Division of Revenue Act

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Published: 2001-03-31

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Division of Revenue Act [No. 1 of 2001]


Government Gazette

REPUBLIC OF SOUTH AFRICA
Vol. 429 Cape Town 31 March 2001 No. 22186
THE PRESIDENCY
No. 308 31 March 2001
It is hereby notified that the President has assented to the following Act which is hereby published for general information:–
No. 1 of 2001: Division of Revenue Act, 2001


2 No. 22186 GOVERNMENT GAZETTE, 31 MARCH 2001
Act No. 1, 2001 DIVISION OF REVENUE ACT, 2001
(Olgiish ?e,rf signed by the President.) (‘Assented to 30 March 2001.)
ACT To provide for-
the equitable division of revenue raised nationally among the national, provincial and local spheres of government for the 2001/2002 financial year; reporting requirements for such allocations; the withholding and the delaying of payments; 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
the equitable division of revenue raised nationally among the national, provincial and local spheres of government; the determination of each province’s equitable share of the provincial share of that revenue; and 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;
B E IT THEREFORE ENACTED by the Parliament of the Republic of South Africa, as follows:- Definitions
1. [n 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
( i ) “accredited bank account” means- (a) 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; an 10
( b ) in respect of a municipality, a bank account of a municipality which the municipal accounting officer has certified to the national accounting oflicer responsible for local government as the bank account into which allocations in terms of this Act must be deposited;
( i i ) “Constitution” means the Constitution of the Republic of South Africa, 1996 15
(iii) “Director-General” means the Director-General of the National Treasury: (iv) “head official of the provincial treasury” means the head official of the
provincial department responsible for financial matters in the province; (v) “Intergovernmental Fiscal Relations Act” means the Intergovernmental 20
Fiscal Relations Act, 1997 (Act No. 97 of 1997); (,vi) “municipality” means a municipality established in terms of the Municipal
Structures Act; ( v i i ) “municipal accounting officer” means the municipal manager of a
municipality or such other person who has been instructed or delegated by the 25 council to perform the functions of an accounting officer;
(Act No. 108 of 1996);
4 No.22186 GOVERNMENT GAZEIT€, 3 1 MARCH 200 I
Act No. 1, 2001 DIVISION OF REVENUE ACT, 2001
(xii) (xiii)
(xiv)
(xv)
(xvi)
(xvii)
“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 2002 and ending on 3 I March 2003; “past financial year” means the financial year which commenced on 1 April 5 2000 and ends on 31 March 2001; “payment schedule” means an instalrnent schedule which sets out- (a) the amount of each instalment of an equitable share or an allocation to be
(6) the date on which each such instalment must be paid; and 10 fc) 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 thepublic Finance Management Act, 1999 (Act No. I of 1999); 15 “receiving officer” means- (a) in respect of a Schedule 3 allocation transferred to a province, the head
(b) in respect of a Schedule 4 or 6 allocation transferred to a province, the
transferred to a province or municipality for the financial year;
must be paid;
official of the provincial treasury;
accounting officer of a provincial department which receives uch 20 allocation; or
(c) in respect of a Schedule 5 or 6 allocation transferred to a municipality,
“SALGA” means the national organisation recognised in terms of section 2( l ) ( a ) of the Organised Local Government Act, 1997 (Act No. 52 of 1997); 25 “transferring national officer” means the accounting officer responsible for a ‘national department which transfers to a province or municipality a Schedule 3, 4, 5 or 6 allocation, but excludes the accounting officer of the National Treasury in respect of an allocation listed in those Schedules and which is on the vote of the National Treasury; and 30 “transferring provincial officer” means the accounting officer responsible for a provincial department which receives a Schedule 5 or 6 allocation for the purpose of transferring it to a municipality in the relevant province.
’ the municipal accounting officer of that municipality;
PART I
Promoting co-operative governance i i tergovernmental budgeting 35
2. The object of this Act is to- (a ) provide for the equitable division of revenue raised nationally among the three
spheres of government; (b) promote co-operative governance in the budget allocation and transfer
process; 40 (c) promote better co-ordination between policy, planning, budget preparation
and execution processes; (d ) promote predictability and certainty in respect of all allocations to provincial
and local governments in order that they may plan their budgets over a multi-year period; 45
( e ) promote transparency and equity in all allocations, including in respect of the criteria for their division;
(’ 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 ar subjected to an audit ; 50
6 NO. ‘2186 GOVEILUMENT GAZETTE, 31 MARCH 2001
Act No. 1, 2001 DIVISION OF REVENUE ACT. 2001 ~.
