Financial and Fiscal Commission briefing on its role and mandate; Draft Taxation Laws Amendment Bill, Draft Tax Administration Amendment Bill & Draft Rates and Monetary Amounts Bill: National Treasury briefing

Meeting report

Role and mandate of the Financial & Fiscal Commission
Mr Bongani Khumalo, acting CEO and Chairperson of the Financial and Fiscal Commission (FFC) briefed the Committee on its role and mandate.

Division of Revenue Bill
The FFC was required to produce recommendations on the equitable division of revenue among the three spheres of government. This would have to be accompanied by a technical report and simpler policy briefs. The Minister of Finance must consult the Commission 14 days prior to the introduction of the Division of Revenue Bill in Parliament. The Commission would then have to produce a response to the Bill.   Before tabling a proposal for a national or provincial assignment to local government in general, the national or provincial Minister are required to consult the FFC.  An assignment of functions or fiscal powers would not have any legal force until the organ of state which had made the assignment had indicated the extent to which it had given consideration to the Commission’s views.

Money Bills Amendment Procedures and Related Matters Act
The recommendations of the Commission must be considered when committees on appropriations consider any Money Bill. The Commission should also be consulted when the appropriations committee pass the annual Division of Revenue Bill.  The FFC must also be consulted for input on the Medium Term Budget Policy Statement (MTBPS) and the fiscal framework. It is also required to provide assistance to portfolio committees drafting budget review and recommendations reports.

Role played in the economy: support and interventions
Direct support and interventions include the training of Members of Parliamentary committees and councillors when requested, advice to municipalities and input delivered in various forums.
The indirect support and interventions given by FFC include sitting on review committees, participation in public hearings and recommendations to annual submissions on Division of Revenue (DoR).
When requested, the FFC also participates in various ministerial task teams and steering groups.

Contribution to the National Development Plan (NDP)
Mr Khumalo said the FFC provided an understanding of the context of decentralisation versus centralisation, and assigned expenditure responsibilities. It also provided instruments for financing sub-national government, such as intergovernmental transfers, local taxation and user fees and investment capital. It also played a part in budget implementation and provided harmony and alignment of support.

Key areas of FFC intervention in NDP: 2014-2019
The Commission’s main areas of intervention for this period have been identified as producing and sharing knowledge, policy-level recommendations, institutional capacity building and a focus on inclusive growth. It has also prioritised organisational issues such as memorandums of understanding and protocols of engagement. Active engagement of the private sector and NGOs would also be prioritised.

It would be the FFC’s duty to unpack some of the factors that indicated whether, and how, the goals of the NDP would be achieved, such as how delivery of the NDP would have to evolve in the medium term and towards 2030. Should the emphasis be on promoting decentralisation through capacity building, or should the national government assume the major responsibility for meeting constitutional mandates?

Ongoing Intergovernmental Fiscal Relations (IGFR) budget and policy issues relevant for FFC
Budget and policy issues that have been identified include maintaining overall fiscal discipline, ensuring adequacy of transfers to sub-national governments, continuous refinement of transfer formulas, striking a balance between national and provincial interests, and increasing direct grants and supply chain management.

Ongoing collaborations
The FFC has signed a memorandum of understanding (MoU) with the Public Service Commission to collaborate in the fight against corruption. It has also collaborated with the Public Service Commission to ensure public sector wage efficiency and productivity. To ensure food security and human rights, the Commission had also entered into collaboration with the Human Rights Commission.

Mr Khumalo extended an invitation to all Committee members to attend an FFC Intergovernmental Fiscal Relations Conference that would take place from 11 to 13 August 2014.

National Treasury: Rates and Monetary Amounts Bill
Mr Ismail Momoniat, National Treasury Deputy Director-General: Tax and Financial Sector Policy, briefed the Committee on the Rates and Monetary Amounts Bill, which he said dealt largely with the rate and threshold changes announced in the Budget.

Taxable income brackets were increased by around 5.4%. The adjustment provided tax relief of R9.25 billion and increased the tax-free threshold from R67 111 to R70 700.  Around 40% of the total relief would go to those with taxable annual incomes that were less than R250 000.

The marginal personal income tax (PIT) rates have decreased between 1998/99 and 2002/03 by between one and nine percentage points.  Between 2002/03 and 2014/15, the bottom threshold was increased by 13.1% per annum and that of the top income bracket by 9.0% per annum. The marginal tax rates have remained unchanged during this period. The tax-free threshold for taxpayers below 65 years increased by 8.4% per annum since 2002/03 and for those 65 years and above, by 8.2% per annum.

The retirement lump sum tables were also adjusted upwards. The brackets in the tables (see slide 19 in the report) have thus been increased by around 10%, but there has been a larger increase in the first retirement lump sum table (see slide 19 in report), from R315 000 to R500 000. The larger increase was to avoid situations where individuals -- especially in provident funds -- who did not receive a deduction on their contributions over their working lives, would now be forced to pay on their retirement benefits.

Inflationary adjustments were made to medical tax credits, car allowances and the taxable income threshold for small businesses. Medical tax credits were increased by 6.2% - from R242 per month for the first two beneficiaries to R257 per month, and from R162 to R172 per month for each additional beneficiary. The maximum value of the cost of a vehicle that an employer could use and claim a travel allowance for, increased from R480 000 to R560 000. The value was last adjusted in 2011 and was increased to allow for inflation.
The taxable income threshold for small businesses increased from R67 111 to R70 700. The new rate would be in line with the new income tax table for individuals to avoid any potential tax arbitrage.

Excise duties on alcohol had higher than inflation increases. The 2012 Budget Review increased the targeted tax burden for beers and spirits to 35% and 48% respectively (from 33% and 45%). Excise rates have been increased at above inflation levels since 2012 to achieve this target. The largest increase in excise duties for regular alcoholic beverages was for sparkling wine and spirits, which each experienced a 10% increase. There were no increases in excise duties for traditional African beer and close to inflationary increases for unfortified and fortified wine, malt beer, ciders and alcoholic fruit beverages.

Tobacco excise duties increased in line with inflation. The largest increase was 9% for cigars, while cigarettes and cigarette tobacco increased by 6.2% and 7.2% respectively. There was a smaller than inflation increase of 2.5% for pipe tobacco since the amendment from the previous year pushed the tax burden above the targeted level.

The increase in the general fuel levy was in line with inflation. The proposed increase of 12c/litre was less than the increase applied in 2013/14. The increase for the Road Accident Fund Levy of 8c/litre was equal to the adjustment in 2013/14. The effective date for both levies was 2 April 2014.

Following public consultation, the National Treasury and the Department of Environmental Affairs agreed on the need to align the design of the carbon tax and the proposed desired emission-reduction outcomes. To allow for this process and ensure adequate time for consultation on draft legislation, implementation of the carbon tax has been postponed to 2016. A draft Carbon Tax Bill would be tabled during the last quarter of 2014.

National Treasury: Draft Taxation Laws Amendment Bill
Mr Momoniat briefed the Committee on the Draft Taxation Laws Amendment Bill.

Tax free savings accounts
Tax free savings accounts were proposed from 1 March 2015 as a measure to encourage household/individual savings. Individuals would be allowed to open multiple tax-free savings accounts.   However, they would be allowed to contribute only up to a maximum of R30 000 into these accounts within any given year. A lifetime contribution limit of R500 000 applied. The returns accruing to these accounts would not be subjected to income or dividends tax. Amounts within the tax-free savings account might be withdrawn at any time.   Where an individual contributed in excess of the prevailing annual or lifetime contribution limit in any year, a “penalty” (additional income tax) of 40% on the amount of excess contribution would be levied by SARS on the individual.

Valuation of fringe benefit for defined benefit contributions
Legislation was amended last year to make all employer contributions to a retirement fund a taxable fringe benefit in the hands of the employee. For members of defined benefit funds this could lead to unfair tax charges, since the employer contribution would not be directly related to the benefits received. To avoid this, it was proposed that a notional employer contribution should be calculated to represent the increase in benefits that the individual would receive at retirement. The notional employer contribution would then be added to all the other retirement fund contributions (e.g. employer contribution and retirement annuity contributions) to check whether the individual is within the 27.5%, or R350 000, deductibility limits.
To calculate the notional employer contribution, the pension fund would be required to split the employees that are members of the fund into different “fund member categories” (where there are different benefits) and provide the “fund member category factor” for each separate category.

Retirement fund accrual date
Retirement funds are obliged to withhold the lump sum tax liability of the individual immediately after the retirement date.   It was proposed that the retirement date -- the date on which the retirement lump sum tax should be withheld -- would be determined by the date on which the individual made the election that determined the lump sum amount. In this way, there would be no timing complications around withholding taxes and it would provide greater discretion on the date of retirement for individuals, allowing them to preserve their retirement assets if they wanted to.

