A number of advance tax rulings have recently been released by the South African Revenue Service (SARS) relating to the corporate tax roll- over relief rules contained in s41 to 47 of the Income Tax Act, No 58 of 1962 (Act). The most recent ruling in this regard is Binding Private Ruling No 168 (BPR 168), which was released on 17 April 2014. The facts in BPR 168 are relatively simple. Company A had acquired assets from company B in exchange for the issue of equity shares in company A in terms of an ‘asset-for-share transaction’ as defined in s42 of the Act.
Author: Nyasha Musviba
VAT – Tax invoices: the address confusion
Author: Varusha Moodaley VAT vendors who make taxable supplies of goods or services are obliged to issue tax invoices to the recipients of such supplies within 21 days of having made such a supply. A valid tax invoice is of utmost importance because without such a document a vendor, being the recipient of a supply, is not entitled to claim any input tax deductions in respect of goods or services acquired in the course or furtherance of making taxable supplies.
Forum shopping – who decides on legal status of assessments?
The Tax Court is a specialist court equipped to adjudicate on tax-related matters pertaining to the legality and correctness of disputed assessments. Sections 104 to 107 of the Tax Administration Act(1) together with the rules of the Tax Court, prescribe the procedures to be followed where a tax assessment is disputed and essentially entrust the Tax Court with the power to determine the merits of a tax assessment. In Medox Limited v The Commissioner for the South African Revenue Service(2) the North Gauteng High Court was recently faced with the question of whether the High Court has the necessary jurisdiction to rule on the legal status of income tax assessments.
Employees’ tax – travel allowances and reimbursements
Author: Hanneke Farrand and Jenny Klein Author page » Most employers are aware that a travel allowance may be granted to an employee where it is anticipated that the employee will be required to undertake business travel by virtue of the duties of his/her employment and that a travel allowance should not be merely used as a mechanism to reduce an employee’s employees’ tax (“PAYE”) liability.
Venture capital companies: part 1 – overview
Author: Mansoor Parker of ENSafrica Introduction This is the first in a series of articles on venture capital companies, a tax-favoured investment vehicle regulated by section 12J of the Income Tax Act, 1962 (“ITA 1962”). The venture capital company (“VCC”) scheme, introduced in 2009, is a tax-based scheme designed to encourage individual and corporate investors to invest in a range of smaller, higher-risk trading companies by investing through the VCCs.
The liability of shareholders for the tax debts of a company
Dr Beric Croome and Warren Radloff of ENSafrica It has a long been a principle of company law that the debts of a company are not the debts of its shareholders. It may be a surprise to some that this principle does not apply to certain tax debts thanks to section 181 of the Tax Administration Act No.28 of 2011 (“section 181”). This section allows shareholders to be held jointly or individually liable for the tax debts of their company. At first glance it seems unfair to punish those who do not manage the day-to-day running of a company. The Fiscus has indicated that its intention is not to punish shareholders, but to discourage them from asset or dividend stripping the company. This article will consider the application of section 181, namely in what circumstances will a shareholder be held liable for the debts of a company?
Relief from transfer pricing for controlled foreign companies
Author: Arnaaz Camay of ENSafrica The current transfer pricing provisions contained in section 31 of the Income Tax Act, 58 of 1962 came into effect on 1 April 2012 and are applicable for years of assessment commencing on or after that date. In terms of section 31(2), where: any transaction, operation, scheme, agreement or understanding constitutes an “affected transaction” and
Repurchase of preference shares
The South African Revenue Service (SARS) recently released a binding class ruling (BCR 44) dealing with the tax consequences of the repurchase of certain non-redeemable, non-participating preference shares. Background The applicant was a public company listed on the Johannesburg Stock Exchange (JSE) which issued preference shares to certain persons.
VAT implications on waived or reduced debts and business rescue plans
By Anton Kriel, Tax Partner Grant Thornton Cape The VAT Input Claw Back In the ordinary course of business, creditors often reduce or write-off bad and irrecoverable debts. For the creditors, the VAT treatment is simple. If output VAT on the written-off debts was accounted for, the creditor is entitled to claim the VAT portion of the written-off debt as input VAT. However, for the debtor the solution is not as simple, and it could give rise to additional liability. In fact, the debtor may just be trading one creditor for another and the another being SARS.
Are audit fees tax deductible?
By Hylton Cameron, Associate Tax Director, Grant Thornton Johannesburg The Supreme Court of Appeals findings in the matter relating to the tax deductibility of audit fees between CSARS v MTN Holdings (Pty) Ltd (MTN) has highlighted the care companies must take in analysing expenses.