.
Note: An Explanatory Memorandum is also published to assist in interpreting and understanding the above bills at a more detailed level.
The National Treasury is scheduled to brief the Parliament's Portfolio Committee on Finance on the draft legislation on 4 March 2008. Parliament will through its processes request public comments on the draft Bill, and thereafter hold public hearings on 5 March 2008. Whilst all comments should be submitted to the Parliamentary Portfolio Committee of Finance, members of the public are also invited to send the same comments to the National Treasury directly, before 5 March 2008 (and hence before the public hearings). Comments in this regard should be sent by email to jeanne.viljoen@treasury.gov.za or by fax to 012 315 5516. Please ensure that the comments reach us by 5 March 2008.
Secondary rebate Section 6(2)(b) R 4 680 R 5 040 2.
Car allowance: Individuals receive an annual vehicle allowance to defray business travel expenses.
Exempt scholarships and bursaries: Employers can provide exempt scholarships and bursaries to relatives of low-income employees, subject to annual monetary ceilings.
Medical scheme contributions: Medical scheme contributions are tax deductible if the individual pays (and tax-free if the employer pays) subject to monthly ceilings.
Public benefit organisations: PBOs providing housing are exempt if beneficiaries are part of households with a monthly income of the stated amount or less.