Division of Revenue Act

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Published: 2002-03-28

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Division of Revenue Act [No. 5 of 2002]


Government Gazette

REPUBLIC OF SOUTH AFRICA
Vol. 441 Cape Town 28 March 2002 No. 23290
THE PRESIDENCY
No. 407 28 March 2002
It is hereby notified that the President has assented to the following Act, which is hereby published for general information:–
No. 5 of 2002: Division of Revenue Act, 2002


2 No. 23290 GOVERNMENT GAZETTE, 28 MARCH 2002
Act No. 5, 2002 DIVISION OF REVENUE ACT, 2002
(English text signed by the President.) (Assented to 27 March 2002.)
ACT To provide for the equitable division of revenue raised nationally among the national, provincial and local spheres of government for the 2002l2003 financial year; to provide for reporting requirements for allocations pursuant to such division; to provide for the withholding and the delaying of payments; to provide for liability for costs incurred in litigation in violation of the principles of co-operative governance and intergovernmental relations; and to provide for matters connected therewith.
PREAMBLE
WHEREAS section 2 14( 1) of the Constitution requires an Act of Parliament to provide for-
(a) the equitable division of revenue raised nationally among the national, provincial and local spheres of government;
(b) the determination of each province’s equitable share of the provincial share of that revenue; and
(c) any other allocations to provinces, local government or municipalities from the national government’s share of that revenue, and any conditions on which those allocations may be made.
E IT THEREFORE ENACTED by the Parliament of the Republic of South Africa, B as follows:- Definitions
1. In this Act, unless the context indicates otherwise, a word to which a meaning has been assigned in the Public Finance Management Act bears the same meaning, and- 5
“accredited bank account” means- in respect of a province, a bank account of the provincial Revenue Fund which the head official of the provincial treasury has certified to the National Treasury as the bank account into which allocations in terms of this Act must be deposited; and 10 in respect of a municipality, a bank account o f a municipality which the municipal manager has certified to the national accounting officer responsible for local government as the bank account into which allocations in terms of this Act must be deposited;
“Director-General’’ means the Director-Generai of the National Treasury; 15 “head official of the provincial treasury” means the head official of the provincial department responsible for financial matters in the province; “Intergovernmental Fiscal Relations Act” means the Intergovernmental Fiscal Relations Act, 1997 (Act No. 97 of 1997); “municipality” means a municipality established in terms of the Municipal 20 Structures Act;
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Act No. 5,2002 DIVISION OF REVENUE ACT, 2002
“municipal accounting officer” means the municipal manager of a munici- pality or such other person who has been instructed or delegated by the council to perform the functions of an accounting officer; “municipal public entity” means- a board, commission, company, corporation, fund, utility or other entity which 5
(a) a juristic person under the ownership control of a municipality; (b) established pursuant o a resolution of the council or in terms of
( c ) fully or substantially funded either from municipal funds or by way of a 10
(d) accountable to the municipality; “Municipal Structures Act” means the Local Government: Municipal Structures Act, 1998 (Act No. 117 of 1998); “next financial year” means the financial year commencing on 1 April 2003 15 and ending on 31 March 2004; “payment schedule” means an instalment schedule which sets out- ( a ) the amount of each instalment of an equitable share or other allocation to
be transferred to a province or municipality for the financial year; (b) the date on which each such instalment must be paid; and 20 ( c ) to whom, and to which accredited bank account, each such instalment
“prescribe” means prescribe by regulation in terms of section 33; “Public Finance Management Act” means the Public Finance Management Act, 1999 (Act No. 1 of 1999); 25 “receiving officer”-
1s-
legislation;
tax, levy or other money imposed in terms of legislation; and
must be paid;
in respect of a Schedule 3 allocation transferred to a province, means the head official of a provincial treasury acting with the concurrence of the accounting officer of the provincial department receiving the allocation; in respect of a Schedule 4 allocation transferred to a province, means the 30 accounting officer of a provincial department which receives such allocation; or in respect of a Schedule 5 allocation transferred to a municipality, means the municipal accounting officer of that municipality;
(xiv) “SALGA” means the national organisation recognised in terms of section 35 2( l)(a) of the Organised Local Government Act, 1997 (Act No. 52 of 1997);
(xv) “transferring national officer” means the accounting officer responsible for a national department which transfers to a province or municipality a Schedule 3, 4 or 5 allocation, but excludes the accounting officer of the National Treasury in respect of an allocation listed in those Schedules and which is on 40 the vote of the National Treasury;
(xvi) “transferring provincial officer” means the accounting officer responsible for a provincial department which receives a Schedule 4 or 5 allocation for the purpose of transferring it to a municipality in the relevant province.