(g ) ensure that proper financial management is appiied; and ( h ) ensure that ley1 proceedings between organs of state of the three spheres of
government u e avoided.
PART 11
EQUITABLE SHARE ALLOCATIONS
Equitable division of revenue raised nationally among spheres of government
3. ( I ) Revenue anticipated to be raised nationally in respect of the financial year is divided 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 2003/2004 financial year, and which must be subject to the provisions of the annual Division of Revenue Act in respect of those financial years, is set out in Column B of Schedule 1.
(3) Despite subsection (2) , the Minister may, in respect of the next financial year and until the commencement of the annual Division of Revenue Act for that financial year, determine that an amount not exceeding 45 per cent of the recommended division for the next financial year, be transferred as a direct charge against the National Revenue Fund to each 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 revenue anticipated to be raised nationally in respect of the financial year is set out in Column A of Schedule 3.
( 2 ) A recommended division of anticipated revenue for the next financial year and the 2003/2004 financial year, and which must be subject to the provisions of the annual Division of Revenue Act in respect of those financial years, is set out in Column B of Schedule 1.
(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 determined by the National Treasury after consultation with the head officials of the provincial treasuries.
(4) Despitz 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 schedule contemplated in subsection (3) in respect of that province.
( 5 ) The advances contemplated in subsection (4) must be set off against transfers to the province which would otherwise become due in terms of that payment schedule.
Equitable share for local government
5. (I) The national accounting officer responsible for local government must determine the allocation for each category A and B municipality in respect of the equitable share for the local sphere of government set out in Schedule 1 for the financial year and such determination must be published by the Minister in a Gazetre by 15 May 2001.
(2} The national accounting oflicer responsible for local government must, in the determination contemplated i n subsection (l), also indicate the recommended division of anticipated revenue for the next financial year and the 2003/2004 financial year.
(3) The criteria for determining the division contemplated in subsection (1) must be in accordance with a framework approved by the National Treasury after consultation with SALCA.
(4) The allocation to each municipality contemplated in subsection (1) must be transfcrred to that municipality in quarterly instalments: Provided that such instalments are transferred within the tirst three weeks of May, August, November and February.
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Act No. I , 2001 DIVtSION OF REVENUE ACT, ZOO1
Shortfalls and excess revenue
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 5 anticipated revenue set out in Schedule 1, the excess accrues to the national government and forms part of its equitable share.
(3) Despite subsection (2), the national government may, by means of an adjustments budget, 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 10 from its share of revznue anticipated to be raised nationally.
PART I11
OTHER ALLOCATIONS TO PROVWCES AND MUNICIPALITIES
General norms and standards for all allocations
7. (1) Other allocations to provinces and municipalities from the national govern- 15 ment’s share of revenue anticipated to be raised nationally are set out in Column A of Schedules 3, 4, 5 and 6 as follows:
(a) Schedulz 3 contains allocations to provinces for general and nationally
( b ) Schedule 4 contains allocations to provinces; 20 (c) Schedule 5 contains allocations to municipalities; and (d ) Schedule 6 contains allocations for designated special programmes and
indirect allocations, or allocations-in-kind, to provinces and municipalities, the amount of which must, in respect of the votes of the Departments of Land Affairs, Minerals and Energy and Transport, be determined by 30 April 2001 25 and published in a Gazerre.
allocated functions;
(2) A recommended division of anticipated allocations to provinces or municipalities for the next financial year and the 2003/2004 financial year and which must be subject to the provisions of the annual Division of Revenue Act for that financial year, is set out in Column B of the Schedules referred to in subsection (1). 30
( 3 ) Despite subsection (2), the Minister may, in respect of the next financial year and until the commencement of the annual Division of Revenue Act contemplated in subsection ( 2 ) , 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, 5 or 6, be transferred to a province or municipality as a direct charge against he National Revenue 35 Fund.
Framework for all grants
8. ( I ) In respect of an allocation set out in Schedules 3, 4, 5 and 6, the following information must be stated in the memorandum contemplated in section lO(5) of the Intergovernmental Fiscal Relations Act, and be published by 15 May 2001 in a Gazerre: 40
(a ) The purpose and conditions of such allocations; (6) the measurable outputs; (cj the reason why the purpose of such allocation cannot be achieved by means of
(d) the projected period to be covered by such allocation; 45 ( e ) the criteria to be utilised for the division of such allocation; (f) the recommended payment schedule for the disbursement of such allocation:
Provided that such payment schedule must provide for at least two instalments, the last of which must be paid during the second half of the financial year unless the National Treasury directs otherwise. 50
(2) The National Treasury may, in respect of a transferring national officer who has failed to provide the information contemplated in subsection (l) , permit such
an equitable share allocation;
A c t No. I , 2001 DIVISION OF REVENUE ACT. ZOO{
transferring national Officer to provide s x h information by 30April 2001: Provided that such information is published in a Gazette.
( 3 ) For the purpose of this Act transfers of allocations to public or private entities in order to perform a function that is normally the responsibility of ;1 province or municipality, are regarded as transfers to such province or municipality.
Transfers not listed in Schedules
9. ( 1) The transfer of an allocation not listed i n the Schedules contemplated in Pan 111 of this Act may only be made with the permission of the Minister and must be published in a C u w t e .
(2) The permission contemplated in subsection (1) may only be granted if- (a ) the allocation is approved by Parliament in an adjustments budget; ihl the allocation is for the purpose of defraying ekpenditure of an exceptional
nature contemplated in section 16 of the Public Finance Management Act; or f'c) the allocation was provided for in the transferring department's budget but, for
good reasons, could not be included in the Schedules contemplated in Part 111 of this Act: Provided that the transfemng national officer has, by 30 April 2001, submitted [o the National Treasury the information contemplated i n section 8( I ) .
(3) The transferring national oficer must. in respect of an allocation contemplated in subsection (1)-
( a ) comply with the provisions of section S( I ) ; 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 in the financial year.
Supplementary allocation to provinces '
10. The National Treasury must, in accordance with a payment schedule, and after taking into account the following information to be submitted to the National Treasury by 15 July 2001 and 15 November 2001 by the head official of the provincial treasury, transfer the supplementary allocation to provinces:
(a) The province's compliance with the Public Finance Management Act and its duty to implement that Act:
(hi the province's tabling of a realistic and credible budget which reflects adequate funding of projected expenditure for education, health, welfare and infrastructure;
(c i the steps taken by the province to improve the collection of its revenue; and ( d j the province's compliance with this Act, the Act of Parliament and national
legislation contemplated in sections 225(2)(h) and 230. respectively. of the Constitution, and with resolutions of the Budget Council established in terms of the Inter_governmental Fiscal Relations Act.
Provincial infrastructure allocation
11. A provincial treasury must. in respect of an allocation for provincial infrastructure
( ( I ) submits to the National Treasury by 30 April 2001 or such other date determined by the National Treasury, a detailed plan on proposed spending for the financial year;
( h J submits to the National Treasury by 30 June 3,001 or such other date determined by the National Treasury, a detailed plan on proposed spending for the next financial year and the 2003E004 financial year: and
listed in Schedule 3, before the transfer of any funds, ensure that the province-
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I\.lunicipal infrastr-ucture allocations
12. ( 1 ) Allocations for addressing backlogs in infrastructure for basic municipal services are set out in Schedule 5 .
(2) Any allocation contemplated in subsection (1) which is intended, entirely or in part. for the installation. maintenance or rehabilitation of municipal infrastructure, mug only be transferred in terms of a framework determined by the Minister.
