The dividends tax, a new form of tax on dividends paid by companies, comes into effect in South Africa soon. Here are some practical questions and answers about the new tax.
Author: Nyasha Musviba
The new South African transfer pricing rules – latest developments
More than a year has passed since the announcement was made in the middle of 2010, that the South African transfer pricing rules would undergo a substantial redrafting process in order to align them with international best practice. In the meantime, the initially envisaged effective date of the 1 October 2011 has come and gone and the third updated version of the new section 31 of the Income Tax Act 58 of 1962 (“the Act”) has just been introduced by the Minister of Finance to Parliament in terms of the Taxation Laws Amendment Bill, 2011 (No. 19 of 2011) (“the 2011 Amendment Bill”), which if promulgated in its current form, will come into operation on 1 April 2012, applying in respect of all financial years commencing on or after that date.
Good intentions gone bad
Many taxpayers have over the years fallen into the trap of waiving a right in favor of a third party without considering the full extent of the tax consequences of their actions. Not only is it necessary for taxpayers to be aware of the potential donations tax implications, but it is also necessary to consider whether any capital gains tax (“CGT”) implications arise as a consequence of their actions.
Realization companies and nature of proceeds received for tax purposes
The Supreme Court of Appeal delivered judgment on 10 May 2011 in the case of Founders Hill (Pty) Ltd v the Commissioner for the South African Revenue Service (Case No. 509/10) (as yet unreported) which dealt with the capital versus revenue nature of proceeds received by a realization company that acquires land in order to dispose of it.
Dividend cessions
The antecedent divestment of a right to a dividend has been a feature of our tax law for longer than I have been in practice. See Hiddingh v CIR 1941 AD 111. The Government are obviously
Capital gains tax relief on certain foreign currency gains
The Draft Taxation Laws Amendment Bill, 2011 (Bill), proposes to delete Part XIII from the Eighth Schedule to the Income Tax Act (Act). Part XIII deals with the taxation of realised gains and losses in respect of foreign currency assets and liabilities in monetary form, such as foreign currency or debts in foreign currency. It only applies to persons to whom section 24I of the Act does not apply.
The importance of residence in determining liability for capital gains
The case of TLD Limited v The Commissioner for the South African Revenue Service heard before the Tax Court raises the interesting issue of the interplay between the imposition of capital gains tax in the context of the Eighth Schedule to the Income Tax Act and the application of a Double Tax Agreement.
Carbon taxes
We have been following the space on the proposed Carbon Tax carefully. There is currently a lot of controversy in Australia concerning a Carbon Tax. Julia Gillard the Prime Minister, said when speaking on a wind farm in New South Wales “the government is committed to a renewable energy target, that 20% of the energy that we use comes from renewable energy sources by 2020, but that renewable energy target was always designed to work with the price on carbon”. Her belief is that to build towards a clean energy future it is imperative for the Australians to price and tax carbon emissions. It appears that that price will
"Adequate consideration" under Section 58(1) of the Income Tax Act
Generally, donations tax is triggered where a person makes a gratuitous disposal of property. Where BEE transactions are concerned, property (eg. shares) is often disposed of at a value below market value. In such cases there are usually good arguments to be made that the disposal is not gratuitous because some indirect commercial benefit will accrue to the person disposing of the property – it makes “
The perils of share incentive schemes for employers
A lot of focus has been placed on the tax implications that flow from an employee’s participation in share incentive schemes. However, employers need to be aware of the potential tax consequences that may arise where such schemes are not administered in accordance with the provisions of Income Tax Act, Act 58 of 1962 (“the Act”).