Valuation of fringe benefit for employer-provided accommodation
Rental value has been defined as the value of use of accommodation for the fringe benefit calculation in the Income Tax Act.   It was proposed that where an employer sourced accommodation from an unconnected third party on a rental basis, the total cost incurred by the employer, if lower than the calculated value, may be deemed to be the “rental value”.

Clarification of loss requirement for key person insurance policies
Prior to 2011, no deduction was given for key person insurance policy contributions, but the benefit payouts were tax free. A 2011 amendment provided optionality, to allow a deduction on contributions whereby the tax was levied on the payout. As the legislation was formulated, companies were able to make use of the deduction option for policies that protect against non-business costs resulting from the death of a key person.
The legislation was amended to clarify that the deduction for such policies would be permissible only where the policy provided cover for losses in normal business continuity, not as security for the outstanding debts of the key person, in line with the original policy intent.

Restraint of trade receipts
The blanket inclusion of natural persons’ restraint of trade receipts brought about unintended consequences, whereby all natural persons were taxable on their restraint of payment receipts, even where no employment relationship existed.   The proposed amendments aligned the treatment of restraint of trade payments for natural persons with those for trusts and companies, while clarifying that the inclusion of natural person restraint of trade receipts applied in situations where there was an employment link between the payer and the recipient.

Contributed Tax Capital
The tax legislation did not provide for a contributed tax capital (CTC) roll-over treatment for deferred or convertible shares. Based on this, CTC on the convertible shares would be lost, because the class of shares to which it related differed from the class of shares after conversion.  The CTC roll-over treatment would be extended to include instances where deferred or convertible shares were converted to the other class of shares. Any consideration received by a company in respect of the conversion of shares would be reflected as part of the CTC in relation to that other class of share.

Third party backed shares: Refinancing
Currently, the refinancing of third party backed shares used to fund the acquisition of equity shares in an operating company has not been covered under the exceptions.   Legislation would be amended so that the refinancing of qualifying transactions would be allowed as an exemption.

Limitations of interest deductions
Certain unintended anomalies in the application and impact of these rules have been identified. The anomalies included:
 
-  Inclusion of Assessed Losses:  The interest limitation rule determined a percentage (currently 40%) of adjusted taxable income to limit the deduction of interest incurred. Taxable income, as determined at the end of any year of assessment, might have been reduced by the set off of an assessed loss carried forward from the previous year.

-  Formula: The tax legislation provided for an adjustment of the 40% limit through a formula. The 40% factor has been adjusted only in circumstances where a significant increase in the repo rate has occurred, i.e. when it exceeded 10%. This did not take into account the costs of servicing commercial debt.

Adjusted taxable income would be amended to exclude the previous years’ assessed losses. The formula would be amended to allow for the maximum percentage to fluctuate in recognition of the change in interest rates and the cost of finance. In order for the fiscus and tax base to be protected in periods of high interest rates, a cap on the interest deduction limitation of 60% of adjustable taxable income has been proposed.

Tax treatment of the risk business of long term insurers
The current taxation of long term insurers did not distinguish between the investment and risk businesses. However, from a tax policy point of view, the two types of businesses could not be taxed by applying the same principles. From the perspective of a long-term insurer, profits or losses that arose in respect of a risk business should be fully taxed and should therefore not form part of the tax calculation of a policyholder fund that had focused on the taxation of the return on assets invested for the benefit of policyholders on the trustee basis.   It is proposed that as from 1 January 2016, a clear distinction should be drawn in the taxation of investment and risk businesses conducted by long term insurers. Profits or losses that resulted from such new risk business would be taxed in the corporate fund.  

Long term insurers: Foreign reinsurance
It is proposed that the net returns from foreign reinsurance should be included in the calculation of the taxable income of the long term insurer.

Depreciation allowance for transmitting electronic communication
Purchases of used lines or cables used for the transmission of any signal for the purposes of telecommunications have become more common in the telecommunications industry.  It was proposed that telephone lines or cables used for the transmission of any signal for the purposes of telecommunications, should be eligible for a 15-year depreciation allowance, and that used assets for the transmission of any signal for the purposes of telecommunications should be eligible for a depreciation allowance in terms of section 12D.

Research and development tax incentive

-  Clinical trials: It was proposed that the definition of research and development in section 11D (1) should be amended to include “clinical trials”. For clinical trials to qualify for the 150% deduction, the criteria provided by way of regulations must be met.

