Division of Revenue Act

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- must deposited; 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 and in respect of a municipality, a bank account o f a municipality which the municipal manager has certified officer to the responsible for local government as the bank account into which allocations in terms of this Act must be deposited; national accounting be 10 of the National Treasury; “Director-General’’ means the Director-Generai “head official of the provincial provincial department responsible for financial matters in the province; “Intergovernmental Fiscal Relations Fiscal Relations Act, 1997 (Act No. 97 of 1997); “municipality” means a municipality established in terms of the Municipal 20 Structures Act; the head official of the Intergovernmental treasury” means Act” means the 15 4 No. 23290 GAZETTE, GOVERNMENT 28 MARCH 2002 Act No. 5,2002 DIVISION OF REVENUE ACT, 2002 “municipal accounting officer” means the municipal manager pality or such other person who has been instructed or delegated 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 1s- (a) a juristic person under the ownership control of a municipality; ( b ) established pursuant to a resolution of a munici- by the of the council or in terms of legislation; ( c ) fully or substantially funded either from municipal funds or by way of a 10 tax, levy or other money imposed in terms of legislation; and Act” means the Local (d) accountable to the municipality; “Municipal Structures 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; Government: Municipal (b) the date ( c ) to whom, and must be paid; on which each such instalment must be paid; and 20 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”- 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 allocation; or in respect of a Schedule 5 allocation transferred to a municipality, means the municipal accounting officer of that municipality; of a provincial department which receives such (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); for a (xv) “transferring national officer” means the accounting officer responsible national department which transfers to a province or municipality a Schedule 3, 4 or 5 allocation, but excludes the accounting officer Treasury in respect of an allocation listed in those Schedules and which is on 40 the vote of the National Treasury; of the National (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

2. The objects of this Act are to- (a) provide for the equitable division of revenue raised nationally among the three spheres of government; (bj promote co-operative governance in the budget allocation and transfer process; (c) promote better co-ordination between policy, planning, budget preparation and execution processes; 45 50 6 No. 23290 GAZETTE, GOVERNMENT 28 MARCH 2002 Act No. 5,1002 DIVISION ACT, OF REVENUE 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; division; (e) promote transparency and equity in all allocations, including in respect of the v) promote accountability for the use of public resources by ensuring that all criteria for their transfers are reflected on the budget of benefiting provincial and local governments, and are subjected to an audit; 5 ( 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 Division of Revenue Act in respect of those financial years, Schedule 1. is subject to the provisions of the annual is set out in Column B of 20 (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 year, be transferred as a direct charge against the National Revenue Fund province and to a municipality contemplated in section 5(1). for the next financial to each 25 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 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 30 transferred to the province in weekly instalments in accordance with a payment schedule 35 determined by the National Treasury after consultation with provincial treasuries. the head officials of the (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. ( 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. (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 consultation with SALGA and must take into account the fiscal capacity of each the National Treasury after 50 8 No. 23290 GOVERNMENT GAZETTE, 28 MARCH 2002 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 subsection if, as a result of information obtained after that determination, there is reason to believe that such an amendment will ensure contemplated in subsection (2). better compliance with the criteria terms of that (4) The national accounting officer responsible for local government must, in the 10 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 transferred not later than the end of May, August, November and February. are (6) Despite subsection (5), the national accounting officer responsible government may, after consultation with the National Treasury, on such conditions as 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. for local he 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 shortfall. out in Schedule 1, the national government bears the (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 are set out in Column A of ment’s share of anticipated revenue raised nationally 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 assigned functions; (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 programmes. special designated 50 (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). 10 No. 23290 GAZETTE, GOVERNMENT 28 MARCH 2002 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 to a province or municipality. out in Schedule 3, 4 or 5 be transferred 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 appropriation legislation; or ( b ) the allocation is for the purpose of defraying expenditure of an exceptional nature contemplated in section 16 of the Public Finance Management Act. (3) The transferring national officer must, in respect of an allocation contemplated in subsection (1)- ( a ) comply with the reporting and monitoring requirements determined by the National Treasury; and ( b ) submit to the National Treasury the province or municipality which receives, or benefits from it, to spend it or benefit from it in the an assessment of the likelihood for financial year. 20 25 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 services are set out in Schedule 5. (2) Any allocation contemplated in subsection (1) which is intended, entirely or in part, for the construction, maintenance or rehabilitation of municipal infrastructure- in terms of a policy framework approved by the 40 ( a ) may only be transferred 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; ( 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, construction, maintenance or rehabilitation of municipal infrastructure without- intended, entirely or in part, for the 45 and 12 No. 23290 GOVERNMENT GAZETTE, 28 MARCH 2002 Act No. 5, 2002 DIVISION OF REVENUE ACT, 2002 (a) that municipality’s confirmation that it will take transfer of such asset for operating purposes; (b) a realistic estimate of the future value of the asset and potential liability, (c) including a reflection of the associated operating costs; and the approval of the municipal council responsible for local government. and the national accounting officer 5 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. (2) The framework contemplated in subsection (1) must take into account financial management, budgeting and spatial planning considerations. 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 effect, certify to the National Treasury that- (a) grant frameworks, conditions and monitoring provisions are reasonable and do not impose an undue administrative burden on benefiting provincial and local governments receiving an allocation contemplated in Part 111; 20 (b) funds will only be transferred after prescribed information has been provided; and (c) funds will only be deposited into an accredited bank account of a province or municipality. 25 (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. (3) Despite anything to the contrary contained in any law, a transferring national 30 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 submit to the National Treasury and the relevant executive authority information on- in the format determined by the National Treasury, ( 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; 1 1 KO. 1-3290 GAZETTE, GOVERNMENT 28 MARCH 2002 Act No. 5,2002 DIVISION OF REVENUE ACT, 2002 ( b ) the amount of funds delayed or withheld from any municipality in the month reported on and for the financial year up to the end of that month; ( c ) actual expenditure in respect of that allocation and for the financial year up to the end of that month; and (d) such other issues as the National Treasury may determine. 5 (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- ( 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; 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 ; (c) 20 25 (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 and a summary of the steps taken has been received such problems or variations; and to deal with (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 determined by the National Treasury. for each quarter and be in such format 16 No. 23290 GOVERNMENT GAZETTE, 28 MARCH 2002 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 municipality; (b) indicate the funds, if withholding; of that allocation transferred to a province or 5 any, which were withheld and the reasons for such (c) certify that all transfers to a province or a municipality were deposited into the account bank accredited 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; indicate to what extent a province compliance with the conditions of an allocation and the provisions of this Act; 15 or municipality was monitored for (e) 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 by the transfemng whether any portion of the allocation was retained 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 that allocation; (6) certify that all transfers in terms of this Act to a province or municipality were deposited into the accredited bank account; (c) indicate to what extent a province or municipality met the conditions of such 30 an allocation, and complied with the provisions of this Act; (di indicate the extent to which its objectives were achieved; and (e) contain such other information as the National Treasury may determine. 