Author: Webber Wentzel Relief in relation to acquisition debt Section 23N contains rules to cap allowable interest incurred by an acquirer of a business pursuant to a Section 45 intra-group transfer or a Section 47 liquidation distribution. It replaces Section 23K from 1 April 2014 and also applies to the refinancing of debt that was subject to Section 23K. In terms of Section 23N, the acquisition debt interest incurred by the acquiring company must, in any year of assessment and for a period of five years of assessment thereafter, not exceed the sum of the amount of interest received by or accrued to the new operating company plus 40% of the higher of the “adjusted taxable income” incurred in the first year in which the acquisition occurred or the year being tested.
Author: Nyasha Musviba
SARS has eye on property taxes
Author: iAfrica.com Established Cape Law firm, Herold Gie Attorneys, who this year celebrate 120 years of legal expertise, recently held an informative property and tax seminar at the Cape Town Hotel School attended by a number of property professionals from across the city. Presented by Di Seccombe, National Head of Tax Training at audit and advisory firm Mazars, the seminar delivered a broad analysis of the recent 2014/2015 Budget Speech, as well as recent legislative and administrative changes that impact the SA property industry and real estate agents in particular.
Companies face onerous foreign tax rules
Author: Amanda Visser (BDlive) The challenges developing countries face from tax avoidance and tax evasion are not new, yet developed countries have suddenly woken up to these challenges, mainly due to the global financial crisis. They call it base erosion and profit shifting, or Beps. The Organisation for Economic Co-operation and Development has over the past two years looked at ways to strengthen international tax standards, and ways to identify and address loopholes in tax laws. The danger is that the developing world will have to adopt new rules, made by the developed world for problems they have been struggling with for many years.
Deductible Donations
By Doné Howell, Tax Partner Grant Thornton Johannesburg “Social responsibility is an ethical theory that an entity, be it an organisation or individual, has an obligation to act to benefit society at large.” When your moral compass and sense of social responsibility lead you to acts of benevolence, you could, in addition to the sense of wellbeing that comes from helping others, also qualify for a reduction in your tax bill. In recognition of the valuable role these donations from individuals and businesses play in these tougher economic times, government has legislated further concessions to allow greater tax relief in respect such donations.
Interest on loans from foreign persons
By Mike Betts, Tax Partner Grant Thornton Cape From 1 January 2015, the interest paid or due to non-residents from a source within South Africa (SA) will be subject to a 15% withholding tax, according to sections 50A to 50H of the Income Tax Act (‘the Act’). These provisions do not affect interest paid by, amongst others, any sphere of government, or any SA bank and will most likely affect loans from foreign shareholders and from other group companies located beyond the borders of SA.
Import VAT – New Rules
By Basil Dikobe, Tax Manager, Grant Thornton Johannesburg The requirements for claiming VAT when importing goods to South Africa have always been contentious and the affected VAT vendors are often unsure about the documentary evidence they need to retain to survive a SARS VAT audit. Even SARS offices interpret or enforce the provisions of the VAT Act differently. For example, some allow the clearing agent’s invoice as proof of import and others accept payment to the clearing agent as proof that VAT has been paid. Even the timing for claiming the input tax deduction has been disputed. These uncertainties have resulted in many VAT vendors receiving significant assessments, penalties and interest charges from SARS.
Latest Research and Development tax allowance still missing the mark
By Barry Visser, Associate Director Grant Thornton Johannesburg Recent Research and Development (R&D) legislative amendments substantially changed the nature of the R&D allowance contained in section 11D of the Income Tax Act. However, despite the significant changes, this allowance still seems to fail to encourage many companies to undertake R&D. We highlight the most significant barriers and provide suggestions to benefit from the allowance.
Determining the base cost of the repayment of an interest-free loan acquired for less than face value
Author: Okkie Kellerman and Esther Geldenhuys of ENSafrica Introduction The Eighth Schedule to the Income Tax Act, 58 of 1962 (“the Act”) creates a tax liability known as capital gains tax which applies generally where an asset is disposed of. A loan is regarded as an “asset” in terms of the definition in paragraph 1 of the Eighth Schedule as it is an incorporeal asset whereby the lender acquires a right to claim payment from the borrower. Where part of a loan is repaid it constitutes part of an asset disposed of and it will be necessary to allocate a part of the base cost of the loan to the part of the loan repaid in order to determine the capital gain or capital loss in respect of the disposal of that part.
Developments in the taxation of collective investment schemes
Author: Toinette Beckert by ENSafrica Section 25BA prior to 1 January 2014 Prior to the recent amendments in the Taxation Laws Amendment Act No. 31 of 2013 (“the TLAA”), a collective investment scheme (“CIS”) was taxed on a semi-flow through regime in terms of section 25BA of the Income Tax Act No. 58 of 1962 (“the Act”). Accordingly, amounts (other than amounts of a capital nature) received by or accrued to a portfolio of a CIS (other than a portfolio of a CIS in property) were deemed to have directly accrued to a person to the extent that the amounts were distributed by the CIS to such person not later than 12 months after its accrual to the CIS and if that person was entitled to the distribution by virtue of holding a participatory interest in the CIS.
Amendments relating to dividend exemptions in the context of incentive schemes
Author: Andrea Minnaar of ENSafrica Recent amendments were made to both the local dividend income tax exemption in section 10(1)(k)(i) of the Income Tax Act, 1962 (“the Act”) as well the foreign dividend income tax exemption in section 10B of the Act, in terms of the Taxation Laws Amendment Act, No. 31 of 2013. In terms of these amendments, the local and foreign dividend income tax exemptions will not be available to any dividend or foreign dividend: