Authors: Wesley Grimm, Associate and Nirvasha Singh, Partner – Webber Wentzel. National Treasury’s proposal in the draft 2018 Taxation Laws Amendment Bill (2018 draft TLAB) to remove the taxable benefit concerning low or interest free loans granted to low-income employees for low-cost housing (the Proposed Amendment) was discussed on Day 2 of the recent National Treasury Workshop on the 2018 draft TLAB (Tax Workshop). Currently, if an employer provides a low or interest free loan to an employee for the acquisition of a low-cost house (ie a house valued at less than ZAR 450,000) instead of solely providing low-cost housing to a low-income earning employee (ie an employee earning less than ZAR 250,000 remuneration per annum), the low or interest free loan will be regarded as a taxable benefit in the hands of that low-income earning employee. National Treasury confirmed the Proposed Amendment at the Tax Workshop and stated that Read More …
Author: Nyasha Musviba
The liability of directors in cyberspace
Author: Berné Burger, Associate and Daniel Vale, Candidate Attorney at Webber Wentzel. Cyber risks are evolving on a near daily basis posing countless threats to companies, and accordingly, directors need to stay abreast of legal developments to protect themselves and their companies in their fiduciary duties. The outline of such duties, in broad terms, is contained in legislation, common law and in the King IV Report on Corporate Governance for South Africa. Furthermore, duties which may not have been relevant to a director ten years ago may now have become relevant due to the development of technology and the associated risks. The Law The South African law prescribes duties that directors of companies must abide when acting and/or carrying out the functions of their office. The bulk of these duties have developed over the course of South Africa’s corporate and legal history and are enshrined in the common law. Despite Read More …
Tax court confirms contributions to fund share incentive scheme are deductible
Author: Joon Chong, Partner, Webber Wentzel There have been a number of binding private rulings providing for the deductibility of contributions made by employer companies to share incentive trusts for the purpose of acquiring shares in the former. Although a binding private ruling is only binding on SARS and the applicant, published rulings can be relied on to provide an indication of the interpretation of law. In our interactions with SARS officials, we have found that this interpretation has generally been accepted, ie that contributions made to trusts for the purpose of acquiring shares in the employer company are deductible over the vesting period of the scheme. In S G Taxpayer v Commissioner for the South African Revenue Service, the Tax Court was faced with the issue of whether there was a sufficiently close connection between the contribution made by the employer/taxpayer to the trust in respect of the share Read More …
SARS prescription only starts once tax return has been submitted
Author: Eric Madumo, a Candidate Attorney and Joon Chong, a Partner at Webber Wentzel. In the recent case of CSARS v Char Trade, the Supreme Court of Appeal (SCA) that prescription begins to run against CSARS when a return for secondary tax on companies (STC) is submitted to SARS by a taxpayer. In the Char Trade case, a return for STC had not been submitted by the taxpayer. Due to this, prescription had not begun to run against CSARS. The result of this is that CSARS was able to make an assessment in 2012 of the taxpayer’s liability amounting to ZAR 1,812,609 for the 2007 cycle.
Potential amendments affecting foreign trusts holding shares in foreign companies
Author: Joon Chong, Tax Partner at Webber Wentzel. National Treasury has held a few workshops this year to engage with stakeholders on proposed amendments before the draft amendment bills are circulated for comment. At one of these workshops attended by the Webber Wentzel Tax Team, National Treasury indicated that there could be amendments in the draft bills which would affect resident beneficiaries and donors to foreign trusts, where these foreign trusts hold shares in foreign companies.
Tax non-compliance status may be inaccurate
Authors: Joon Chong, a Tax Partner, Nina Keyser, a Tax Partner, Nirvasha Singh, a Tax Partner & Carryn Alexander, an Associate at Webber Wentzel. SARS replaced the Tax Clearance Certificate (TCC) system with the enhanced Tax Compliance Status (TCS) system on eFiling in April 2016. The new TCS system is aimed at improving tax compliance as taxpayers can better manage their TCS and remedy any non-compliance through the “My Compliance Profile” (MCP) function on eFiling.
Urgent reinstatement of tax compliance status granted
Author: Joon Chong, Tax Partner at Webber Wentzel. For certain taxpayers, a tax clearance certificate is of utmost importance in ensuring that it is able to receive payment and to tender for new services. In the recent Gauteng High Court decision (Red Ant Security Relocation and Eviction Services (Pty) Ltd v CSARS (2999/18)), the taxpayer applied for urgent interdictory relief for reinstatement of its tax compliance status in order to be able to generate a tax clearance certificate pending determination of review proceedings which it had instituted against CSARS.
Efficient or inept? South Africas corporate income tax rate and restructuring rules
Author: Candice Gibson. The Davis Tax Committee (DTC) released a media statement on 12 April 2018 in which it announced the publication of four additional final reports and conclusion of its work based on its Terms of Reference. For purposes of this alert, certain aspects from the report on the efficiency of South Africas corporate income tax (CIT) system (CIT Report) will be expanded upon, with particular reference to the reviews undertaken in respect of: the efficiency of the CIT rate; and the efficiency of the corporate restructuring rules (CRRs).
Accrual of amount on cession of right to dividends
Author: Ben Strauss (Tax Director at Cliffe Dekker Hofmeyr). Generally speaking, dividends paid by South African companies are exempt from income tax in the hands of shareholders. The dividends may, however, be subject to dividends tax, subject to certain exemptions.
The capital v revenue question in the context of government grants: The SCA decides in favour of the motor manufacturing industry
Author: Louis Botha and Louise Kotze. In the recent case of Volkswagen South Africa (Pty) Ltd v Commissioner for South African Revenue Service 80 SATC 179, the age-old question of whether a receipt is capital or revenue in nature was addressed by the Supreme Court of Appeal (SCA), in the context of government grants paid to motor vehicle manufacturers.