The Tax Court gave judgment in the matter of ABC (Pty) Ltd vCommissioner for the South African Revenue Service (case number 13512, as yet unreported) on 30 March 2015. Even though the case concerned secondary tax on companies (STC), which has been replaced by dividends tax, it is interesting to see how the court dealt with the interpretation of an exemption provision.
Author: Nyasha Musviba
Capital gains tax deferred
Put simply, capital gains tax (CGT) is levied on the capital gain arising on the disposal of an asset, that is, on the difference between the base cost of the asset and the proceeds accruing on disposal. In terms of paragraph 35(4) of the Eighth Schedule to the Income Tax Act, No 58 of 1962 (Act) when a person disposes of an asset during a current tax year and that person becomes entitled to any amount which is payable in future tax years, that amount is deemed to have accrued to that person during the current tax year. So, if the price of an asset is paid, say, in three equal instalments over three tax years, the person disposing of the asset must account for CGT on full price in the first tax year, that is, the year of the disposal.
VAT treatment of supplies to non-residents
On 30 March 2015 the tax court delivered judgment in the matter of ABD CC v Commissioner for the South African Revenue Service. The matter concerned the Value-Added Tax (VAT) treatment of the supply of goods and services to non-residents in circumstances where such goods and services are physically supplied to and consumed by a person within South Africa. The vendor had certain agreements in place with foreign tour operators in terms of which the vendor would arrange tours in South Africa. The foreign tour operators, in turn, sold tour packages to their customers, who were foreign tourists wishing to visit South Africa.
Tax free investments Implications for parents of a minor child
Author: Leonard Willemse (Mazars) The Minister of Finance, as an incentive to encourage household savings, introduced the concept of a ‘tax free investment’ with effect from 1 March 2015. A tax free investment is any financial instrument or policy administered by regulated institutions (such as banks) owned by a natural person and authorised as such by the Minister of Finance. In terms of section 12T of the Income Tax Act No. 58 of 1962 (‘the Act’) any amount received by or accrued to a natural person in respect of a tax free investment shall be exempt from normal tax. Furthermore, where any capital gains or losses are realised in respect of the disposal of a tax free investment, it should be disregarded in determining the aggregate capital gain or loss of a person.
A preservation order is not of itself a ‘tax collection’ measure
A preservation order is not of itself a ‘tax collection’ measure – but it may well be followed by tax collection processes On 1 December 2014 the Pretoria High Court confirmed a provisional preservation order that had been granted in terms of section 163 of the Tax Administration Act 28 of 2011 against Africa Cash and Carry (Pty) Ltd and various members of the Hathurani family in their personal capacities and in their representative capacities as trustees of trusts. (The judgment – thus far published only on the SARS website – is reported as Commissioner for the South African Revenue Services, as applicant, and 19 respondents, including trustees of the Edrees Hathurani Family Trust; case 49274/2014.)
Challenge to SARS under the Promotion of Administrative Justice Act
Author: PwC South Africa In this issue we have focused on the SARS tactic of challenging the forum to which a taxpayer brings a dispute with SARS. These challenges illustrate that the selection of the procedure to be followed in a dispute with SARS may be critical to success. In the matter of Ackermans Ltd v Commissioner for the South African Revenue Service Case No 16408/2013 in the North Gauteng High Court, the taxpayer had elected to bring an application for a review of the actions of SARS as unconstitutional in terms of section 6 of PAJA. It should be mentioned that the taxpayer had also, on the merits of the dispute, noted an objection and appealed to the Tax Court against the disallowance of that objection.
When may SARS challenge the jurisdiction of the Tax Court?
Our tax cases contain a few instances in which SARS, or its predecessor, Inland Revenue, has sought to avert an anticipated unfavourable judgment by challenging the procedure under which the dispute has been raised. The most recent attempt was in the matter of ABC (Pty) Ltd v Commissioner for the South African Revenue Service [2015] ZAWCHC 8 (judgment delivered on 6 February 2015) (‘the ABC Case’). The recent challenge is perplexing, as SARS had readily entertained an objection against the assessments in question and had contested the appeal in the Tax Court, and had not at any stage of those proceedings suggested that the decision in question was not subject to objection and appeal.
Treasury stands firm over carbon tax
Author: Linda Ensor (BDlive) The Treasury is sticking to its guns about implementing the carbon tax from next year, dashing the hopes of business that there might be further delays to the unpopular measure it believes will add another burden to an economy already reeling from load shedding and low growth. Treasury deputy director-general Ismail Momoniat confirmed on Tuesday that the 2016 implementation date was still on track and that it would “hopefully” be releasing a draft bill within the next two months for public comment. This would allow enough time to get the bill promulgated by next year.
Davis Tax Commitee Call for comment: Proposed Carbon Tax
Author: The Davis Tax Committee The Davis Tax Committee (DTC) has acceded to requests by a number of stakeholders to review the scope and design of the proposed carbon tax as part of its review of the South African tax system as a whole. The Minister of Finance announced in his 2015 Budget Speech that a draft carbon tax bill is expected to be published for public comment during the course of 2015. This will be a culmination of discussion papers released by the National Treasury for comments in 2010, 2013 and 2014. These papers and further information on the carbon tax are available from the National Treasury.
State faces a tough balancing act on tax
Author: Banele Ginindza (Business Report) Finance Minister Nhlanhla Nene last week received preliminary recommendations from the Davies Tax Committee, but whatever the recommendations, the government faces a tough balancing act. Nene said last week at the presentation of the SA Revenue Services (Sars) collection report that he “will want to allow South Africans to engage quite openly on the issue of other sources of government revenue”.