Disaster Management Tax Relief & Administration Bills: public hearings

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Finance Standing Committee

22 July 2020
Chairperson: Mr M Maswanganyi (ANC)
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Meeting Summary

Video: Joint Meeting: Standing Committee on Finance and Select Committee on Finance, 22 July 2020

The joint Finance Committees of the National Assembly and the National Council of Provinces received presentations from the Congress of South African Trade Unions (COSATU), the South African Institute of Chartered Accountants (SAICA), the South African Institute of Tax Professionals (SAIT) and PricewaterhouseCoopers (PWC) during public hearings on the Covid-19 disaster management tax bills. During the virtual meeting, these bodies put forward various technical recommendations for consideration. 

COSATU said conditions needed to be attached to the tax relief, and should be aimed at retaining and creating employment, as well as being tied to local procurement for the Solidarity Fund and COVID-19 donations. The time frame provided for in the Bills posed a danger, as it limited tax relief measures to September, and it was very possible that some areas of the economy, such as the alcohol, sports and entertainment industries, would still be in lockdown then. It thought some additional tax relief intervention was needed to support indigent households. Tax relief should be conditional on employers retaining jobs, and should incentivise job creation. The R200 billion loan surety to the banks was a good move, but the fact that only 5% of it had been utilised was a concern, particularly since the government had stood surety for only R100 billion. There was a need for a solidarity tax, and wealth tax interventions for the wealthy.

SAICA was concerned that the relief measures seemed to bypass Parliament’s oversight before the Bill was tabled. This was effectively rubber-stamping the decision of the Executive. It also highlighted tax challenges that might arise over donations to relief organisations. It suggested that home office allowances, allowing tax relief for people who were beginning to work from home and work productively, was important. 
SAIT raised a number of technical issues, such as the implications for the fiscus of a possible four-month tax relief extension. It also pointed out that the Organisation for Economic Cooperation and Development (OECD) had agreed that people should not be taxed in their tax residence, based on the fact that they had been stuck in a particular country during lockdown, and requested the same treatment in South Africa.

PWC said relief was provided in a Bill dated 1 May, which had effectively been reduced in the version published on 19 May and in the final Bill. The reduction applied specifically to relief for employees earning less than R2 000 a month. PWC was not against the increases made, but it was unhappy with the retrospective, effective reduction in the relief for employees who were paid less than R2 000 a month. 

Generally, there was a sentiment that although the parties were pleased with the bills, more consultation would have ironed out some of their concerns. Concerns about the separation of powers and the fact that the bills left little room for Parliamentary oversight were also raised. 
The Committee expressed concerns about pensioners on the provisional taxpayers’ roll being taxed when they earned below the threshold. The Bill being tabled by a Member on employees being allowed to leverage pension funds without withdrawing from the market or incurring a penalty, was also discussed. Members referred to the unconscionability of penalising taxpayers who relied on draft legislation which was required to be implemented in an emergency environment. Tax exemption for employers acquiring personal protective equipment (PPE) was also requested, along with greater support for the South African Revenue Service (SARS) to assist the economy through various forms of relief to indigent members of society, and to small businesses in need. 


Meeting report


Opening Remarks

Chairperson Maswanganyi extended condolences to the family of Ntate Andrew Mlangeni, who passed away the day prior. The role which he played in the struggle and the numerous years spent on Robben Island for this country to be liberated was recalled, and to the ANC and members of the alliance, he expressed the hope that the soul of Mr Mlangeni rested in eternal peace.

Mr Y Carrim (ANC, KwaZulu-Natal) clarified the role of the National Council of Provinces (NCOP) in the meeting. The Select Committee Chairperson was not co-chairing. For COVID-19 purposes, the Committees were required to meet jointly, but this was not always the case for every occasion. The Committees had already decided that for briefings, section 75 bills and public hearings, the Select Committee would sit in for the presentations, but he would not co-chair whilst deliberations were taking place. Ultimately, both Committees would look at the bill separately and vote on it separately. 

New members on the NCOP side must not consider that there was a joint responsibility to process a fiscal framework. Although this was the case with some bills, it was not the case with these bills. He had checked with Adv Frank Jenkins, Senior Parliamentary Legal Adviser, who had confirmed this a few minutes earlier. Accordingly, the Select Committee participated somewhat informally in this case. It would however, meet to look separately at the decisions taken by the National Assembly (NA), as required by its constitutional responsibility, bearing in mind that with a section 75 bill, all the NCOP could do was to alert the NA to any glitches or reviews they may want to consider, but the NCOP could not impose on them. 

Chairperson Maswanganyi thanked Mr Carrim for the clarification, and expressed the desire to move through the meeting very quickly as there were several plenary meetings to attend in the busy parliamentary schedule. He asked COSATU to begin and gave them 15 minutes.