PART I
OBJECTS OF ACT
Promoting co-operative governance in intergovernmental budgeting
45
2. The objects of this Act are to- (a) provide for the equitable division of revenue raised nationally among the three
(bj promote co-operative governance in the budget allocation and transfer
(c) promote better co-ordination between policy, planning, budget preparation
spheres of government; 50
process;
and execution processes;
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Act No. 5,1002 DIVISION OF REVENUE ACT, 2002
(dj promote predictability and certainty in respect of all allocations to provincial and local governments to enable such governments to plan their budgets over a multi-year period;
(e) promote transparency and equity in all allocations, including in respect of the criteria for their division; 5
v) promote accountability for the use of public resources by ensuring that all transfers are reflected on the budget of benefiting provincial and local governments, and are subjected to an audit;
(g) ensure that proper financial management is applied; and ( h ) ensure that legal proceedings between organs of state of the three spheres of 10
government are avoided.
PART I1
EQUITABLE SHARE ALLOCATIONS
Equitable division of revenue raised nationally among spheres of government
3. (1) Anticipated revenue raised nationally in respect of the financial year is divided 15 among the national, provincial and local spheres of government for their equitable share as set out in Column A of Schedule 1.
(2) A recommended division of anticipated revenue for the next financial year and the 2004/2005 financial year, and which is subject to the provisions of the annual Division of Revenue Act in respect of those financial years, is set out in Column B of 20 Schedule 1.
(3) Despite subsection (2) , the Minister may, in respect of the next financial year and until the commencement of that financial year’s Division of Revenue Act, determine that an amount not exceeding 45 per cent of the recommended division f r the next financial year, be transferred as a direct charge against the National Revenue Fund to each 25 province and to a municipality contemplated in section 5(1).
Equitable division of provincial share among provinces
4. (1) Each province’s equitable share of the provincial share of anticipated revenue raised nationally in respect of the financial year is set out in Column A of Schedule 2.
(2) A recommended division of anticipated revenue for each province for the next 30 financial year and the 2004/2005 financial year and which is subject to the provisions of the annual Division of Revenue Act for those financial years, is set out in Column B of Schedule 2.
(3) Each province’s equitable share contemplated in subsection (1) must be transferred to the province in weekly instalments in accordance with a payment schedule 35 determined by the National Treasury after consultation with the head officials of the provincial treasuries.
(4) Despite subsection (3) , the National Treasury may, on such conditions as it may determine, advance funds to a province in respect of its equitable share contemplated in subsection (l), which have not yet fallen due for transfer in accordance with a payment 40 schedule referred to in subsection (3) in respect of that province.
the province which would otherwise become due in terms of that payment schedule.
Equitable share for local government
( 5 ) The advances contemplated in subsection (4) must be set-off against transfers to
5. (1) The national accounting officer responsible for local government must, not later 45 than 14 days after this Act takes effect, determine the allocation for a municipality in respect of the equitable share for the local sphere of government set out in Schedule 1 and such determination must be published by the Minister in the Gazette.
(2) The criteria for determining the division contemplated in subsection (1) must be in accordance with a policy framework approved by the National Treasury after 50 consultation with SALGA and must take into account the fiscal capacity of each
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Act No. 5,2002 DIVISION OF REVENUE ACT, 2002
municipality with a view to the prioritisation of the funding of municipalities which bear primary responsibility for basic service delivery.