-  Multisource Pharmaceutical Products (generics): It was proposed that the definition of research and development in section 11D (1) should be amended to include “multisource pharmaceutical products”. For multisource pharmaceutical products to qualify for the 150% deduction, activities must meet the criteria provided by way of regulations.

-  Adjustment of deduction in respect of research and development funding in a group of companies: It was proposed to amend 11D (5) to allow for a 150% deduction, subject to research and development being approved by the Minister of Science and Technology.

-  Functional design: It was proposed to amend “innovation” in the definition of functional design.

Public-private Partnerships
It was proposed that taxpayers party to a public-private partnership contract be allowed to claim a capital allowance for expenditure incurred (of a capital nature) to affect improvements on government-owned land where government used or occupied the land or building.

Refinement of oil and gas incentive
To ensure clarity, it was proposed to amend the wording to achieve the following outcome: where an oil and gas company had an existing FSA with government and subsequently entered into a joint venture with another oil and gas company, both oil and gas companies that were party to the joint venture would be entitled to all the rights under the fiscal stability agreement entered into by the original oil and gas company.

Refinement of allowances for industrial policy projects
It was proposed that taxpayers who undertake an industrial policy project in respect of immovable manufacturing assets should be accommodated for purposes of this incentive.

Refinement of special economic zone tax incentive
Some of the provisions captured in section 12R were vague and potentially conflicting. The proposed amendments were aimed at clarifying these provisions. A decision tree had been implemented in the explanatory memorandum, to assist taxpayers in determining the tax incentives for which they were eligible.

Venture capital company regime
The normal tax deductions would be made permanent if the investments were held for a period exceeding five years. The asset limits for qualifying investee companies were increased from R30 million to R50 million for qualifying companies, and from R300 million to R500 million for junior miners.   Venture capital companies were required to use 80% of their investment expenditure to acquire qualifying shares issued by qualifying companies. They were given a period of 36 months to meet this requirement. The legislation that dealt with this 36-month requirement was clarified to indicate that venture capital companies had to comply with the 80% allocation rule, even after the 36-month period. The verification methodology was amended to use “subscription monies received” as a basis, rather than “expenditure incurred”. This would make it easier for venture capital companies to comply.

Supporting small businesses – grant funding
The Income Tax Act did not provide tax relief for grant funding aimed at supporting and developing small businesses.   Entities that provide grant funding for small business development have been allowed tax relief. A new section 30C was proposed to define the terms and requirements for such entities. Grants in the hands of small businesses were also made tax exempt.

Small business taxation – changes to the small business corporation regime
The graduated rate structure currently available to small business corporations would be replaced and small businesses would be taxed at 28% on their net profits.   A refundable tax compliance rebate of R15 000 would be given to small businesses which were fully tax compliant. Only companies with a turnover between R1 million and R20 million would qualify for the rebate.  Micro businesses with a turnover of less that R1 million would be accommodated in a revised turnover tax regime.

Reducing the distribution requirement for funding Public Benefit Organisations
It was proposed that conduit Public Benefit Organisations’ distribution requirements should be reduced to 50%. Some conditions would be placed on the use of undistributed funds.

Allowance for land conservation in respect of nature reserves or national parks
It was proposed to delink the current incentive for nature reserves/national parks from treatment as a section 18A donation.  Instead a straight line deduction over 25 years, based on the cost of acquisition of land and improvement thereon, should be allowed.  However, if the market value exceeded the cost, the deduction would be determined with reference to the lesser of municipal value, or market value, of the land.

Refinements to the employment tax incentive
A cap was placed on the amount of incentive that should be rolled over for employers who were not tax compliant at the end of each bi-annual reporting period.  It was proposed that that the rolled over amount should be ring fenced and paid when the firm became compliant.  If the firm was not compliant within six months, the amount would be lost.

International Taxation
Transfer pricing secondary adjustment
It was proposed that the amount of the secondary adjustment should be deemed to be a dividend. In other words, where a South African subsidiary undercharged its foreign parent, the shortfall would be deemed to be a dividend paid by the South African subsidiary to its foreign parent. That dividend would be subjected to Dividends Tax.

Currency reacquisition of assets of persons ceasing to be a resident
The new rules introduced on 12 December 2013 did not state in which currency the reacquisition of the assets should take place. It was proposed that the currency in which the asset was actually acquired be deemed to be the currency of acquisition.

