Author: Louis van Manen (Grant Thornton) The Taxation Laws Amendment Bill of 2013 (TLAB) contains a proposed amendment to the newly introduced Real Estate Investment Trust (REIT) legislation which should be welcomed by such trusts. While it is generally assumed that the tax burden associated with income and capital gains of REITs is effectively shifted to shareholder level under the REIT legislation, it will not always be the case under the current legislation. Despite enjoying exemption from Capital Gains Tax (CGT) on most immovable
Author: Nyasha Musviba
The limitation of deductions for untaxed interest
Author: Kyle Mandy (PwC) The Taxation Laws Amendment Bill 39 of 2013 proposes the introduction of a new section (section 23M) to the Income Tax Act (ITA) to limit the deduction of interest incurred by a debtor in respect of a debt owed to a creditor that is in a ‘controlling relationship’ with the debtor and the interest in question is not subject to South African tax. The restriction will apply to interest incurred on or after 1 January 2015. In essence, the section limits the deduction for interest paid between connected persons where the interest is not taxed in the hands of the recipient to an amount determined with reference to 40% of taxable income before interest and capital allowances.
What you should know about medical tax credits
Ingé Lamprecht More changes to be introduced from 1 March. JOHANNESBURG – Over the past two years, the tax benefits individuals enjoy for medical aid contributions and expenses, have gradually changed from a deduction to a tax credit system. While the deductions for medical aid contributions have already been replaced with a medical credit system for most taxpayer categories, deductions for qualifying medical expenses will also be replaced with a credit system from March 1 this year.
Income Tax Act 58 of 1962 – Deemed exchange gains & losses
Section 24I(10) of the Income Tax Act 58 of 1962 (ITA) has been replaced by a new provision for years of assessment commencing on or after 1 January 2013. Section 24I(10) of the ITA deferred unrealised exchange gains and losses on exchange items between connected persons and groups companies until they were realised. However, section 24I(10) has been deleted and replaced with section 24I(10A)with effect from years of assessment commencing on or after 1 January 2013.
VAT Alert – Homeowners Associations to deregister for VAT
In the past Home Owners Associations (HOAs) were not exempted from VAT and had to charge VAT on their levies, whereas sectional title body corporates were generally exempt from VAT. SARS is now of the view that the supply of services by an HOA to its members is not a business enterprise but merely a cost sharing arrangement and the law was amended accordingly. As from 1 April 2014 the levies payable by members to HOAs will also be exempt from VAT. However, the effect of this amendment is that many HOAs will have to deregister for VAT purposes as from 1 April 2014 which will have certain financial and administrative implications.
Tax Alert – Employment Tax Incentive
The Employment Tax Incentive Act 26 of 2013 (ETI) was promulgated on 18 December 2013. The purpose of the ETI is to encourage youth employment and reduce unemployment, and will remain in place until 1 January 2017. The ETI came into operation on 1 January 2014 and will apply to qualifying employees employed on or after 1 October 2013 by eligible employers, which in effect means that the first claims for the incentive will be submitted with the January 2014 employees’ tax monthly return on or before 7 February 2014.
2014/15 Budget could provide clarity on carbon tax – Deloitte
Author: Leandi Kolver Clarity on the design of South Africa’s carbon tax policy could be a feature of the 2014/15 National Budget to be presented by Finance Minister Pravin Gordhan in February, professional services firm Deloitte said at its pre-Budget event on Wednesday. “If announced, the new look carbon tax policy will probably present improved linkage between the proposed carbon tax pricing mechanism and the desired emission reduction outcomes (DEROs) proposed in the National Climate Change Response Policy,” Deloitte director Izak Swart said. Deloitte manager Barry Drotsche explained that the DEROs, as mentioned in the National Climate Change Response Policy, considered sectors that played a vital role in the
Amendments to the Tax Administration Act 2013
Author: Beric Croome (ENS) The Tax Administration Laws Amendment Bill, No. 40 of 2013 was introduced in Parliament on 24 October 2013. The President of the Republic of South Africa must still assent to the Bill and it must then be published in the Government Gazette before it becomes an Act. The Tax Administration Laws Amendment Bill (“TALAB”) contains various amendments of an administrative nature to various tax Acts administered by the Commissioner: South African Revenue Service. In this article it is not possible to deal with all of the amendments contained in the Bill and only the more important changes to the Tax Administration Act, No. 28 of 2011 will be dealt with.
Transfer Pricing adjustments: What are the consequences?
Author: Billy Joubert (Deloitte) South Africa’s transfer pricing rules changed radically for years of assessment starting on or after 1 April 2012. This means that the consequences of such an adjustment being made now are very different, depending on whether the adjustment relates to a year of assessment commencing before – or after – 1 April 2012. Perhaps the most fundamental change was in relation to the mechanics for making transfer pricing adjustments. As regards the consequences of TP adjustments, these are also now very different. Many of the TP adjustments currently being made or contemplated relate to years of assessment commencing before 1 April 2012. For ease of reference we shall refer to such years as old years.
Assumption of contingent liabilities
The South African Revenue Service (SARS) recently released its discussion paper (Discussion Paper) on the tax implications of the assumption of contingent liabilities in the context of a sale of business as a going concern and where the assumption of the contingent liabilities is in part settlement of the purchase price of the assets. Whereas the purchase price can generally be settled by, for example, a cash payment, the assumption of unconditional liabilities, loan account, or the issue of shares, the Discussion Paper specifically deals with the assumption of contingent liabilities.