Tag Archive | amnesty extension

Budget 2016: more on amnesty

 sent to clients 8 April….

Deadline extended for amnesty…..

In the 2016 Budget presentation, which included an amnesty offer on undeclared overseas funds, it was claimedpravingordhan by the main opposition party that that this year’s financial plan may not have been bold enough to avert a downgrade, top of the mind remaining possible future tax hikes, particularly VAT – on which the jury is still out – and the ballooning public service wage bill.

Among the many other points raised in this year’s budget was the remark by Minister of Finance, Pravin Gordhan, that “The principles of honesty and fairness needed to be embraced by all South Africans in order to overcome the challenges.”

The amnesty plan

To follow this up with action, Treasury have made a second offer for all those with undeclared assets abroad to get on the right side of the law without penalties and now have extended even that deadline because more time is often needed for applicants to prepare submissions.

“In acting together”, the Minister said, “we can address declining confidence, the retreat of capital and we can combat emerging patterns of predatory behaviour and corruption.” On this issue, he offered amnesty on undeclared offshore income and assets and another chance of the regularisation of offshore affairs.

Very little reaction occurred in parliamentary benches, possibly because the implications meant little personally but in having had to sweep the floor for further tax revenue inputs, any idea that works is a good one and a “voluntary disclosure programme” (to give it it’s technical name) could raise between R2bn to R4bn, once applied. Clearly also the Minister is looking for more reaction to increase funds resulting in the deadline being moved along the calendar.

Budget papers

budget 2016This offer was included with the usual raft of Bills the Minister tabled before he commenced his Budget speech and a few days later debated by the Standing Committee on Finance. They are “money” Bills and cannot be altered by Parliament, only commented upon.

Gordhan warned in his speech that “in terms of the new global disciplines on exchange of information between countries time was running out for tax dodgers who still have undeclared assets outside South Africa.”

Details

There are a number of conditions of course.

SARS will only include 50% of the total amount used to fund the declared acquisition assets before March 2015 in the taxable income column, as it were, and this will subject to normal tax. All refers to items from March 2010 onwards as taxable income at normal rates. Investment returns prior to March 1 will be exempt. Interest arising from tax debts as a result of the voluntary disclosure will only commence from March 2010.

Bearing in mind that relief is also granted from the appropriate penalties that would have applied and any criminal action not taken, this say experts, is a pretty fair offer. Levies will be applied of between 5% and 10% according to whether the funds from proceeds are repatriated or not, which levy must be paid from outside external funds. On levies generally, there are a number of special conditions according to circumstances.

Not just business

Minister Gordhan made it quite clear that the offer was coming from both the Treasury and the Reserve Bank. He said that deceased estates and beneficiaries of discretionary trusts can participate in the programme if they deem and if they admit that the funds were destined for them. Resident South Africans are included in the amnesty.

The grace period was given originally in the Budget for the period October 1 to March 31 of the current government financial year but in hearings before Parliament later, the Standing Committee on Finance listened to business submissions on the Budget and “recommended” to Treasury that this is impractical given the amount of time it takes to come up with all the necessary information and submit, bearing in mind, as we say, Parliament cannot touch a money Bill. Treasury obviously heard this

Public submissions worked

It was chairperson of the Finance Standing Committee, Yunus Carrim, who pointed this out to Treasury after listening to public submissions, so at least he will find that more applicants will probably be encouraged to submit.
Previous articles on category subject
Budget vote speeches: Out of touch with each other – ParlyReportSA
Minister Nene maps survival route – ParlyReportSA
Parliament votes on 2014 budget – ParlyReportSA

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