Taxation in South Africa 2015/2016 Taxation in South Africa – 2015/16 Preface This is a general guide providing an overview of the most significant tax legislation administered in South Africa by the Commissioner for the South African Revenue Service (SARS), namely, the – • Income Tax Act; • Value-Added Tax Act; • Customs and Excise Act; • Transfer Duty Act; • Estate Duty Act; • Securities Transfer Tax Act; • Securities Transfer Tax Administration Act; • Skills Development Levies Act; • Unemployment Insurance Contributions Act; • Employment Tax Incentive Act; and • Tax Administration Act. This guide is not an “official publication” as defined in section 1 of the Tax Administration Act 28 of 2011 and accordingly does not create a practice generally prevailing under section 5 of that Act. It should, therefore, not be used as a legal reference. It is also not a binding general ruling under section 89 of Chapter 7 of the Tax Administration Act. Should an advance tax ruling be required, visit the SARS website for details of the application procedure. The information in this guide concerning income tax relates to – • natural persons, deceased estates, insolvent estates or special trusts for the 2016 year of assessment commencing on 1 March 2015 or ended on 29 February 2016; • trusts for the 2016 year of assessment commencing on 1 March 2015 or ended on 29 February 2016; and • companies for the 2016 year of assessment with financial years ending during the 12-month period ending on 31 March 2016. The information in this guide concerning the rates of the various taxes, duties, levies and contributions reflect the rates applicable as at the date of its publication. While care has been taken in the preparation of this document to ensure that the information and the rates published are correct at the date of publication, errors may occur. The rates recorded as “as to date” are the rates as at the date of publication of this guide. Should there be any doubt it would be advisable for users to verify the rates with the relevant legislation pertaining to that rate, applicable to the tax, customs or excise concerned. All guides, interpretation notes, forms, returns and tables referred to in this guide are available on the SARS website at www.sars.gov.za, and are as at the date of this publication. Taxation in South Africa 2015/16 i This guide has been updated to include the Taxation Laws Amendment Act 25 of 2015 promulgated on 8 January 2016 and the Rates and Monetary Amounts and Amendment of Revenue Laws Act 13 of 2015 promulgated on 17 November 2015 as well as the Budget Review of 2016. Should you require additional information concerning any aspect of taxation, you may – • visit your nearest SARS branch; • contact the SARS National Contact Centre – if calling locally, on 0800 00 7277; or if calling from abroad, on +27 11 602 2093 (only between 8am and 4pm South African time); • visit the SARS website at www.sars.gov.za; or • contact your own tax advisor or tax practitioner. Comments on this guide may be sent to [email protected]. Prepared by Legal and Policy Division SOUTH AFRICAN REVENUE SERVICE 21 April 2016 Taxation in South Africa 2015/16 ii Contents Preface .................................................................................................................................. i Glossary .............................................................................................................................. 1 1. Introduction ............................................................................................................. 2 1.1 SARS ........................................................................................................................ 2 1.2 Secrecy and confidentiality ........................................................................................ 2 1.3 Overview of taxes ...................................................................................................... 2 1.4 Budget review of 2016 ............................................................................................... 4 2. Income tax ............................................................................................................... 5 2.1 Introduction ............................................................................................................... 5 2.1.1 Main source of government’s income ........................................................................ 5 2.1.2 Registration as a taxpayer ......................................................................................... 5 2.1.3 Change of address .................................................................................................... 5 2.1.4 Year of assessment ................................................................................................... 5 2.1.5 Filing of tax returns .................................................................................................... 6 2.1.6 eFiling........................................................................................................................ 6 2.1.7 Payments at banks .................................................................................................... 7 2.1.8 Electronic funds transfer ............................................................................................ 7 2.1.9 Assessment ............................................................................................................... 7 2.1.10 Calculation of taxable income .................................................................................... 7 2.1.11 Calculation of final income tax liability........................................................................ 8 2.2 A resident .................................................................................................................. 9 2.2.1 Natural persons ......................................................................................................... 9 (a) Ordinarily resident test ............................................................................................... 9 (b) Physical presence test ............................................................................................... 9 2.2.2 Companies and other entities .................................................................................... 9 2.2.3 Residents working outside South Africa ................................................................... 10 2.2.4 Agreements for the avoidance of double taxation .................................................... 10 2.2.5 Unilateral relief for foreign taxes paid or payable ..................................................... 10 2.3 Non-resident ............................................................................................................ 11 2.3.1 A person who is a non-resident but working temporarily in South Africa .................. 11 2.3.2 Employees working at foreign diplomatic or consular missions in South Africa ........ 11 2.4 Natural persons ....................................................................................................... 12 2.4.1 Requirements to submit a return of income (return) ................................................. 12 2.4.2 Taxation of income from employment ...................................................................... 13 (a) Allowances .............................................................................................................. 13 (b) Taxable benefits ...................................................................................................... 14 (c) Taxable gains .......................................................................................................... 16 2.4.3 Exempt benefit – Relocation costs ........................................................................... 16 2.4.4 Income of spouses .................................................................................................. 17 2.4.5 Pay-As-You-Earn .................................................................................................... 18 (c) Pay-As-You-Earn liability of employees ................................................................... 18 (d) Pay-As-You-Earn liability of directors ...................................................................... 18 (e) Pay-As-You-Earn liability of personal service providers ........................................... 19 (f) Pay-As-You-Earn liability of labour brokers ............................................................. 19 (g) Pay-As-You-Earn liability of independent contractors .............................................. 19 2.4.6 Provisional tax ......................................................................................................... 20 2.4.7 Allowable deductions ............................................................................................... 21 (a) General deduction formula ...................................................................................... 21 Taxation in South Africa 2015/16 iii (b) Home office expenses ............................................................................................. 22 (c) Other limited deductions which employees and office holders may claim ................ 22 2.4.8 Prohibited deductions .............................................................................................. 24 (a) Domestic or private expenses ................................................................................