A number of advance tax rulings have recently been released by the South African Revenue Service (SARS) relating to the corporate tax roll- over relief rules contained in s41 to 47 of the Income Tax Act, No 58 of 1962 (Act). The most recent ruling in this regard is Binding Private Ruling No 168 (BPR 168), which was released on 17 April 2014. The facts in BPR 168 are relatively simple. Company A had acquired assets from company B in exchange for the issue of equity shares in company A in terms of an ‘asset-for-share transaction’ as defined in s42 of the Act.
Category: SARS Binding Rulings
Repurchase of preference shares
The South African Revenue Service (SARS) recently released a binding class ruling (BCR 44) dealing with the tax consequences of the repurchase of certain non-redeemable, non-participating preference shares. Background The applicant was a public company listed on the Johannesburg Stock Exchange (JSE) which issued preference shares to certain persons.
Exemptions – Listed shares and the foreign dividend exemption
The South African Revenue Service (SARS) released Binding Class Ruling No. 42 (BCR 42) on 7 February 2014. The factual circumstances in respect of which the ruling was made are as follows: Company Y is a company incorporated and resident in foreign country Y. Company X is a company incorporated and resident in country X. Company X is also a wholly-owned subsidiary of Company Y. Company X is to be listed on the JSE Limited. Its business is investment in foreign debt instruments, on which it will receive interest returns. Company X intends to raise funds for its business by issuing certain preferred securities. The preferred securities will be issued through its branch in country Y.
Successive corporate reorganisation transactions
Author: Andrew Lewis (CliffeDekkerHofmeyr) A number of advance tax rulings have recently been released by the South African Revenue Service (SARS) relating to the corporate tax rollover relief rules contained in s41 to 47 of the Income Tax Act, No 58 of 1962 (Act). The most recent ruling in this regard is Binding Private Ruling No 168 (BPR 168), which was released on 17 April 2014.
BINDING RULING – COMMERCIAL BUILDING ALLOWANCE
1. Summary This ruling deals with the deduction of a commercial building allowance in respect of a unit, as contemplated in the Sectional Titles Act No. 95 of 1986 (the ST Act). 2. Relevant tax laws This is a binding private ruling issued in accordance with section 78(1) and published in accordance with section 87(2) of the Tax Administration Act No. 28 of 2011.
Note a change in requirement when issuing a VAT invoice
Author: David Warneke SARS recently issued a binding general ruling clarifying the requirement that the address of the recipient and supplier be reflected on a tax invoice, debit or credit note. The ruling is effective from 11 March 2014 and it applies for an indefinite period. In terms of the ruling, a businesses may elect to reflect either: The physical address from where the enterprise is being conducted; The postal address of the enterprise; or Both the physical and postal addresses of the enterprise.
CORPORATE RULES: DISPOSAL OF ASSETS WITHIN 18 MONTHS OF ACQUISITION
1. Summary This ruling deals with the effect of section 42(7) on the disposal of assets in terms of an “intra-group transaction” as defined in section 45(1) when the disposal will take place within 18 months of the assets having been acquired in terms of an “asset-for-share transaction” as defined in section 42(1).
New Binding General Ruling on the Address to be Reflected on Tax Invoices
This ruling clarifies that the address of the recipient and supplier to be reflected on a tax invoice, debit or credit note is either: The physical address from where the enterprise is being conducted; The postal address of the enterprise; or Both the physical and postal addresses of the enterprise.
Interest incurred on replacement loans
This private ruling from SARS deals with interest incurred on replacement loans and addresses whether such loans retain their initial business purpose for purposes of determining whether the interest incurred on the loans qualifies for a deduction under section 24J(2).
Buy-back of ordinary shares by a company in excess of market value
SARS recently issued the above Binding Private Ruling which deals with the question whether the buy-back of ordinary shares by a company at an amount in excess of the market value of the shares, in circumstances where the purpose of the buy-back was to maintain the BBBEE status of the company, has donations tax effects or would invoke paragraph 38 of the Eighth Schedule.