By Ashton Crommelin of Hogan Lovells Interim costs awards in arbitration proceedings are not often the precursors to winding up applications. However, it may happen that if such an award of costs is not paid, the possibility of winding up the non-paying party may arise. This possibility leads to the following question, “Is a bill of costs drafted pursuant to an arbitration award and taxed by the taxing master of the High Court a “debt” for purposes of section 345 of the Companies Act 61 of 1973?”
Author: Nyasha Musviba
Liquidation applications on a disputed tax debt and the applicability of section 177(3) of the Tax Administration Act 28 of 2011
Judge Andre van Niekerk handed down an interesting judgment in the High Court of South Africa (North Gauteng Division) on 30 September 2013. In my respectful opinion the judgment is insightful and is correct. The facts are fairly simple. Miles Plant Hire (Pty) Ltd (MPH) had a tax liability of R37 441 090.59 to the commissioner of the South African Revenue Services (SARS). SARS had levied a tax assessment in this amount on MPH, which included penalties and interest. When MPH failed to pay the assessment, SARS brought a liquidation application against it, which was opposed on two grounds.
Single registration – Changes to tax & customs registration
What is Single Registration? The way you register for tax & customs and update your existing details has changed from 12 May 2014. SARS will now have a ‘Single Registration’ of a taxpayer across all taxes they pay and legal entities they’re associated with. From a taxpayer’s view, you will only have to register once as a new taxpayer and there-after add only the relevant details when you start paying e.g. VAT. It will also now be easier to update your existing details.
Apportionment of audit fees
Apportionment of audit fees – Commissioner for the South African Revenue Service v Mobile Telephone Network Holdings (Pty) Ltd This appeal considered the deductibility of statutory audit fees incurred by a holding company that derived income comprising interest and dividends. The audit fees incurred in relation to exempt income, in the form of dividends, were held to be non-deductible for income tax purposes and the court had to decide the relevant method of apportionment.
Not all hybrids are cost effective!
The provisions of section 8F became effective on 1 April 2014. In terms of this section any interest incurred on or after that date in respect of a “hybrid debt instrument” will be deemed to be a dividend in specie declared and paid on the last day of assessment by the company; and is not deductible for income tax.
Valuation of pre-valuation date shares
Valuation of pre-valuation date shares – ABC (Proprietary) Limited v The Commissioner for the South African Revenue Service ABC (Pty) Ltd (Appellant), a minority shareholder in D Entity, realised a capital gain when it disposed of small percentages of its shareholding in D Entity during the 2002 and 2003 years of assessments. D Entity held a casino licence, but was involved in litigation concerning the location of the casino and had consequently not commenced operation of the casino at the time of the disposal.
South Africa leading the pack towards global information exchange
On 9 June 2014, the South African Revenue Service (SARS) announced that South Africa and the United States (US) had entered into an inter-governmental agreement (IGA) which facilitates the implementation of the US Foreign Account Tax Compliance Act (FATCA), and signifies an important step in South Africa’s journey in a global movement towards the automatic exchange of information for tax purposes. The so-called “Model 1A” agreement has not yet been ratified by Parliament. However, Public Notices confirming its implementation have been gazetted.
Binding private rulings – Who bore the full cost of the fuel?
By Webber Wentzel Who bore the full cost of the fuel? Generally speaking, where a person uses his or her private vehicle to conduct business and receives an allowance or grant in respect of such usage, a deduction against the allowance may be made on assessment for normal tax.
2014 draft Taxation Laws Amendment Bill
By Webber Wentzel No surprises in the “first batch” 2014 draft Taxation Laws Amendment Bill What National Treasury have dubbed the “first batch” of the draft Taxation Laws Amendment Bill (TLAB) proposes two main sets of amendments, namely changes to the tax treatment of the risk businesses of long-term insurers, and clarification of the fringe benefit valuation rules with regards to defined benefit funds in terms of the suite of reforms to retirement savings coming into effect on 1 March 2015.
Additional changes made to SA’s transfer pricing legislation
After widespread criticism and various comments and submissions to National Treasury/SARS, it has been proposed, in terms of the 2014 Draft Tax Laws Amendment Bill, that South Africa’s transfer pricing legislation relating to Secondary Adjustments, be amended once again. Secondary adjustment The term Secondary Adjustment is explained as follows in the Organisation for Economic Co-operation and development’s Transfer Pricing Guidelines: