Opposition political parties have lauded Finance Minister Trevor Manuel’s announcement that the South African Revenue Service (Sars) is introducing a new, simplified income-tax return system.
”The long overdue and welcome simplification of South Africa’s tax-return system will hold many benefits for the economy and clears the way for much-needed tax breaks to boost the production side of our economy,” DA spokesperson Ian Davidson said on Thursday.
The new system will reduce the administrative burden of businesses, encourage potential entrepreneurs to start businesses and encourage operators of informal businesses to register their businesses formally, he said in a statement.
However, to bolster the growth prospects of these businesses and to encourage job-creation and growth-promoting investment, the government now has to leverage the significant extra revenue likely to result because of the tax simplification and grant tax breaks to reduce the costs of doing business.
Ways to do this include reducing the effective corporate-tax rate to under 30%, eliminating the skills-development levy and to incentivise skills development in the hands of the employer.
The costs of employment should be reduced by subsidising it through tax incentives in the hands of the employer, rather than the employee.
All infrastructure-only industrial-development zones should be converted into fully fledged incentive-driven export-processing zones, Davidson said.
In another statement, Inkatha Freedom Party spokesperson Hennie Bekker said his party applauded Sars for initiating a process to simplify the tax system.
”We believe the new online submission of tax returns will make things easier for the taxpayer, as well as speed up matters tremendously,” he said.
On Wednesday, Manuel announced taxpayers will have until October 31 to submit their returns this year using a new, much easier system.
The new forms for individual tax are the two-page IT12S (for simple), for the 3,5-million taxpayers earning basic income and standard allowances, and the five-page IT12C (for complex), for those earning additional income.
Taxpayers will also no longer have to attach supporting documentation — such as IRP5s, IT3s, bank statements, medical receipts, logbooks and petrol slips.
Under the new system, taxpayers will not have to do any calculations either.
While they will be told how to do the maths, that responsibility will rest with Sars.
However, returns will be sent back to taxpayers who have not signed them or completed them incorrectly — placing them at risk of penalties of up to R300 for late submission.
Returns will be posted to taxpayers from mid-July. They will also be available on the Sars e-filing website, from employers and at Sars offices.
No extensions will be granted — other than to e-filers, as an incentive.
They will be given until January 31 to submit.
Payments will no longer be made by cheque, but electronically, directly into bank accounts. — Sapa