( 3 ) Despite subsection (l), the national accounting officer responsible for local government may, after consultation with the relevant member of the executive council responsible for local government and in accordance with a prescribed procedure, amend, 5 in respect of a category B or C municipality, a determination made in terms of that subsection if, as a result of information obtained after that determination, there is reason to believe that such an amendment will ensure better compliance with the criteria contemplated in subsection (2).
determination contemplated in subsection (l), also indicate the recommended division of anticipated revenue for the next financial year and the 2004/2005 financial year.
(5) The allocation to each municipality contemplated in subsection (1) must be transferred to that municipality in quarterly instalments in accordance with a payment schedule determined by the national accounting officer responsible for local government 15 after consultation with the National Treasury: Provided that such instalments are transferred not later than the end of May, August, November and February.
(6) Despite subsection (5), the national accounting officer responsible for local government may, after consultation with the National Treasury, on such conditions as he or she may determine, advance funds to a municipality in respect of its equitable share 20 contemplated in subsection (l), which have not yet fallen due for transfer in accordance with a payment schedule referred to in subsection ( 5 ) in respect of that municipality.
(7) The advances contemplated in subsection (6) must be set-off against transfers to the municipality which would otherwise become due in terms of that payment schedule.
(4) The national accounting officer responsible for local government must, in the 10
Shortfalls and excess revenue 25
6. (1) If actual revenue raised nationally in respect of the financial year falls short of the anticipated revenue set out in Schedule 1, the national government bears the shortfall.
(2) If actual revenue raised nationally in respect of the financial year is in excess of the anticipated revenue set out in Schedule 1, the excess accrues to the national government 30 and forms part of its equitable share.
(3) Despite subsection (2), the national government may, by means of an adjustments budget or any other appropriation legislation, and additional to the equitable share allocation and the allocations contemplated in Part 111, make further allocations to the provincial and local spheres of government from its share of revenue anticipated to be 35 raised nationally.
PART 111
OTHER ALLOCATIONS TO PROVINCES AND MUNICIPALITIES
General norms and standards for all allocations
7. (1) Other allocations to provinces and municipalities from the national govern- 40 ment’s share of anticipated revenue raised nationally are set out in Column A of Schedules 3 ,4 ,5 and 6 as follows, and must, except in respect of Schedule 6 allocations, be transferred in terms of a payment schedule submitted to the National Treasury not later than 14 days after this Act takes effect:
(aj Schedule 3 contains allocations to provinces for general and nationally 45
(b) Schedule 4 contains allocations to provinces for specified purposes; (c) Schedule 5 contains allocations to municipalities for specified purposes; and (dj Schedule 6 contains allocations-in-lund to provinces and municipalities for
(2) A recommended division of anticipated allocations to provinces and municipali- ties for the next financial year and the 2004/2005 financial year and which is subject to the provisions of the Division of Revenue Acts for those financial years is set out in Column B of the Schedules referred to in subsection (1).
assigned functions;
designated special programmes. 50
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Act No. 5 , 2002 DIVISION OF REVENUE ACT, 2002
(3) Despite subsection (2), the Minister may, in respect of the next financial year and until the commencement of the relevant Division of Revenue Act, determine that an amount not exceeding 45 per cent of the recommended division of the allocation for the next financial year set out in Schedule 3, 4 or 5 be transferred to a province or municipality. 5
Transfers to public entities
8. Transfers to public or municipal entities in order to perform a function that is normally the responsibility of a province or municipality, must be regarded as being transfers to such province or municipality.
Transfers not listed in Schedules 10
9. (1) The transfer of an allocation not listed in the Schedules contemplated in Part I11 of this Act may only be made with the permission of the Minister and must be published in the Gazette.
(2) The permission contemplated in subsection (1) may only be granted if- ( a ) the allocation is approved by Parliament in an adjustments budget or any other 15
(b) the allocation is for the purpose of defraying expenditure of an exceptional
(3) The transferring national officer must, in respect of an allocation contemplated in subsection (1)- 20
(a ) comply with the reporting and monitoring requirements determined by the National Treasury; and
(b) submit to the National Treasury an assessment of the likelihood for the province or municipality which receives, or benefits from it, to spend it or benefit from it in the financial year. 25
appropriation legislation; or
nature contemplated in section 16 of the Public Finance Management Act.
