Authors: Tsanga Mukumba and Louis Botha. Section 46 of the Income Tax Act, No 58 of 1962 (Act) provides tax relief where a company (Unbundling Co) wishes to unbundle its shareholding in a subsidiary (Unbundled Co), to the companys own shareholders. The Unbundling Cos shareholders indirect shareholding in the Unbundled Co is converted to a direct shareholding, in proportion to their shareholding in the Unbundling Co.
Author: Nyasha Musviba
Tax exemption is not a formality the Tax Court considers the PBO status of a non-profit company
Authors: Louise Kotze and Louis Botha. In terms of s30 of the Income Tax Act, No 58 of 1962 (Act), an entity can only become a public benefit organisation (PBO) if it meets the requirements in that section and is approved by the South African Revenue Service (SARS) as a PBO. In practice, to be approved as a PBO, an application must be submitted to SARSs Tax Exemption Unit (TEU).
SARS lifts tax return threshold from R350 000 to R500 000
The SA Revenue Service announced on Tuesday that it has lifted the tax return threshold from R350 000 to R500 000. This means that people who earn less than R500 000 per year, and meet certain other criteria, will not need need to file tax returns, commissioner Edward Kieswetter said at a media briefing in Pretoria. SARS explained that taxpayers who meet the following criteria will not need to file returns.
SARS improving service delivery – 2019 tax return filing season
Author: Done Howell, Director,Tax – BDO South Africa. SARS released its notice today announcing the up-coming 2019 tax return filing season for individual and trust taxpayers. Various changes have been announced which according to SARS will make it simpler and more convenient for taxpayers to file their tax returns.
Travel e-log book- SARS Logbook used to claim a deduction on personaltax
When can you claim for travel? If you receive a travel allowance from an employer or principal, you can claim a deduction on assessment of your annual income tax return for the use of a private motor vehicle for business purposes. What do I need to do? Firstly, record your motor vehicles odometer reading on 1 March, i.e. on the first day of a tax year.
Setting up your business in a Special Economic Zone (SEZs)
Authors: Ashika Nichha, Tax Consultant, BDO South Africa. Section 12R of the Income Tax Act 52 of 1962, as a consequence of an initiative by the Department of Trade and Industry, was introduced in 2014 to enhance trade through the Special Economic Zone Act 16 of 2014 and attract direct foreign investment.
VAT on Grants versus Consideration for Supplies
Author: Leah Nieman. Non-profit organisations (NPOs) or Public Benefit Organisations (PBOs) often receive funding, payments, or consideration from public authorities or municipalities (Government). This frequently gives rise to uncertainty regarding the treatment of payments received from Government which could result in the VAT vendor treating the receipt incorrectly. If Government engages with a vendor to acquire goods or services, an actual supply is made. However, uncertainty arises if payment received from Government does not relate to the procurement of goods and services.
Timing of tax on gift cards
Author: Ben Strauss. The timing of income tax in relation to retailer gift cards was recently an issue in the interesting case in the Cape Town Tax Court, case number IT 24510, reported as A Company v The Commissioner for the South African Revenue Service (IT 24510) [ZATC] 1 (17April 2019). Judge Binns-Ward neatly set the scene in the opening paragraph of the judgment:
Investing abroad? The foreign investment allowance is at your disposal
Author: Louis Botha. It is common nowadays for SouthAfrican persons to diversify their investment portfolio and to invest in foreign jurisdictions. When doing so, South African residents must ensure that they transfer funds abroad in a manner that complies with SouthAfricas exchange control rules. In our Tax & Exchange Control Alert of 6 October 2017, we explained how South African resident individuals can make use of their annual single discretionary allowance (SDA) of R1 million, to transfer and take funds abroad without the prior approval of the South African Reserve Bank (SARB) and without first having to obtain a tax clearance certificate.
Preference share funding and the potential application of paragraph 43A of the Eighth Schedule of the Income Tax Act
Authors: Ludwig Smith and Julia Kaplan. In a preference share funding transaction, the funder subscribes for preference shares in the share capital of a company. In contrast to a loan where interest on a debt facility is taxable in the hands of the lender, the dividends received by the holder of the preference shares are generally exempt from income tax. This tax benefit is, in turn, advantageous to the company as the funder can charge the company a lower funding rate than would otherwise have been charged had the funding been advanced in the form of a loan.