Author: admin_kmos

“Associated institution” definition of Seventh Schedule

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For the purposes of this Schedule, unless the context otherwise indicates –

 

“associated institution”, in relation to any single employer, means –

 

(a)     where the employer is a company, any other company which is associated with the employer company by reason of the fact that both companies are managed or controlled directly or indirectly by substantially the same persons; or

 

(b)     where the employer is not a company, any company which is managed or controlled directly or indirectly by the employer or by any partnership of which the employer is a member; or

 

(c)     any fund established solely or mainly for providing benefits for employees or former employees of the employer or for employees or former employees of the employer and any company which is in terms of paragraph (a) or (b) an associated institution in relation to the employer, but excluding any fund established by a trade union or industrial council and any fund established for postgraduate research otherwise than out of moneys provided by the employer or by any associated institution in relation to the employer;

Paragraph 28A (Fourth Schedule) – Payments regarded as taxpayer’s liability for tax

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28A.  Payments by way of employees’ tax and provisional tax must, for the purposes of this Act and subject to the provisions of paragraph 28, be regarded as having been made in respect of the taxpayer’s liability for tax whether or not the liability has been ascertained or determined at the date of any payment.

Paragraph 2 (Fourth Schedule) – Employers to deduct tax

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2.    EMPLOYERS TO DEDUCT TAX

(1)    Every-

(a)     employer that is a resident; or

(b)     employer that is not a resident and conducts business through a permanent establishment in the Republic; or

(c)     representative employer,

(whether or not registered as an employer under paragraph 15) who pays or becomes liable to pay any amount by way of remuneration to any employee shall, unless the Commissioner has granted authority to the contrary, deduct or withhold from that amount, or, where that amount constitutes any lump sum contemplated in paragraph 2(1)(b) of the Second Schedule, deduct from the employee’s benefit or minimum individual reserve as contemplated in that paragraph, by way of employees’ tax an amount which shall be determined as provided in paragraph 9, 10 or 11 or section 95 of the Tax Administration Act, whichever is applicable, in respect of the liability for normal tax of that employee, or, if such remuneration is paid or payable to an employee who is married and such remuneration is under the provisions of section 7(2) of this Act deemed to be income of the employee’s spouse, in respect of such liability of that spouse, and shall, subject to the Employment Tax Incentive Act, 2013, pay the amount so deducted or withheld to the Commissioner within seven days after the end of the month during which the amount was deducted or withheld, or in the case of a person who ceases to be an employer before the end of such month, within seven days after the day on which that person ceased to be an employer, or in either case within such further period as the Commissioner may approve.

[Subparagraph (1) amended by section 23(a) of Act 72 of 1963, substituted by section 29(1)(a) of Act 55 of 1966, by section 38 of Act 88 of 1971, by section 45(a) of Act 129 of 1991, by section 54 of Act 59 of 2000, amended by section 65(1) of Act 35 of 2007, by section 18(1)(a) of Act 18 of 2009 and by section 13 of Act 26 of 2013 and substituted by section 6(1)(a) of Act 16 of 2016 and by section 13(a) of Act 18 of 2023]

(1A)  Notwithstanding the provisions of subparagraph (1), a person shall not be required to deduct or withhold employee’s tax in respect of any year of assessment of a company or trust solely by virtue of paragraph (c) of the definition of ‘personal service provider’ where the company or trust has in respect of such year of assessment provided that person with an affidavit or solemn declaration stating that the relevant paragraph does not apply and that person relied on that affidavit or declaration in good faith.

(1B)   Notwithstanding the provisions of subparagraph (1), a person shall deduct or withhold employees’ tax in respect of any amount payable in respect of variable remuneration, as defined in section 7B(1), on the date on which the amount is paid to the employee by the employer as contemplated in section 7B(2).

(2)     Any employer may, at the written request of any employee, deduct or withhold from any amount of remuneration an amount by way of employees’ tax greater than that required to be deducted or withheld in terms of sub–paragraph (1), and shall remit such amount to the Commissioner, and the provisions of this Schedule relating to employees’ tax shall mutatis mutandis apply in respect of such amount.

(2A)   An employer may deduct the amount of the employment tax incentive for which the employer is eligible in terms of the Employment Tax Incentive Act, 2013, from the amount of the employees’ tax to be paid to the Commissioner by that employer in terms of subparagraph (1), unless section 8 of that Act applies.