Provincial infrastructure allocation
10. A provincial treasury must, in respect of an allocation for provincial infrastructure listed in Schedule 3, not later than 14 days after this Act takes effect, ensure that the province-
( a ) submits to the National Treasury a plan in the format determined by the 30 National Treasury on proposed spending for the financial year, the 2003/2004 financial year and the 2004/2005 financial year; and
(b) indicates to what extent it will match the allocations contemplated in paragraph (a ) .
Municipal infrastructure allocations 35
11. (1) Allocations for addressing backlogs in basic municipal infrastructure and
(2) Any allocation contemplated in subsection (1) which is intended, entirely or in services are set out in Schedule 5 .
part, for the construction, maintenance or rehabilitation of municipal infrastructure- ( a ) may only be transferred in terms of a policy framework approved by the 40
National Treasury; (b) must be accompanied by an indication of the recommended amounts of a
similar allocation for the next financial year and the 2004/2005 financial year, unless the National Treasury grants exemption from compliance with this requirement; and 45
( c ) must be in accordance with a distribution formula approved by the National Treasury.
Transfer of assets to municipalities
12. A transferring national officer or a transferring provincial officer may not make any commitment to a municipality, of assets or any other financial resource, including an 50 allocation-in-kind or a future asset transfer, intended, entirely or in part, for the construction, maintenance or rehabilitation of municipal infrastructure without-
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Act No. 5, 2002 DIVISION OF REVENUE ACT, 2002
(a) that municipality’s confirmation that it will take transfer of such asset for
(b) a realistic estimate of the future value of the asset and potential liability,
(c) the approval of the municipal council and the national accounting officer 5
operating purposes;
including a reflection of the associated operating costs; and
responsible for local government.
Municipal capacity building allocations
13. (1) Any transfer of an allocation aimed at developing and improving municipal systems and the capacity of municipalities to perform functions assigned to them may only be made in terms of a framework determined by the national accounting officer 10 responsible for local government in consultation with the Director-General.
management, budgeting and spatial planning considerations. (2) The framework contemplated in subsection (1) must take into account financial
PART IV
DUTIES OF ACCOUNTING OFFICERS AND TREASURIES 15
Duties of transferring national officer
14. (1) A transferring national officer must, not later than 14 days after this Act takes
(a) grant frameworks, conditions and monitoring provisions are reasonable and effect, certify to the National Treasury that-
do not impose an undue administrative burden on benefiting provincial and 20 local governments receiving an allocation contemplated in Part 111;
and
municipality. 25
(b) funds will only be transferred after prescribed information has been provided;
(c) funds will only be deposited into an accredited bank account of a province or
(2) A transferring national officer who has not complied with subsection (1) must, unless the National Treasury has, for exceptional reasons, directed otherwise, transfer such funds unconditionally to provinces and municipalities on the basis of the equitable share formula.
officer must, in respect of any allocation contemplated in Part 111, as part of the report contemplated in section 40(4)(c) of the Public Finance Management Act, within 20 days after the end of each month and in the format determined by the National Treasury, submit to the National Treasury and the relevant executive authority information on-
(3) Despite anything to the contrary contained in any law, a transferring national 30
( a ) the amount transferred to a province or municipality in the month reported on 35 and for the financial year up to the end of that month;
(b) the amount of funds delayed or withheld from any province or municipality up to the end of that month and for the financial year up to the end of that month;
(c) the actual expenditure incurred by the province or municipality in the month reported on and for the financial year up to the end of that month in respect of 40 allocations set out in Schedules 4 and 5 ; and ’
(d) such other issues as the National Treasury may determine.
