On 25 June 2014 SARS issued its annual notice (‘Notice’) to specify which persons must file income tax returns for the 2014 year of assessment. The Notice was issued in terms of section 66 of the Income Tax Act (the ‘Act’), read together with section 25 of the Tax Administration Act. The 2014 year of assessment generally runs from 1 March 2013 to 28 February 2014.
Author: Nyasha Musviba
The tax implications of statutory mergers
Author: Justine Krige (DLACliffeDekkerHofmeyr) 1. Concept of a Statutory Merger The purpose of this note is to discuss aspects of the relationship between the provisions of the Companies Act, No 71 of 2008 (“Companies Act”) and the Income Tax Act, No 58 of 1962 (“ITA”) in relation to statutory mergers.
Public benefit organisations – lowering the distribution requirement
Author: Nicole Paulsen and Gigi Nyanin (DLACliffeDekkerHofmeyr) On 17 July 2014 the National Treasury (Treasury) released the draft Taxation Laws Amendment Bill (TLAB) which aims to give effect to the various tax proposals announced in the 2014 Budget. One of the proposals relates to the control measures, and more specifically the distribution requirement, prescribed for a defined conduit public benefit organisation (PBO).
Tax free savings accounts
Author: Heinrich Louw (DLACliffeDekkerHofmeyr) An overhaul of the current retirement dispensation and the promotion of savings has been on the cards since at least the 2012 Budget when the Minister of Finance announced that a series of discussion papers would be released on these matters. It was revealed by National Treasury (Treasury) in a paper entitled Strengthening retirement savings (14 May 2012) that the reforms would include measures to encourage non-retirement household savings.
Contributed tax capital in a company context
Author: Emil Brincker (DLACliffeDekkerHofmeyr) The creation of contributed tax capital (CTC) and the return thereof by a company to its shareholders has been the subject matter of some misconception over the years. The CTC of a company is a notional amount that is created pursuant to the subscription of shares by holders of a specific class of shares as consideration for the issue of those shares by the company. To the extent that a
Can SARS just say “Prove it”?
By Ian Wilson An important element in disputes between taxpayers and SARS is the burden of proof. This deals with identifying which of the parties must prove its case in order to succeed. In section 102(1) of the Tax Administration Act the burden of proof that an amount is exempt or is not otherwise taxable, or that an amount is deductible, rests on the taxpayer.
Where to with thin capitalisation?
The South African Revenue Service (“SARS“) believes that the current thin capitalisation rules are not aligned with the views of the Organisation for Economic Co-operation and Development (“OECD”) in that the thin capitalisation rules should form part of transfer pricing principles. Interest between connected parties should only be deductible to the extent that the underlying debt finance would have been granted if such funding was advanced by an unconnected party on an arm’s length basis. In other words, the extent of the debt must be measured against the arm’s length principle as a first test and only then should we consider whether the interest rate charged is an arm’s length price.
Transfer pricing changes in the Taxation Laws Amendment Bill, 2014
SARS issued a new draft Taxation Laws Amendment Bill, 2014 on 17 July 2014. The draft legislation gives effect to matters presented by the Minister of Finance in the Budget Review 2014, as tabled in Parliament earlier this year.
Recent exchange control developments in relation to "domestic treasury management companies"
During 2013, a treasury management company regime was introduced for exchange control purposes to encourage the establishment of group treasury management functions in South Africa and to further enhance South Africa’s position as a “gateway into Africa”.
Employment Tax Incentive – accounting and income tax treatment
It is no hidden secret that unemployment in South Africa remains considerably high. According to the World Economic Forum Global Risk 2014 Report, structural unemployment and underemployment appears second overall in the Ten Global Risks of Highest Concern as many people in both advanced and emerging economies struggle to find jobs. The youth and minorities are especially vulnerable. Youth unemployment rates hover around 50% in some countries and South Africa was listed among them.