SARS deputy commissioner Ivan Pillay Author: Aarti J Narsee and Penelope Mashego (Times Live) The deputy commissioner of the South African Revenue Services (Sars) who was suspended earlier this month can return to work on Friday. The Johannesburg Labour Court on Thursday ruled that Ivan Pillay’s suspension was unlawful and ordered Sars to reverse it with immediate effect. Pillay was suspended for 30 days by new Sars commissioner Tom Moyane on December 5. The suspension came after an investigation into claims of a rogue spy unit within Sars that was set up in 2007.
Author: Nyasha Musviba
Two Noteworthy Tax Changes Effective from January 1st, 2015
Authors: Dawid van der Berg and Roxanna Nyiri, Tax, BDO South Africa Johannesburg, 17 December 2014 – Two noteworthy taxation amendments come into effect on the 1st of January 2015. The first tax amendment relates to the deductibility of interest paid to a person who is not liable to tax in South Africa, for example non-residents. The section in question, section 23M of the Income Tax Act, intends to protect the South African tax base by limiting such deduction. Views have been expressed that the limitation could deter foreign direct investment into South Africa. For example, local subsidiaries could suffer higher effective tax rates as a result.
SARS opened a new branch in MitChells Plain – Cape Town, Western Cape – South Africa
? Mitchells Plain is one of South Africa’s largest townships with a population of about 290,000 people. It is located about 32 km from the city of Cape Town, on the Cape Flats on the False Bay coast between Muizenberg and Khayelitsha. This is one of the reasons why SARS has decided to increase its reach in the area, by opening a new branch. Also making it easy for taxpayers to comply and assist in the facilitation of trade in the area.
Exemption of foreign pensions received by South African residents
Over the past few years there has been uncertainty surrounding the circumstances of South African residents receiving pension payments for services rendered or partly rendered outside South Africa. The South African Revenue Service (SARS) has previously taken the view that if the fund was located in South Africa, then the source was deemed to be in South Africa and therefore rendered the total amount of the pension payment as being taxable in South Africa, irrespective of the fact that the pension may have related partly to services that were rendered outside the country.
Deferral of the implementation of the electronic Tax compliance status system
Tax clearance certificates (TCCs) are issued by the South African Revenue Service (SARS) to, inter alia, validate the status of a taxpayer and confirm that such taxpayer’s tax affairs are in order. TCCs are, almost without exception, required for tender or bid applications, to reflect good standing, foreign investment and for emigration purposes. A TCC is only valid for one year from the date of issue in respect of a tender and/or good standing, provided the taxpayer remains compliant with SARS requirements.
Overall tax cost and compliance burden lower for businesses around the world: World Bank and PwC Report
Paying taxes has become easier over the past year for medium-sized companies around the world, according to a new report released by the World Bank and PwC today. The time it takes such a company to meet its tax obligations dropped by four hours on average in 2013, according to the Paying Taxes, 2015 study. The report also discloses that the average total tax rate such a company paid and the number of payments also declined. This is a trend seen every year over the ten-year period covered by the publication.
Binding Ruling – Draft ruling on unbundling transactions
Author: Emil Brincker – Tax Director (Cliffe Dekker Hofmeyr) The South African Revenue Service (SARS) recently issued a draft Binding General Ruling (BGR) that addresses the interpretation of the words “at the end of the day after that distribution” as used in s46(3)(a)(v) of the Income Tax Act 58 of 1962 (Act). Section 46 of the Act deals with unbundling transactions and provides parties to such a transaction with relief from various taxes that would otherwise become payable.
Professional tax advice vital in mitigation of penalties and interest
Author: Andrew Lewis – Tax Director (Cliffe Dekker Hofmeyr) Judgment was handed down in the Tax Court on 18 November 2014 in the case of Z v The Commissioner for for the South African Revenue Service (case number 13472), as yet unreported. The dispute concerned the calculation by the taxpayer of his capital gains tax liability arising pursuant to the disposal of shares. In 2007 the taxpayer disposed of his shares in a company for R841 million. In and around the time of the disposal of the shares, a company (A) instituted a damages claim against the taxpayer for an amount of R925 million which related to a transaction that took place in 2003. Shortly after the damages action was instituted, the taxpayer agreed to pay A an amount of almost R700 million in full and final settlement of its claim.
No evidence justifying tax penalty
Author: Heinrich Louw – Senior Tax Associate (Cliffe Dekker Hofmeyr) Judgment was handed down in the Tax Court on 18 November 2014 in the case of AB (Pty) Ltd v The Commissioner for the South African Revenue Service (case number 1132, as yet unreported). In this matter the South African Revenue Service (SARS) audited and assessed a vendor in respect of Value-added Tax (VAT). It appeared that the vendor could not adequately explain, nor provide supporting documentation, in respect of discrepancies between its VAT declarations for the relevant periods, and the VAT control account in its books.
Interpretation of fiscal legislation
Author: Emil Brincker – Tax Director at DLA Cliffe Dekker Hofmeyr The judgment of the Supreme Court of Appeal in Commissioner SARS v Bosch (394/2013) [2014] ZASCA 171 (19 November 2014) (Bosch case) dealing with the fiscal consequences of a deferred delivery transaction is not only important in the context of the meaning of simulation, but also with reference to the way in which legislation should be interpreted. In the Bosch case the question arose as to the meaning of s8A of the Income Tax Act, No 58 of 1962, which read that there was to be included in a taxpayer’s income an amount of any gain made by him by the exercise, cession or release during a year of assessment of any right to acquire a marketable security.