Duties of transferring provincial officer
15. (1) A transferring provincial officer must, as part of the report contemplated in section 40(4)(c) of the Public Finance Management Act, and in respect of any allocation 45 to be transferred to municipalities, within 15 days after the end of each month and in the format determined by the National Treasury, submit to the transferring national officer, the relevant treasury and executive authority responsible for that department, information on-
(a ) the amount transferred to a municipality in the month reported on and for the 50 financial year up to the end of that month;
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(b) the amount of funds delayed or withheld from any municipality in the month
( c ) actual expenditure in respect of that allocation and for the financial year up to
(d) such other issues as the National Treasury may determine. 5
reported on and for the financial year up to the end of that month;
the end of that month; and
(2) A provincial accounting officer intending to make an allocation in the financial year, other than an allocation listed in any Schedule to this Act, to a municipality from the Provincial Revenue Fund must, not later than 14 days after this Act takes effect or such other date determined by the National Treasury, provide the provincial treasury with the prescribed information and the provincial treasury must, not later than the date 10 determined by National Treasury, publish such information in the Provincial Gazette.
Duties of receiving officer
16. (1) The relevant receiving officer must, in respect of an allocation transferred to- ( a ) a province, and as part of the report contemplated in section 40(4)(c) of the
Public Finance Management Act, within 15 days after the end of each month, 15 submit a report to the relevant provincial treasury, the relevant provincial executive authority and the transferring national officer; and
(b) a municipality, within 10 days after the end of each month, submit a report to the relevant transferring national or provincial officer.
(2) The reports contemplated in subsection (1) must set out- 20 (a ) the amount received by the province or municipality, as the case may be, in the
month reported on and for the financial year up to the end of that month; (6) the amount of funds delayed or withheld from the province or municipality, as
the case may be, in the month reported on and for the financial year up to the end of that month; 25
(c) the actual expenditure by the province or municipality, as the case may be, for the month reported on and for the financial year up to the end of that month in respect of allocations set out in Schedules 4 and 5 ;
(d) the extent of compliance with the conditions of an allocation and with this Act; ( e ) an explanation for any material problems or variations experienced by the 30
province or municipality, as the case may be, regarding an allocation which has been received and a summary of the steps taken to deal with such problems or variations; and
(fi such other issues and information as the National Treasury may determine. (3) The receiving officer of a municipality which intends to transfer to another 35
municipality an allocation or portion of it transfen-ed to it in terms of this Act must, prior to such transfer, obtain the approval of the National Treasury.
(4) The Minister may prescribe additional duties for the relevant officers of the municipalities contemplated in subsection (3).
Duties of provincial treasury 40
17. ( I ) A provincial treasury must, within 22 days after the end of each month and in the format determined by the National Treasury and as part of its consolidated monthly report, report on-
(a ) actual transfers received by the province from national departments; (b) the actual expenditure on such allocations, excluding the allocations set out in 45
Schedule 3, up to the end of that month; and (c) any problems of compliance with the provisions of this Act by transferring
provincial officers and receiving officers, and the steps taken to deal with such problems.
(2) The report contemplated in subsection (1) must, in respect of the provincial 50 infrastructure allocation, include reports for each quarter and be in such format determined by the National Treasury.
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Act No. 5, 2002 DIVISION OF REVENUE ACT, 2002
Annual report and financial statements
18. (1) The annual report and financial statements contemplated in section 40 of the Public Finance Management Act must, in respect of a department transfening funds for an allocation set out in Schedules 3, 4, 5 and 6, also-
(a) indicate the total amount of that allocation transferred to a province or 5 municipality;
(b) indicate the funds, if any, which were withheld and the reasons for such withholding;
(c) certify that all transfers to a province or a municipality were deposited into the accredited bank account of that province or municipality; 10
(d) certify that, except in respect of allocations contemplated in Schedule 6. no other funds were spent, directly or through a public or private entity, on a function normally performed by a province or municipality;
(e) indicate to what extent a province or municipality was monitored for compliance with the conditions of an allocation and the provisions of this Act; 15
If) indicate to what extent the allocation achieved its purpose and outputs; (8) indicate the funds, if any, utilised for the administration of the allocation, and
whether any portion of the allocation was retained by the transfemng department for that purpose; and
(h) indicate any non-compliance with this Act, and the steps taken to deal with 20 such non-compliance.
