Dear reader,

A few days ago, we asked our tax consultants for their pick of the tax issues that will have the greatest (or most dramatic) impact on taxpayers in the next few months.

Here are six of these tax law changes, and how they’ll impact you:

1)    The new administrative penalty regulations: These will firstly target those tax payers with multiple returns outstanding, which means that if you haven’t been following the tax rules, you’re in for some serious penalties.

The good news for us taxpayers is that these new regulations mean greater control and simple procedures. For example, we’ll have one set of rules to follow when settling disputes.

2)    Employee travel:  The scrapping of the deemed kilometre claim method, in favour of recording actual kilometres travelled, means that employee cashflow will be hit hard next year. What it boils down to, is that taxpayers won’t get away with over-stated travel claims.

The bad news for taxpayers is a smaller take-home salary (because the proportion of travel allowances that will be taxed, will be greater).

Logbooks will become the must-have accessory for anyone who has a business travel allowance built into their salary package.

3)    Social security: We wait to see exactly how this will impact us, but make no mistake — it will impact every employer and every employee. Businesses and individuals will need new strategies for business and cashflow planning.

4)    One Stop Registration: The new Tax Admin Act calls for simplification of tax registration and the submission of tax returns. Which means you’ll have to go through registration once. And since SARS will pre-populate your tax returns for you, all you’ll have to do to get your tax returns done, is sign on the dotted line! Thank you SARS for making business life a LITTLE easier!

5)    Changes to the definition of a Small Business Corporation or a Micro Business will provide some additional tax relief for qualifying tax payers, and create entrepreneurial opportunities for small businesses too.

6)    Changes to the IRP5 reconciliation process: previously, only individuals earning more than R60 000 annual taxable remuneration (or with other allowances where PAYE were applicable) had to register for personal income tax. But changes to the IRP5 reconciliation process will require all employees to register for income tax purposes.

The onus will be on the employer, to make sure that all employees are registered. But don’t worry- SARS is going to make it easy for you to check who’s registered and who hasn’t — and you’ll be able to register those who haven’t easily too.

It looks like 2010 is going to be a year of great change for South African business and taxpayers.

Until next time,

Fulvia Becatti
Managing Editor: Practical Tax Handbook and Practical Vat Handbook