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The South African Revenue Services (SARS) are modernizing its systems and process, and this could potentially have a significant effect on how South Africans abroad will need to remain compliant with the SARS obligations. SARS announced back in February 2020 that it aimed to become a future revenue authority informed by data-driven insights, self-learning computers, AI, and other devices in what was termed “Vision 2024”. And much of this planning has been converted into reality already. We have seen this through the SARS tax implications.

Through a SARS app, Vision 2024 anticipates using third-party data to make an “assessment” of an individual where real-time tax liabilities will be shown, which will be valid in terms of the Tax Administration Act

As the first step to this process, The South African Revenue Service (SARS) plans to collect taxes from individuals on a real-time monthly basis. The goal SARS outlined in its Vision 2024 is to do away with the “filing season” in 2025.

According to a recent SAIT/SAGE payroll tax update webinar, Vision 2024 aims to:

Enable accurate and timely withholding of taxes from employees and their payment to SARS;
Reduce the payroll administration for employers, payroll administrators and SARS\enable employees to monitor their tax obligations during the tax year;
Simplify the annual returns process for employers; and
Relieve the necessity for most salaried employees to file annual tax returns.

Currently, banks, financial institutions, medical schemes, attorneys, estate agents and issuers of bonds, debentures and financial products are required to file third-party returns to SARS once a year after the end of the year of assessment which accrued to a taxpayer in that year and contains information on interest, dividends or capital gains from that year.

These third-party returns, together with the IRP5 certificates issued to employees and EMP 501 returns filed with SARS by employers, are currently used to pre-populate the ITR12 annual tax returns for individuals.

Vision 2024 envisages a data analytics environment where third-party data will be provided to SARS on a real-time monthly basis which will then be used to generate an “assessment” on a SARS app.

This could allow for the possibility that third-party data could be used by SARS to generate an “effective tax rate” for each taxpayer.

There is, however, no information on how SARS will collect the tax due on business income, rental income and capital gains which are not subject to third-party data reporting.

It appears that taxpayers will need to update the app with these amounts and monitor and pay their monthly tax liabilities on the app as they arise. This means that SARS tax implications can be managed easily and therefore remains manageable.

In order for the foundations to be laid for this system to potentially be implemented, experts at Webber Wentzel anticipate that:

– The Tax Administration Act and various other tax statutes will need to be amended to accommodate the implementation of Vision 2024.
– The provisional tax system would be reviewed given changing circumstances and international developments, as noted in the 2022 Budget, and this review would coincide with the implementation of Vision 2024.
– SARS will circulate information on Vision 2024, especially on the implications for employers and employees and all those required to file third-party data with SARS.

Whether or not the legalities can be executed effectively, (based on the complexities of the many components, acts and case law that dictate income tax) and the necessary amendments implemented within the required timeframe remain to be seen. The theory and idea are positive and one of a progressive, forward-facing approach from SARS.

The effect of all of this is that South Africans abroad need to be cognizant of their interactions with SARS, and will be well-served to speak to us about becoming fully compliant. SARS tax implications as we all know can have a huge impact on expats.

For much more information download the South African Expat Navigation Guide.

Also, download our South African Budget Speech 2021.

South African Tax Guide

About Mike Coady

Mike Coady is an expert expat financial advisor based in Dubai and is on hand to help with all of the above and more. With expertise about UK and Dubai expats, you will be in safe hands with Mike Coady and his expat tax services, so contact us today.

Mike is an award-winning money coach and industry leader in the financial sector.

Qualified to UK Financial Conduct Authority (FCA) standards, a member of the Chartered Insurance Institute, a Founding Fellow of the Institute of Sales Professionals (FF.ISP), a Fellow of the Institute of Directors (FIoD) and featured as a highly qualified Financial Adviser in Which Financial Adviser.

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Blog published by Mike Coady.

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