Draft Bills and Explanatory Memoranda

Draft Bills and Explanatory Memoranda

• 19 June 2023
• Accounting
• South African Accounting Academy

These draft bills provide the necessary legislative amendments required to implement the first phase of the “two-pot” retirement system, they also take into account public comments received on the 2022 Draft Revenue Laws Amendment Bill published on 29 July 2022, and make provision for the name change from the word “pot” to the word “component” in the bills to be introduced formally by the Minister in Parliament. However, the word “pot” is still used in the colloquial form to describe the reform itself, in which Government proposes a further reform to the retirement saving regime. This reform will see the introduction of the so called “two-pots” retirement system. The “two-pots” regime seeks to retain the current principle of exempting contributions and growth thereon while taxing withdrawals of benefits.

The 4 relevant publications are:

• 2023 Draft Revenue Administration and Pension Laws Amendment Bill
• Draft Memorandum on Objects of 2023 Draft Revenue Administration and Pension Laws Amendment Bill
• 2023 Draft Revenue Laws Amendment Bill
• Draft Explanatory Memorandum on the 2023 Draft Revenue Laws Amendment Bill

Due date for comment is 15 July 2023.

A joint media statement was also published with more details about the key proposals incorporated in the revised 2023 Draft Revenue Laws Amendment Bill, and consequential legislative amendments to the Pension Funds Act 24 of 1956, as outlined in the 2023 Draft Revenue Administration and Pension Laws Amendment Bill, to ensure the smooth implementation and administration of the “two pot” retirement system changes.

Click here to download the above documents:

https://www.sars.gov.za/legal-counsel/preparation-of-legislation/draft-documents-for-public-comment/

Relevance to Auditors, Independent Reviewers & Accountants:

• The Income Tax Act is yet another piece of legislation that your clients must comply with, and which you must assess compliance with.  If they don’t comply with the relevant laws and regulations, you have certain reporting obligations in terms of NOCLAR (NOn-Compliance with Laws And Regulations) – this could include reporting to management, qualifying your audit opinion, reporting a Reportable Irregularity, etc.
• As an auditor, independent reviewer, an accountant or tax practitioner, you need to be aware of the proposed changes to tax legislation that is brought about by the annual budget speech.
• As an employer and taxpayer, you also need to comply with the Income Tax Act in your workplace and be aware of the Draft Revenue Laws Amendment Bill, so that you and your practice may apply the two-pot reform to the retirement regime.

Relevance to Your clients:

• An entity (company or close corporation) has a duty to comply with the Income Tax Act, and directors have to fulfil their duties accordingly, otherwise they could be held liable.
• It is important to be aware of the proposed changes to tax legislation that is brought about by the annual budget speech, and the Draft Revenue Laws Amendment Bill so that your clients may apply the two-pot reform to the retirement regime.

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