Simplified foreign business establishment exemption for controlled foreign companies
It was proposed that the net income of a controlled foreign company would be deemed to be nil if either the high-tax exemption or the foreign business establishment exclusion were met.  The foreign business establishment exclusion would be available only if the controlled foreign company earned no passive or diversionary income.

Value Added Tax
Withdrawal of VAT zero-rating of the supply of certain intermediate agricultural/farming supplies
SARs had detected that a significant number of VAT-registered vendors were abusing the authorisation granted to acquire certain goods at the zero rate of VAT.  It was proposed that the zero rating of goods for agricultural, pastoral and other farming activities be withdrawn/repealed.

Withdrawal of the ability to claim a notional input VAT in the case of precious metals (gold)
A VAT vendor who had acquired second-hand goods from a seller who is not a vendor, was entitled to claim a notional input tax deduction. SARS has detected that VAT vendors were abusing this provision to obtain fraudulent input tax deductions.  In order to address this problem, it was proposed that second-hand goods made from precious metals should be excluded from obtaining the notional input tax.

Providing for the VAT exemption of legal tender
It was proposed that the supply of legal tender or money to the South African Reserve Bank be exempted from VAT.

National Treasury: Draft Tax Administration Laws Amendment Bill
Mr Franz Tomasek, Group Executive: Legislative Research and Development at National Treasury, briefed the Committee on the Draft Tax Administration Laws Amendment Bill.

Dividends tax refund – dividends in specie
It was proposed that a company that had to pay dividends tax as a result of not being in possession of shareholder declarations, would be allowed to a refund of tax paid to SARS once such declarations were obtained.

Proposed amendments to provisional tax system
The amendment proposed to align the exemptions from payment of provisional tax for people 65 years or older, with those of people under 65.  The threshold for taxable income derived from interest, foreign dividends and fixed property rentals would be raised from R20 000 (previously applicable only to under 65s) to R30 000 for all natural persons.

Compulsory tariff determinations – alcoholic beverages
It was proposed that liquor manufacturers be compelled to apply to SARS for tariff determinations on their alcoholic beverages, to obtain certainty on the appropriate tariff classification and excise duty rate applicable to their products.

Exchange of information for customs and excise purposes
It was proposed that the exchange of information provisions of Section 50 should specifically deal with the automatic exchange of information and the uses to which such information might be put.

Elimination of the four monthly VAT filing category
The proposed amendment would eliminate this category and would bring the registered vendors into the bi-monthly VAT filing category.

Preventing the unlawful use of SARS’ intellectual property
Fraudulent use of SARS’ names, trademarks and logos by, for example, bogus tax practitioners has become prevalent and has been aggravated by their improper and unauthorised use in domain names, the internet and social media.  The purpose of a proposed amendment to the SARS Act was to broaden SARS’s protection against unlawful use of its intellectual property and to protect the public from fraudulent schemes and misrepresentations of SARS’s names and logos on the internet, in various media as false advertising, and on goods.
Automatic exchange of information
The new international standard for the exchange of information has been labelled as automatic exchange of information. Amendments were proposed to improve the framework for automatic exchange of information and related due diligence obligations on third parties.

Reportable arrangements
An amendment was proposed to include tax evasion under the term “tax benefit,” to provide greater certainty as to what was meant by a “tax benefit” for purposes of the reportable arrangement system under the Tax Administration Act.  Other proposed amendments sought to clarify the reporting obligation of the promoter of an arrangement and all of the participants when the reporting obligation arose.

Tax clearance modernisation
Current legislation was built on the model of a tax clearance certificate.  Proposed amendments would cater for a full transition to a real time confirmation of a taxpayer’s tax compliance status.
Discussions
Role and mandate of the Financial & Fiscal Commission
Dr M Khoza (ANC) asked if the Commission had engaged with SARS to find out if there was a possibility an independent body could not be established which would be able to do collections on behalf of municipalities. It would help municipalities to become more efficient.

Mr Khumalo replied that they had not yet discussed that possibility with SARS. The Commission had noted this suggestion and would bring it up in future discussions with SARS.

Dr Khoza asked if the Commission was in collaboration with the Demarcation Board.

Mr Khumalo replied that it worked closely with the Demarcation Board when it compiled its current submission.

Ms P Kekana (ANC) referred to issues such as the poor basic infrastructure and almost no revenue, which affected poor, rural municipalities and asked what the Division of Revenue Amendment (DORA) Bill had done for those municipalities after 20 years of democracy.  What had the FFC’s redistribution and decentralisation action done to fix this situation for municipalities?