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(3) The objectives of the framework contemplated in subsection (2) must be- ( u ) to provide- 10
(i) infrastructure for basic municipal services to poor households; ( i i ) urban renewal and development;
( i i i ) integrated rural development; and (iv) for three year allocations to municipalities:
development; and
programmes.
fh) to encourage the planning of appropriate local economic and spatial I5
I C ) to co-ordinate. where applicable, the housincg and municipal infrastructure
Transfer of assets to municipalities
13. A national accounting o k e r or a provincial accounting officer may not make any , 29 commitment to a municipality, of assets or any other financial resource, including an allocation-in-kind or a future asset transfer. intended. entirely or in part, for the installation, maintenance or rehabilitation of municipal infrastructure without-
l a ) that municipality's confirmation, by means of a council resolution, that it will: take transfer of such asset for operating purposes; 15
(b ) a realistic estimate of the value of the asset and potential liability, including ;1 reflection on the budget of the benefiting municipality of the associated operating costs; and
(c) an indication to the National Treasury of the steps taken or to be taken to ensure that such commitment will be converted into an allocation in terms of 30 this Act.
iCIunicipa1 capacity building allocations
14. ( I ) 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- 35
((1) in terms of a framework determined by the national accounting officer for local government after consultation with the national accounting officers responsible for Water Affairs and Forestry, Land Affairs, Transport, Minerals and Energy. Housing and Public Works; and
(0) with the concurrence of the National Treasury. 40 (7) The objectives of the framework contemplated in subsection ( l ) ( a ) must take into
account financial management. budgeting and spatial planning considerations.
P.4RT IV
DUTIES OF ACCOUNTING OFFICERS AND TREASURIES
Duties of transferring nation l officer 45
IS. ( 1 ) A transferring national oflicer must, by -30 April 1001 or such other d:m
( ( I ) any business plans that art: required in respect of an allocation. are in terms o f a framework determined by the department and which has been approved by the National Treasury; 50
determined by the National Treasury. certify to the National Treasury that-
ibJ frameworks, conditions and monitoring provisions are reasonable 2nd do not impose an undue administrative burden on benefiting provincial and local governments;
fcJ funds will only be transferred after the information contemplated i n section 8( 1 j has been provided;
[til funds will only be deposited into an accredited bank account of a province or municipality: and
( e ) all other arrangements or requirements necessary for the transfer of an allocation have been complied with.
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( 3 ) '4 transferring national officer who has not complied with subsection (1) must. 10 unless the National Treasury has, for exceptional reasons directed othenvise, transfer such funds unconditionally to provinces and municipalities: Provided that the hlinister W L ~ determine that such funds be allocated on the basis of the equitable division of revenue formula.
otticer must. i n respect of any allocation, as part of the report contemplated in section 40(-F)(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 Trcasury and the relevant executive authority information on-
(3) Despite anything to the contrary contained in any law. a transferring national 15
( a ) the amount transferred to ;\ province or municipality for the financial year up 70
(6) the ;\mount of funds delayed or withheld From any province or municipality up
. IC) the actual expenditure incurred by the province. or municipality up to the
to the end of that month;
to the end of that month:
month reponed on; and 25 ( d l such other issues as the National Treasury may determine.
Duties of transferring provincial otficer
16. ( I ) A transferring provincial oflicer mustl as part of the report contemplated in section 40(4)(c) of' the Public Finance PvIanagement Act, and in respect of any allocation to be [ransferred to municipalities, within 15 days after the end of each month and in the 30 t'onnat determined by the National Treasury, submit to the national transfemnz officer. the relevant Treasury and executive authority responsible for that department, information on-
( a ) the amount transferred tu a ~nunicipality up to the month reported on; (h,J the amount of funds delayed or withheld from any municipality up to the 35
( c ) actual expenditure in respect of that allocation; and (d) such other issues as the National Treasury may determine.
month reported on;
(2) A provincial accounting oKcer intending to make an allocation, other than an allocation listed in any Schedule to this Act, to a municipality from the provincial 40 Revenue Fund in the financial year must, by 30 April 2001, and in a format determined by the National Treasury, provide the provincial treasury with the information contemplated in section 8( 1) and the provincial treasury must publish such information in a Provincial G a x t t e .
