A quick look at points raised by Finance Minister Trevor Manuel in his Budget speech.
- Low-cost housing allowances:
In its guide to the Budget tax proposals, the South African Revenue Service (SARS) says it will enhance current provisions in the Income Tax Act to encourage business employers, developers, landlords and public benefit organisations to provide houses for low-income households.
SARS says it will look at giving employees who are provided with low-cost housing by their employers further relief from fringe-benefits tax - the tax you pay for being given a housing benefit by your employer.
SARS says it will revise the amounts employers can deduct for low-income housing provided to their employees. A tax bill released this week proposes that the current limit of R6 000 that an employer can deduct for a dwelling provided to an employee be increased to R15 000.
- Bursaries for employees' relatives:
If your employer gives a bursary to, for example, your child, you are regarded as having received a taxable fringe benefit.
However, currently, if you earn below R60 000 a year, your employer can give a bursary to a relative of yours and you will be exempt from fringe-benefits tax up to R3 000.
SARS plans to increase the amount you can earn and still qualify for this exemption to R100 000 a year and to increase the tax-free fringe benefit to R10 000.
- Refund of tax:
If you earn below R60 000, you pay only tax that is referred to as Standard Income Tax on Employees (SITE) and you don't have to submit a tax return.
SITE is calculated assuming that you will work a full year. Many people in this income category, however, do not work for a full year, and are unable to claim back the tax they have paid on their earnings.
SARS plans to allow these taxpayers to submit a tax return to claim a refund of tax they have overpaid. Currently, these taxpayers can submit a tax return only if they, for example, need to claim a deduction for medical expenses.
- Use of cell phones/laptops:
Employees are increasingly being given cell phones and laptops by their employers to increase their productivity outside of the office, and personal use of these items is inevitable, SARS says.
The good news is that SARS is not planning to tax you for minor or incidental personal use you get from cell phones and laptops supplied by your employer.
- Repayable employee benefits:
SARS says employees sometimes receive payments from their employers, such as maternity payouts, retention payments and performance bonuses, that subsequently have to be repaid if certain conditions are not met.
Currently, these payments are included in your income for tax purposes when you receive them, but the repayments, should you have to make these, are not tax deductible.
SARS says it plans to remedy this unfair situation.
- Provisional tax:
In its guide to the Budget tax proposals, SARS says it plans to continue reviewing the current provisional tax system.
Tax practitioners says SARS is considering measures to ensure that you do not under-report your expected earnings in your provisional tax return by applying penalties and interest if the income you declare in your final tax return is way out of line with what you declared in your provisional return.
Currently, you are expected to use your earnings in the previous tax year to estimate your income in the current tax year on your provisional tax returns.
SARS says in its guide to the Budget tax proposals that you should be allowed to exclude any lump sums you received from a retirement fund in the previous tax year from your income estimate for the current year and it plans to introduce changes to effect this.
A tax bill released this week proposes that if you are under the age of 65, you will become liable for provisional tax if your taxable interest, dividend or rental income (that is after the interest income exemptions) exceeds R20 000. Currently, this limit is R10 000.
- Interest on tax owed or owing:
Another change SARS is considering is amending the way in which you are charged and paid interest on tax you owe and are owed respectively if you are not a provisional taxpayer.
Franz Tomasek, SARS's assistant general manager for legislative policy, says SARS will set a deadline for each tax year. For example, if the tax year ends on February 28, the deadline could be September 30.
If you haven't paid your tax by the deadline, you'll become liable for interest on the tax you owe and, if SARS owes you a refund of tax and has not paid you by the deadline, it will be liable to pay you interest.
Tomasek says this means that if you delay submitting your return, for example, for two years, and are liable for tax, you will no longer enjoy free use of the money you owe SARS for all the time that elapses since you should have been assessed.
Equally, if SARS delays your refund you will be paid interest for the time you have been out of pocket.
Currently, you are liable only for a penalty for late submission. Interest on tax you owe SARS only applies if you fail to pay by the due date set after you have been assessed.
SARS is also considering a more objective penalty system that is consistent across different tax acts.
- Tax evasion:
Currently, if you make a false statement or entry on your tax return, under various tax acts you can be presumed to have had the intent to evade assessment or taxation. You have to prove that this was not your intention.
SARS says that the constitutionality of this presumption will be reviewed.