A decision in the Tax Court in the Western Cape (Case No. 13002) related to the question whether a company was carrying on farming. The company (Company A) had acquired a piece of land on which there were substantial plantations. Company A itself did not wish to exploit the plantations commercially, but wished to ensure their preservation. It therefore entered into an arrangement with a second company (Company B), in terms of which Company B had the right to exploit the timber, but was obliged to maintain the rotation by planting trees to replace those that were cut. Company B was entitled to all proceeds from the exploitation and was obliged to meet its own costs and to keep the plantations insured against fire.
Author: Nyasha Musviba
Taxation of Issue of shares as consideration
In order for the ownership of assets to pass from a seller to a buyer it is necessary that the parties agree three essential elements: price, terms and structure. These three elements are interdependent in any transaction. For instance, after agreeing the price of a transaction, i.e. the number of rands or rand value of the consideration the seller will receive, the parties will need to agree the terms such as whether the price will be paid by means of cash, debt and/or shares as well as the timing of these payments.
UK capital gains tax ‘is bad news for SA’
SOUTH Africans with property in the UK will in future be liable for capital gains tax there once they sell their property, following an announcement last month that the tax will be introduced in the UK from April next year. The South African economy is likely to lose revenue because of the step, as the UK would in future be getting the tax instead of South Africa, Michael Honiball, partner in the tax department of law firm Webber Wentzel, said on Tuesday. South Africa’s domestic laws,
Treasury Plans to Tax Dividends Paid to Employees as Income
Changes proposed by the Treasury in the Taxation Laws Amendment Bill follow international trends in tightening the net on the use of salaries disguised as dividends. According to the explanatory memorandum published by the Treasury recently, many share schemes hold pure equity shares where the sole intent of the scheme is to generate dividends for employees as compensation for past
Taxation of public benefit organisations changed
‘Ruling could take parties unaware’ – Piet Nel. JOHANNESBURG – Public benefit organisations (PBOs) should take note of a new binding ruling issued by the South African Revenue Service (Sars), which could result in the loss of their tax exemption on business undertakings or trade activities. Last month, Sars issued a binding general ruling, which aims to provide clarity on the concept “substantially the whole”.
Plan for Tax on Foreign Services Questioned
The proposed introduction of a 15% withholding tax on consultancy, management and technical fees for services rendered by a foreign consultant or company to a South African firm has been described as “unworkable”. The tax was proposed in the Taxation Laws Amendment Bill at the end of last year and was aimed at protecting the tax base, as the fees generated local deductions and thereby gave rise to a potential erosion of the tax base, the Treasury said in its explanatory memorandum to the bill.
Youth Wage Subsidy Comes into Effect Youth Wage Subsidy Comes into Effect
The Employment Tax Incentive Act, commonly known as the youth wage subsidy, came into effect at midnight, SABC news reported on Wednesday. The government hopes the law will promote employment for young people and create jobs in special economic zones once legislation providing for them has been promulgated. In terms of the act, employers will receive a tax incentive to employ young workers for a maximum of two years under certain conditions
How SA’s tax system stacks up
By Ingé Lamprecht Worldwide ranking improves from 32nd to 24th position –World Bank & PwC report. JOHANNESBURG – South Africa’s worldwide paying tax ranking has improved over the past year due to the success of the eFiling system and the abolishment of secondary tax on companies (STC). According to the Paying Taxes 2014 report,
SA records R770m trade surplus
Johannesburg – South Africa recorded a R770m trade surplus in November after a R12.39bn deficit the previous month, data from the South African Revenue Service (Sars) showed on Monday. The data incorporates previously excluded trade with South Africa’s regional neighbours Botswana, Lesotho, Namibia and Swaziland, collectively referred to as BLNS. When stripping out trade with the BLNS countries, the trade balance showed a R9.24bn deficit for November, narrower than the R20.97bn shortfall for October. Exports in November, including regional trade, were up 5.3%, while imports were down 8.8%, Sars said.
International Tax – Exit charge CGT – Section 9H
The Taxation Laws Amendment Bill 39 of 2013 (the Bill) was tabled by the Minister of Finance on 24 October 2013. One of the interesting amendments in the Bill to the Income Tax Act 58 of 1962 (the Act) relates to the exit charge on interests in immovable property, especially in light of the recent amendments to the double tax treaty between South Africa and Mauritius, concluded on 17 May 2013.