Public hearings: Disaster Management Tax Relief and Administration Bills

Congress of South African Trade Unions (COSATU)

Mr Matthew Parks, Deputy Parliamentary Coordinator: Congress of South African Trade Unions (COSATU), said COSATU supported the tax relief proposed by government in the two tax relief bills. It supported any measure by government to provide relief to the economy, save jobs and to save liquidity. Even before the lockdown, there was 40% unemployment, and the level was rising. It was difficult to predict what the effect of the lockdown would be on jobs, with figures suggesting between one and three million jobs may be lost. 

COSATU appreciated any measure from government to support the economy, even throwing the kitchen sink at it. It appreciated the speed with which National Treasury (NT) had moved to implement tax relief for employers. It also supported the provision which provided tax relief exemptions to the Solidarity Fund and similar COVID-19 relief efforts. COSATU supported the Solidarity Fund, and its members had contributed their salaries towards it in the hope of building solidarity as a nation and assisting those in need.

Its concerns were that the Bill contained no conditionalities for money given to employers. Handing over a blank cheque was dangerous -- there needed to be conditions attached to the giving of money. 

He asked Parliament to consider a number of their proposals. Firstly, conditions needed to be attached to the tax relief, and should be aimed at retaining and creating employment, as well as being tied to local procurement for the Solidarity Fund and the COVID-19 donations. The time frame provided for in the Bills posed a danger, as it limited tax relief measures to September, and it was very possible that some areas of the economy, such as the alcohol, sports and entertainment industries, would still be in lockdown then. He recalled previous commitments made by the 5th Parliament and the ANC about providing relief to indigent households. Given the scope of the crisis, COSATU thought some additional tax relief intervention was needed to support those households.


Unemployment was the main crisis being faced in the economy right now, with millions of workers facing retrenchment on a daily basis. The retrenchment claims to the Unemployment Insurance Fund (UIF) had already increased five-fold in the past few months. Tax relief should be conditional on employers retaining jobs, with the manner of proof being simply the payroll slips before and after COVID-19. 

Tax relief should incentivise job creation with, for example, arrears being reduced if new jobs were created. If more jobs were created, there would be more tax coming to the state and less pressure on the state to assist workers.

COSATU had previously expressed concern about the lack of conditions around the Employment Tax Incentive (ETI). Government and the South African Revenue Service (SARS) had not been able to show whether new jobs had been created, and thus far it had seemingly been a wage subsidy. COSATU thought it needed tightening to ensure that employers showed that they had created new jobs. The majority of personal protective equipment (PPE) should be locally procured, as the majority of it was being imported. At the beginning of the lockdown, the Solidarity Fund had been importing more than 90% of its PPE, but fortunately there had been a significant shift in that regard through the efforts of a joint task team comprising the Department of Trade and Industry and Competition (DTIC), the private sector, COSATU and other unions, to turn it around so that the figure was now majority being locally procured. COSATU was not confident, however, that provincial and local governments, along with other employers, were doing this to the same extent.


Mr Parks said COSATU proposed that tax relief provided for Solidarity Fund and COVID-19 donations should be conditional on locally produced goods being used, unless it could be proved that no such locally produced goods existed, or local production capacity was inadequate. All categories of PPE were currently being produced locally, and there was a chance to ramp it up.

Although though government had moved with commendable speed in implementing tax relief interventions, it had not moved with speed on other interventions which had been proposed for years. For more than five years, industry, COSATU and other players, including the ruling party, had been calling for an export tax on scrap metal. This had not been implemented, and this could be done through an export levy without having to wait for a tax bill. COSATU thought this should be done immediately.

It also felt that the Public Procurement Bill needed to be tabled more speedily. It was currently at NT, and it would like to see a firm commitment from Treasury to table it by the medium-term budget policy statement (MTBPS) in October; and for Parliament to prioritise it so that it could be adopted by April next year. COSATU understood that normal legislation took time for Parliament to process, but these were not ordinary times and this was a critical Bill to grow the economy.

Time frames in the Bills should be linked to the Disaster Management Act. Having the time frames end in September may result in unintended consequences, as some sectors in the economy such as the alcohol industry, gyms and entertainment may still be closed after September.

The Value Added Tax (VAT) increase in 2019 had been committed to relief for indigent households. COSATU proposed that free electricity and water be given to indigent households in municipalities.

The R200 billion loan surety to the banks was a good move, but the fact that only 5% of it had been utilised was a concern, particularly since the government had stood surety for only R100 billion.

There was a need for a solidarity tax, and wealth tax interventions for the wealthy, to show solidarity. 

There was a need to capacitate SARS. Fewer than 5% of import containers were inspected by SARS. COSATU suggested that surplus SANDF personnel be sent to capacitate SARS. 

South African Institute of Chartered Accountants (SAICA)

Ms Sharon Smulders, Project Director: Tax Advocacy, said SAICA also appreciated the speed with which the Bill had been tabled. However, it had four main concerns.

1. Separation of powers

Relief measures seemed to by-pass Parliament’s oversight before the Bill was tabled. This was effectively rubber-stamping the decision of the Executive. The Constitutional mandate of Parliament was therefore, at risk. 

Practical implementation of legislation

Practical implementation was difficult, because once relief had been provided, reversal was tricky. This had previously been raised in Parliament when the VAT rate changed to 15%. Although Parliament did not necessarily agree with it, they were left powerless to change it back to 14%. 

She gave the example of a taxpayer who was querying why relief was not available to him, as according to both him and SARS, he did qualify. SAICA understood that the SARS system had been changed to automatically provide relief, and although there had been hiccups in the beginning, she believed that they had been resolved. The response the taxpayer had received from SARS, however, was that because the legislation had not yet been promulgated, SARS could not change its systems to make the changes, and he would have to apply for the relief specifically. This response ran contrary to what SARS actually did, and was doing for many other taxpayers, but this version was actually correct. SARS should not have implemented the changes in its system until it was law. This applied equally to businesses as well.

SAICA accordingly urged Parliament to reconsider the approach being followed, because there was a separation of powers concern. 


This was an emergency situation, and emergency bills had previously been passed in three days. There were mechanisms to put this in place, and SAICA wondered why it was not done in this case. Parliament should ensure its oversight and the right to reversal should be more substantial.

2. COVID-19 Disaster Relief Organisations -- Section 18A 

The COVID-19 relief organisations were deemed to be public benefit organisations that were exempt from tax. The law stated that they were deemed to be exempt, but the explanatory memorandum said that they had to apply for approval to be exempt. On the donation side, people who were making donations to these organisations were provided with a deemed deduction. This was SAICA’s concern. SAICA wondered how the correctness of the deemed deduction was ensured and whether there was an approval process, as there was no process in law currently for section 18A approvals. Therefore, there needed to be a process, as SARS agreed that there was no process. A process could include that a section 18A form was used by people making donations, otherwise they would not receive the tax deduction. SAICA recommended that the legislation be amended and that that the National Treasury update the Explanatory Memorandum to clearly state that donors and employers doing payroll giving must ensure that they obtain a valid section 18A receipt should they wish to deduct the COVID-19 or Solidarity Fund donations for income tax purposes in their own tax returns or through the payroll. 


3. Case-by-case penalty waivers


SAICA said case-by-case applications for the waiving of penalties actually referred to the deferral of tax payments under the Tax Administration ct. SAICA supported this, but the case-by-case waiver was administratively dense, and would cause a backlog for SARS at the very least.

Internationally, many Organisation for Economic Co-operation and Development (OECD) countries had implemented relief. South Africa had generally implemented the same types of relief mechanisms, but what other countries had done with penalty waivers and deferral of payments and submission of returns was that they had given blanket postponement and deferrals, which would reduce the administrative burden and help taxpayers and SARS to focus on the important tasks of saving jobs and continuing business.

S 167 and 168 of the TAA

Deferment of payment was an option for those who had found themselves with penalties and interest. However, a requirement to gain deferment was the provision of interest. Unfortunately, a lot of small businesses applying for deferment would likely already have applied for loans, meaning that they did not actually have the assets to provide this kind of security. SAICA suggested a relaxation of s 168(e) on the provision of security during COVID-19 because it was really important, not only for the business to survive, but should they not be able to make payment, businesses would then be regarded as non-compliant and future assistance would not be available to them. Treasury had indicated in May that 9 000 business had taken up the relief. SAICA felt this number was quite low, and considered that this may be one of the reasons why it was so low. 

4 Relief not included in the Bills

Various people were putting their lives at risk for no compensation whilst providing essential services. Essential service relief could be done simply through donations of tax relief, fringe benefit ‘care packages,’ Section 10(1)(o) exemption and concerns around the permanent establishment of corporates. Finally, home office allowances, allowing tax relief for people who were beginning to work from home and work productively, was important. 

South African Institute of Tax Professionals (SAIT) 

Ms Beatrie Gouws, Stakeholder Management and Strategic Development: SAIT, said there were three items SAIT would like to address. Firstly, there were comments on the tax relief bills, and secondly, comments on additional measures, as due to time constraints, some things could not be included. Finally, it would comment on cash flow concerns regarding alleviating strain in the economy through cashless means.

1 Employment Tax Incentives and Administrative Justice

The ETI proposal had changed about four times between when it was first introduced and when it arrived in bill form. The period of the enhanced ETI relief was from1 April to 21 July. The formula from the first version, in comparison to the last version, gave one two different amounts. The result was that for those who applied it immediately in April, they had now over-claimed from SARS in most cases, in both April and May. This was because they had applied legislation that had not yet been promulgated. However, because it was incumbent on SARS and government to implement immediately, the situation was that taxpayers now owed penalties and interest to SARS. 

SAIT had approached SARS, who had committed to investigate how to assist those employers who had applied the draft legislation as it stood at the time. Employers would then not pay penalties and interest to SARS. From an administrative point of view, considering the fact that SARS and everybody had to apply the draft legislation that would be the correct relief to provide. 

SAIT requested that SARS be supported to provide relief in this regard, as currently the legislation did not permit it to provide this kind of relief. To expect employers to carry the penalties at this point would cause additional distress.

2 Possible extension of 4-months of relief

Ms Gouws said the fiscus may not be able to carry a four-month extension. Since the tax system was mainly based on accrual, it resulted in a situation where one had to pay the tax for rentals that had not yet been received, be it VAT or income tax. In both instances, the fact that one had not received the cash made it almost impossible for businesses to fund that amount to pay over to the fiscus. SAIT realised that in most cases the accrual system worked, but the lag between putting something into a bad debt and then being able to pay the taxes to SARS, or at least getting a refund, resulted in a time lag that was too long. SAIT asked for SARS to look at this again, to ensure that relief was provided.

3 Dies non (no days) for tax administration purposes

SAIT asked that given the uncertainty associated with the Covid-19 pandemic and whether the country (and / or provinces) would again move to Alert Level 5, it may be prudent to provide for sufficient flexibility for the dies non period to be adjusted without having to return to Parliament to amend the legislation. There were a number of administrative functions, and even though SARS had gone extremely far in trying to make everything electronically accessible, there remained instances between both SARS and the private sector where the period demanded of the administration of the tax system was almost impossible. SAIT also asked Treasury and SARS to clarify when dies non applied, to the extent that one would have to return to Parliament to amend the legislation to extend dies non in the event that there was a need to return to Alert Level Five again. At this point, it had been observed that any lack of communication would either result in people not applying for relief or if they did apply for relief, it resulted in interest and penalties, and a mismatch between SARS and taxpayers.


Additional Measures

SAIT said some of these measures were administrative in nature, while others were policy-based. Many of these incentives were by their nature cashless. Part of the industrial policy projects were required to meet an extensive set of requirements, characterised by compliance with set time frames, such as: 


•  The period during which qualifying manufacturing assets must be brought into use; 

•  A compliance period for fulfilment of the point scoring requirements; and 

•  The period during which submission of annual progress reports were required. 


4 Section 12I Tax incentives

A thriving economy was normally needed in order to fulfil the s12l tax incentive requirements. SAIT requested that a combined task team be created between Treasury and the DTI to give adjusted requirements during this time, so that jobs could be retained.

5. Place of Effective Management (POEM), and permanent establishments, and residence status 

SAIT asked for clarity on how this should be applied going forward, as COVID was likely to be here at least until the end of the year.

6. Globally mobile employees

In most countries, tax residency had not been determined by the country where one was stuck in lockdown. The OECD had agreed that people should not be taxed and looked in their tax residence, based on the fact that they had been stuck in a particular country during lockdown. SAIT requested the same treatment in South Africa, as nothing had been mentioned in South Africa. It requested that something to be included in the Bills coming out in this particular tax period, as waiting for the budget presentations coming out next year would not provide certainty for the tax year currently being lived through.

7. Contributions to communities by taxpayers

In a lot of instances, big organisations were providing services to industries, and it was unclear whether they would be able to get a tax deduction, or whether it would be considered to not be a donation. and SAIT asked for clarity from both SARS and the Treasury.

8. Joint liability for employees’ tax (individual income tax)

In a lot of instances, employers, if businesses go under, do not issue IRP 5s to individual employees. In those cases, SARS could then go after the individuals, the whole country over, and hold them responsible for failure to pay the employee tax. SAIT suggested that in order for individuals to prove that they did not receive that money, proof be given to SARS by the individuals through a pay slip and not through an IRP 5, as it was unlikely that they would have received one from their employers. 

9 Special remuneration, as defined in Section 5(9) of the ITA

SAIT suggested that where a healthcare service was being provided in overtime, that that income not be annualised so that they had a massive bump up in income tax in a particular month, but that it be considered as special remuneration in the same way that miners receive special remuneration for performing hazardous tasks during any emergency. This type of alleviation was similar.

11 Reduced salaries and benefits

For individuals who were giving of some of their salaries to keep businesses afloat, SAIT requested that they not be taxed on salaries which they had not actually received.


Ms Gouws said there remained instances where government and the private sector could come together so that the fiscus need not finance the expense of relief entirely in the short-term. This was specifically possible if the millions of diesel refunds which had not been paid out could be relied on. This was exacerbated by the fact that SARS was currently unable to do physical audits, meaning that a lot of these amounts were stuck in limbo. SAIT asked for specific attention to be made on that so that diesel refunds could go through the system more quickly.

Regarding the mining industry, SAIT suggested that the option of providing limited access be investigated, so that mines could borrow a portion of the cash balances from their own mining rehabilitation trust funds, and the money could be accessed up front so that mines could start using their work force which was currently unable to be used for mining production.

