The OECD led Base Erosion and Profit Shifting (BEPS) Project is aimed at updating corporate tax systems around the world to reduce the tax minimisation opportunities created by the global economy. If the Project is successful, all countries will be required to make significant changes to their domestic tax law and treaty networks with the aim of ensuring that multi-national businesses are paying their “fair share” of the income tax burden.
Author: Nyasha Musviba
Coming Soon – changes to the dispute forms and process
All saved or pending income tax dispute forms, Notice of Objection (NOO) or Notice of Appeal (NOA), will be deleted from eFiling after 31 October 2014. The dispute forms and process will be changed in November 2014. Taxpayers, who haven’t submitted their forms (NOO or NOA), by 31 October 2014, will need to manually transfer the information to the updated NOO or NOA, which will be available in November 2014. Top Tip: The deadline for submitting a dispute is 30 business days: Objection – from the date of the assessment Appeal – from the date the objection wasn’t allowed or wasn’t allowed in full.
Recent developments regarding tax free savings accounts
Author: David Warneke, BDO South Africa Johannesburg, South Africa- Oct. 8, 2014 – A proposed section 12T to be inserted into the Income Tax Act will allow individuals to save up to R30 000 per annum, tax free. It appears that this concession will also apply to minor children. In order to encourage savings, in the 2013 Budget speech the Minister of Finance proposed the introduction of tax free savings accounts. The idea was that individuals could invest up to R30 000 per annum into such accounts, with an overall lifetime ceiling of R500 000. Returns generated in the account would be tax free, whether by way of income or capital gains. The individual could withdraw the amount invested at any stage on a tax free basis.
Concerns about reduction in interest deduction limitation rate
Author: Andrew Lewis Interest deduction limitation provisions have been enacted in terms of s23N of the Income Tax Act, No 58 of 1962, which apply to so called ‘reorganisation and acquisition transactions’. These provisions have been in effect since 1 April 2014. The purpose of these provisions is to limit interest deductions in respect of certain debt arrangements that National Treasury consider as being susceptible to excessive gearing.In addition, a new s23M of the Act will have effect from 1 January 2015, which will essentially apply to debts owed by a debtor to a creditor in a ‘controlling relationship’ and the amount of interest incurred by the debtor is not subject to tax in the hands of the creditor (e.g. a non-resident creditor). National Treasury contends that these interest deduction limitation provisions are necessary to avoid the erosion of the South African tax base.
UDZ tax incentive extended for six years
By: Graeme Palmer In 2003 the Urban Development Zone (UDZ) tax incentive was introduced under section 13quat of the Income Tax Act, 1962 to promote urban renewal in demarcated areas. The UDZ incentive provides for an allowance for the taxpayer which when claimed, reduces his taxable income. This deduction was initially only available until March 2014 but has now been extended to March 2020.Any person who meets the requirements of section 13quat is eligible to claim the UDZ incentive. Firstly, the person must have erected, extended, added to or improved a commercial or residential building. If only part of a building is erected, extended, added to or improved then the floor area must be at least 1,000m2 to qualify. The person may, subject to certain requirements having been met, also qualify if the building was purchased from a developer who has not previously claimed the UDZ deduction.
President Zuma appoints Mr Lesetja Kganyago as SA Reserve Bank Governor
(Full Statement by President Jacob Zuma) The Minister of Finance, The Governor and Deputy Governor of the South African Reserve Bank, Ladies and gentlemen of the media, In terms of the Constitution, the primary objective of the South African Reserve Bank is to protect the value of the currency in the interest of balanced and sustainable economic growth in the Republic. The Reserve Bank must perform its functions independently and without fear, favour or prejudice. During the past five years, the Bank performed its functions in the context of a tough global financial crisis and challenging domestic economic factors. The institution registered excellent performance during this difficult period, under the capable leadership of the Board, the Governor, Ms Gill Marcus and the Deputy Governors.
Employment Tax Incentive (ETI) Refund Process
How does it work? The Employment Tax Incentive Act and the draft amendments to this Act in terms of the Draft Taxation Laws Amendment Bill, 2014, allows for the introduction of a refund process that will refund employers the amount of the allowable ETI that wasn’t used to reduce the Employees’ Tax amount payable at the end of each six month reconciliation period (1 March to 31 August and 1 September to 28/29 February). An ETI refund will only be paid if an employer is tax compliant. This means that all tax returns have been submitted and there is no outstanding tax debt, when the Employer Reconciliation documents [EMP501 and IRP5/IT3(a)s] are received and processed by SARS. Top Tip: A non-compliant employer will have six months from the start of the next reconciliation cycle (1 September to 28 February or 1 March to 31 August in respect of the interim Read More …
Shuttleworth could have 'shuttled' his monies out of South Africa without the payment of a levy
Author: Gigi Nyanin (Cliffe Dekker Hofmeyr) In a far reaching judgment the Supreme Court of Appeal (SCA) held on 01 October 2014 that Mark Shuttleworth could have repatriated his funds out of South Africa without the imposition of a 10% exit levy that was imposed by the South African Reserve Bank (SARB) at that stage. In particular, it was indicated that the SARB had to repay such levy together with interest at the prescribed rate from 13 April 2012 to the date of payment.
Improvements effected on land not owned by the taxpayer
Author: Emil Brincker (DLA Cliffe Dekker Hofmeyr) On 1 October 2014, the South African Revenue Service (SARS) released Binding Private Ruling 180 (Ruling) dealing with the question of whether a taxpayer, who is a party to a Public Private Partnership (PPP), would qualify for a deduction under s12N of the Income Tax Act, No 58 of 1962 (Act) in respect of improvements effected on land not owned by the taxpayer.In respect of PPP’s, Government often undertakes to provide underlying land to a private party for the construction of buildings or the improvement of the land, without parting with ownership of such land.
Shuttleworth’s battle ‘for all South Africans’
Author: Amanda Visser (BDlive) Businessman and philanthropist Mark Shuttleworth appears intent on continuing his battle over the constitutionality of some of SA’s exchange control regulations. The cryptic response by the Reserve Bank after this week’s decision by the Supreme Court of Appeal (SCA) in favour of Mr Shuttleworth indicates it and the Treasury may also be heading for the Constitutional Court.