On 9 July 2015 the South African Revenue Service (“SARS“) issued a media statement informing allSouth African resident taxpayers, who hold foreign bank accounts, that an investigation was underway and taxpayers were therefore requested to make use of its Voluntary Disclosure Programme(“VDP“) to regularise their tax affairs. If you have a foreign bank account, and have used that bank account to evade your local or international tax obligations, you have until 12 August 2015 to declare this information under the VDP,after which time SARS will start their auditing process.
Category: Tax Administration
Third party returns – exchange of information in accordance with international tax standards
In order to provide the necessary legislative amendments required to implement the tax proposals that were announced in the 2015 National Budget on 25 February 2015, the National Treasury (Treasury) published the 2015 Draft Tax Administration Laws Amendment Bill (TALAB) on 22 July 2015 for public comment. One of the important proposals relates to greater tax transparency and the automatic exchange of information between tax administrations in various jurisdictions in order to counter cross-border tax evasion and aggressive tax avoidance. To this effect, s32 of the TALAB proposes the insertion of a definition of “international tax standard” in s1 of the Tax Administration Act, No 28 of 2011 (TAA), to mean “an international standard as specified by the Commissioner by public notice for the exchange of tax-related information between countries”.
Shuttleworth’s exit charge was valid and did not constitute a tax
In an about-turn the Constitutional Court handed down judgment in the Shuttleworth matter on 18 June 2015. Not only was it found that Shuttleworth’s exit charge constituted a regulatory charge as opposed to a tax, but it was also found that the Exchange Control Regulations were not unconstitutional. Should one consider the history of the matter, Shuttleworth made application to the South African Reserve Bank (Reserve Bank) to transfer approximately R2,5 billion out of South Africa. This approval was granted subject to an exit charge of 10% being imposed on the capital that was exported. The payment of this exit charge was challenged by Shuttleworth:
Notice of judgment in terms of the Tax Administration Act
Judgment was handed down in the matter between Lifman and others v The Commissioner for the South African Revenue Service and others (case no 5961/15, as yet unreported) on 17 June 2015 in the Western Cape Division of the High Court. The applicants were Mark Lifman and a number of close corporations of which he was the sole member. During an enquiry in terms of s50 of the Tax Administration Act, No 28 of 2011 (TAA), conducted by the South African Revenue Service (SARS) into the affairs of the applicants, it came to light that the applicants owed SARS tax of approximately R13 million.
Cancellation of contracts in the 21st century
Author: Douglas Molepo – Dispute Resolution Director at ENSafrica Can parties cancel or amend written agreements by email if their written agreement prohibits amendments or cancellation unless in writing and signed by the parties? In the recent case of Spring Forest Trading v Wildberry (case no 725/13), the Supreme Court of Appeal (SCA) answered this question with a firm “yes”, meaning that parties should carefully consider the wording of their contracts before signing on the dotted line.
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”).
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.
Shuttleworth’s exit charge was valid and did not constitute a tax
In an about-turn the Constitutional Court handed down judgment in the Shuttleworth matter on 18 June 2015. Not only was it found that Shuttleworth’s exit charge constituted a regulatory charge as opposed to a tax, but it was also found that the Exchange Control Regulations were not unconstitutional. Should one consider the history of the matter, Shuttleworth made application to the South African Reserve Bank (Reserve Bank) to transfer approximately R2,5 billion out of South Africa. This approval was granted subject to an exit charge of 10% being imposed on the capital that was exported. The payment of this exit charge was challenged by Shuttleworth:
Changes to reportable arrangements previously listed in draft notices
On 16 March 2015, the Commissioner for the South African Revenue Service published Public Notice No. 212 in Government Gazette No. 38569 listing certain arrangements as ‘reportable arrangements’ for purposes of s35(2) and s36(4) of the Tax Administration Act, No 28 of 2011 (TAA) (Notice). With effect from the date of publication of the Notice, all previous notices issued under s80M(2)(c) and s80N(4) of the Income Tax Act, No 58 of 1962 (ITA) and s35(2) of the TAA were replaced.
Ability of SARS to request information from a taxpayer
Author: Peter Dachs (Tax Director at ENSAfrica) The South African Revenue Service (“SARS”) often sends out information requests in terms of section 46 of the Tax Administration Act. The question arises, in what circumstances SARS is permitted to ask such questions and what limits exist in respect of their powers? Relevant legislative provisions The Tax Administration Act has recently been amended by the Tax Administration Laws Amendment Act, 2014. This made certain changes to SARS’ powers to request information from a taxpayer.