Duties of receiving officer 45
17. ( I ) The relevant receiving officer must, in respect of an allocation transferred to- ( n ) a province, and as pan of the report contemplated in section 30(4)(c) ot' the
Public Finance Management Act, within I5 days after the end of each month. submit a report to the relevant provincial treasury, the relevant provincial executive authority and the transferring national officer; and 50
( h ) 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 i n subsection ( I ) must set out- ((11 the ;~mot~nt received by the province or municipality. AS the case may be, up [O
[he month reportcd on: - - 33
16 No. 32156 GOVERVMENT GAZ T E, 3 1 MARCH 700 I
A c t No. I , 200f DIVISION OF R E V E W E ACT, 2001
(b) the amount of funds delayed or withheld from the province or municipality, as
(c) the actual expenditure by the province or municipality, as the case may be, up
( d ) the extent of Compliance with the conditions ofan allocation and with this Act; 5 ( e ) m explanation for any material problems or variancies experienced by the
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 variancies; and
ff) such other issues and information as the National Treasury may determine. 10
the case may be, up to the month reported on;
to the month reported on;
Duties of provincial treasury
18. A provincial treasury must, within 22 days after the &d of each month and in the format determined by the National Treasury, and as part of its consolidated monthly report to the National Treasury, report on-
throuzh public or private entities; ( n ) actual transfers received by the province from national departments directly or 15
(h ) the actual expenditure on such allocations; and (cl any problems of compliance, by transferring provincial ofticers and receivinz
officers, with the provisions of this Act, and the steps taken to deal with such problems. 20
Annual report and financial statements
19. ( I ) A department transferring funds in respect of an allocation set out in Schedules
( a ) indicate the total amount of that allocation transferred to a province or municipality during the financial year; 25
(b ) indicate the funds, if any, which were delayed or withheld and the reasons for such delay or withholding;
(c) certify that all transfers to a province or municipality were deposited into the accredited bank account of that province or municipality;
(d) certify that, except in respect of allocations contemplated in Schedule 6. no 30 other funds were transferred to a province or municipality, directly or through a public or private entity;
(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;
(f) indicate to what extent the allocation achieved its purpose and outputs; 35 ( g ) indicate whether any portion of the allocation was retained by the transferring
( h ) indicate any non-compliance with this Act, and the steps taken to deal with
3, 4, 5 and 6 must, in its annual report and financial statements, also-
department for administration costs: and
such non-compliance. (2) The annual report and financial statements must, for a department or municipality 40
receivinz an allocation in terms of this Act, also- ( a ) indicate the total amount of that allocation received during the financial year; (h) 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 45
( ( I ) indicate to what extent outputs were achieved; and ( e ) contain such other information as the National Treasury may determine.
deposited into the accredited bank account;
an allocation, and complied with the provisions of this Act;
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Act No. 1,200l DIVISION OF REVENUE ACT, 2001
PART V
DUTIES OF DIRECTOR-GENERAL AND AUDITOR-GENERAL
Duties of Director-General
20. The Director-General must- (a , for the purposes of the report contemplated in section 32(2) of the Public 5
Finance Management Act, publish a report on- ( i ) actual transfers of all allocations Listed in the Schedules or in terms of
(ii) estimated expenditure on the provincial infrastructure allocation and on
( 1 7 ) repon to the Auditor-General, within 40 days after the end of the second and the fourth quarters, the extent of compliance by accounting officers with the provisions of sections 8, 9, 15, 16 and 18, and any serious or persistent material non-compliance with the provisions of this Act.
section 9;
ailocations listed in Schedules 4, 5 and 6; and 10
Duties of Auditor-General I5
21. 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 of financial statements on the allocations in terms of this Act, report on-
( a ) the extent of compliance with this Act by the Director-General, provincial treasuries, transferrin$ national ofticers, transferring provincial officers and 20 receiving oficers;
ments of this Act;
internal audit process dealt with the accuracy of the information provided to 25 that department's accounting officer and the National Treasury;
(d) whether an accounting 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 transfemng department fulltilled its monitoring responsibility in 30 terms of the provisions of this Act.
Ih) whether there was compliance with the certification and reporting require-
fc) whether, in respect of any monthly report or annual report, a department's
PART VI
GENERAL
Delaying of payments
22. ( i-) The transferring national officer may, for a period not exceeding 30 days, delay 35 the payment of an allocation in terms of this Act, if the province or municipality which receives, or benefits from, such allocation, does not comply with sections 17 and 18, or if expenditure on previous transfers reflects significant underspending for which no satisfactory explanation is provided.
been made. inform the National Treasury and the relevant provincial treasury or municipality 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.