(2) The annual report and financial statements contemplated in section 40 of the Public Finance Management Act or in any other national legislation or prescribed must, for a department or municipality receiving grants in respect of an allocation set out in Schedules 3, 4 and 5, also- 25
(a ) indicate the total amount of that allocation received and actual expenditure on
(6) certify that all transfers in terms of this Act to a province or municipality were
(c) indicate to what extent a province or municipality met the conditions of such 30
(di indicate the extent to which its objectives were achieved; and (e) contain such other information as the National Treasury may determine.
that allocation;
deposited into the accredited bank account;
an allocation, and complied with the provisions of this Act;
PART V
DUTIES OF DIRECTOR-GENERAL AND AUDITOR-GENERAL 35
Duties of Director-General
19. The Director-General must, for the purposes of the report contemplated in section 32(2) of the Public Finance Management Act, publish a report on actual transfers of all allocations listed in the Schedules or made in terms of section 9.
Duties of Auditor-General 40
20. Without derogating from the powers and duties of the Auditor-General in terms of the Constitution and any other law, the Auditor-General must, in the audit report n the financial statements of a department or municipality on the allocations set out in Part 111, report on-
( a ) the extent of compliance with this Act by the Director- General, transfemng 45 national officers, transfening provincial officers and receiving officers;
(6) whether there was compliance with the certification and reporting require- ments of this Act;
( e ) the evaluation of evidence supporting the amounts and disclosures in monthly and annual reports contempl tei this Act; 50
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Act No. 5, 3002 DIVISION OF REVENUE ACT. 2002
(d) whether a transfemng national officer or transferring provincial officer made unauthorised transfers to any province or municipality or to any entity under the control of a province or municipality; and
(e) whether the monitoring of the receiving government’s compliance with allocation conditions was undertaken in terms of the provisions contemplated 5 in this Act.
PART VI
GENERAL
Delaying of payments
21. (1) Subject to subsection (2), the transferring national officer may, after 10 consultation with the National Treasury and, if the National Treasury deems it appropriate, with the relevant provincial treasury and for a period not exceeding 30 days, delay the payment of an allocation in terms of Part 111, if-
(a) the province or municipality which receives such allocation, or benefits from
(6) expenditure on previous transfers reflects significant underspending for which
(2) The National Treasury may allow the transfer to be delayed for a period exceeding 30 days in order to ensure compliance with the conditions to which an allocation is subject or to ensure significant spending onthat allo tio . 20
(3) The transfemng national officer must, in the monthly reports contemplated in this Act, inform the National Treasury of the reasons for the decision to delay the payment of an allocation and of the steps taken to deal with the causes of the payment delay.
it, does not comply with the conditions to which the allocation is subject; or 15
no satisfactory explanation is given.
Withholding of payments
22. (1 1 The National Treasury may withhold the transfer of- 25 ( a ) an allocation, or any portion of it, referred to in Schedule 3 , 4 or 5 ; or (b) an allocation in terms of section 9,
if the transferring national officer has submitted to the province or municipality in question, a written report at least 21 days before such allocation is due to be transferred, setting out facts reflecting serious or persistent material breach of the conditions 30 attached to an allocation in terms of section 9 or set out in Part 111.
(2) The Minister may, by notice in the Gazette, approve that an allocation or a portion of it withheld in terms of subsection ( l ) , be utilised to meet a municipality’s outstanding statutory financial commitments.
Reallocation of allocations between municipalities
23. (1) The transferring national or provincial officer may, with the consent of the National Treasury and after consulting with affected municipalities, reallocate an allocation or portion of it from one municipality to another municipality, if the reallocation will reduce the risk of underspending. *
(2) The National Treasury must publish such a reallocation in the Gazette.
35
40
Spending in terms of purpose and subject to conditions
24. (1) Despite anything to the contrary contained in any law, an allocation set out in Schedule 3, 4, 5 or 6 may only be utilised for the purpose stipulated in the relevant Schedule and subject to the prescribed conditions.
out in the Schedules in question, constitutes a breach of the measures established in terms of section 216(1) of the Constitution.
( 3 ) Despite subsections (1) and (2), the National Treasury may authorise a province or municipality to retain and utilise such portion of an allocation contemplated in Part 111
(2) The utilisation of an allocation set out in Part III for purposes other than those set 45
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which remains after the fulfillment of its purpose and compliance with the conditions to which it is subject.