(2B)  Notwithstanding the provisions of subparagraph (1), a person that pays an annuity and is a pension fund, pension preservation fund, provident fund, provident preservation fund, retirement annuity fund or is licensed as an insurer under the Insurance Act shall, when deducting or withholding employees’ tax in respect of any year of assessment, apply the fixed tax rate that the Commissioner directs must be used in determining the amount of employees’ tax to be withheld, where the person to whom that annuity is paid receives an amount of remuneration from more than one employer.

[Subparagraph (2B) added by section 51(1) of Act 34 of 2019 effective on 1 March, 2022 (effective date in section 51(2) of Act 34 of 2019 as substituted by section 79(1) of Act 23 of 2020) and substituted by section 37(1) of Act 20 of 2021 effective on 1 March, 2022]

(2C)  A pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund that pays a “savings withdrawal benefit” as defined in section 1 shall, when deducting or withholding employees’ tax in respect of that savings withdrawal benefit, apply the rate of tax that the Commissioner directs must be used in determining the amount of employees’ tax to be withheld.

[Subparagraph (2C) added by section 6(1) of Act 12 of 2024 and substituted by section 4(1) of Act 44 of 2024 deemed to have come into operation on 1 September, 2024]

(3)     ……….

(4)     The amount required to be deducted or withheld from any remuneration under this Schedule by way of employees’ tax must be calculated on the balance of the remuneration remaining after deducting therefrom-

(a)     any contribution by the employee concerned to any pension fund or provident fund which the employer is entitled or required to deduct from that remuneration, but limited to the deduction to which the employee is entitled under section 11F having regard to the remuneration and the period in respect of which it is payable;

[Item (a) substituted by section 18 of Act 18 of 2009 and section 8 of Act 39 of 2013 effective on 1 March 2016 (Date of operation in section 8 of Act 39 of 2013 as substituted by section 68 of Act 44 of 2014) and section 66 of Act 17 of 2017 effective on 1 March 2016]

(b)     at the option of the employer, any contribution to a retirement annuity fund by the employee in respect of which proof of payment has been furnished to the employer, but limited to the deduction to which the employee is entitled under section 11F having regard to the remuneration and the period in respect of which it is payable;

[Paragraph (b) substituted by section 8 of Act 39 of 2013 effective on 1 March 2016 – comes into operation in terms of section 8 of Act 39 of 2013 as substituted by section 68 of Act 44 of 2014 and section 66 of Act 17 of 2017 effective on 1 March 2016]

(bA)  any contribution made or amount paid by the employer to any retirement annuity fund on behalf of or for the benefit of the employee, but limited to the deduction to which the employee is entitled under section 11F having regard to the remuneration and the period in respect of which it is payable;

[Item (bA) inserted by section 18 of Act 18 of 2009 and substituted by section 8 of Act 39 of 2013 effective on 1 March 2016 (Date of operation in section 8 of Act 39 of 2013 as substituted by section 68 of Act 44 of 2014), section 66 of Act 17 of 2017 and section 67 of Act 23 of 2018 effective on 1 March 2018]

 

(c)       . . . . . .

[Item (c) amended by section 50(1)(a) of Act 31 of 2005 and deleted by section 8(1)(b) of Act 39 of 2013 effective on 1 March, 2015 and applicable in respect of premiums paid on or after that date]

(cA)     . . . . . .

[Item (cA) inserted by section 94(1)(a) of Act 24 of 2011 repealed by section 92 of Act 21 of 2012) and deleted by section 8(1)(b) of Act 39 of 2013 effective on 1 March, 2015 and applicable in respect of premiums paid on or after that date]

 

(d)     ……….

 

(e)     ……….