(3) The transferring national oece r must, within seven days after the decision has 40
,\ct Nn. 1, 2001 D[VISION OF REVENUE ACT. 2001
(b ) an allocation approved in terms of section 9, be withheld if the transferring national officer has submitted to the province concerned a written report at least 2 1 days before such allocation is due to be transferred, setting out facts reflecting serious or persistent material breach of the measures contemplated in section 716(1) of the Constitution: Provided that-
(i) a supplementary allocation to provinces may be withheld even if a report has not been given to a province; and
( i i ) an allocation to a province may be withheld if that province has not responded satisfactorily in writing to the Auditor-General regarding queries in the audit reports and the Auditor-General recommends such withholding.
(3) For the purposes of this section, the following conduct may be taken into account to determine whether a serious breach ofthe measures contemplated in section 2 16( 1 ) of the Constitution has been committed:
( a ) A failure by n municipality or province to *meet its statutory financial obli,oations, including all payments of employee or employer contributions for taxes, pensions. medical aid and audit fees;
(h ) a failure by a province or municipality to submit satisfactory financial statements within two months after the end of its financial year:
( c ) a failure by a municipality or province to respond to, and comply with, audit queries raised in respect of the previous years' audited financial statements;
( d ) non-compliance with the conditions to which an allocation is subject and the mismanagement of an allocation; and
( e ) non-compliance with the provisions of this Act. (4) The Minister may, by notice in a Gnzetre, approve that an allocation or a portion
of it withheld in terms of subsection ( I ) , be utilised to meet a municipality's outstanding statutory financial commitments.
( 5 ) Despite subsections ( I ) and (2). the Minister may, by notice in a Gazerre, and in order to prevent the disruption of basic services, permit the flow of funds to a province or municipality.
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 3,1. 5 or 6 may only be utilised for the purpose contemplated in the Schedule concerned and in accordance with the conditions it is subject to.
(2) Despite subsection ( I ) , the National Treasury may permit a province or municipality to retain and utilise such portion of an allocation set out in Schedule 3, 4, 5 or 6, which remains after the fulfillment of its purpose, and in compliance with the conditions to which it is subject.
(3) The LMinister may, by notice in a Gazette, determine that funds which. for any reason, may not flow to a province or municipality, be allocated unconditionally to such province or municipality.
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 purpose of its Revenue Fund.
(2) A transfer contemplated in subsection (1) must be recovered without delay by the responsible transferring national oflicer.
(3j The Director-General may direct that the recovery contemplated in subsection ( , I ) be etfected by set-off against future transfers to the province, which would otherwise 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 IeSally due to that municipality and must be recovered without delay by the responsible transferring national officer.
( 5 ) The national accounting otti'ticer responsible for local government may direct that [he recoverv contemolated in subsection (4) be effected bv set-off against transfers to the
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municipality concerned, which would otherwise become due in accordance with any payment schedule.
Transfers to municipalities with weak administrative capacity
26. ( 1 ) If the national accounting officer responsible for local government reasonably believes that 3 municipality is not able to effectively administer an allocation or a 5 portion of it, that officer may transfer such allocation or portion of it to the province in which the municipality is located or, when appropriate, to the relevant Category C municipality, after consultation with the municipalities and province concerned: Provided that such allocation or portion of it is utilised for the benefit of the municipality to which it was originally allocated.
( 2 ) Any allocation or portion of it contemplated in subs;ection ( 1) must be dealt with. by the province or Category C municipality to which it has been transferred. in accordance with any directions by the national accounting of3cer responsible for local go!'ernment.
I O
Funds follow transfer of functions or obli, oations 15
27. ( 1) The transfer of functions or obligations from one sphere of government to another must take place with the prior written approval of the National Treasury and the national accounting officer rzsponsible for provincial and local government and, unless the Minister directs otherwise. includes the transfer of funds available to the transferring sphere of government for performing such functions or obligations. 20
(2) Despite anything to the contrary contained in this Act or any other law, the National Treasury may, for the purpose of facilitating the transfer of funds contemplated in subsection (1). stop the transfer of funds to the sphere of government from which the functions or obligations are transferred.
department may be imposed on a municipality wtthout- ( 3 ) No financial obligation or function being performed by a national or provincial 25
(a) that municipality's prior written acceptance by resolution of its council; and ( 6 ) the prior written approval of the National Treasury.
