On 8 April 2013 in Gaertner v Minister of Finance [2013]75 SATC 184,the Western Cape High Court held that sections 4(4)(a)(i)-(ii), 4(4)(b), 4(5) and 4(6) of the Customs and Excise Act, No. 91 of 1964 (the Customs and Excise Act) are inconsistent with the Constitution, and declared them invalid. The declaration of constitutional invalidity has now been confirmed by the Constitutional Court in a unanimous judgment handed down on 14 November 2013.
Author: Nyasha Musviba
Employees' Tax – Fringe Benefits on employer provided low cost housing
Introduction As part of Government’s anti-poverty objectives, Government is seeking to provide low-income South Africans with low cost housing and more specifically, ownership of residential property. In this regard, Government appears to be supportive of employers who provide low cost housing to low-income employees with the aim of enabling these employees with the opportunity to acquire ownership of the housing. This is specifically the case in industries where companies operate in remote areas and/or require employees to live away from their ordinary place of residence, like the mining industry.
Income Tax Exemptions – Employee share schemes
As a general rule, subject to certain exceptions, local dividends received and accrued to a South African tax resident are exempt from normal tax in terms of section 10(1)(k) of the Income Tax Act, No. 58 of 1962 (the Act). One such exception applies to employee share schemes by virtue of the application of section 10(1)(k)(i)(dd). Section 10(1)(k)(i)(dd) of the Act Section 10(1)(k)(i)(dd), which was introduced from 1 January 2011, prescribes that a dividend will not be exempt from normal tax if such dividend is received or accrued in respect of a restricted equity instrument (as defined in section 8C) unless:
Minister Gordhan Officially Launches Tax Ombud’s Office
Pretoria 7 April 2014 – The Minister of Finance Pravin Gordhan today (7 April 2014) officially launched the SA Tax Ombud whose objective is to review and address complaints by taxpayers regarding service, procedural or administrative issues relating to their dealings with the SA Revenue of Service (SARS). As announced in October 2013, retired Judge Bernard Ngoepe is the Tax Ombud.
Managing indirect tax data in the digital age
Dealing with indirect tax data is the key to effective indirect tax management. But the variety of indirect tax data required by different jurisdictions and the sheer quantity of relevant data generated by large organizations can present a range of logistical issues. With the increased reliance on indirect taxes and the “fair tax” debate putting companies’ affairs firmly in the spotlight, we consider some key challenges faced by multinational tax, trade and finance departments.
Specifications for the reporting of information under FATCA, AEOI and domestic law
Pretoria 3 April 2014 – On 8 February 2013, the National Treasury and the South African Revenue Service (SARS) announced the start of negotiations with the US Department of the Treasury to enter into an inter-governmental agreement (IGA) with respect to the USA’s Foreign Account Tax Compliance Act (FATCA). The wording of a draft IGA has now been agreed upon and will be signed at Governmental level as soon as possible. When signed, the US Treasury will view South African financial institutions as being generally compliant with FATCA.
Subordination agreements: the Income Tax Act section 8f trap
Section 8F of the Income Tax Act, dealing with hybrid debt instruments was substituted by the Taxation Laws Amendment Act of 2013. In its substituted form the provision is considerably broader in scope than its predecessor. In particular it appears that certain subordination agreements may render the subordinated debt subject to reclassification as hybrid debt with potentially costly consequences. The new treatment applies to amounts incurred on or after 1 April 2014. In terms of section 8F if a debt instrument falls into classification as a hybrid then the effect is that interest incurred in respect of the hybrid debt instrument:
Employers – Get ready for the 2014 Employer Annual Reconciliation
Dear Employer From 1 April 2014 it will be time to submit your Employer Annual Reconciliation for the period 1 March 2013 to 28 February 2014. You are encouraged to submit your reconciliation early as this will give you time to resolve any issues which may arise. To help you get ready to submit, we would like to tell you about the changes you may expect this year: • Updated version of e@syFile™ Employer availableRemember to always backup your current information on your computer prior to installing a new version of e@syFile™ Employer, as the installation may delete your current information.
Grant Thornton IBR research also reveals South Africa’s “golden goose” still being taxed too heavily
New research from the Grant Thornton International Business Report (IBR) reveals that 64% of South African business leaders would welcome more global co-operation and guidance from tax authorities on what is acceptable and unacceptable tax planning, even if this provided less opportunity to reduce tax liabilities across borders This figure is in line with BRIC business leader responses (68%) while globally 53% of executives surveyed would also welcome greater global co-operation.
Preliminary Outcome of Revenue Collection for the 2013-14 Fiscal Year
JOHANNESBURG, 1 April 2014 – The 1st of April is traditionally the day we report our preliminary revenue outcome within twelve hours after the close of the fiscal year at midnight on the 31st of March. The February 2014 Budget sets SARS a revenue target of R899 billion. For the 2013/14 fiscal year which ended at midnight— SARS collected R899.7 billion which is R0.7 billion above the revised estimate in the 2014 Budget. Tax revenues grew and exceeded the previous year’s revenue collections of R814.1 billion by R85.7 billion Nominal GDP growth for 2013 remained subdued at 8.3% but tax revenue grew by 10.5%