SAIT requested that broader access for COVID-19 relief organisations be provided than was provided in section s30(1) of the Income Tax Act, to also cover private relief schemes, which also provide general relief and support to the community. 

Finally, it requested that preserved retirement interest be accessed without a punitive rate disincentivising early withdrawal.

PricewaterhouseCoopers (PWC)

Mr Greg Smith, Senior Manager: Corporate and International Tax, PWC, said not a lot of time would be spent on the presentation. He would raise only a few important points.

Expansion of the Employment Tax Incentive (ETI): Interaction with Temporary Employee Relief Scheme (TERS)

PWC suggested that section 4 of the ETI, which deals with wage regulation measures and the national minimum wage (NMW), be amended. Where one had a wage regulation measure or was paying less than the NMW, one was not entitled to an ETI incentive. TERS, or the UIF, provide for the payment of benefits to employees for the period of closure, of a minimum of R3 500 per month. The employer was often paying a little bit more than this to make a contribution towards the employees’ quality of life. In many instances, this contribution was less than the minimum wage. The effect was this was that s 4(1)(a) rendered the employer ineligible to receive an ETI. PWC suggested that for the period of the relief, section 4 be amended so that it took into account money paid to employees in terms of TERS. Alternatively, section 4 should be deleted for the period of the relief.

Expansion of ETI: Retrospective changes

There were a few versions of the Bill, and with each new version it appeared that there was an increase in the amount of ETI provided. It was not entirely correct that there was an increase across the board. There was relief provided in a Bill dated 1 May 2020, which had effectively been reduced in the version published on 19 May and in the final Bill. The reduction applied specifically in relief for employees earning less than R2 000 a month. PWC was not against the increases made, but it was unhappy with the retrospective, effective reduction in the relief for employees who were paid less than R2 000 a month. 

Compounding the problem, the change became evident only in late May, when the 19 May Bill was published. At that stage, many employers had already claimed the relief. The information on the SARS website indicated information based on the first draft of the Bill, all the way until the end of June 2020. Employers were relying on this information for at least April and May. There was no response document along with the 19 May version to explain the change. A portion of the relief announced by the government, and on which taxpayers relied, was not proposed to be withdrawn with retrospective effect. Many employers acting in good faith undertook to pay an amount which was usually less than R2 000 to tide employees over, but the relief was actually reduced. PWC suggested that the relief provided in the 19 May draft bill be reversed to the Bill as at 1 May in so far as employees earning less than R2 000 a month was concerned.

Process and consultation

PWC appreciated that ETI had been tabled speedily, but felt there could have been more robust public engagement. The understanding was that workshops would be held where public consultations would be held with the public and stakeholders. Although comments had been submitted, there had been no consultation amongst stakeholders before tabling. If there had been a little bit of consultation, it would have resulted in less uncertainty or cleared up anomalies or concerns, like the under R2 000 concern. 


This concern was in written form, not in the slides. The concern was around time limits. There were certain provisions in the Disaster Management Tax Relief Administration Bill that deal with time periods and the fast-tracking of VAT refunds, time periods, deferrals for payments of taxes etc. There was no provision in the Bill for extensions. PWC argued that there should be some provision for extension of time periods to make some allowances, particularly as no-one knew how long the current situation would go on. Given these were administrative bills, this could be done by Ministerial comment, and not necessarily through amendment of the Bill. 

National Treasury’s response

Ms Yanga Mputa, Chief Director: Legal, Tax Design: Tax Policy Unit, NT, said that at this stage National Treasury was committed to considering the comments received and in terms of normal processes, it would complete a response document to Parliament by next week, responding to all the comments received from Parliament in writing. If there were any changes which were considered, because the Bill had been tabled in Parliament, it requested that Parliament make changes to the Bills. If there were any changes which the Minister would like to make, the Minister would have to request Parliament for these, because the Bills belonged to Parliament now.

The Chairperson said he thought the Committee had agreed to receive the written responses from Treasury next week, as its responses needed to be evidence-based and any other response given would be personal overviews.


Mr G Hill-Lewis (DA) thanked the presenters for their helpful presentations. He asked that when referring to presentations, there should be specific clause references for clause amendments, particularly when dealing with legislation. He asked for a written note of their recommendations to supplement their presentations, as he feared he may have missed something, and that this should be standard practice in future.

He asked the teams from SAICA and SITA, who had made some proposals on pension access, for their view on another proposal about taxpayers who earned pension income and were provisional taxpayers, whose total pension income was below the tax threshold for their age.  What happened was that these people had to pay tax upfront and get that back from SARS at the end of the year, but in the meantime they had to come up with the money. He had received many inquiries from people who had hardship in trying to come up with the money at this time to pay SARS. 

