Taxation of Income from two sources

What to do if you receive income from two sources? Taxpayers who receive income from more than one source of employment or pension are reminded that the employees tax (PAYE) deducted by the respective employers or pension funds may not be enough to cover their final tax liability on assessment. The reason for this is the manner in which a taxpayers tax liability is calculated on assessment. The South African tax system is based on the principle of adding together all sources of income of a taxpayer into a single sum, and applying a progressive tax rate table to determine the final tax liability of the taxpayer on assessment. A progressive tax rate system means that the more income is earned, the higher is the marginal tax rate and more tax is paid on assessment.

Refunds subject to set-off under the Tax Administration Act

Author: Robert Gad and Jo-Paula Roman. In order to create a more uniform system for the administration of taxes in South Africa, section 191 of the Tax Administration Act, 2011 (the TAA) has effectively replaced various refund and set-off provisions which appeared in respective tax acts. Section 191 of the TAA now provides that all tax debts that are due must be set-off against refunds, including the interest thereon, due by the South African Revenue Service (SARS) to that taxpayer.

Under the radar: Today one tax rate, tomorrow another?

Author: Louis Botha and Heinrich Louw. Since the first version of the Draft Taxation Laws Amendment Bill, 2016 (First Draft TLAB) and the Explanatory Memorandum thereto (Memorandum) were released on 8 July 2016, the proposed amendments applicable to trusts and employee share schemes received most of the attention. However, another proposed amendment with potentially far-reaching consequences that has received little attention since the release of the First Draft TLAB is one which could lead to a taxpayer paying tax at one rate today and another rate tomorrow, as and when the Minister of Finance (Minister) says so.

The price is not right: Advertising and the VAT Act

Author: Louis Botha. An efficient advertising campaign can often be the difference between a successful and an unsuccessful business venture. When advertising the price of a product, however, businesses must be mindful of the provisions of the Value-Added Tax Act 89 of 1991 (VAT Act). This issue recently came up in the matter of Security Outfitters Safety Gear/L Munian/2016-4420F, a ruling handed down by the Directorate of the Advertising Standards Authority of South Africa (ASA Directorate) on 18 November 2016 (Ruling).

Tax administration – Prescription

From time to time, our courts are called upon to remind public officials that compliance with the requirements of provisions in legislation is necessary to enable them to enforce the powers entrusted to them. The requirements are in place to enable the public to understand the reasons for the administrative action and to determine whether the action is compliant with the law.

Set-off of customs debt against amounts refundable

Author: Petr Erasmus (Director at Cleffe Dekker Hofmeyr). South African Revenue Service (SARS): Customs (Customs) sets off amounts owed to Customs against amounts refundable to clients. Section 76C of the Customs and Excise Act, No 91 of 1964 (Act) provides for set-off as follows: “Set-off of refund against amounts owing – Where any refund of duty is in terms of this Act due to any person who has failed to pay any amount of tax,

Criticism on SARS’s approach to the interpretation of legislation

Author: Mareli Treurnicht (Senior Associate at Cliffe Dekker Hofmeyr). On 29 April 2016 the High Court of South Africa (Gauteng Division, Pretoria) handed down judgment in an application brought by Julius Malema (Applicant) against the Commissioner for the South African Revenue Service (SARS). The matter concerned a compromise agreement concluded between them in terms of s205 of the Tax Administration Act, No 28 of 2011 (TAA).

SARS Tax Clearance Certificate – be cleared online

Author: Sduduzo Mhlongo (ENSAfrica candidate attorney). The South African Revenue Service (“SARS”) has introduced a new Tax Compliance Status System (“TCS”)  from 18 April 2016 in an effort to improve compliance and to make it easier for taxpayers to manage their tax affairs. The Tax Compliance Status System is a holistic view of the tax compliance level across all registered tax types. The new system makes it stress-free for taxpayers to obtain a Tax Clearance Certificate (“TCC”) and allows taxpayers to obtain a Tax Compliance Status PIN which can be used by authorised third parties to verify the taxpayer’s compliance status online via SARS eFiling. There are 2 steps in the process of obtaining a TCS:

VAT – Consequences of non-registration for VAT

The Value Added Tax Act 89 of 1991 (the VAT Act) requires VAT to be levied by a vendor on the supply of goods or services in the course or furtherance of an enterprise carried on by the vendor. A vendor is any person who is or is required to be registered in terms of the VAT Act. The fact that a vendor includes any person that is required to be registered makes it clear that a person’s liability for VAT is not dependent on whether the person is in fact registered as a vendor but rather whether the person is required to be registered as a vendor. The VAT Act requires registration as a vendor on either a prospective or retrospective basis. On a prospective basis, a person would be required to register as a vendor on the first day of the month in which the total value of Read More …