Despite growing pressure to hike taxes to balance the government’s books, Finance Minister Enoch Godongwana did not announce any major tax increases in his 2024 Budget speech in Cape Town on Wednesday.

No value-added tax (Vat) hike, no clear wealth tax, and no increases in the fuel levy and Road Accident Fund levy for the third year in a row.

But this has come at a cost – Godongwana and National Treasury have been forced to tap into SA’s Gold and Foreign Exchange Contingency Reserve Account (GFECRA) for the first time in two decades.

The GFECRA is administered by the South African Reserve Bank (Sarb). The move, tabled by Godongwana in his budget speech and related document, means that SA will be able to rein in debt, provide for public wage increases for nurses, doctors and teachers, and keep SA’s budget deficit as a percentage of GDP at 4.9%, as tabled in the 2023 Medium-Term Budget Policy Statement (MTBPS) in November.

Watch: Finance minister delivers 2024 Budget speech.

Here are the highlights

SA’s fiscal framework

* Revised estimate

SA GDP and CPI

• Government is sticking to the fiscal strategy outlined in the 2023 MTBPS and will achieve a primary budget surplus in 2023/24, with debt stabilising by 2025/26;
• Debt-service costs will peak as a share of revenue in 2025/26 and decline thereafter; and
• The consolidated budget deficit is projected to narrow from 4.9% of GDP in 2023/24 to 3.3% by the end of the 2024 medium-term expenditure framework (MTEF) period.

Tax proposals

• Government to tap SA’s contingency reserves over the medium term (three-year budget cycle) to the tune of R150 billion, with another R100 billion to support the Sarb;
• No increases in income tax rates or Vat;
• No fuel or Road Accident Fund levies (this will result in tax relief of around R4 billion);
• No inflation adjustments to the personal income tax tables and medical tax credits;
• Income tax will only be paid by those who earn more than R95 750 a year (rising to R148 217 for those aged between 65 and 75, and R165 689 for those aged 75 or older);
• Government proposes tax increases totalling R15 billion in 2024/25 to alleviate immediate fiscal pressures;
• SA will implement a global minimum corporate tax, with multinational corporations subject to an effective tax rate of at least 15%, regardless of where its profits are located;
• Producers of electric vehicles in the country will be able to claim 150% of qualifying investment spending as an incentive to aid the transition to new energy vehicles.

Sin taxes

Sin taxes were increased above inflation in most cases.

Social grants

SA’s social grants increase is below the 5% mark for 2024, with the main increase in April and a marginal increase in October. However, the increases are below the current inflation rate.

Source: https://www.moneyweb.co.za/in-depth/budget/budget2024-in-a-nutshell-no-major-tax-hikes/

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1. The Problem / Facts

With regards to the requirements for a valid tax invoice, does legislation specify whether it should include the physical address or the postal address? What address should be used in the case of a company with multiple branches?

2. Applicable Law 

Section 20(4) of the Value-Added Tax Act, No 89 of 1991

3. Application of the Law to the Facts

Section 20 (4) of the Value-Added Tax Act, No 89 of 1991 (VAT Act) prescribes that a tax invoice must contain certain details about the taxable supply as well as the parties to the transaction before it can be used by a trader to claim an input tax deduction in respect of the purchases made by the trader for his enterprise123. The following information must be included in a tax invoice.

• The words ‘tax invoice’, ‘VAT invoice’ or ‘invoice’.
• The name, address and VAT registration number of the supplier.
• The name, address and VAT registration number of the recipient (if applicable).
• Serial number and date of issue.

BGR 21, clarified that the address of the recipient and the supplier that must be reflected on a tax invoice, credit or debit note is either the physical address from where the enterprise is being conducted; the postal address of the enterprise; or both the physical and the postal address of the enterprise.

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SARS views VAT and Customs as two key areas of non-compliance where significant revenue is lost for the fiscus.

Over the last few months SARS have been conducting a large number of VAT and Customs audits resulting in significant assessments being issued to taxpayers.

In many instances assessments that should have been challenged by taxpayers have been accepted due to a lack of internal knowledge and a lack of financial resources to access external council.

Both the VAT and the Customs and Excise Acts are process and documentation  driven. Detailed knowledge of what is required to dispose of the onus of proof that non-compliance has not occurred is therefore essential to adequately and confidently respond to a SARS challenge.

Unfortunately this knowledge is often lacking resulting in hapless taxpayers!

As a taxpayer and a steward of the business, it is your duty to ensure that you have the minimum levels of knowledge and capacity to deal with any challenge that may come the way of your organisation.

The Tax Faculty actively assists with this challenge by providing relevant and practical webinars to alleviate the pressure and risk.

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If you did not sign an antenuptial contract, you are automatically married in community of property, which is the default marriage regime in South Africa.

As Crystal Venter, tax consultant at Tax Consulting SA, explains, this means that all assets and liabilities possessed prior to the marriage (subject to certain exceptions), as well as those acquired throughout the marriage, will be part of a communal (joint) estate.

Each spouse will be required to declare their respective earnings separately, with both being required to declare their respective joint assets.

As these assets form part of the joint estate, the tax liabilities would be equally divided.

Subsequently, when you and your spouse are married in community of property, the income tax implication is that you are taxed on 50% of each spouse’s individual earnings from assets.

According to the SA Revenue Service (Sars), once it has identified you as married in community of property based on your previous declaration and has further verified this information against the department of home affairs, you and your spouse will be linked as follows:

“If investment income is identified for you based on third-party data received (such as IT3(b) certificate for interest earned), the third-party data will also be entered on the spouse’s return if you have been linked on the Sars system and vice versa.

The investment income will be apportioned accordingly and will reflect on the notice of assessment (ITA34) issued to you and your spouse, on assessment.”

If you are married in community of property, Sars may also share the information of your investments with your spouse, as this is allowed under the Protection of Personal Information Act.

This can have consequences for couples who may manage their finances separately, or who may be estranged. If you are separated or divorced from your spouse, you may inform Sars of the separation by completing an RRA01 form or lodging a dispute.

Venter explains that there are certain exceptions. Any earnings derived from engaging in a trade – such as receiving a salary – will not be divided between spouses; instead, they will be subject to taxation in the individual capacity of the respective spouse.

The same applies to earnings from a pension, provident or retirement annuity fund.

Similarly, deductions for medical aid contributions, retirement annuities or pension funds will not be considered part of the communal estate and are applicable on an individual basis.

“In contrast, if you and your spouse elect to sign an antenuptial contract, each spouse bears individual accountability for their own assets and debts,” says Venter, who adds that it is essential for spouses married in community of property, like any other taxpayer, to exercise caution while filling in their annual tax returns to accurately indicate their marital status.

“If you have uncertainties regarding how your marriage regime may affect your annual income or estate in the event of death, we suggest consulting a tax expert for additional guidance.”

SOURCE: News24

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