The South African Revenue Service (SARS) published notice No 140 in the Government Gazette (No 39650) on 3 February 2016, in terms of s35(2) of the Tax Administration Act, No 28 of 2011 (TAA). Among other things, the notice lists an additional reportable arrangement that was not included in previous notices. The following arrangement is now a reportable arrangement: An arrangement for the rendering of consultancy, construction, engineering, installation, logistical, managerial, supervisory, technical or training services to a:
Author: Nyasha Musviba
Wealthy earners’ retirement dilemma
Author: Ingé Lamprecht (Moneyweb). Tax deductible contributions to retirement funds to be capped at R350 000 from March 1. JOHANNESBURG – The tax harmonisation of retirement funds will also see the introduction of a cap of R350 000 per annum on deductible contributions to pension funds, provident funds and retirement annuities on March 1. This means that a number of high net worth individuals (HNWIs) who previously contributed in excess of R350 000 to retirement vehicles and who were able to deduct the full contribution from their taxable income, will now see the deductible portion of their contribution capped at R350 000. As a result, their take-home pay will reduce.
Extent of tax fraud unknown – SARS
Author: Amanda Visser (IOL). The South African Revenue Service (SARS) still does not know the full extent of tax evasion, despite its work probing foreign bank accounts held by South African residents. It has been a year since SARS confirmed some account holders had been using their offshore accounts to evade their tax obligations, both locally and internationally. SARS received the damming information through international exchange of information agreements with foreign financial institutions.
Swap taxation for land rentals and watch SA boom
Author: Stephen Meintjes (BDlive). Note how quickly the reaction to white racism connects to land! Writing in Business Day on January 20, author Thando Mgqolozana repeated his earlier controversial tweet: “We can’t deal with one Penny Sparrow at a time. We have to go for the whole thing at once. Decolonisation. Get land. Forcefully.” He is not alone in his stance, which shows that the deeply ingrained emotions around land could indeed upend the historic achievements of our constitutional democracy by unleashing a race war and turning our country into a rubble heap like Syria. The tragedy of this would be that we would have failed to understand our famous Constitution.
Is tax advice given by an accountant covered by legal professional privilege?
Author: PwC South Africa. Does SARS have the power, in investigating a taxpayer’s affairs or in the context of a disputed tax assessment, to demand that it be allowed to scrutinise documents generated by his professional advisers that record tax advice that was sought and given? This depends on whether those documents are privileged in the legal sense of the word, for neither SARS, nor a court, nor any other person, has the right (unless a court order determines otherwise) to be given sight of another person’s documents that are covered by legal professional privilege.
Remuneration structuring or salary sacrifice – SCA endorses taxpayer scheme
Ever since the Margo Commission recommended that there should be a uniform system for the determination of the value of benefits of employment, and the enactment of the Seventh Schedule to the Income Tax Act, there has been a tension between SARS and employers over the legitimacy of structured remuneration packages. There are few reported cases of instances in which employers have resisted a challenge by SARS. In the recent judgment of Cachalia JA, in the matter of Anglo Platinum Management Services (Pty) Ltd v C:SARS [2015] ZASCA 180 (30 November 2015), the employer’s remuneration practices were found to be legitimate.
Proposed extension of existing prescription periods
Author: Mareli Treurnicht (International Law Office). Introduction Section 99 of the Tax Administration Act (28/2011) prescribes the period of limitations for issuance of assessments. It states that, among other circumstances, the South African Revenue Service (SARS) may not make an assessment in terms of Chapter 8 of the Tax Administration Act: three years after the date of an original assessment by SARS; in the case of self-assessment for which a return is required, five years after the date of an original self-assessment by the taxpayer or, if no return is received, an assessment by SARS; or in the case of a self-assessment for which no return is required, five years after: the date of the last tax payment for the tax period; or the effective date, if no payment was made in respect of the tax period.
SARS targets tax dodgers
Author: Lyse Comins (IOL). SARS must shift focus to small businesses and clamp down on rampant tax dodgers in Durban, tax experts said in reaction to the taxman’s announcement of a blitz on cash stores countrywide on Wednesday. The South African Revenue Service (SARS) Commissioner, Tom Moyane, announced the launch of random, on-site inspections of cash businesses and called on taxpayers to voluntarily disclose any unpaid taxes or face penalties or criminal prosecution.
The fine tax line during retrenchments
Author: Amanda Visser (IOL). The different tax treatment of lump sum withdrawals following retrenchment seems at odds with efforts to give relief in difficult times. In March 2011 the Income Tax Act was changed, treating severance benefits similar to lump sum payments from pension or provident funds. However, it appears as if policy is not taking heed of the dire employment situation in the country.
REITs – a recent ruling about ‘qualifying distributions’
Author: Ben Strauss (Director at CDH). Real estate investment trusts (REITs) are subject to a special tax regime in South Africa. Put simply, a REIT may deduct for income tax purposes distributions made to its shareholders. As a REIT by its nature distributes most of its net income to its investors, the REIT itself usually pays little or no income tax; instead, the shareholder pays income tax on the distributions received from the REIT.