Authors: Andrew Wellsted and Rivalani Mutshinya (NortonRoseFulbright) A recent appeal case South African Revenue Service v Pretoria East Motors (Pty) Ltd, sets out the standard that SARS is expected to uphold when auditing taxpayers. SARS must try to understand the systems used by taxpayers before raising additional assessments and imposing penalties for incorrect tax treatment. The court criticised SARS for employing bullying tactics when dealing with taxpayers.
Author: Nyasha Musviba
The Davies Tax Committe says Tax not really the problem
Author: BDlive The Davis tax committee’s discussion document on the taxation of small and medium enterprises (SMEs) could open up a useful debate on SA’s small business sector and how to boost it. This is because what the committee says, in a subtle sort of way, is that tax is not really the problem. True, the burden of compliance is a major concern for small businesses, which according to one study cited by the committee spend 255 hours a year on average to deal with all tax-compliance matters.
State wants tax consultant's bail revoked
The State asked the Cape Town Magistrate’s Court on Tuesday to revoke bail granted to a tax consultant accused of fraudulently claiming tax refunds. Heide Jasmine was accused of filing false claims for refunds amounting to R80 847, based on false medical expenses, since she was released on bail.
South African Tax and investment incentive
Basis of taxation South African residents are taxed on their worldwide income. Non-South African residents are taxed on their South African sourced income. A company will be a South African resident if it is incorporated in South Africa or if it has its place of effective management in South Africa. An individual will be a South African resident if he or she is ordinarily resident here or is physically present here for a specified number of days over a five year period. Any person who is deemed to be a resident of another state through the application of a double tax agreement will not be treated as a South African resident.
SARS extends list of non-resident persons having to file an income tax return
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.
New binding private ruling on plant used in the production of renewable energy
SARS released BPR 172 on 25 June 2014. The ruling deals with the question of whether various items used in the production of solar energy qualify for the section 12B allowance. By way of background, section 12B(1)(h) read with section 12B(2) of the Income Tax Act allows a deduction on a 50:30:20 basis over three years of any ‘machinery, plant, implement, utensil or article owned by the taxpayer … and which was or is brought into use for the first time by that taxpayer for the purpose of his or her trade to be used by that taxpayer in the generation of electricity from:
SARS issues new binding private relating to debt SARS issued Binding Private Ruling 173 on 2 July
SARS issued Binding Private Ruling BPR 173 on 2 July. The ruling purports to deal with a thorny issue which has been the cause of uncertainty but unfortunately raises more questions than answers. The issue is whether the debt reduction provisions of the Income Tax Act, namely section 19 or paragraph 12A of the Eighth Schedule, would be invoked where a company issues shares and utilises the proceeds from the share issue to repay debt.
Should the South African Revenue Service adopt a Taxpayer Bill of Rights?
Author: Beric John Croome A Taxpayers’ Charter setting out the rights and obligations of taxpayers in South Africa was published for the first time during 1997. That Charter contained a statement of intent insofar as taxpayers’ rights in South Africa is concerned. On 19 October 2005 the SARS Client Service Charter was released setting out the levels of service that taxpayers could expect in their dealings with the South African Revenue Service (‘SARS’). Currently, neither the Taxpayers’ Charter nor the SARS’ Service Charter Standards can be located on the SARS website and it would appear to be a matter of ‘out of sight out of mind’.
Pay now argue later
Possession, as they say, is nine tenths of the law. Generally in commercial litigation where, for example, a claim for an outstanding amount is brought against a party, such party is not required to make payment to the claimant until a court has adjudicated on the matter. However, when it comes to matters of tax, the Tax Administration Act, No. 28 of 2011 (‘TAA’) requires taxpayers to first make payment to SARS on assessment and then to pursue their various remedies against SARS.
Bribe tycoon Hathurani hit with R1.2bn tax bill
Author: Loni Prinsloo (BDLive) The SA Revenue Service (SARS) has swooped on Edrees Hathurani, the controversial cash-and-carry tycoon at the centre of a bribery scandal involving the regulator, the Financial Services Board (FSB). On Friday morning, SARS officials served a court order on Hathurani’s Africa Cash ‘n Carry, a warehouse-style business in southern Johannesburg which sells 15 000 products from cosmetics to electronics, effectively freezing its assets.