Author: Kyle Mandy (PwC). In order to prevent the five year rule from being abused, there are certain exceptions. Section 99 of the Tax Administration Act regulates the prescription of tax periods. The most important circumstances in which SARS is barred from raising further assessments in relation to a tax period are those relating to the passing of time. As a general rule, SARS is time-barred from raising an assessment in relation to a tax period as follows:
Author: Nyasha Musviba
Can SARS limit legal professional privilege?
Authors: Natalie Napier and Phillip Lourens (Hogan Lovells). New rules have come into effect for how legal professional privilege is regulated, we look at what effects they may have in practise. Amendments have been made to the Tax Administration Act (the TAA) by the insertion of a new section 42A with effect from 8 January 2016. Section 42A prescribes the procedures and requirements that must be followed by the taxpayer in order to claim legal professional privilege in respect of relevant material required by SARS, during an inquiry or during the conduct of a search and seizure by SARS.
Tax: No need to panic
Author: Claire Bisseker (Financial Mail) Judge Dennis Davis, who heads the Davis Tax Committee, believes that despite slow economic growth, SA will meet its revenue targets next year without any significant tax increases. Davis’s comments, made in an exclusive interview with the Financial Mail, should bolster the credibility of national treasury’s fiscal consolidation plans at a time when Moody’s is considering downgrading SA’s sovereign credit rating. His optimism stems mainly from his estimate that the new tax amnesty announced in the 2016 budget will raise R6bn-R10bn or even more within the next 12 months.
Impact of tax on investment returns
Saving more and investing through a tax-free savings account is a very tax efficient way of ensuring maximum after-tax returns for your hard earned money, according to Francis Marais, research and investment analyst at Glacier by Sanlam. “Fortunately, in South Africa, we have a few tools to help with achieving maximum tax efficiency. Some are explicit tax savings vehicles, while some are less explicit, but worth keeping in mind,” said Marais.
Navigating the Reit environment
Always be conscious of risk in your approach to the Real Estate Investment Trust (Reit) sector, according to Andrew Parsons, MD of Resolution Capital Australia. At a recent conference hosted by the SA Reit Association Parsons said key lessons to be learnt from the Australian Reit experience is that one ignores history at your own peril. “History may not repeat itself, but it does rhyme,” he cautioned. “Always be conscious of risk. We grew our platform in a measured way, building on our Australian operations and experience to what is a mature and stable real estate market. At the same time we accessing opportunities in new markets through relatively modest investments in smaller platforms, which can achieve scale and diversity in a measured way without undue risk,” explained Parsons.
Value Added Tax – VAT on Residential property
Historically, it was smaller investors who bought and let residential property. However, more recently, even listed Real Estate Investment Trusts (REITs) are building, buying and letting large portfolios of residential property. No doubt the investors are looking to satisfy the demand for residential property, and to realise better yields than may be achieved in commercial property. The value-added tax (VAT) rules on the building, buying, letting and selling of residential properties are not simple. It is worthwhile recapping some of the general principles that apply.
Tax Administration – Rules of prescription
A fundamental reason for the existence of the rules of prescription in our tax law is to provide a taxpayer with certainty as regards its tax position. It is therefore important that such rules are clear and not subject to unfettered discretions. In disputes with the Commissioner for South African Revenue Service (the Commissioner or SARS), prescription is a powerful defence available to compliant taxpayers, allowing them to bring finality to their tax assessments. For some time, amendments to the prescription provisions have been on the cards. SARS has motivated for such amendments due to the fact that it has been involved in protracted information entitlement disputes which it alleges are being used as a delaying tactic to force audits closer to the end of a prescription period. SARS also alleges that it has difficulty finalising certain audits within prescription periods due to their sheer complexity.
Employee Fringe Benefits on Motor vehicle salary sacrifice
In the recently reported case of Anglo Platinum Management Services v SARS [2015] ZASCA 180 (the Anglo case), the judgment of which was delivered on 30 November 2015, the Supreme Court of Appeal (SCA) ruled in favour of the taxpayer in respect of a motor vehicle salary sacrifice scheme. The judgment stresses the importance of employers and employees properly agreeing to, understanding and correctly implementing remuneration structures that contain a salary sacrifice component. Before dealing with the SCA judgment, it is useful to touch on the basic principles of a ‘salary sacrifice’ arrangement, or more eloquently put, a ‘salary substitution’ arrangement. I use the word ‘substitution’, as that is what it boils down to: it is the substitution of a cash component of an employee’s overall cost to company remuneration package, for a non-cash benefit, that generally results in a lower amount subject to the deduction of employees’ tax.
Carbon Tax Draft Bill published for comment
On Monday, 2 November 2015, the South African National Treasury published a Draft Carbon Tax Bill (the “Bill”) for public comment by 15 December 2015. At first glance, the Bill does not stray too far from the carbon tax design that Treasury has been proposing since 2010 in various discussion papers, national budget speeches and their associated explanatory memoranda and responses to stakeholder commentary on the design. Whilst the Bill does not change the essentials, it does progress certain of the detail while providing only a tantalising glimpse of some of the more interesting aspects of the design. While the proposed tax is vaunted as thecarbon tax, this is not the only or the first carbon tax imposed in South Africa. Emissions on new vehicles are subject to emissions taxation and approximately five years ago, the fossil fuel electricity levy was introduced. These are both taxes on greenhouse gas emissions, Read More …
Vendor beware: capital gains tax on instalment sales
Taxpayers should take great care when selling assets where the price is paid in instalments as the transaction may trigger some tricky capital gains tax (CGT) consequences. Consider the case of New Adventure Shelf 122 (Pty) Ltd vs The Commissioner of the South African Revenue Service (7007/2015) [2016] ZAWCHC 9 (17 February 2016). In this case the taxpayer acquired immovable property in 1999. In the taxpayer’s 2007 tax year it sold and transferred the property to a third party for a profit. The buyer had to pay the price of the property in instalments over more than one tax year.