SARS issued Binding Private Ruling BPR 173 on 2 July. The ruling purports to deal with a thorny issue which has been the cause of uncertainty but unfortunately raises more questions than answers. The issue is whether the debt reduction provisions of the Income Tax Act, namely section 19 or paragraph 12A of the Eighth Schedule, would be invoked where a company issues shares and utilises the proceeds from the share issue to repay debt.
Category: Tax Administration
Should the South African Revenue Service adopt a Taxpayer Bill of Rights?
Author: Beric John Croome A Taxpayers’ Charter setting out the rights and obligations of taxpayers in South Africa was published for the first time during 1997. That Charter contained a statement of intent insofar as taxpayers’ rights in South Africa is concerned. On 19 October 2005 the SARS Client Service Charter was released setting out the levels of service that taxpayers could expect in their dealings with the South African Revenue Service (‘SARS’). Currently, neither the Taxpayers’ Charter nor the SARS’ Service Charter Standards can be located on the SARS website and it would appear to be a matter of ‘out of sight out of mind’.
Pay now argue later
Possession, as they say, is nine tenths of the law. Generally in commercial litigation where, for example, a claim for an outstanding amount is brought against a party, such party is not required to make payment to the claimant until a court has adjudicated on the matter. However, when it comes to matters of tax, the Tax Administration Act, No. 28 of 2011 (‘TAA’) requires taxpayers to first make payment to SARS on assessment and then to pursue their various remedies against SARS.
New tax dispute resolution rules brings about some welcome and unwelcome changes
Author: TaxTalk The wait is finally over! After three draft documents for public comment, numerous workshops and internal discussions, the new Dispute Resolution Rules (‘the new Rules’) issued in terms of section 103 of the Tax Administration Act (No. 28 of 2011) (‘the TAA’) has today been promulgated into law under Government Notice 550 published in Government Gazette No. 37819. It should be noted that the new Rules replace the Rules issued in terms of section 107A of the Income Tax Act (‘the old Rules’) with immediate effect. Although the new Rules are a lot more comprehensive than the old Rules, the South African Institute of Tax Professionals’ (‘the SAIT’) technical department warns the public of some common pitfalls and welcome changes.
SARS’ powers to apply to court to declare a director delinquent in terms of the Companies Act
Section 162 of the Companies Act, Act 71 of 2008 (“the Companies Act”) introduced a new mechanism which allows a broad range of interested and related persons, including qualifying organs of state, the opportunity to apply to court for an order declaring a director of a company delinquent or placing him under an order of probation. Notwithstanding the negative social ramifications such an order has, there are also severe adverse consequences to a director’s
A taxpayer is entitled to object to an assessment on the grounds that the information given in his return was incorrect
One of the issues in GB Mining v Commissioner: SARS [2014] ZASCA 29 was the deductibility or otherwise of expenditure that had been outlaid by the taxpayer, GB Mining and Exploration (SA) (Pty) Ltd, in an attempted rescue of a company listed on the Johannesburg Stock Exchange, OTR Mining Ltd, with the intent that GB Mining would transfer its business to OTR and become its principal shareholder, thereby securing access to the JSE.
Sars to focus on certain areas this tax season
The South African Revenue Service (Sars) will pay particular attention this season on medical aid claims, retirement fund contributions, income protection policy contributions and taxpayers who submit revised returns for previous years. This is according to acting Sars commissioner Ivan Pillay. “We are doing this deliberately. We are telling you up front. We don’t want to catch you out. We’re saying don’t go there,” he said.
Reportable arrangements and retrospectivity
Author: Carmen Moss-Holdstock of DLA Cliffe Dekker Hofmeyr The South African Revenue Service (SARS) recently issued an updated Draft Notice listing transactions that constitute reportable arrangements for purposes of s35(2) of the Tax administration Act No 28 of 2011 (TAA). The Draft Notice, once finalised, is intended to replace any previous notices issued in respect of reportable arrangements under s80M(2)(c) and s80N(4) of the Income Tax Act No 58 of 1962 (ITA).
Understatement Penalties in hindsight
Some 20 months after the introduction of Understatement Penalties, it is worth taking stock of where taxpayers find themselves following their introduction, and highlighting some of the challenges they are experiencing. Many taxpayers have become all too familiar with this Understatement Penalty Percentage Table (fig. 1 below) contained in section 223 of the Tax Administration Act No 28 of 2011 (“the TAA”), which was mercifully amended earlier this year by the reduction of some of the penalty percentages:
SARS targets R1 trillion in tax collections
The SA Revenue Service intends collecting nearly R1 trillion during the 2014/15 tax season, which began on Tuesday. Tax revenue was expected to grow by 10.4% to R993.6 billion, with R899.8 billion collected last year, after refunds, Finance Minister Nhlanhla Nene told reporters in Pretoria. Nene said Sars’s ability to collect revenue had been one of the cornerstones of South Africa’s 20-year-old democracy as it affected government’s ability to deliver public services.