Author: Louise Kotze. Section 7C of the Income Tax Act 58 of 1962 (ITA) contains various anti-avoidance provisions in respect of loans or credit advanced to trusts. These provisions were introduced to curb the abuse of trusts by taxpayers who transfer their wealth to trusts, tax-free, by means of low interest or interest-free loans or credit. At present, the anti-avoidance provisions apply to schemes in terms of which natural persons or companies, at the instance of a natural person:
Author: Nyasha Musviba
Want to withdraw retirement funds on emigration? National Treasury and SARS say try again in 3 years’ time
Authors: Joon Chong, Partner &Wesley Grimm, Associate at Webber Wentzel. The National Treasury published the Draft Taxation Laws Amendment Bill, 2020 (Draft Tax Bill) for public comment. One of the more contentious proposals in the Draft Tax Bill relates to the ability of people emigrating from South Africa to access amounts in their pension preservation fund, provident preservation fund and retirement annuity fund (retirement funds) when they leave. In accordance with the policy decision to phase out “financial emigration” for exchange control purposes, which was announced in the 2020 Budget Speech, National Treasury and the South African Revenue Service (SARS) have proposed to amend the definitions of the terms “pension preservation fund”, “provident preservation fund” and “retirement annuity fund”.
Life in a remote world – tax enforcement in transfer pricing
Authors: Joon Chong, Partner & Karen Miller, Consultant at Webber Wentzel. The unusual business conditions of the Covid-19 outbreak will require a more flexible approach from tax authorities when analysing transfer pricing in the 2020 year of assessment The Covid-19 outbreak in late 2019 / early 2020 has impacted the way we live daily and has had a devastating impact on the global economy. While countries struggle to revive ailing economies with interest rate cuts and capital injections, tax authorities need to be more flexible when enforcing transfer pricing for affected transactions in the 2020 year of assessment.
Tax Appeal Tribunal ruling: Commissioner Generals discretion must be exercised judiciously
Authors: Celia Becker and Phillip Karugaba. The recent ruling of the Tax Appeals Tribunal (TAT) in the case of Century Bottling Company v Uganda Revenue Authority (URA), has brought the discretion of the Commissioner General of the URA sharply in focus. It is absolutely necessary and indeed important that in the exercise of their functions, public authorities exercise discretion. It is equally important that such discretion is properly exercised taking into account only the relevant considerations and for the proper reasons. The citizen has recourse to court to check the excesses of executive discretion. A public official is therefore not like the cultural leader kamala byona (he who finishes all matters). The formers discretion is very much controlled by law and by the courts.
Deferring tax on the transfer of listed shares to a collective investment scheme portfolio
Author: Ben Strauss. Ms X inherited a large number of valuable shares in a blue chip listed company. She has no other material assets. She is concerned that, from a wealth planning perspective, all her eggs are in one basket. She wishes to diversify her portfolio. If Ms X sold her shares with a view to buying a mixture of other shares or investments, she would ordinarily incur capital gains tax (CGT) on the capital gain derived in respect of the sale, assuming that she holds her shares as a long-term investment, that is, not for speculative purposes.
Inextricably linked contracts? The Constitutional Court has the final say regarding section 24C of the Income Tax Act
Author: Aubrey Mazibuko and Louis Botha. On 21 July 2020, the Constitutional Court (CC) handed down judgment in Big G Restaurants (Pty) Ltd v Commissioner for the South African Revenue Service [2020] ZACC 16, which concerned section 24C of the Income Tax Act 58 of 1962 (Act). At issue before the CC was whether future expenditure incurred in terms of a franchise agreement was deductible against income derived by the taxpayer, Big G Restaurants (Pty) Ltd (Big G) from operating its franchise business.
About tax debts and civil judgments the High Court considers sections 172 and 174 of the TAA
Author: Aubrey Mazibuko and Louis Botha. Under the Tax Administration Act 28 of 2011 (TAA), the South African Revenue Service (SARS) has various powers to collect and enforce the payment of tax debts owing to it. One of the ways in which it can do so is by applying for a civil judgment for the recovery of tax, which is provided for in section 172 of the TAA. On 15 May 2020, the Western Cape Division, Cape Town, (WCHC) delivered judgment in Barnard Labuschagne Inc v South African Revenue Service and Another 2020 ZAWCHC (15 May 2020), which concerned the application of sections 172 and 174 of the TAA. More specifically, the taxpayer, Barnard Labuschagne Inc, sought to rescind a statement filed by SARS under section 172 of the TAA. The judgment deals with a number of related issues, but we focus mainly on the WCHCs interpretation of the TAA Read More …
Deductions available for commission earners
Author: Joon Chong, a Tax Partner a Webber Wentzel. Commission earners could make an argument to SARS that they should be allowed to deduct their normal range of business expenses, even if commission is no longer more than 50% of their total remuneration under the exceptional circumstances of the Covid-19 pandemic. Who is a commission earner? Commission earners who earn more than 50% of their total remuneration as commission income are not limited in the type of business expenses they can claim, as long as these are incurred in the production of their income and are not capital or personal in nature.
Tax Filing Season 2020 for Individuals
In support of the Presidents call to the Covid-19 pandemic, that Social Distancing be observed at all times and that we should at most stay indoors and limit movement, SARS is responding by rapidly enhancing its efforts to further simplify the tax return filing requirements for individual taxpayers and removing the need to travel to our Branches in 2020. Through the increased use of third-party data, SARS will be completing your tax return for you more accurately than ever. Where we have the required information we will provide you with a proposed assessment without the need to file a tax return. This enables you to view, accept or edit your proposed assessment from the comfort of your home or place of work using eFiling or SARS MobiApp.
High Court sets aside notice by SARS to debit a taxpayers bank account
Authors: Heinrich Louw and Ndzalama Dumisa. In the recent case of SIP Project Managers (Pty) Ltd v The Commissioner for the South African Revenue Service (Case Number 11521/2020) (as yet unreported), the High Court set aside a notice by the South African Revenue Service (SARS) to a bank to debit a taxpayers bank account in terms of section 179 of the Tax Administration Act 28 of 2011 (TAA), and ordered SARS to repay the amount to the taxpayer.