He emphatically agreed with the comments COSATU had made about the R200 billion guarantee scheme. He pointed out to the Chairperson that he had written asking for a briefing from Treasury, because it was now more than a month since the Minister had made the budget speech and referred to doing the things which COSATU had asked for. There had been no public announcement on this, and he would be grateful if a briefing with Treasury could be arranged as soon as possible. 

He strongly disagreed with COSATU about small businesses. He asked COSATU to put themselves in the position of a small business in South Africa right now, and the concerns they had. It was a very difficult time and entrepreneurs were likely to have incurred a lot of personal debt in order to remain afloat, and had possibly maximised their TERS benefit. The government had told them they could not sell their products because somehow they were related to COVID-19, which was a ridiculous rule which had further crushed the air out of their businesses. Treasury had then offered a package to small businesses to assist in keeping businesses open. He therefore disagreed with more conditionalities at this time, as it was frankly something of a miracle that so many had got through these last four months without shutting down entirely. They needed all the support and appreciation from Parliament and from government without conditionalities, as the alternative may be the whole business would shut down and everyone would lose their jobs. The fewer conditionalities placed on businesses at the moment, the better -- the outcome should be whether as many businesses as possible could be kept alive.  

Dr D George (DA) referred to the presentations from SAICA and SAIT, and said he understood that SARS had made a statement regarding home offices, but it certainly did not seem as if they were doing much about it. SARS seemed to have said that people who had been locked down for a period of six months would be able to get some relief on their home offices, but it had not gone further than this by relaxing rules etc. He asked whether SAICA and SAIT had had a look at some of their statements, and whether there was something he was missing, because if that was so, then SARS needed to bear in mind, as this was a circumstance that people had not chosen for themselves, and they were not locked up because they wanted to be. Those working from home should receive tax relief. 

He asked whether SAICA and SAIT had made any representations on vehicle allowances. The problem with this was that people who got vehicle allowances could not use their vehicles.  There was no reason why the formula could not be amended in some way to make provision for this difficulty. His reasoning was that SARS was spending a lot of money advertising for people to be tax compliant, but it did not seem to be doing much about supporting people. There was an expectation that the social contract should be a two-way street. 

On pension funds, it was well known that that accessing retirement annuities could result in a punitive fee. On the issue of retirement annuities, government had been encouraging people, especially business people, to make provision for their retirement, but this could not be accessed until the age of 55 because it was a different kind of vehicle. He had been making proposals for a Bill he hoped would be tabled to provide a way for people to leverage their pension funds without withdrawing from the market or incurring a penalty.

Mr D Ryder (DA, Gauteng) agreed with Members who had commented that the absence of Mr Ismail Momoniat, Deputy Director General (DDG): Tax and Financial Sector Policy, NT, was disappointing. He wondered what meeting could be more important than presenting his own Bills to Parliament, particularly as PWC and the Committee would have appreciated the opportunity of interacting with him more directly. 

Retrospective reductions had been made to the legislation, and it was unconscionable that people were now facing penalties. If there was going to be a retrospective reduction of a benefit, it did not make sense to have a penalty on that benefit, as it would cause people to become even more disillusioned with the taxation system. 

He noted SAICA’s comments on home offices, and disagreed that the easiest route should be followed. He thought a hybrid system should be put in place, though not to follow the line of least resistance. A fringe benefit tax on care packages and allowances given to employees needed to be looked at carefully, and the month’s groceries should not be disguised as a fringe benefit. However, where there was a legitimate care package being given to people working in highly exposed conditions, there should not be fringe benefit taxpayers. 

The fact that memos and media announcements needed to be made was making the system extremely complex. He had sympathy for the entrepreneur in a small business, trying to keep expenses down, but now a large amount of his funds needed to go to tax advisors just to remain compliant. That being said, he thought Treasury’s response had been swift, although he think that some of what Parliament had done was rubber-stamping. As PWC had said, if it could have consulted more closely it could have ironed out some of the issues which had been highlighted. 

Mr Carrim thanked everyone for their contributions. The issue of the role of Parliament in terms of tax bills kept coming up in discussion about Parliament in effect rubber-stamping them. This had been discussed before in meetings with SAICA, and it knew the answers to that. Since he was confident that COVID-19 would pass at some point or the other, this concern should be raised again. Parliament was not happy with the process and in 2014/2015, the Committee had asked the research unit to look into the matter, and it had come up with the same issues that Treasury had raised, including a court decision which came slightly later. It had asked for parallels elsewhere in the world and had been surprised to find that many tax bills elsewhere were dealt with in a similar fashion. Since he started chairing in 1998, there were often clauses in tax bills which were not understandable. This was apparently a feature common to other countries, such as the British Parliament, where similar things were said by Members of Parliament who were far more educated on financial matters. He raised this issue, because it kept coming up, and he thought the Committee needed to move past this. To the people who criticised this method of passing tax bills, he asked that they should provide their parallels elsewhere in an established democracy, where tax bills were passed differently. 

