A new global standard on the exchange of tax information intended to raise the bar on international cooperation will make it easier for the authorities to track down tax cheaters and fight tax evasion, says PwC. But the new standard also raises questions around privacy and cost implications, in particular for developing countries in Africa. The Organisation for Economic Cooperation and Development (OECD) recently announced plans for a global common reporting standard for the automatic exchange of information between the tax authorities.
Author: Nyasha Musviba
CORPORATE RULES: DISPOSAL OF ASSETS WITHIN 18 MONTHS OF ACQUISITION
1. Summary This ruling deals with the effect of section 42(7) on the disposal of assets in terms of an “intra-group transaction” as defined in section 45(1) when the disposal will take place within 18 months of the assets having been acquired in terms of an “asset-for-share transaction” as defined in section 42(1).
New Binding General Ruling on the Address to be Reflected on Tax Invoices
This ruling clarifies that the address of the recipient and supplier to be reflected on a tax invoice, debit or credit note is either: The physical address from where the enterprise is being conducted; The postal address of the enterprise; or Both the physical and postal addresses of the enterprise.
Interest incurred on replacement loans
This private ruling from SARS deals with interest incurred on replacement loans and addresses whether such loans retain their initial business purpose for purposes of determining whether the interest incurred on the loans qualifies for a deduction under section 24J(2).
Buy-back of ordinary shares by a company in excess of market value
SARS recently issued the above Binding Private Ruling which deals with the question whether the buy-back of ordinary shares by a company at an amount in excess of the market value of the shares, in circumstances where the purpose of the buy-back was to maintain the BBBEE status of the company, has donations tax effects or would invoke paragraph 38 of the Eighth Schedule.
Tax dispute resolution
Times have certainly changed. Ten years ago a tax query from a SARS assessor would find its way to the desk of the financial director or in-house tax advisor who would send it off to their auditors. The auditors would, in turn, give it to their tax department who would draft a reply to SARS and hope the matter went away. If not, an informal meeting between the financial director and tax advisor at the audit firm would usually settle the dispute.
Simulated transactions: welcome clarification from the Supreme Court of Appeal
In Roshcon (Pty) Ltd v Anchor Auto Body Builders CC (“Roshcon”) the Supreme Court of Appeal (“SCA”), in a unanimous judgment drafted by Wallis JA, has clarified the issues caused by its previous decision in SARS v NWK Limited (“NWK”). Roshcon was not a tax case; it concerned supplier and floorplan agreements relating to the sale of trucks, with a reservation of ownership to a finance house as security until the trucks were fully paid for by the purchaser. On the assumption that NWK had transformed
Deductibility of audit fees – Commissioner for the South African Revenue Service v Mobile Telephone Networks Holdings (Pty) Ltd, (966/2012) [2014] ZASCA 4 (7 March 2014)
On 7th March 2014 the Supreme Court of Appeal delivered judgment in the as yet unreported case of Commissioner for the South African Revenue Service v Mobile Telephone Networks Holdings (Pty) Ltd, (966/2012) [2014] ZASCA 4 (7 March 2014) which dealt with the deductibility of audit fees incurred for a dual or mixed purpose and the apportionment thereof for tax purposes in light of section 11(a) of the Income Tax Act 58 of 1962, as amended (‘the Act’) read with sections 23(f) and 23(g) of the Act.
Capital gains tax – method of valuation on the disposal of shares
Authors: Gigi Nyanin and Nicole Paulsen (DLA Cliffe Dekker Hofmeyr) Capital Gains Tax (CGT) is payable on the disposal of capital assets which were in the seller’s possession on, or were acquired after 1 October 2001 (valuation date). A capital gain or loss is determined by calculating the difference between the proceeds and the base cost of the disposed asset.
Reportable arrangements – a bad moon rising
Authors: Ruaan van Eeden and Danielle Botha (DLA Cliffe Dekker Hofmeyr) Draft Public Notice The South African Revenue Service (SARS) recently issued a Draft Public Notice (Draft Notice) listing transactions that constitute reportable arrangements (RA’s) for purposes of s35(2) of the Tax administration Act, No 28 of 2011 (TAA). The Draft Notice, once finalised, is intended to be supplementary to any previous notices issued with regard to RA’s and serves as an extension of the existing listed RA’s. Existing reportable arrangements include certain arrangements qualifying as hybrid equity instruments in terms of s8E and 8F of the Income Tax Act, No 58 of 1962 (ITA).