Author: Varusha Moodaley – Tax Associate at ENSafrica A person is obliged to register as a value-added tax (“VAT”) vendor where such person makes taxable supplies (comprising of standard and zero-rated supplies) in excess of R1 million in a consecutive period of 12 months. A person may however, voluntarily register for VAT where the person has already made taxable supplies exceeding R50 000 in a 12 month period, or where the person carries on an enterprise and has not yet exceeded the R50 000 threshold, but reasonably expects that the R50 000 threshold will be exceeded within 12 months from the date of registration.
Author: Nyasha Musviba
SARS incorrectly treating objections as invalid
Author: Mmangaliso Nzimande – Tax Director at ENSafrica In terms of section 104 of the Tax Administration Act No. 28 of 2011 (“the TAA”), a taxpayer who is aggrieved by an assessment made in respect of that taxpayer may object to the assessment. Furthermore, in terms of section 106 of the TAA, SARS must consider a valid objection in the manner and within the period prescribed under the TAA and the rules promulgated under section 103 of the TAA, prescribing the procedures to be followed in lodging an objection and appeal against an assessment or decision subject to objection and appeal (“the Rules”).
Exchange Control Appeal Won Against Shuttleworth
Author: By Ferdie Schneider, Head of Tax, BDO The Constitutional Court delivered judgement on 18 June 2015 against Mark Shuttleworth in favour of the South African Reserve Bank (SARB) and the Minister of Finance. Mark Shuttleworth emigrated to the Isle of Man in 2001 to invest outside South Africa and applied to SARB to transfer approximately R2.5 billion. SARB imposed an exit charge of 10% on the capital and Shuttleworth paid approximately R250 million although he challenged the constitutionality of imposition.
Which taxes apply to share loans?
The ability to enter into loans over listed shares is an important part of the financial industry as it offers sellers of listed shares the ability to comply with their obligations to deliver shares under a short sale contract. This ability could ensure that the sale of listed shares do not result in failed trades, provided the relevant shares can be sourced and borrowed prior to the seller having to deliver the shares. The intended change by the JSE limited to move to from a T+ 5 to a T + 3 settlement date in order to align with its settlement period with the international norm, reinforces the importance of the share lending industry. As a result of the shorter settlement period, the ability to borrow shares to settle trades will be paramount to ensure as little failed trades as possible.
Tax consequences of foreign companies rendering services in South Africa
Where a foreign company renders professional services to a South African company, it is important that the foreign entity considers whether, as a result of rendering such services, the foreign company will create a permanent establishment in South Africa. The reason why this becomes important is that where a foreign company creates a permanent establishment in South Africa, South Africa will under the provisions of a Double Taxation Agreement (“DTA”) concluded with another country, be entitled to subject that foreign entity to tax on the profit attributable to that permanent establishment created in South Africa. In the case of X LLC, case number 13276 heard in February 2015, as yet unreported, the Tax Court had to determine whether X had created a permanent establishment in South Africa, and as a result thereof, was liable to tax in South Africa. The case involved a corporation incorporated in the United States of Read More …
South Africans already pay three carbon taxes, so why is government imposing another one?
With no real focus on behaviour change, CO2 Tax is just another taxation scheme to make up for the national budget deficit Taxes now make up one-third of the retail price of fuel after Finance Minister Nene raised the levy by 80.5 cents ($0.07) a litre (0.26 gallon) in the 2015/2016 Budget. He also increased electricity levies by 2 cents to 5.5 cents per kilowatt-hour to help curb power demand and will phase these out when the carbon tax is implemented – or so he says.
SARS signed a Memorandum of Understanding (MOU) with the Mauritius Revenue Authority (MRA)
On 22nd May 2015 SARS signed a Memorandum of Understanding (MOU) with the Mauritius Revenue Authority (MRA). David Warneke, Tax Director at BDO South Africa, explains that the background to the MOU is that a new Double Taxation Agreement (DTA) between South Africa and Mauritius was signed in Maputo on the 17th of May 2013. This new DTA has now been ratified by both countries and is expected to enter into force with effect from 1 January 2016.
Take advantage of tax-free savings now
Author: Douglas Gaul, tax manager Grant Thornton Johannesburg Following much anticipation, tax-free savings accounts (TFSA) were introduced on 1 March 2015 as a way to encourage South Africans to save. Natural persons, as well as the deceased or insolvent estates of a natural person, can invest in certain approved tax-free investment vehicles.
Venture Capital Investments – are you missing an excellent opportunity?
Author: David Honeyball, partner Grant Thornton Cape Small business development continues to be a focus area for economic development for South Africans desperate for faster economic growth. Therefore, the introduction of Section 12J of the Income Tax Act, which was introduced on 1 July 2009, created a welcome pooling mechanism allowing investors to channel funds into small businesses and junior mining companies. The intention of the legislation is that by pooling funds, a Venture Capital Company (VCC) can provide equity and management services to the investee. As incentive, the VCC shareholders enjoy a 100% upfront tax deduction of the value of their investment (shares) and with no recoupment if the shares are sold within 5 years.
Has your tax return prescribed? SARS’ powers reach to infinity and beyond
Author: Hylton Cameron, associate director Grant Thornton Johannesburg In the recent case of Ackermans Ltd v CSARS the issue of prescribed tax returns was re-visted in the Pretoria High Court. In terms of the Income Tax Act, SARS is entitled to raise additional assessments for three years from the date of final assessment. However if there is a misrepresentation of a material fact in the original return, the three prescription period does not apply.