Employer Annual Reconciliation Employers are required to submit their Pay-As-You-Earn (PAYE) Employer Annual Reconciliations between 18 April and 31 May 2016 to SARS, confirming or correcting payroll tax amounts which were declared during the 2015/2016 tax period. This year, employers are urged to accurately verify and update each employee’s personal and financial details before submitting their Annual Reconciliation Declaration (EMP501) and Employees Income Tax Certificates [IRP5/IT3(a)s] to SARS.
Author: Nyasha Musviba
Section 104 of the Tax Administration Act and the meaning of ‘exceptional circumstances’ – a cautionary tale
Author: Heinrich Louw (Senior Associate). In terms of s104 of the Tax Administration Act, No 28 of 2011 (Act), a taxpayer who is aggrieved by an assessment or decision of the South African Revenue Service (SARS), may object to the assessment or decision. The Act states that the objection must be lodged within 30 business days from the date of the assessment. A senior SARS official may extend this period by no more than 21 business days, unless the official “…is satisfied that exceptional circumstances exist which gave rise to the delay in lodging the objection”.
Amendments to tax free investment regulations
Author: Mareli Treurnicht (Senior Associate at Cliffe Dekker Hofmeyr). With effect from 1 March 2015, the South African Government (Government) introduced tax free investments (TFI). In this regard, the Income Tax Act, No 58 of 1962 (Act) was amended to introduce a new s12T, in addition to the notice and regulations published in the Government Gazette on 25 February 2015. Section 12T exempts certain taxpayers from paying normal tax on any amount received by, or accrued in respect of a TFI. Section 12T further states that, in determining the aggregate capital gain or capital loss of a person in respect of a year of assessment, any capital gain or capital loss in respect of the disposal of a TFI must be disregarded. Contributions to a TFI must be limited to cash, R30,000.00 in aggregate during any year of assessment and R500,000.00 in aggregate.
The Kluh-ed up taxpayer wins – a decision on section 26 of the Income Tax Act
In its efforts to increase its income from tax revenue, the South African Revenue Service (SARS) sometimes applies legislative provisions in tax legislation in a manner that can best be described as tenuous. An example of this is apparent from the recent decision of the Supreme Court of Appeal (SCA) in CSARS v Kluh Investments (Pty) Ltd (115/2015) [2016] ZASCA 5 (1 March 2016).
The complex world of hybrid debt instruments: a ruling applicable to non-resident issuers
On 1 March 2016, the South African Revenue Service (SARS) issued Binding Private Ruling 225 (Ruling), dealing with the dividends tax consequences for a non-resident issuer of hybrid debt instruments. By way of background, according to the Explanatory Memorandum on the Revenue Laws Amendment Bill, 2004 (Explanatory Memorandum) s8F of the Income Tax Act, No 58 of 1962 (Act) was introduced to draw a distinction between debt and equity for tax purposes. The section was further introduced to limit the deductibility of interest by persons other than natural persons in respect of hybrid debt instruments which are debt in legal form, but have sufficient equity features to place them clearly at the equity end of the debt/equity spectrum.
Special voluntary disclosure programme: is the carrot big enough or will taxpayers risk facing the stick?
A special voluntary disclosure programme (Special VDP) was announced on 24 February 2016 by the Minister of Finance in the 2016 Budget Speech, which is intended to provide further relief to qualifying persons in addition to the relief provided by the standard voluntary disclosure programme under the Tax Administration Act, No 28 of 2011 (TAA). On 12 April 2016, National Treasury (Treasury) released a media statement in which the public is requested to make formal submissions on draft legislation that sets out the legal framework of the Special VDP.
When are funds used for a ‘qualifying purpose’? a ruling regarding s8EA in the context of a BEE transaction
On 13 April 2016, the South African Revenue Service (SARS) issued Binding Private Ruling 228 (Ruling), which dealt with s8EA of the Income Tax Act, No 58 of 1962 (Act). Section 8EA is an anti-avoidance provision, which treats the yield on third-party backed shares as income instead of dividends in the hands of the holder.
Decision on the VAT treatment of the supply of student accommodation
An interesting judgment was recently delivered in the High Court (Gauteng Division, Pretoria) in the matter of Respublica (Pty) Ltd v Commissioner for the South African Revenue Service (as yet unreported). The matter concerned the value-added tax (VAT) treatment of the lease of a building to a university for purposes of student accommodation. Facts Respublica (Pty) Ltd (Vendor) owned an immovable property which it leased to the Tshwane University of Technology (University).
Taxing measures to curb trust fund tricks
Author: Maarten Mittner (BDlive). The tax efficiency of trusts may have taken a knock after the latest budget proposals, but trusts are likely still to remain viable wealth-preserving instruments. Some analysts have raised alarm at the possible negative consequences of the new proposals, but others remain optimistic. The days of using trusts to avoid tax or reduce a tax burden, however, may be over. Finance Minister Pravin Gordhan had harsh words for trusts in last month’s budget. In the review, he said the government’s aim was to keep the tax system progressive. Some taxpayers used trusts to avoid paying estate duty and donations tax, the review said.
Pay Now, Argue Later: Are There Any Exceptions To This Rule?
Author: Alan Lewis (Practitioner in Private Practice). We look at exceptions to SARS’ pay now, argue later rule and how they are being applied At first glance, it appears that the “pay now, argue later-rule” approach, which applies when SARS’ demands payment of all outstanding or assessed taxes, is set in stone. In terms of Section 164 (1) of Tax Administration Act (TAA), a taxpayer’s obligation to pay taxes, and SARS’ right to recover taxes, is not suspended by an objection, appeal, or pending the decision of the Tax Court. This means that, in most cases, a taxpayer’s pleas for an extension of their obligation to pay these taxes falls on deaf ears.