ATC171108: Report of the Standing Committee on Finance on the Tax Administration Laws Amendment Bill [B28 - 2017] (National Assembly- section 75), dated 8 November 2017

Finance Standing Committee

Report of the Standing Committee on Finance on the Tax Administration Laws Amendment Bill [B28 - 2017] (National Assembly- section 75), dated 8 November 2017.

The Standing Committee on Finance, having considered and examined the Tax Administration Laws Amendment Bill [B28 - 2017] (National Assembly – section 75), referred to it, and classified by the JTM as a section 75 Bill, reports that it has agreed to the Bill.

 

1. The TALAB makes provision for a R350 000 annual cap on deductible retirement fund contributions to be spread over a tax year for PAYE purposes. Some taxpayers were claiming the full R350 000 deduction on contributions to retirement funds in the first few months of the year, which is out of line with the treatment of other deductions for PAYE purposes (which are calculated on an annual basis and apportioned across each month). This treatment created a benefit for the taxpayer and complications in the PAYE system if the person is moved to another employer. Comments from stakeholders highlighted that the original proposal effectively led to a monthly cap, which prejudiced individuals with a variable income as the excess deduction could not be claimed for a later month. SARS agreed to amend the proposal to have a cumulative cap to avoid such a circumstance.

 

1. In order to improve the effectiveness of combatting VAT refund fraud and in response to representations by members of the financial sector, the TALAB provides that if there is a suspected refund fraud, banks should notify SARS and automatically place a hold on the refund (maximum of 2 business days) if the banks reasonably suspect that the payment of a refund into the taxpayer’s account by SARS has been obtained illegally. There was concern in the comments provided by some banks that the legislation effectively forces banks to place these amounts on hold, rather than only enabling the banks to hold these after consultation with SARS and the taxpayer. This view was not supported by SARS since prior consultation with the account holder would render the provision ineffective, given the speed with which amounts can be transferred to other accounts. SARS stated that after further discussions and engagement with the banks, through the Banking Association of South Africa (BASA), that these institutions agreed on the importance of the measure and would support the amendment.

 

The Democratic Alliance (DA) reserves its position on the Bill.

 

Report to be considered.