SAICA’s presentation had been a very skewed one, and this was the first time that it had raised the concern so frankly. Obviously, as a politician, his hackles had been raised. To what extent were these issues being raised because SAICA was committed to a people’s organ Parliament, and to what extent was it to rationalise some of its problems, that it did not always get what it wanted. The fact was that Parliament did make changes to tax bills, as SAICA was well aware. That was why there was an informal process first, and then the formal process, because once the bill was introduced, there existed the complexities of going through the Money Bills Act process. 

He said that on tax bills, there would never be consensus, whatever class people were in and wherever one was in the world, because people did not like paying taxes. Parliament had said before that Treasury needed to consult more, and the Chairperson had already raised this. 

With due respect to the team from Treasury, Mr Momoniat was very accomplished and experienced, as well as a former political activist of repute, but he was not indispensable. If he was not here, it did not mean that the team could not respond, as Ms Mputa was a very accomplished representative of Treasury on tax, and there was no reason why she could not give answers. Treasury’s response that the provision of line-by-line answers would be given was not at the expense of an initial cursory response whilst stakeholders were here. In these Committees, exchange was encouraged. There was nothing stopping Ms Mputa from giving tentative responses. She knew that she was on the agenda, and although the Committee had accepted it, he personally would not have. Although Mr Momoniat was great, he was not indispensable. 

Finally, on the issue of rubber-stamping, he suggested that the research unit and the legal services unit once again assist them in looking at what the Committee could do on the passing of tax bills. When certain taxes were going up, one could not consult on the matter, because it would be foolhardy and would affect the markets, as it would result in people stockpiling cigarettes and liquor, and so on. That was a nonsensical suggestion, and the people who were implying it presumably knew better than to do so, because they were technical experts. 

On the VAT matter, although Parliament was not convinced that it qualified in that way, it had got no-where and the non-governmental organisation (NGO) had retreated, presumably because they had checked and it was not easy. He recommended that the Portfolio Committee ask for another study, because the tax bills were the Portfolio Committee’s responsibility to deal with this matter.

The Chairperson said that it should not be that because Mr Momoniat was not present, the whole office could not respond. Delegation would be important, as it allowed others a chance to rise, and there were many competent tax professionals in Treasury. He asked the Committee Secretary to find time in its schedule for Treasury and the Solidarity Fund to come to present to Parliament.

Mr Carrim said that such a meeting would be useful, but he thought the Department of Trade and Industry should also be invited, as he believed the Solidarity Fund fell under the DTI.

Stakeholder responses


Mr Parks said that COSATU would support the giving of some kind of early rebate relief for pensioners, as it would be a useful lifeline to those pensioners. Although it would be keen for the Committee to have engagements with Treasury, he asked what was being done to unblock the R200 billion so it was released by the banks, as there were very few lifelines being released into the economy. It was worrying how slowly the banks were releasing it, and COSATU felt that the banks were stifling the economy when it could least afford it. 

COSATU shared the plight of workers, as they were the first to suffer the effects of retrenchment when a business went under. This was why COSATU had put pressure on the UIF and government to release more than the present R400 billion into the economy. Not all employers were the same, as some employers had retrenched employees due to their own mismanagement, and not due to COVID-19. For COSATU, it was a moral issue, as it asked why a company should be bailed out if it was going to throw the support out of the window. It felt that Mr Hill-Lewis was correct, as the UIF could not carry the burden alone, and other departments needed to come to the party.

He told Dr George that COSATU was keen to see his Bill move through Parliament, and had been discussing it. Although it was engaging with Treasury, it did not feel that Treasury was moving with the speed required in a state of crisis. Thousands of workers were resigning every day, simply to cash out their pensions. This became the worse of two scenarios. The Fifth Parliament and the Finance Committee’s Chairperson had done fantastic work with VAT, and the Public Investment Corporation (PIC) Bill showed what it meant to be an activist Parliament. 

It would be useful to have a VAT review, even though they were in the middle of the pandemic crisis. The Minister of Finance had been talking about a formal review of taxation, and there was no better time to do this than now. It should be done before February, because the tax increases in the past few years had increasingly impacted upon the working class and the poor, whilst allowing the rich to get away with it because they had fancy accountants. He understood, however, that government needed every single cent it could to support the economy.


Ms Smulders said that the written submission had been sent last week Friday, with clause references and its submissions, to National Treasury. 

Home office allowances

Regarding the SARS’s statement, she thought this referred to an article which was published in the press the day before, stating that if one stayed at home for six months, one was allowed to claim home office allowances. She was not sure if SARS could correct her, but she was not sure of any statement of that nature other than the interpretation note that had always been there, and the way section 23(b) always reads with its specific requirements. Unless there was a statement released that she was unaware of, it was the status quo, and there was no further relief than what was provided for as required by the section. SAICA does not agree with articles in the press saying that if one was at home for six months, one should be able to claim, because it was based on an incorrect interpretation which would result in people claiming for relief without looking at what was required -- which was determined per expense and not necessarily related to time periods. This was something that urgently needed to be revisited, if there was no relief being provided. SAICA agreed with Mr Ryder that the path of least resistance was not always the best.