Mr Khumalo agreed that not enough resources had been put into local government. However, he questioned whether municipalities were able to handle the revenue they received, which was evident through their history of under-spending. With regard to infrastructure, not enough had been done to address this. It needed to be addressed, especially the lack of maintenance of buildings.   It was an ongoing process and they were currently engaged in reviewing local government grants.

Ms Kekana referred to the spending performance regarding conditional grants, and the efficiency and capacity challenges that the Commission had identified.  She wanted to know why it was still an issue. Should the FFC not have identified the challenges regarding non-spending and the allocation of grant money by now? What were the incapacity challenges?

Mr Khumalo replied that it was a human resources challenge. Rural municipalities were unable to attract the right people. Also, the wrong people were employed in positions for which they were not qualified.

Ms S Nkomo (IFP) referred to the training which the FFC had been “imparting to core staff working on IGFR (Intergovernmental Fiscal Review) and budgetary issues.”  How long had the training been going on? How have people been benefiting from it?  Who were the core group referred to?  Where have this core group been deployed?

Mr Khumalo replied that a specialised group of people worked at the FFC and because the FFC was such a small entity, a lot of its staff ended up working elsewhere within the public sector. He said this justified their investment in training them.

Ms Nkomo referred to page 5, where Mr Khumalo mentioned having had discussions with the Minister of Finance. The Committee needed to be informed about these discussions, as it sounded serious.

She referred to page 9, where the FFC spoke about “eliminating poverty and reducing inequality to 0.6”. How much was 0.6?  What influenced that figure?

Dr Ramos Mabugu, Research and Recommendations Director, said the 0.6 was a ratio of income that was distributed between individuals. It was not a measure of poverty.

Mr S Swart (ACDP) expressed concern regarding functions that had been shifted, especially where national and provincial ministers intended to shift functions without having consulted with the Commission. This could have serious legal implications, as it might be contested on the basis that these ministers never consulted with the FFC. The Committee must draw attention to this, and highlight it for the attention of the executive.

Mr Khumalo replied that the Commission took the shifting of functions seriously, and welcomed the Committee Members’ suggestions.

Mr Swart referred to page 15, and the points on corruption and supply chain management. The FFC had indicated that it had signed an MoU with the Public Service Commission to deal with those issues. How would this be done?

Mr Khumalo replied that the FFC did not investigate corruption.

Mr Swart wanted the Commission to look into the implications of IGFR, especially regarding the Wage Bill negotiations that were going to take place.

Mr Khumalo said that the Wage Bill should be linked to productivity.  When wage allocations were made they should be in accordance with performance.

Mr D Ross (DA) was concerned that the FFC was not active enough in getting itself recognised. It was vital for the FFC to become recognised, as it needed to make presentations on the state of the economy and the role it played in the economy.

Draft Bills
Ms Kekana wanted to know what the global trends concerning personal income tax were.  She asked whether the pollution of rivers had been factored into the carbon tax.  She wanted to know why the gap in income still remained so wide in South Africa where certain CEOs were earning million of rands in performance bonuses. Were National Treasury looking into this?

Mr Ross said the 20% tax bracket for companies tax was disappointing, as individuals paid more than companies.  Taxation on retirement funds was too high and caused consternation among people. Was it possible to look at those issues again? The fuel levy should be addressed to make it easier, and people needed to be taxed less.  Were the consultations with the farming sector still on track?  He said the Davis Tax Committee was too harsh on small businesses, which needed to be taxed less if the country wanted to see more growth and employment.

Ms Nkomo referred to the Annual Tax Bill, and asked what National Treasury wanted the Committee to do.  She said people were not saving enough for their retirement.  What were the chances of changing the retirement age to 70?   She was impressed with National Treasury’s collaboration with the Department of Trade and Industry.

The Chairperson asked what happened to those small businesses that fell below the R1 million to R20 million turnover bracket, and did not qualify for a rebate.  He asked for more clarity on the tax-free savings account.

Mr Momoniat said because they did not have enough time to answer the questions, he would suggest that they hold a workshop where National Treasury would be able to answer all their questions in detail. The Committee would then also be able to view the Davis Tax Review Committee’s paper on the taxation of small businesses.

The Chairperson and the Committee Members agreed to the workshop.

Mr Momoniat appealed to the Committee to schedule public hearings for the first and second weeks of August.

The Chairperson proposed that public hearings should rather be scheduled for the end of August, or the beginning of September.

The meeting was adjourned.