Ngiyabonga Sihlalo na malungu ahloniphekile. [Thank you, Chairperson and hon members.]
The Taxation Laws Amendment Bill and the Taxation Laws Second Amendment Bill, as the Minister has already indicated, are just the first instalments of legislation that give legal effect to this year's tax proposals that were announced in the Budget Speech which he delivered on 20 February this year.
These Bills essentially cover the changes in rates, thresholds, technical changes and other urgent matters. For the purposes of this debate, I would be dealing with miscellaneous policy and administrative amendments, and my colleague Comrade Aaron Mnguni will deal with the changes in rates, thresholds and the urgent matters that I have referred to. In pursuit of the ANC's agenda of a better life for all, and in response to the people's call in 1955 when they called for sharing in the country's wealth, it is imperative that attention be given to the redistribution of income through tax instruments.
Over the years, since the ANC came into power, tax reforms have played a key role in addressing the skewed distribution of income, which is symptomatic of all capitalist dispensations, and the apartheid one was one of the cruellest. Building on this foundation, this year's Taxation Laws Amendment Bills take the process a step further. In line with the country's campaign to attract scarce skills, last year - in 2007 - a number of amendments were proposed including the extension of a concession that foreign expatriates visiting South Africa could receive tax-free employer- provided accommodation for up to one year.
This exemption period is extended to two years, in line with temporary work permits. The rationale for this exemption is that it is understood that short-term expatriates normally retained their houses back home. However, this exemption is subject to a monetary ceiling equal to the lesser of 25% of monthly salary or R25 000 per month.
In order to develop research and development, section 11(d)(7) is amended to extend the 150% deduction to the receiving taxpayer where funding came from the other party as opposed to only exempting the funding party. This had the disadvantage of defeating its purpose if the funding party was outside the tax net. Research and development was conducted on behalf of the funding party.
Last year's adjustments provided for the re-organisation of collective investment schemes with unintended consequences. The amendment clarifies the eligibility of permissible active participation of any controlled group company in relation to the company that is issuing the shares. Some of the submissions on this matter revealed some startling evidence that the committee would be keen to follow up on, particularly as it relates to the black economic empowerment transactions, mergers and acquisitions. The committee is currently considering holding hearings on these subjects so as to get to the bottom of this.
On employee's tax, it is proposed that no employee's tax be set off against a taxpayer's normal tax liability, unless the employer has submitted an acceptable annual reconciliation to the SA Revenue Service. This ensures that the employee is assessed on a fair basis. These amendments also propose an overhaul of the administrative penalty system by introducing a more objective system that creates a more certain environment for taxpayers. Personal income tax is further simplified by proposing that taxpayers no longer have to submit supporting documents when filing their tax returns. This is an ongoing process that we have seen being implemented already during this past tax year. Taxpayers are, however, required to keep their supporting documents for a period of five years, after which these may be discarded.
It is also proposed that employers that fail to submit the pay-as-you- earn/IRP5 reconciliation should be penalised. In the briefing by Sars on their strategic plan, we were informed that it was well underway and that the co-operation from the employers was encouraging. As members will be aware, filing season has also been delayed in order to allow the employers time for preparations for the new system. The SA Revenue Service is also assisting employers with the necessary software in order to implement the system smoothly. A number of submissions were received and processed before the committee with regard to these amendments. I must admit that the time allocated to deal with such large volumes of submissions had not been adequate and a number of presenters raised this matter with the committee. We hope that in future this will be addressed - all in the interests of participatory democracy.
Allow me to extend our gratitude to the team from National Treasury and SA Revenue Service for the time, energy and passion they dedicated to the process. The committee members were under tremendous pressure to digest and plough through the large volumes of information with very little or no technical and administrative support, and the overworked staff was equally tremendous.
As I have indicated, this is but the first instalment of our tax legislation this year. We will return to this House with the Revenue Laws Amendment Bill later in the year and plead for your indulgence in advance. The committee supported these Bills unanimously. I thank you.