 

(f)      so much of any donation made by the employer on behalf of the employee—

(i)      as does not exceed 5 per cent of that remuneration after deducting therefrom the amounts contemplated in items (a), (b) and (bA); and

[Sub-item (i) substituted by section 94(1)(c) of Act 24 of 2011, by section 19(1)(c) of Act 21 of 2012 and by section 6(1)(b) of Act 16 of 2016 deemed effective on 1 March, 2015 and applicable in respect of donations paid on or after that date]

 

(ii)      for which the employer will be issued a receipt as contemplated in section 18A(2)(a);

[Item (f) added by section 67(1)(c) of Act 60 of 2008 and amended by section 3(1)(a) of Act 43 of 2024]

(g)     any amount referred to in section 11(nA) as is actually refunded to the employer granting the deduction under this item: Provided that if the amount so deducted exceeds the remuneration for the month during which the amount is deducted, the excess amount may be deducted in the next succeeding month, if such next succeeding month falls within the same year of assessment as the year in which such amount was actually refunded:

[Item (g) added by section 3(1)(b) of Act 43 of 2024 effective on 1 March, 2025]

: Provided that at any time during the year of assessment the amount of the contribution to be deducted in terms of paragraphs (a), (b) and (bA) must not exceed an amount that bears to the amount stipulated in section 11F(2)(a) the same ratio as the period during which remuneration was paid by an employer to the employee bears to a whole year.

[Proviso to subparagraph (4) added by section 9 of Act 13 of 2017 effective on 1 March 2018, applies in respect of years of assessment commencing on or after that date]

(5)

(a)     The Commissioner shall on application made to him by any person who is a labour broker or who is an employee by reason of the provisions of paragraph (d) of the definition of “employee” in paragraph 1, issue to such person a certificate of exemption if –

 

(i)      such person carries on an independent trade;

[Sub-item (i) substituted by section 3(1)(c) of Act 43 of 2024]

 

(ii)     in the case of any such labour broker, he is registered as an employer under the provisions of paragraph 15; and

 

(iii)    such person has, subject to any extension granted by the Commissioner, submitted all such returns as are required to be submitted by him under this Act:

 

Provided that the Commissioner shall not issue a certificate of exemption if-

 

(aa)   more than 80 per cent of the gross income of such person during the year of assessment consists of, or is likely to consist of, an amount or amounts received from any one client of such person, or any associated institution as defined in the Seventh Schedule to this Act in relation to such client unless that person is a labour broker who throughout the year of assessment employs three or more full-time employees-

 

(A)    who are on a full-time basis engaged in the business of that labour broker of providing persons to or procuring persons for clients of that labour broker; and

 

(B)    who are not connected persons in relation to that labour broker;

 

(bb)   such labour broker provides to any of its clients the services of any other labour broker; or

 

(cc)   such labour broker is contractually obliged to provide a specified employee of such labour broker to render any service to such client.

 

(b)     The certificate of exemption referred to in item (a) shall be issued in such form as the Commissioner may decide and shall be valid for such period as the Commissioner may indicate thereon.

 

(c)     An employer shall not be required to deduct or withhold employees’ tax from any remuneration paid or payable by the employer to any person who produces to the employer a valid certificate of exemption issued by the Commissioner under item (a).

[Subparagraph (5) added by section 45 of Act 101 of 1990. Item (c) substituted by section 13(b) of Act 18 of 2023]

(6)     Any amount included in gross income in terms of paragraph (eA) of the definition of “gross income” shall for the purposes of this Schedule be deemed to be an amount which an employer pays or becomes liable to pay by way of remuneration to an employee.

“Lump sum benefit” definition of Second Schedule

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“lump sum benefit” includes-

(a)     any amount determined in respect of the commutation of an annuity or portion of an annuity-

(i)      payable by; or

(ii)     provided in consequence of membership or past membership of,

a pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund; and

(b)     any fixed or ascertainable amount (other than an annuity) –

(i)      payable by; or

(ii)     provided in consequence of membership or past membership of,

a pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund, whether in one amount or in instalments, but does not include any amount deemed to be income accrued to a person in terms of section 7(11);

Section 89bis (ITA) – Payments of employees’ tax and provisional tax and interest on overdue payments on such taxes

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89bis.     Payments of employees’ tax and provisional tax and interest on overdue payments of such taxes

(1)     ……….

(2)     If any amount of employees’ tax is not paid in full within the period of seven days prescribed for payment of such amount by paragraph 2(1) of the Fourth Schedule, or if any amount of provisional tax is not paid in full within the relevant period prescribed for payment of such amount by paragraph 21, 23, 23A or 25(1) of that Schedule, interest shall, unless the Commissioner having regard to the circumstances of the case otherwise directs, be paid by the person liable to pay the amount in question at the prescribed rate (but subject to the provisions of section 89quin) on so much of such amount as remains unpaid in respect of the period (reckoned from the end of the relevant period prescribed as aforesaid for payment of such amount) during which the amount underpaid remains unpaid.