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 on 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 in annual contemplated and reports this Act; 50 18 GOVERNMENT No. 23290 GAZETTE, 28 MARCH 2002 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 compliance with allocation conditions was undertaken in terms of the provisions contemplated in this Act. of the receiving government’s 5 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 delay the payment of an allocation in terms of Part 111, if- a period not exceeding 30 days, ( a ) the province or municipality which receives such allocation, or benefits from it, does not comply with the conditions to which the allocation is subject; or 15 (6) expenditure on previous transfers reflects significant underspending for which no satisfactory explanation is given. (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 or subject (3) The transfemng national officer must, in the monthly reports contemplated in this allocation. spending that significant on to ensure 20 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. Withholding of payments 22. (1 1 The National Treasury may withhold the transfer of- ( 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, 25 if the transferring national officer has submitted to the province question, a written report at least 21 days before such allocation is due to be transferred, 30 setting out facts reflecting serious attached to an allocation in terms of section 9 or set out in Part 111. or persistent material breach or municipality in of the conditions (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 35 23. (1) The transferring national or provincial officer may, with the consent of the an if the National Treasury and after consulting with affected municipalities, reallocate allocation or portion reallocation will reduce the risk one municipality to another municipality, * of underspending. of it from (2) The National Treasury must publish such a reallocation in the Gazette. 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. (2) The utilisation of an allocation set out in Part III for purposes other than those set 45 out in the Schedules in question, constitutes a breach terms of section 216(1) of the Constitution. of the measures established in ( 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 20 GAZETTE, GOVERNMENT No. 23290 28 MARCH 2002 Act No. 5 , 2002 DIVISION OF REVENUE ACT, 2002 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 purpose of its Revenue Fund. due to the province for the 5 (2) A transfer contemplated in subsection (1) must be recovered without delay by the responsible transfemng national officer. (3) The Director-General may direct that the recovery contemplated in subsection (1) be effected 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 legally due to that municipality and must be recovered without delay by the responsible transferring officer. 10 (5) The national accounting officer responsible for local government may direct that 15 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. 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. (2) Any allocation or portion of it contemplated in subsection (1) must be dealt with 25 C municipality to which it has by the province or Category in accordance with any directions by the national accounting officer responsible for local government. been transferred (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 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 government. and local accounting officer responsible for provincial ( 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. of the National Treasury and the national (3) Despite anything to the contrary contained in this Act or any other law, the 35 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 treasury. (5) A province must utilise its own funds for any transfer of functions w h c h is in conflict with subsection (1). 