However, in terms of the revised draft Taxation Laws Amendment Bill, 2014 (TLAB), which was tabled in parliament on 15 October 2014 and is likely to be promulgated in its current form, a subtle amendment has been made to the effective date such that the interest withholding tax will only be effective from 1 March 2015. Taxpayers are unlikely to be too concerned that the interest withholding tax has been delayed by three months.
Author: Nyasha Musviba
Increased compliance burden on the cards for PBOs
By David Warneke, Director: Tax, BDO South Africa Johannesburg, South Africa- In the first version of the Draft Taxation Laws Amendment Bill of 2014 that was released in July, it was proposed that Public Benefit Organisations (PBOs) that provide assets or funding to other PBOs would have to comply with a prescribed investment regime. In terms of current law such PBOs have to distribute, or incur the obligation to distribute at least 75 per cent of the donations received during the year of assessment for which section 18A receipts were issued, within 12 months of the end of the year of assessment (s18A(2A)(b)). The Commissioner is given the discretion to vary this requirement having regard to the public interest and the purpose for which the PBO wishes to accumulate the funds.
Overhaul of retirement reform loses momentum
The Treasury’s delay in implementing retirement reform has been met with dismay by some industry players, who view the proposed changes as crucial to improving SA’s low savings rate. Payroll providers and pension-fund administrators have invested millions in new systems to carry out the changes, which were to have taken effect in March next year. But the Treasury announced earlier this month the first phase of the reforms would be delayed until March 2016 or even March 2017.
Important changes to section 23M of the Income Tax Act (ITA)
The Taxation Laws Amendment Bill (TLAB), tabled in parliament on 22 October 2014, contains welcome changes to the provisions of section 23M of the Income Tax Act (ITA), due to come into operation on 1 January 2015. Section 23M provides for a limitation on the amount of interest which can be deducted on loans sourced from a person that is in a ‘controlling relationship’ with the debtor where the interest is not subject to tax in the hands of the person to which it accrues.
Proposed changes to secondary transfer pricing adjustment – further developments
We have previously reported on the draft Taxation Laws Amendment Bill 2014 (Bill) that was released by the National Treasury and the South African Revenue Service (SARS) earlier this year, and specifically in respect of the proposed changes to the secondary transfer pricing adjustment mechanism. The secondary transfer pricing adjustment mechanism, contained in s31(3) of the Income Tax Act, No 58 of 1962 (Act), currently takes the form of a deemed loan in an amount equal to the difference between the arm’s length amount that is taken into account for tax purposes of any resident party as a result of the primary transfer pricing adjustment and the non-arm’s length amount that would have been taken into account had there been no primary transfer pricing adjustment.
The future of the international tax landscape
The Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Sharing (BEPS) Action Plan, approved by the OECD Committee of Fiscal Affairs (CFA) in June 2013 and endorsed by the G20 Heads of Government in September 2013, was formulated to combat international tax avoidance by multinational enterprises (MNEs) through artificially shifting profits to low tax jurisdictions and eroding the tax bases of their primary high tax jurisdictions of operation. The objective of the BEPS Action Plan is to secure government revenues by ensuring that profits are taxed in the jurisdiction where the economic activities generating such profits are performed and where value is created.
Watch out for tax increases, experts warn
Cape Town – Eugene du Plessis, head of tax at Grant Thornton in Johannesburg said overall he is impressed with the way Finance Minister Nhlanhla Nene handled his first budget presentation. “He was well spoken, his points were clear and the delivery was good.” Du Plessis applauded Nene for his attention to focus on cost cutting within government and hopes to see some notable improvements in the future as hard evidence to back up his statement.
Nene instils confidence with a steady hand
By Craig Dodds (IOL) Cape Town – Before Wednesday, Finance Minister Nhlanhla Nene was something of an unknown quantity. He may have been a familiar face at the Treasury, having served as deputy minister under Trevor Manuel (briefly) and Pravin Gordhan and had certainly served his time as an understudy. But deputy ministers, if they know what’s good for them, rarely say anything their principal wouldn’t have said, making it hard to gauge their own thinking.
Economists salute finance minister
Parliament – Economists saluted Finance Minister Nhlanhla Nene for containing state spending and debt in his first medium-term budget on Wednesday, but opposition parties faulted him for not doing more to stem waste. Wits economist Kenneth Creamer said that with growth lagging at 1.4 percent of GDP, fiscal stimulus risked becoming counter-productive by pushing up national debt to unacceptable levels. “Nene appears to have a clear grasp of this problem, and he has signalled a clear intention to change the fiscal policy stance from stimulus to consolidation.
Youth incentive scheme bears fruit
Author: Siyabonga Mkhwanazi (IOL) AT LEAST 209 000 youth have been absorbed into the labour market this year under the government’s youth employment tax incentive scheme, a significant increase from the 56 000 young people announced by then finance minister Pravin Gordhan in his Budget speech in February. Gordhan said at the time, during the first month of the launch of the scheme, 56 000 young people were employed by different companies.