Transfers made in error
25. (1) Despite anything to the contrary contained in any law, the transfer of an allocation to a province in error is regarded as not legally due to the province for the 5 purpose of its Revenue Fund.
responsible transfemng national officer.
be effected by set-off against future transfers to the province, which would otherwise 10 become due in accordance with a payment schedule or any other transfer.
(4) Despite anything to the contrary contained in any law, the transfer of an allocation to a municipality in error is regarded as not legally due to that municipality and must be recovered without delay by the responsible transferring officer.
the recovery contemplated in subsection (4) be effected by set-off against transfers to the municipality in question, which would otherwise become due in accordance with any payment schedule.
(2) A transfer contemplated in subsection (1) must be recovered without delay by the
(3) The Director-General may direct that the recovery contemplated in subsection (1)
(5) The national accounting officer responsible for local government may direct that 15
Transfers to municipalities with weak administrative capacity
26. (1) If the national accounting officer responsible for local government reasonably 20 believes that a Category B municipality is not able effectively to administer an allocation or a portion of it, that officer may transfer such allocation or portion of it to the province in which the municipality is located or, where appropriate, to the relevant Category C municipality, after consultation with the municipalities and province concerned.
by the province or Category C municipality to which it has been transferred in accordance with any directions by the national accounting officer responsible for local government.
(3) The national accounting officer responsible for local government must publish in the Gazette information on the transfer of an allocation contemplated in subsection (1). 30
(2) Any allocation or portion of it contemplated in subsection (1) must be dealt with 25
Funds to follow transfer of functions
27. ( I ) The transfer of functions from one organ of state to another or from one sphere of government to another and which has financial or planning implications must take place only with the prior written approval of the National Treasury and the national accounting officer responsible for provincial and loc l government. 35
( 2 ) The transfer of functions contemplated in subsection (1) must, unless the Minister has directed otherwise, include the transfer of funds available to the transferring organ of state or sphere of government for performing such functions.
(3) Despite anything to the contrary contained in this Act or any other law, the National Treasury may, in accordance with a prescribed procedure and for the purpose 40 of facilitating the transfer of funds contemplated in s’ubsection (2) , stop the transfer of funds to the transfemng organ of state or sphere of government.
(4) No financial obligation or liability of a national or provincial department may be imposed on a municipality without-
(a) that municipality’s prior written acceptance by resolution of its council; and 45 (b) the prior written approval of the National Treasury and the relevant provincial
(5) A province must utilise its own funds for any transfer of functions whch is in treasury.
conflict with subsection (1).
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(6) Any liability arising from a determination of functions between a category C and B municipality by a province in terms of section 84 or 85 of the Municipal Structures Act, is a liability of that province and not of the national government.
Amendment of payment schedule and transfer mechanism
28. (1) Subject to subsections (2) and ( 3 ) , a transferring national officer may, in 5 respect of an allocation set out in Part 111, amend a payment schedule due to the underspending of the funds or for any other exceptional reason.
(2) The transferring national officer must, not later than seven days before the amendment contemplated in subsection (l)? inform the National Treasury and, if the National Treasury deems it appropriate, the relevant provincial treasury of the proposed 10 amendment and the reasons for it and must submit the proposed payment schedule to the National Treasury.
(3) The National Treasury may, in the interest of improved accountability or debt and cash-flow management, or on the grounds of substantial non-compliance with any condition to which an allocation is subject, amend any payment schedule of an 15 allocation listed in Schedule 3 , 4 or 5 , and direct that no transfer of funds be effected through the payment schedule amended in accordance with subsection (1) or that the payment schedule be amended as directed by it.
Exemptions by National Treasury
29. (1) The National Treasury may, on application i writing by a transferring national 20 or provincial officer, exempt in writing a transferring national or provincial officer from the duty to comply with reporting requirements or any other duty regarding an allocation contemplated in Part I11 or envisaged in section 9: Provided that such exemption may only be granted if such officer satisfies the Director-General that-
(a) the du y cannotbe compliedwit that stage; 25 (b) the allocation programme is properly designed; and (c) the accounting officer is taking steps to comply with this Act.