22 GAZETTE, GOVERNMENT No. 23290 2002 28 MARCH Act No. 5 , 2002 DIVISION OF REVENUE ACT, 2002 (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 respect of an allocation set out underspending of the funds or for any other exceptional reason. (2) and ( 3 ) , a transferring national in Part 111, amend a payment schedule due to the officer may, in 5 (2) The transferring national officer must, not later than seven days before the amendment contemplated in subsection (l)? inform the National Treasury and, National Treasury deems it appropriate, the relevant provincial treasury of the proposed 10 amendment and the reasons for National Treasury. it and must submit the proposed payment schedule to the if the (3) The National Treasury may, in the interest of improved accountability or debt and cash-flow management, or on the grounds condition to which an allocation is subject, amend any payment schedule 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. of substantial non-compliance with any of an 15 Exemptions by National Treasury 29. (1) The National Treasury may, on application in 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- stage; that (a) the at duty with complied be cannot (b) the allocation programme is properly designed; and (c) the accounting officer is taking steps to comply with this Act. 25 (2) Any exemption contemplated in subsection (1)- (a) may only be granted if the accounting officer provides reasons why information was not included in respect of an allocation set out in Part 111; and 30 (b) must set out any condition to which it may be subject, and must be published 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 Management Act. in the Public Finance 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 every effort to settle the dispute with the other organ making use of Relations Act. the structures established in terms to resolve such dispute, make of state in question, including of the Intergovernmental Fiscal (2) In the event that a dispute is referred back by a court in accordance with section 45 41(4) of the Constitution, due to the court not being approaching the court has complied with subsection organ in approaching the court is regarded as fruitless and wasteful. satisfied that the organ of state (I), the expenditure incurred by that (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). 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 5 Act. 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. (2) The repeal of the Act referred to in subsection (1) does not affect any act in terms 15 of that Act which performance of any outstanding duties or obligations under or in terms of that Act. is necessary for the effective implementation of this Act or the Short title

35. This Act is called the Division of Revenue Act, 2002, and takes effect on a date determined by the President the by proclamation in Gazette. 20 26 2002 MARCH No. 23290 28 GAZETTE, GOVERNMENT Act No. 5,2002 DIVISION OF REVENUE ACT, 2002 ~- SCHEDULE 1 Equitable division of revenue raised nationally among the three spheres of government Sphere of Government National’

1 Provincial Local TOTALS 287 Column A 2002103 Allocation R’000 164 604 548 086 I 119 452 I 3 852 478 909 112 I 1 Column B MTEF Outer Years 2003104 R’000 128 466 096 089 137 030 1 5 021 478 311 230 868 1 2004105 R’000 192 011 637 177 743 360 1 5 460 546 279 561 334

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) ~ ~~ Column A 2002103 Allocation R’000 20 497 693 7 996 034 18 223 977 24 343 129 8 428 035 Column B MTEF Outer Years 2003104 R’000 2004105 R’000 23 323 512 21 856 381 8 538 456 19 736 234 26 416 263 9 111 482 21 061 055 28 189 838 9 221 126 9 839 983 16 144 950 9 992 807 North 10 918 905 452 086 128 466 119 832 17 458 872 189 11 452 677 030 3 329 070 3 18 630 775 11 382 062 10 666 12 221 319 137 089 096 Province Eastern Cape Free State Gauteng KwaZulu-Natal Mpumalanga Northern Cape 2 906 556 Northern Province West Western Cape TOTALS 119 i 2002 MARCH 28 No. 23290 28 GAZETTE, GOVERNMENT Act No. 5,2002 DIVISION OF REVENUE ACT, 2002 1 T I - e C .- 2 I h v 0 3 3 30 No. 23290 GOVERNMENT GAZETTE, 28 MARCH 2002 Act No. 5, 2002 DrVISION OF REVENUE ACT, 2002 -i 4 -t--+-i 32 GOVERNMENT No. 23290 GAZElTE, 28 MARCH 2002 Act No. 5,2002 DIVISION OF REVENUE ACT, 2002 Y 1 J I 2002 34 MARCH 28 No. 23290 GAZETTE, GOVERNMENT Act No. 5,2002 DIVISION OF REVENUE ACT, 2002 r I I I 38 No. 23290 GOVERNMENT GAZETTE, 28 AMARCH 2002 Act No. 5,2002 DIVISION OF REVENUE.ACT, 2002 1 40 GAZETTE, GOVERNVENT No. 23290 28 MARCH 2002 Act No. 5,2002 DIVISION OF REVENUE ACT, 2002 1 8 .- > z a W I I e, c 42 No. 23290 GOVERNMENT GAZETTE, 28 MARCH 2002 Act No. 5,2002 DIVISION OF REVENUE ACT, 2002 Y $ a Act No. 5,2002 DIVISION OF REVENUE ACT, 2002 I e, w id P 46 No. 23290 GOVERNMENT GAZETTE, 28 MARCH 2002 Act No. 5,2002 DIVISION OF REVENUE ACT, 2002 h i - s " r 8 0 5 - 5 - P - z 0 3 0 m m - 0 0 c 0 z 48 No. 23290 GAZETTE, GOVERNMENT 28 MARCH 2002 Act No. 5,2002 DIVISION OF REVENUE ACT, 2002 C s1 N m 01 L 3 50 No. 23290 GAZETTE, GOVERNMENT 28 MARCH 2002 Act No. 5.2002 DIVISION OF REVENUE ACT, 2002 I 0 3 0 t 0 E 00 m Y B 1 52 No. 23290 GAZETTE, GOVERNMENT 28 MARCH 2002 DIVISION OF REVENUE ACT. 2002 I a, * P 54 No. 23290 GAZETTE, GOVERNMENT 28 MARCH 2002 Act No. 5,2002 DIVISION OF REVENUE ACT, 2002 56 No. 23290 GOVERNMENT GAZETTE, 28 MARCH 2002 Act No. 5, 2002 DIVISION OF REVENUE ACT, 2002 I 58 No. 23290 GAZETTE, GOVERNMENT 28 MARCH 2002 Act No. 5,2002 DIVISION OF REVENUE ACT, 2002 ' l l l l l l l l l l l l l l l l l I L. P : a 2002 MARCH 60 28 No. 23290 GAZETTE, GOVERNMENT Act No. 5, 2002 DIVISION OF REVENUE ACT, 2002 I 0 0 2 0 0 In 0 - 0 c. P 0 3 m 3;; ? X i c I .- x e 2 - u13 62 No. 13290 GOVERNMENT GAZETTE, 28 MARCH 2002 Act No. 5,2002 DIVISION OF REVENUE ACT, 2002