(4) A province must utilise its own funds for any obligation which is i n conflict with subsection (3). 30
( j ) Any obligation arising from a determination, by a province, of functions between a Category B and C municipality. is a liabilicy of that province and not of the national government.
Amendment of payment schedule
28. (1) Subject to subsections (2) and (3), a transferring national officer may, in 33 respect of an allocation set out in Schedule 3,4, 5 or 6, amend a payment schedule due to the underspending of the funds or for any other exceptional reason.
(2) The transferring national officer must inform the National Treasury within seven days of the amendment contemplated in subsection (1) and the reasons for it .
(3) The National Treasury may, in the interest of improved debt and cash-ffow 40 management. or on the grounds of substantial non-compliance with any condition to which an allocation is subject. amend any payment schedule of an allocation listed in Schedule 3 . 4 , j or 6, 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. 45
Exemptions by National Treasury
29. ( 1 ) The National Treasury may, on application in writing by a transferring national or provincial ofiicer. exempt such o f x e r in writing from the duty to comply with reporting requirements or any orher requirements or any other duty regarding an allocation set out in Part 111: Provided that such exemption may only be $ranted if such 50 officer satisfies the National Treasury that-
9
GOVERNMENT GAZETTE. 3 1 MARCH 2001
Act No. 1.2001 DIVISION OF REVENUE ACT. 7-001
( a ) the duty cannot be complied with at that stage; (b j the allocation programme is properly designed; and (c,l that oflicer is taking steps to comply with the provisions of this Act.
(a) may only be granted if that officer can provide reasons to the satisfaction of the 5
( b ) must set out any condition to which it is subject and be published in a Gazerre.
( 2 ) Any exemption contemplated in subsection (1)-
National Treasury why the duty cannot be complied with; and
Non-compliance with this Act constitutes financial misconduct
30. Despite anythins to the contrary contained in any law, any serious or persistent non-compliance with the provisions of this Act, or &he conditions to which any 10 allocation in terms of this Act is subject, constitutes financiql misconduct.
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 an allocation provided for in this Act must, before approaching a court to resolve such 15 dispute, make every effort to settle the dispute with the other organ of state concerned, including malung use of the structures established in terms of the Intergovernmental Fiscal Relations Act.
(2) In the event that a dispute is referred back by a court in accordance with section 41(4) of the Constitution, due to the court not being satisfied that the organ of state 20 approaching the court has complied with subsection (l), 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 of state not to comply with the requirements of subsection (1). 25
Acts performed prior to commencement of this Act
32. Any act performed prior to the coming into etfect of this Act in fulfillment of the objects of this Act, is regarded as having been done in terms of the relevant provisions of this Act.
Regulations
33. The Minister may. by notice in a Gazette, make regulations regarding- (a ) anything which must or may be prescribed in terms of this Act; and (b) any matter which is necessary to prescribe for the effective implementation of
the provisions and objects of this Act.
Repeal of Acts
30
35
34. This section repeals the whole of the- (a ) Division of Revenue Act, 1998 (Act No. 25 of 1998); (b) Division of Revenue Act, 1999 (Act No. 30 of 1999); and (c) Division of Revenue Act, 2000 (Act No. 16 of 2000): Provided that this repeal
takes effect on 1 April 2001 or on the date of commencement of this Act, 40 whichever is the later.
Short title
35. This Act is called the Division of Revenue Act, 2001.
26 No. 221 86 GOVERNMENT GAZETTE. 3 I MARCH 200 I
Act No. I , 2001 DIVISION OF REVENUE ACT, 2001
SCHEDULE 1
Equitable division of revenue raised nationally among the three spheres
of government
Sphere Column B - Column A of MTEF Outer Years 2001/02
Government 2003104 2002/03 Allocation R'000 R'000 1 R'000
National
297523926 277322850 258317736 Total Allocated Expenditure 3551 123 ,! 3002 123 2618 123 Local
1 2 o z 1 5 e z 4 112560356 104 136460 Provincial 173 756 979 161 760 371 151 563 153
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)
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