(a) may only be granted if the accounting officer provides reasons why
(b) must set out any condition to which it may be subject, and must be published
(2) Any exemption contemplated in subsection (1)-
information was not included in respect of an allocation set out in Part 111; and 30
in the Gazette.
Non-compliance with this Act constituting financial misconduct
30. Despite anything to the contrary contained in any law, any serious or persistent non-compliance with this Act, or any condition which an allocation in terms of this Act 35 is subject to, constitutes financial misconduct as envisaged in the Public Finance Management Act.
Liability for costs incurred in violation of principles of co-operative governance and intergovernmental relations
31. (1) An organ of state involved in an intergovernmental dispute regarding any 40 provision of this Act must, before approaching a court to resolve such dispute, make every effort to settle the dispute with the other organ of state in question, including making use of the structures established in terms of the Intergovernmental Fiscal Relations Act.
41(4) of the Constitution, due to the court not being satisfied that the organ of state approaching the court has complied with subsection (I), the expenditure incurred by that organ in approaching the court is regarded as fruitless and wasteful.
(3) The amount of any such fruitless and wasteful expenditure must, in terms of a prescribed procedure, be recovered without delay from the person who caused the organ 50 of state not to comply with the requirements of subsection (1).
(2) In the event that a dispute is referred back by a court in accordance with section 45
24 No. 23290 GOVERNMENT GAZE'ITE, 28 MARCH 2002
Act No. 5,2002 DIVISION OF REVENUE ACT, 2002
Acts performed before this Act took effect
32. Despite anything to the contrary contained in any law, any act performed before this Act took effect or in accordance with any prescribed requirements in fulfillment of the objects of this Act, must be regarded as having been done in terms of the relevant provisions of this Act. 5
Regulations
33. The Minister may, by notice in the Gazette, make regulations regarding- (a) anything which must or may be prescribed in terms of this Act; and (b ) any matter which it is necessary to prescribe for the effective implementation
of the provisions of this Act and the achievement of its objects. 10
Repeal of law
34. (1) Subject to subsection ( 2 ) , the Division of Revenue Act, 2001 (Act No. 1 of 200 l), is hereby repealed with effect from the date on which this Act takes effect or from 1 April 2002, whichever is the later.
of that Act which is necessary for the effective implementation of this Act or the performance of any outstanding duties or obligations under or in terms of that Act.
(2) The repeal of the Act referred to in subsection (1) does not affect any act in terms 15
Short title
35. This Act is called the Division of Revenue Act, 2002, and takes effect on a date determined by the President by proclamation in the Gazette. 20
26 No. 23290 GOVERNMENT GAZETTE, 28 MARCH 2002
Act No. 5,2002 DIVISION OF REVENUE ACT, 2002 ~-
SCHEDULE 1
Equitable division of revenue raised nationally among the three spheres
of government
Sphere Column B Column A of MTEF Outer Years 2002103
Government
192 011 637 177 743 360 164 604 548 National’ R’000 R’000 R’000
2004105 2003104 Allocation
1 Provincial 1 119 452 086 I 128 466 030 137 089 096 1 Local TOTALS 287 909 112 I 311 230 868 1 334 561 279 3 852 478 I 5 021 478 1 5 460 546
1. National share includes conditional grants to provincial and local spheres.
SCHEDULE 2
Determination of each province’s equitable share of the provincial sphere’s share of revenue raised nationally
(as a direct charge against the National Revenue Fund)
Province Column A ~ ~~
Column B 2002103 MTEF Outer Years
Allocation 2004105 2003104 R’000 R’000 R’000
Eastern Cape
21 061 055 19 736 234 18 223 977 Gauteng 9 111 482 8 538 456 7 996 034 Free State
23 323 512 21 856 381 20 497 693
KwaZulu-Natal 24 343 129 26 416 263 28 189 838 Mpumalanga 8 428 035 9 221 126 9 839 983 Northern Cape 2 906 556
12 221 319 11 452 677 10 918 905 Western Cape 11 382 062 10 666 189 9 992 807 North West 18 630 775 17 458 872 16 144 950 Northern Province 3 329 070 3 119 832
TOTALS 119 452 086 128 466 030 137 089 096
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