By Webber Wentzel Who bore the full cost of the fuel? Generally speaking, where a person uses his or her private vehicle to conduct business and receives an allowance or grant in respect of such usage, a deduction against the allowance may be made on assessment for normal tax.
Category: Corporate Tax
Not all hybrids are cost effective!
Author: Webber Wentzel The provisions of section 8F became effective on 1 April 2014. In terms of this section any interest incurred on or after that date in respect of a “hybrid debt instrument” will be deemed to be a dividend in specie declared and paid on the last day of assessment by the company; and is not deductible for income tax.
Getting to grips with Base Erosion and Profit Shifting (BEPS)
By AJ Jansen van Nieuwenhuizen, Tax Partner, Grant Thornton Johannesburg The winds of change blowing through South Africa to expand its tax base and revenues are not unique. Countries around the world are looking for ways to improve their financial situation and their attentions are increasingly focused on company profits. Especially since the low levels of corporate tax which multinationals like Amazon, Apple, Google and Starbucks paid in the past hit world headlines in 2013 and the term Base Erosion and Profit Shifting (BEPS) became commonly used in government and business circles.
Tax implications of expenditure funded by government grants
By Christel du Preez, Senior Tax Manager, Grant Thornton Johannesburg Section 12P was introduced into the Act to deal with government grants received by taxpayers and applies to years of assessment commencing on or 1 January 2013. As a result, taxpayers are now facing potentially complex rules that could have an adverse effect on their tax planning efforts.
Datakor case is still alive for new debt reduction rules
By Barry Visser, Associate Director: Tax, Grant Thornton Johannesburg Old debt reduction rules The matter of CIR v Datakor Engineering (Pty) Ltd 1998 (4) SA 1060 (SCA) related to a company (Datakor) that entered into an arrangement whereby Datakor’s creditors relinquished their claims against it in exchange for preference shares in the company. It was held that the discharge of a contractual obligation, to pay a debt, through the issue of shares, amounted to a compromise. The court concluded that the compromise benefited the company as it was absolved from its obligation to settle the debt.
Venture Capital regime needs overhaul
In the 2014 Budget Speech, the Minister of Finance noted the importance of small business and entrepreneurship in facilitating the creation of jobs in the private sector. In this regard, specific mention was made of proposed amendments to the venture capital company (“VCC”) tax regime in order to enhance support for entrepreneurial development.
Rules on amalgamation transaction
Author: Heinrich Louw (DLACliffeDekkerHofmeyr) The South African Revenue Service (SARS) released Binding Private Ruling 171 (Ruling) on 9 June 2014. The facts were as follows. Two individuals, A and B,were each the sole members of close corporations C and D, respectively. C and D each held half of the issued share capital of a company E. It appears that C and D also each had a loan claim against company E, while A and B each had a loan claim against C and D, respectively.
Deductibility of costs in respect of plant used in the production of Renewable energy
Author: Nicole Paulsen In our Tax Alert of 7 March 2014, we discussed how the energy landscape has developed over the last few years with the introduction of a number of private and public sector funded renewable energy projects, aimed at reducing the energy footprint of corporate taxpayers.
Tax Avoidance -Simulated transactions
In Roshcon (Pty) Ltd v Anchor Auto Body Builders CC [2014] ZASCA 40 (Roshcon) the Supreme Court of Appeal (SCA), in a unanimous judgment drafted by Wallis JA, has clarified the issues caused by its previous decision in SARS v NWK Limited [2011] SA 67 (NWK). Roshcon was not a tax case; it concerned supplier and floor plan agreements relating to the sale of trucks, with a reservation of ownership to a finance house as security until the trucks were fully paid for by the purchaser. On the assumption that NWK had transformed our law in regard to simulated transactions, counsel contended that the agreements in question were a disguise or simulation, amounting in fact to a pledge of the trucks without delivery or possession as required by law. In rejecting this argument, the SCA took great care to reaffirm the well-established principles relating to simulations, and to explain its Read More …
Deductions – Apportionment of holding company expenses
Mobile Telephone Networks Holdings (Pty) Ltd (the taxpayer) v Commissioner for the South African Revenue Service [2011]73 SATC 315, the taxpayer was the holding company of five directly held subsidiaries and a number of indirectly held subsidiaries and joint ventures, within a group of companies. The collective business of the operating companies within the group was the operation of mobile telecommunication networks.