National Treasury
National treasury has briefed the standing committee on finance on the Draft Taxation Laws Amendment Bills.
The bills were released for public comment at the beginning of June.
According to a treasury statement released at the time, the bills give effect to most of the 2011 budget review tax proposals announced during the budget speech in February as well as other urgent measures.
The two bills consist of a money bill and an ordinary bill covering administration.
Mr Ismail Momoniat, deputy director general, provided a brief overview of the consultation process around the two bills.
The standing committee is scheduled to hold hearings on the bills next week.
Treasury plans to hold workshops with the public in mid-July.
A document outlining treasury responses to proposals emanating from the public hearings is to be presented to the committee in August.
The bills will be tabled in Parliament in September.
Treasury highlighted some of the broad tax policy objectives for the year ahead.
Some of the issues include:
• Broadening the tax base
• Raising sufficient revenue to adequately finance government
• Tax relief for individuals
• Tax breaks to support job creation
• The closing of tax loopholes
• Changes to specific excise taxes in the interests of the environment
Treasury, supported by the South African Revenue Service, drew attention to some of the proposed changes in the tax laws.
Highlights include:
• To introduce a tax credit system as from 1 March 2012 for medical scheme contributions-discussion document to be released next week
• Allow additional entities to offer living annuities- to be known as retirement income drawdown accounts
• All road accident fund payments to be exempt from tax-lump sum and annual payments
• Dividends tax of 10% on dividends paid to replace secondary tax on companies-from 1 April 2012
• Foreign dividends to be taxed in the same way as domestic dividends
• The suspension of section 45 rollovers from 3 June 2011 until the end of 2012-this was not announced in budget-a new development-to deal with growing tax avoidance
• Introduce a government Sukuk in terms of Islamic finance
• The removal of the potential for double taxation by South African multinationals operating abroad
• Introduce limited foreign tax credit
• Adjust foreign tax rebate rules
Treasury also dealt with pending issues not covered in the bills but to be dealt with in future legislation.
A discussion paper on the taxing of gambling winnings is also to be made available before the end of this year.
Sabinet Cape Town Office
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