by Lorys Charalambous, Tax-News.com, Cyprus 04 October 2012 The South African Revenue Service (SARS) has announced that the Tax Administration Act (TAA), which is intended to simplify and provide greater coherence in South African tax administration law, and was promulgated on July 4, 2012, largely came into effect on October 1, 2012.
Author: Nyasha Musviba
SARS Rolls Out Mobile Phone Tax Return Filing
In a first for revenue authorities in Africa, the South African Revenue Service (SARS) has announced that taxpayers can now complete and file their tax returns via their mobile phones using its eFiling application. Using the application, users can submit their individual income tax return, view their notice of assessment and see their income tax statement of account, as well as view their tax calculator. For taxpayers to be able to submit their tax return using the SARS eFiling app, taxpayers must first register for eFiling from a computer or laptop at the SARS website. Once registered, users can then eFile from their mobile device or tablet. Earlier in September, SARS also announced that users of e-Filing who required assistance while completing their tax returns online would be able to use the Help-You-eFile service, a new facility which allows them to be in direct contact with a SARS Call Centre Read More …
South Africa Closes Loopholes In New Dividend Tax
by Lorys Charalambous, Tax-News.com, Cyprus South Africa’s Minister of Finance, Pravin Gordhan, has announced the closing of tax avoidance schemes which have arisen with regard to the operation of the new dividends tax.
Transfer pricing in South Africa
South Africa’s transfer pricing and thin capitalisation regime, as contained in s31 of the Income Tax Act, No 58 of 1961 (Act) has undergone some extensive principle changes over the past two years. In respect of transfer pricing, the focus had always been on the supply of goods and services between certain connected persons, usually a resident and a non-resident. Where the price for such goods or services was not at arm’s length, the South African Revenue Service (SARS) could adjust the consideration paid so that the parties would be taxed as if they did deal at arm’s length. A secondary adjustment also entailed a deemed distribution of a dividend in respect of which the now-repealed secondary tax on companies would have had to be accounted for.
Cash versus in specie dividends
With the introduction of the new dividends tax on 1 April 2012, the distinction between cash dividends and dividends in specie requires consideration. Where a company declares and pays a dividend and that dividend consists of a distribution of an asset in specie, the amount of the dividend is dee
South African tax case considers application of capital gains treaty exemption to deemed disposition
A recent decision of the Supreme Court of Appeal of South Africa considered the application of the capital gains article in a double tax convention based on the OECD model to a deemed disposition of property occurring as a result of an “exit tax” imposed on an emigrating corporation. As the Court’s decision concerns capital gains exemption language that is similar to that used in most double tax treaties based on the OECD Model, it provides a helpful glimpse into how such provisions may be interpreted in other jurisdictions, including Canada.
Sent packing – Sent v Commissioner of Taxation [2012] FCA 382)
Mr Eduard Sent (Sent) was sent packing by the Federal Court of Australia (FCA) on 16 April 2012, in an appeal against a decision by the Administrative Appeals Tribunal (Tribunal) on whether some or all of a payment of $11,600,000 to an executive share trust (Trust) was assessable as income in the hands of Sent (Sent v Commissioner of Taxation [2012] FCA 382). While the taxation of share incentive schemes in Australia differs from the position in South Africa, the case does highlight certain principles that are equally applicable in South Africa.
Disastrous tax consequences for share incentive schemes
The current wording of the tax legislation has the result that both employers and participants in share incentive schemes will suffer substantial negative tax consequences when participating in these types of schemes that are actually designed to incentivise employees and to align their interest with the employer companies.
Carbon tax – writing on the wall?
A renewed interest in the concept of carbon pricing was ignited by the publication of the “Discussion Paper for Public Comment Reducing Greenhouse Gas Emissions: The Carbon Tax Option” (the “Discussion Paper”) published by the National Treasury in December 2010.
The payment of dividends out of negative reserves
The issue has often arisen as to whether the payment of a dividend that results in the creation of negative reserves can still be said to be a dividend or whether it is effectively funded from the share capital of a company. For instance, a company can have 100 as equity that is reflected as 100 in assets. However, the company then declares a dividend that results in it effectively having negative reserves of 100 in circumstances where the assets of 100 are used to fund the dividend.