The tax matters that matter day-to-day
The tax matters that matter day-to-day
By Geraldene Göldner
National Treasury released the 2026 Budget on Wednesday, which contained several welcome surprises. In particular, the Budget introduced various tax relief measures and provided greater clarity on matters with which taxpayers commonly struggle.
In its proposals, Treasury acknowledged the significant compliance burden faced by taxpayers and, accordingly, presented a number of compliance-related relief measures. Some of these proposals are explored below.
Carbon tax
It is proposed that the current capacity-based threshold applicable to commercial and institutional activities be replaced with an emissions-based threshold of 25 000 tonnes of carbon dioxide equivalent.
Voluntary Disclosure Programme (VDP) and SARS interest
Closely linked to the burden of compliance is the risk of errors arising when managing tax affairs. Many taxpayers are familiar with the SARS Voluntary Disclosure Programme (VDP) provided for in the Tax Administration Act, which allows relief from understatement and late-payment penalties where a valid VDP application is submitted.
At present, the legislation does not allow for the remission of interest when applying for VDP relief. Treasury has proposed that this be addressed by allowing taxpayers to also request the remittance of interest relating to the tax matters disclosed under a VDP application.
Provisional tax – tax-exempt entities
It is proposed that exempt and partially exempt entities will no longer be required to register as provisional taxpayers.
Provisional tax – penalties
Treasury has proposed a review of the penalty regime applicable to the underestimation of provisional tax. For years of assessment commencing on or after 1 March 2026, it is proposed that the R1 million taxable income cap for reliance on the “basic amount” be increased to R1,8 million.
Accordingly, where estimated taxable income is less than R1,8 million, taxpayers may rely on the “basic amount” reflected on the IRP6. If no adjustment is made to the basic amount, no underestimation penalty will be imposed.
However, within the same proposal, Treasury has also clarified that where an estimate submitted to SARS is sufficient to avoid an underestimation penalty, but the related tax is not paid before year-end, the underestimation penalty may still be levied. This proposal is intended to take effect immediately.
Tax compliance status and suspension of payment
A taxpayer’s ability to conduct business is often dependent on maintaining a ‘tax compliant’ status with SARS, as suppliers may require confirmation of such status (previously referred to as a tax clearance) before engaging or continuing commercial relationships.
As is well known, SARS applies a ‘pay-now-argue-later’ principle, and failure to make payment can negatively affect a taxpayer’s compliance status. If a taxpayer disagrees with an assessment, they can file an objection and also ask for payment of the disputed debt to be suspended.
Currently, the submission of a suspension of payment request does not remedy a taxpayer’s ‘non-compliant’ status, which can significantly hinder business operations. Treasury has proposed that the legislation be amended so that a taxpayer’s status is reflected as ‘compliant’ with immediate effect for the period during which the suspension of payment request is under consideration.
It has further been proposed that, where a request for suspension of payment is rejected, the ‘compliant’ status should be maintained for the additional 10 business days provided for in the legislation.