Although old news to some, there still seems to be little awareness regarding the interplay between value-added tax (VAT) and transfer duty, and the benefits stemming from the ‘not so recent’ amendments to the Value-Added Tax Act No. 89 of 1991 (the Act), as applicable to fixed property acquired by a VAT vendor from a non-vendor on or after 10 January 2012.
Author: Nyasha Musviba
VAT – Tax Invoice
South Africa operates a value-added tax (VAT) system whereby the VAT charged by suppliers is subtracted from the VAT charged to customers to calculate the VAT payable or refundable. This system was established to relieve the trader entirely of the burden of the VAT payable or paid in the course of all his economic activities.
Tax Administration Act – Suspension of payment of tax
Any taxpayer who wishes to object to or appeal against an assessment issued by the South African Revenue Service (SARS) must be aware that their obligation to pay any tax under that assessment is not automatically suspended by virtue of the submission of the objection or appeal itself. Any taxpayer who wishes for an objection or appeal to first be concluded before paying the tax due under an assessment would have to lodge a separate request for suspension of payment of tax in terms of section 164 of the Tax Administration Act No. 28 of 2011 (the TAA).
International Tax – Base erosion and profit shifting
The Organization for Economic Cooperation and Development (OECD) issued a 15 point action plan on base erosion and profit shifting (BEPS). The plan aims to “effectively prevent double non-taxation” and to ensure that low tax jurisdictions will not be able to continue with practices that “artificially segregate taxable income from the activities that generate it”. It seems that the action plan of the OECD will have a huge impact on worldwide transfer pricing and these actions must be carefully considered as it may have a major impact on how multinational groups operate.
Tax in quantification of damages – Barclay v Road Accident Fund [2012] (3) SA 94 (WCC)
The decision of the Cape High Court in Barclay v Road Accident Fund [2012] (3) SA 94 (WCC) concerns the question whether, in quantifying damages for loss of earning capacity, the amount to be awarded to the claimant should be reduced to take account of the income tax that would have been payable if the claimant had received the amount by way of ordinary earnings, rather than as a lump-sum award of damages.
Estate Planning – Letter of wishes
Estate planning is a tricky and complex matter, replete with many pitfalls for the testator and his professional advisers. Tax planning is of course an important dimension of estate planning, and a close familiarity, on the part of the planner, with the Estate Duty Act, the Income Tax Act – and of course the provisions of the Wills Act – is essential.
Ringo’s R1.5m ‘tax fraud’
Afro soul musician Ringo Madlingozi could face up to 15 years in jail or a hefty fine if he is found guilty of tax fraud and theft, said a tax lawyer on Sunday. Madlingozi allegedly hasn’t been paying his employees’ Pay As You Earn (PAYE) to SARS, but has been deducting it from their salaries since 1999. He reportedly owes SARS R1.5m in PAYE and R421693 in VAT. A charge sheet, which The New Age has seen, shows that the star has been hit with more than 40 charges of theft by SARS. He appeared in the Johannesburg Magistrate’s Court on Wednesday and is expected to be back in court on 9 January 2014.
Sars’ bizarre decision in Shauwn Mpisane case
Tender queen’s company given a tax-clearance certificate by taxman despite state charges of tax fraud Shauwn Mpisane, Durban’s tender queen, has won a major battle to keep her business empire intact. She’s been awarded tax clearance by the SA Revenue Service (Sars). Mpisane is due back in court on Wednesday on tax fraud charges – charges brought against her by Sars. City Press can reveal that Mpisane’s Zikhulise Cleaning, Maintenance and Transport was awarded tax clearance on September 20, despite the court case, after repeated applications were refused by Sars officials in Durban. The clearance, which City Press has seen, is valid for a year. It states that Mpisane is in “good standing” with Sars and had not, as at that date, contravened the Income Tax Act or the Value Added Tax Act.
Employment Tax Bill is signed into law
The long-awaited Employment Tax Incentive Bill, to create jobs and provide relevant skills for young, unemployed South Africans has been signed into law. Employers will receive a tax incentive to employ young workers in special economic zones for a maximum of two years, under certain conditions. The law takes effect on January 1. Employers will be able to claim the incentive on a sliding scale for any employee between 18 and 29 who was hired on or after October 1 this year and is receiving a monthly salary that is above the relevant minimum wage and less than R6000 a month.
Deductibility of empowerment costs
The costs associated with black economic empowerment transactions are akin to obtaining a licence to operate; on this basis, these costs should form part of the income earning operations of the company.(1) The Income Tax Act(2) contains various provisions relating to deductibility of specific expenditure, some of which have been identified as possibilities for the deduction of expenditure relating to indirect black economic empowerment measures, such as: