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South Africa: SARS Shifts Income Tax Focus to Employers
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BuaNews (Tshwane)
16 May 2008
Posted to the web 16 May 2008
Michael Appel
Johannesburg
The South African Revenue Services (SARS) on Thursday announced that the responsibility of completing and submitting Personal Income Tax (PIT) forms would shift to the employer for the 2008 Tax Season.
SARS announced it would like to transform the current tax submission system where individual taxpayers provide SARS with a tax returns completed by them.
Instead this process will be changed to one where the tax and liability of the salary earning taxpayer is calculated using data supplied directly to SARS by the employer. The invoice for the return is then sent to the tax payer, reflecting the information submitted by the employer to SARS.
As of 1 July 2008 the new Pay-As-You-Earn (PAYE) reconciliation process will also go live with the release of software and the new EMP501 form which replaces the old IRP501 reconciliation form.
"The Personal Income Tax reform introduced in 2007 laid a basis for changes such as a move from a manual paper-based process to an electronic automated process, also SARS eliminated the need for supporting documents and relies rather on third party data," said SARS Chief Operations Officer Edward Kieswetter.
Some of the key successes of 2007 included the processing of over four million tax returns by the new Automated Tax Processor, and e-filing submissions increased from 35 thousands to over one million.
More than one million returns were scanned and the paper processed and stored electronically.
As a result the digitisation of the data capture and filling process, average turnaround times has halved with the average turnaround time improving from 45 to 55 days in 2006, to 20 to 30 days in 2007, said Mr Kieswetter.
He said tax returns assessment improved significantly from 1 percent within 48 hours in 2006, to 32 percent within 48 hours in 2007.
The changes made to the PIT system has freed up and allowed skilled professionals to help tax payers within individual queries.
Challenges, however, still exist for SARS within the five-step automated process which checks for completeness, accuracy, outstanding obligations, risks, and verifies banking details.
"Approximately 600 000 returns were sent back to tax payers due to incorrect or incomplete information.
"About 400 000, were returned because the tax return did not match information from the third party or employer," said SARS General Manager for Strategy, Modernisation and Technology, Barry Hore.
There were a further 150 000 refunds to tax payers that could not be paid because the banking details of the individual were incorrect or could not be verified.
SARS indicated that there ultimate goal is to transform from the current system where individual taxpayers provide SARS with a PIT return completed by them with data obtained from third parties, including employers.
Eventually, SARS aims to implement a completely return-free system.
Mr Kieswetter on Thursday also announced that an estimated 500 000 employees in South Africa will no longer be required to file tax returns as anybody earning under R120 000 annually, was a single employer or had no additional income or deductions was now exempt from filing returns.
Mr Hore highlighted that about 800 000 people on average filed a return with a neutral outcome in which they were not owed any money and no money was owed to them by SARS.
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The GM concluded by saying SARS would embark on a number of workshops and road shows between May and June 2008 in order to train employers on the new SARS PIT system.
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