Author: Annalie Pinch and Chris de Bruyn Earlier this year, the South African Revenue Service (“SARS”) released issue 2 of Interpretation Note 6 (“draft Interpretation Note”) on the “place of effective management” (“POEM”). Comments were due by 31 July 2015. POEM is often of critical importance in determining the tax residency of an entity. The interpretation previously put forward by SARS in terms of Interpretation Note 6 issued during 2002 (“IN6”) in this regard, did not accord entirely with international precedent and the approach followed by SARS was that the POEM is:
Author: Nyasha Musviba
Estate planning: Tax trouble for trusts
Authors: Ruan Jooste and Maarten Mittner (Financial Mail) The Davis Committee’s recommendations on the taxation of trusts and estate duties are punitive in their present form, say industry players, and could lead to new forms of legal avoidance. If the recommendations are implemented, all SA resident trusts and their beneficiaries or donors will be taxed as separate taxpayers. Trusts will be taxed at a flat income tax rate of 41% and an effective capital gains tax (CGT) rate of 27,31%.
Tax free accounts provide training wheels for beginners
Author: Robert Laing (BDlive) Next year will mark the 20th anniversary of the JSE closing its Diagonal Street trading floor and switching to trading via computer screens and networks. Unlike Chicago, Frankfurt and many other exchanges, which kept their trading floors going as a backup while they eased into the new technology, the JSE decided to make a clean break from the past — a reckless leap, I thought, given how firm Telkom’s monopoly was and how bad its lines were back in 1996 when it had only recently split from the post office.
Binding Ruling on issue of capitalisation shares
The South African Revenue Service (SARS) issued Binding Private Ruling No 201 (Ruling) on 13 August 2015. The Applicant, being a natural person, held 100% of the equity shares in a resident operating company (OpCo). OpCo, in turn, owned 100% of the shares in a dormant resident company (Co-Applicant). The parties wished to introduce a black-owned company (BEECo) as a shareholder in OpCo in order to improve its Black Economic Empowerment (BEE) credentials.
Scope of capital gains tax liability broadened
In order to provide the necessary legislative amendments required to implement the tax proposals that were announced in the 2015 National Budget on 25 February 2015, the National Treasury published the Draft Taxation Laws Amendment Bill (TLAB), 2015, on 22 July 2015 for public comment. One of the proposed amendments relates to the definition of ‘immovable property’ as provided in paragraph 2 of the Eighth Schedule to the Income Tax Act, No 58 of 1862 (Act).
The tax free nature of a voluntary severance package
Loss of employment through retrenchment (forced or voluntary) is a reality many employees face in the current economic climate. Over the last number of years, various tax concessions have been made to ease the financial burden on employees facing retrenchment, mainly in the form of tax free thresholds which apply to certain lump sum employer payments. Navigating the tax pitfalls of retrenchment is important, as it is not necessarily guaranteed that all forms of payment upon retrenchment will qualify for preferential tax treatment.
Do you or your dependant have a medical disability?
Author: Ilsa Groenewald, Associate Director, Tax, BDO Durban Tax expert offers guidance on SARS changes to tax claims for medical disabilities 06 August 2015 – Taxpayers who have a disability, or who have a spouse or child with a disability, should be aware of the claims that can be made when completing their 2015 income tax return. ‘The medical tax calculation has changed for the 2015 tax year’, said Ilsa Groenewald, Associate Director for tax at the Durban office of audit, advisory and tax firm, BDO South Africa.
DAVIS TAX COMMITTEE – SIGNIFICANT CHANGES PROPOSED TO ESTATE DUTY AND TAX ON TRUSTS
True to its mandate, the Davis Tax Committee (DTC) has been hard at work reviewing the South African tax system. Since its formation in 2013, it has already issued reports on small and medium enterprises (SMMEs), Base Erosion and Profit Shifting (BEPS) and VAT. It also compiled a macro analysis of the South African tax system, a World Bank study on the effective tax burden in South Africa and presented carbon tax proposals. However, on 13 July the committee issued the “Estate Duty Report” which deals with a variety of topics sure to spark outcry and fierce debate, especially from more wealthy taxpayers. Whatever the outcome of the report may be following consultations, taxpayers will need to review their estate and tax plans to accommodate the impending changes.
Davis Tax Committee – Significant changes proposed to Estate Duty and Tax on Trusts
True to its mandate, the Davis Tax Committee (DTC) has been hard at work reviewing the South African tax system. Since its formation in 2013, it has already issued reports on small and medium enterprises (SMMEs), Base Erosion and Profit Shifting (BEPS) and VAT. It also compiled a macro analysis of the South African tax system, a World Bank study on the effective tax burden in South Africa and presented carbon tax proposals. However, on 13 July the committee issued the “Estate Duty Report” which deals with a variety of topics sure to spark outcry and fierce debate, especially from more wealthy taxpayers. Whatever the outcome of the report may be following consultations, taxpayers will need to review their estate and tax plans to accommodate the impending changes.
Remission of the provisional tax “underestimation” penalty
Author: Lesedi Seforo (SAIT) Lesedi Seforo urges tax professionals to apply their minds when estimating the taxable income for the purpose of calculating the second professional tax payment. Over the past few months, SAIT has received numerous queries from members regarding what the Fourth Schedule to the Income Tax Act (No. 58 of 1962) (Act) describes as the “penalty for underpayment of provisional tax as a result of underestimation”. As far as this particular penalty is concerned, the challenge for some tax practitioners appears to be two-fold: