Changesin legislation from 1 March 2016 Deaths prior to 1 March 2016: Post death income is taxable in the hands of the beneficiary. There is a deemed capital gain tax (CGT) event on date of death of the deceased. During the liquidation process, accounting for CGT on the disposal of assets is by way of aSpecial Trust registered at SARS. A Special Trust still applies for deaths prior to 1 March 2016 which are still currently being administered.
Author: Nyasha Musviba
SARS – Customs requirements for South African travellers
The South African Revenue Service (SARS) would like to clarify a recent confusion in the media about Customs requirements for travellers returning to South Africa with personal valuables. In terms of Customs legislation, South African residents travelling abroad are not required to declare their personal effects when leaving the country, nor upon return. Personal effects is defined in legislation as including items such as personal laptops, iPads, cellphones, golf clubs, cameras and/or other high value items forming part of the travellers possessions when leaving the country.
STATEMENT BY ACTING COMMISSIONER, MARK KINGON – TAX SEASON 2018
MEDIA BRIEFING ON 04 JUNE 2018. We have been hard at work taking stock of how we can be more efficient and improve service to taxpayers. This requires that we make better use of our resources and technology, while factoring in feedback from taxpayers on what their pain-points are. Our main objective is to make tax compliance a simple and routine experience for the taxpayer. This is a work in progress, and we will be refining our initiatives with every tax season, over the next two years, taking on board the lessons learned.
SARS to host BRICS Tax Experts and Heads of Tax Administrations
The South African Revenue Service (SARS) will host the tax experts and heads of tax administrations from BRICS member countries, namely Brazil, Russia, India China and South Africa, in Sandton next week. This will take place at the Hilton Hotel in Sandton from 18 to 21 June 2018. The BRICS Tax meetings follow on BRICS Customs meetings held in April this year, which contributed to creating an enabling framework for BRICS Customs cooperation.
Is it time to lower South Africas income tax rates?
Author: David Warneke, Head of Income Tax Technical, BDO South Africa. A fundamental question posed by commentators around the 2018 National Budget was whether an increase in personal or corporate income tax rates, or both, would be announced. The consensus, which proved to be correct, was that such increases were unlikely. The main reasons given were that personal and corporate income tax rates are already high by international standards. Personal income tax rates, mainly due to the introduction of the 45% maximum marginal rate in the 2017/2018 income tax year of assessment for taxable income above R1.5 million, and also since relatively high marginal rates are reached at low taxable income levels, by global standards. Corporate income tax rates, as the rates in most of our main trading partners are lower than ours and globally rates are decreasing.
Reducing the cost of transfer pricing compliance for MNEs
Author: Okkie Kellerman (ENS Africa). Many countries have become more focused on combating tax avoidance. As such, transfer pricing compliance has become much more burdensome due to substantial documentation requirements and multiple filing deadlines. Multinationals (MNEs) have to take action to control their transfer pricing risks, but the cost of doing so could substantially increase.
Controlled foreign companies: look before you leap
Authors: Carmen Gers and Simone Krupanandham (ENS Africa). Section 9D of the Income Tax Act, 1962 (the Act) is aimed at South African residents who directly or indirectly hold more than 50% of the total participation (broadly speaking shares) or voting rights in a foreign company. A foreign company in this context is classified as a controlled foreign company (CFC). In terms of section 9D, the net income of the CFC is included in the relevant residents income in proportion to the residents effective participation rights in that CFC, thus resulting in the resident being subject to tax on such notional income imputed to it.
Revised debt reduction rules
The debt reduction provisions contained in section 19 of the Income Tax Act, 1962 (the Act) and paragraph 12A of the Eighth Schedule to the Act have been amended with effect from 1 January 2018 and are applicable to years of assessment commencing on or after that date. As a result of the changes, the ambit of these provisions has widened significantly, as discussed below, and the additional circumstances to the rules find application are worth noting.
Time is running out for transfer pricing documentation compliance
In terms of the South African Income Tax Act, 1962 (the Act),transfer pricing adjustments are made in circumstances where multinational entities transact at prices that do not reflect prices expected to be charged if parties to the transaction were independent persons dealing at arms length. Base Erosion and Profit Shifting (BEPS) refers to tax planning strategies that shift profits from high tax jurisdictions like South Africa to locations where little or no corporate tax is being paid.
Overlap in treatment of dividend
Author: Joon Chong, Partner in the Tax Practice at Webber Wentzel. Section 1 of the Income Tax Act (ITA) defines a “dividend” to be any amount transferred by a resident company for the benefit of any person in respect of any share in that company whether by way of a distribution or consideration for a share repurchase but does not exclude a reduction of contributed tax capital of the company. The section 31 transfer pricing rules in the ITA require transactions between resident and non-resident connected parties (affected transactions) to be carried out on an arm’s length basis. To the extent that this is not done, section 31(2) requires a taxpayer to calculate its taxable income to account for any adjustments necessary, as if any affected transaction has been entered into on an arm’s length basis. This is the primary adjustment to taxable income.