The South African Revenue Service (SARS) has implemented several updates and tax changes for the 2024 tax season. These reforms are designed to improve tax compliance and transparency and foster investment in critical sectors such as renewable energy and urban development.
SARS Announces Tax Changes 2024
Key Dates for the 2024 Tax Season
- 16 September 2024: The tax season opens for trusts in South Africa.
- 20 January 2025: The filing window closes for trusts and provisional taxpayers.
For the first time, trusts have a dedicated filing period, a result of recent updates that allow SARS to scrutinize trusts more closely and ensure compliance.
SARS Focus on Trusts and Beneficial Owners
SARS is concentrating its efforts on trusts and their beneficial owners to increase revenue collection and curb tax evasion. As part of these efforts, SARS has expanded its third-party reporting standards, requiring both local and foreign trusts to submit tax returns with specified third-party data. This move is expected to improve oversight and accountability for trusts.
Amendments to Trust Income Tax Returns
The trust income tax return has undergone significant revisions for the 2024 tax season. These include changes in the reporting of income, capital gains, and other financial activities to better align with SARS’s compliance initiatives.
Table: Key Tax Filing Dates
Tax Season 2024 |
Start Date |
End Date |
|---|---|---|
Auto-assessments |
1 July 2024 |
14 July 2024 |
Individual Taxpayers (Non-Provisional) |
15 July 2024 |
21 October 2024 |
Provisional Taxpayers |
15 July 2024 |
20 January 2025 |
Trusts |
16 September 2024 |
20 January 2025 |
IT3(t) Third-Party Data Returns for Trusts
SARS has set a deadline of 30 September 2024 for trusts to submit their IT3(t) third-party data returns. This document details all amounts vested to the trust’s beneficiaries during the assessment year, including income, capital gains, and other financial contributions. Trustees are responsible for submitting this return, although they may appoint a representative to do so on their behalf.
Detailed Information Requirements for Trusts
Trusts are now required to provide more in-depth reporting on several fronts:
- Beneficial Ownership: Trusts must disclose extensive details about their beneficial owners, especially regarding individuals identified as beneficiaries.
- Income and Activities: Detailed reporting on income sources, the nature of trust activities, and how these align with the trust’s stated objectives is now mandatory.
- IT3(t) Reporting: Trusts are required to annually declare all distributions to beneficiaries in accordance with SARS’s updated reporting framework.
Mandatory Upload of Supporting Documents
To ensure transparency, SARS requires all trust taxpayers to upload supporting documents when filing their tax returns. This ensures that all information submitted is verifiable and accurate. Key documentation includes:
- Trust Financial Statements
- Trust Resolutions
- Other Relevant Documents verifying the trust’s financial activities
Changes to Filing Forms
SARS has introduced several updates to the filing forms required, with the goal of streamlining the filing process and boosting compliance, particularly in areas like renewable energy and urban development.
Encouragement for Renewable Energy Investment
SARS has enhanced tax deductions for investments in renewable energy to encourage private investment in this critical sector. These deductions apply to various items related to renewable energy production.
Extension of the Urban Development Zone Tax Incentive
The Urban Development Zone (UDZ) tax incentive, which encourages development in underdeveloped urban areas, has been extended by two years, now expiring on 31 March 2025. This extension aims to drive further investments in urban revitalization projects.
Clarifications on Loans and Advances to Trusts
SARS has clarified tax treatments regarding loans and advances made to trusts by connected persons, ensuring that these financial activities are accurately reported and taxed.
Updated Donation Section
The donation section has been updated to allow taxpayers to enter up to 20 approved organizations when declaring donations, making it easier for taxpayers to report their charitable contributions.
New Feature for Reduced Assessments
A new feature allows companies to request reduced assessments via the Request for Reduced Assessment (RRA02) form. This feature helps determine a company’s eligibility for a reduction in its assessed tax liabilities.
Beneficial Ownership Updates
The Beneficial Ownership section now includes clarifications to assist taxpayers in providing detailed information for unnamed beneficiaries, ensuring compliance with updated reporting requirements.
Enhanced Letters for Verification
SARS has improved the letters it sends to taxpayers selected for verification, providing clear guidance on the supporting documents required for submission.
Corporate Tax Changes
SARS has also implemented changes to Corporate Income Tax to improve compliance. Some of these changes mirror those for trusts, ensuring consistency across different taxpayer categories.
Tax Treatment of Government Grants
SARS has specified that assets acquired through government grants are not eligible for depreciation claims. Additionally, any assets purchased with grant funds cannot be depreciated for tax purposes.
Credit Agreements and Debtors Allowance
A new field for “Credit agreement and debtors’ allowance (lay-by) (s24)” has been added to the ITR14 return. This allowance can be claimed in the current year but must be reversed the following year.
Deductions for Learnership Agreements
SARS has introduced a new validation question for deductions related to learnership agreements. Only agreements entered into before 1 April 2024 are eligible for deductions.
Refinements to the Research and Development (R&D) Tax Incentive
The R&D tax incentive has been refined, with the Department name updated to “Department of Science and Innovation.” A new qualification question has also been added to confirm eligibility for the incentive.
Interest Expense Limitation
Taxpayers must limit interest expenses to non-trading interest income as outlined in section 11G. A new adjustment field has been introduced for all companies to add back non-allowable interest.
Summary of Key Changes
Change |
Description |
|---|---|
Tax Treatment of Government Grants |
No wear and tear claims on grant-acquired assets. |
Credit Agreements and Debtors Allowance |
New ITR14 field; allowance reversal required next year. |
Learnership Agreements Deduction |
Only for agreements entered into before April 2024. |
R&D Incentive Refinements |
Updated department name; new qualification question. |
Interest Expense Limitation |
Limit to non-trading income; new adjustment field. |
Renewable Energy Deduction |
s12BA allowance; new container and validation. |
UDZ Tax Incentive Extension |
Extended until March 2025. |
Reduced Assessment Requests |
New RRA02 form to assess eligibility. |
These tax reforms aim to simplify the filing process, encourage compliance, and boost investments in key sectors like renewable energy and urban development. SARS’s new measures for trusts and corporate taxpayers are expected to bring greater accountability and transparency to the tax system.
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