Trending in Tax — March 16, 2020

Author: Ernest Marais

Service: Andersen Tax

Treasury excludes duty rebates for goods damaged, lost or stolen due to robbery and theft. Adjustments in the Employee Tax Incentive Act aim to boost youth employment and clarification on eligible employers is provided.

Customs & Excise Tax amendment

  • The current legal position is section 13(3) of the Customs and Excise Tax Act allows for a rebate on goods when the goods are lost, destroyed or damaged or in other circumstances which the commissioner regards as exceptional in respect of which custom duty and fuel levy is more than R2500 while the goods are—
    - in any customs and excise warehouse or under the Commissioners control
    - being removed with deferment of payment; or
    - being stored in a rebate storeroom, provided that—
    * such goods have not entered home consumption;
    * such loss, destruction or damage isn’t due to negligence or fraud and;
    * no compensation in respect of the customs duty will be paid to the owner of the goods.

  • The amendment now excludes circumstances where goods are lost, damaged or destroyed due to robbery and theft.

Employment Tax Incentive Act Amendment

  • The Employment Tax Incentive Act seeks to promote youth employment and up-skilling as it incentivises employers by reducing the payable employees’ tax. The employment tax incentive (“ETI”) is applicable to employers in specific economic zones (“SEZs”), as well as employers who recruit persons between the ages of 18 and 29.

  • The first leg of the amendment is an increase in the earning threshold of eligible employees from R6000 to R6500. This increase accounts for inflation and ensures the qualifying employers remain eligible to benefit from the scheme as the legislature intended.

  • Pursuant to the introduction of the National Minimum Wage Act (the NMW Act) in 2018 the ETI Act has now been amended in line with the NMW Act, ensuring government policies are aligned.

  • The second leg of the amendment seeks to address a gap in the ETI which doesn’t clearly provide specific requirements for employers operating within specific economic zones and wish to claim the ETI without adhering to the age limit.

  • For uniformity, the definition of the “special economic zone” in the ETI Act has now been amended in line with the definition in the Income Tax Act. The amendment clarifies that a company must be regarded as a qualifying company in terms of the Income Tax Act in order to claim income tax incentives as per the SEZ categories.