[Subsection (2) amended by section 26(1) of Act 91 of 1982, by section 32(1) of Act 121 of 1984 and by section 21 of Act 65 of 1986 and substituted by section 11 of Act 18 of 2023]

(3)     ……….

89ter.  ……….

PART III – Objections and Appeals (ITA)

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PART III

Objections and Appeals

81.  ……….

82.  ……….

 

83.  ……….

 

84.  ……….

 

85.  ……….

 

86.  ……….

 

87.  ……….

 

88      Payment of tax pending objection and appeal


(1)      . . . . . .

[Subsection (1) repealed by section 271 read with paragraph 66 of Schedule 1 of Act 28 of 2011]

(2)      . . . . . .

[Subsection (2) repealed by section 271 read with paragraph 66 of Schedule 1 of Act 28 of 2011]

(3)     . . . . . .

[Subsection (3) repealed by section 271 read with paragraph 66 of Schedule 1 of Act 28 of 2011]

(4)      . . . . . .

[Subsection (4) repealed by section 271 read with paragraph 66 of Schedule 1 of Act 28 of 2011]

(5)     Where any assessment is altered in accordance with—


(a)     an objection or appeal;


(b)     a decision by a court of law under section 86A; or


(c)     a decision by the Commissioner to concede the appeal to the tax board or the tax court or that court of law,


a due adjustment must be made, amounts paid in excess refunded with interest at the prescribed rate, the interest being calculated from the date that excess was received by the Commissioner to the date the refunded tax is paid, and amounts short-paid being recoverable with interest calculated as provided in section 89.


(6)     The payment by the Commissioner of any interest under the provisions of this section shall be deemed to be a drawback from revenue charged to the National Revenue Fund.


(7)     The provisions of section 102(3) apply mutatis mutandis in respect of any amount refundable and any interest payable by the Commissioner under this section.

[Section 88 amended by section 12 of Act 6 of 1963, substituted by section 44 of Act 85 of 1974, amended by section 25 of Act 103 of 1976 and by section 24(1) of Act 91 of 1982, substituted by section 30(1) of Act 121 of 1984, by section 17(1) of Act 70 of 1989 and by section 40 of Act 113 of 1993, amended by section 14(1) of Act 140 of 1993, by section 60(1) of Act 60 of 2001, by section 14 of Act 32 of 2005 and by section 17(1) of Act 4 of 2008 and substituted by section 13(1) of Act 18 of 2009 effective on 1 February, 2011 and applicable to all amounts payable by or to the Commissioner on or after such date, and where payment was already suspended on such date, that suspension will lapse on the earlier of the expiry date thereof or six months from the date so determined by the Minister – section 13 of Act 18 of 2009 pending repeal by section 271 read with paragraph 196 of Schedule 1 of Act 28 of 2011 superseded by repeal of section 88(5)-(7) of this Act by section 271 read with paragraph 66 of Schedule 1 of Act 28 of 2011]

Subsections 2, 3 and 4 of section 80E of ITA

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(2)     A person may be an accommodating or tax-indifferent party whether or not that person is a connected person in relation to any party,

 

(3)     The provisions of this section do not apply if either –

 

(a)     the amounts derived by the party in question are cumulatively subject to income tax by one or more spheres of government of countries other than the Republic which is equal to at least two-thirds of the amount of normal tax which would have been payable in connection with those amounts had they been subject to tax under this Act; or

 

(b)     the party in question continues to engage directly in substantive active trading activities in connection with the avoidance arrangement for a period of at least 18 months: Provided these activities must be attributable to a place of business, place, site, agricultural land, vessel, vehicle, rolling stock or aircraft that would constitute a foreign business establishment as defined in section 9D(1) if it were located outside the Republic and the party in question were a controlled foreign company.

 

(4)     For the purposes of subsection (3)(a), the amount of tax imposed by another country must be determined after taking into account any applicable agreements for the prevention of double taxation and any assessed loss, credit or rebate to which the party in question may be entitled or any other right of recovery to which that party or any connected person in relation to that party may be entitled.