Care packages

SAICA understood that there was no relief, and would welcome changes. It suggested a limit of R200 to prevent abuse, and said more about this in its submission.

She took Mr Carrim’s point. She and her colleague had been at SAICA for a month, but this was an emergency situation. The Sexual Offences Act had been changed in three days when it was declared unconstitutional. SAICA had made submissions before, and these concerns had been addressed in the Bills when all stakeholders had worked together to get the consultations to happen. It accepted what Treasury had done, but felt it could have been handled better.

Pensioners below threshold

If pensioners were below the tax threshold, they should not have to pay tax and be due refunds at the end, so she was uncertain why this would be the case. It may be that they earned additional income, in which case they should be registered as provisional taxpayers. Otherwise, it may be the 25% that pension funds would have to withhold, and if there was a problem with that, they would have to ask for a declaration in that respect. She asked if Mr Faber had anything to add on this point, but she knew that Ms Gouws would speak on it, as well as on the punitive withdrawals, which were problematic, and SAICA would welcome any changes in that regard.

Mr Pieter Faber, Senior Executive: Tax, SAICA, referred to the comments made by Mr Carrim, and said SAICA had previously made a comparative submission to the Committee. As a closing statement, SAICA was simply raising a practical concern, which was not about whether something was retrospective or retro-active. SAICA was simply enquiring whether something which had been implemented without legislation could be undone. For example, pay-as-you earn (PAYE) had a life cycle and could be undone, but if it was something transactional, it may not be possible to undo it. This was the practical concern which it had raised.

Mr Hill-Lewis clarified that he had been talking about pensioners who were registered as provisional taxpayers. They received investment income, but the total of that income was still below the threshold, but because they were registered s provisional taxpayers, they had to pay upfront.

The Chairperson asked Mr Hill-Lewis if he had received any written responses.

Mr Hill-Lewis said that he had not, but he would communicate with the Committee Secretary to confirm this. 

Ms Smulders said that the point he had raised was not in the documents, but it was something SAICA would look into. 


Pensioners’ provisional tax share

Ms Gouws thanked Mr Hill-Lewis for the question, and said that she would appreciate looking at some of these cases, as sometimes a trend could be seen which would indicate whether it would be a matter of distributing the right information which would inform people step-by-step of what they should do. She would be in contact with Mr Hill-Lewis to get the information. 

It was critical that in the same way that it was recognised they were living in an exceptional time and businesses needed to be supported, for individuals, things like withdrawing a portion of their pension was something that needed to be looked at, as it was a matter of survival. In some instances, pensions were the only savings that people had, and the desire was not for them to lose their jobs in order to be able to access their life savings. In this respect, SAIT supported Dr George on that point and would get in contact with him about what his Bill proposed. SAIT was in support of less punitive measures for people to access relief.


People were currently being taxed for work vehicles which were sitting at home, because they were not travelling to work and back. In this case, there was still a fringe benefit. In that regard, one was being taxed on something one had no private enjoyment of. From a fairness perspective, it would be a good move to make sure that there was no unintentional hardship in this respect.

Home offices

Ms Gouws concurred with Ms Smulders, and said she thought that there were a lot of issues in this area and a massive amount of misunderstanding, to the extent that SARS should provide some clarification. If there was something that could be done from a legislative perspective to assist SARS to not carry this burden alone, Treasury may have to be involved.


SAICA agreed with Mr Ryder that employers who applied the draft legislation should be assisted.

PPE and related support

SAICA felt that in instances where employers were paying for people’s COVID-19 tests, this should not be seen as being taxable. In the same way that a hat was given for a hat during the 2010 FIFA World Cup, that was not taxable. At the very least, as the country was being brought together at a time of crisis as it was at that time, a similar exemption should also apply.


PWC said it did not have anything to add, but there was a detailed submission statement referencing the clauses, which it could resend if requested.

Mr Kyle Mandy, Head: National Tax Technical, PWC, said that it would have been ideal for the Bills to be tabled in April, but at the same time, it would have appreciated more consultation. 

It was one thing to request written submissions, as this was not in itself always effective, as it needed to be backed up with engagement through discussion in order to remedy and avoid misunderstanding, with the hope of arriving at a common understanding, if not agreement.

Mr Carrim said he had nothing to add except that the way tax bills were managed was consistent with the Committee’s parliamentary role. He humorously suggested it was important to check whether it was parliamentary for Mr Hill-Lewis to agree with anything which COSATU had said, given that he was in the DA.

The Chairperson laughed, and said that it would be career limiting for Mr Hill-Lewis. On that lighter note, he adjourned the meeting. 

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