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Inextricably linked contracts? The Constitutional Court has the final say regarding section 24C of the Income Tax Act

Author: Aubrey Mazibuko and Louis Botha. On 21 July 2020, the Constitutional Court (CC) handed down judgment in Big G Restaurants (Pty) Ltd v Commissioner for the South African Revenue Service [2020] ZACC 16, which concerned section 24C of the Income Tax Act 58 of 1962 (Act). At issue before the CC was whether future expenditure incurred in terms of a franchise agreement was deductible against income derived by the taxpayer, Big G Restaurants (Pty) Ltd (Big G) from operating its franchise business.

Deductions available for commission earners

Author: Joon Chong, a Tax Partner a Webber Wentzel. Commission earners could make an argument to SARS that they should be allowed to deduct their normal range of business expenses, even if commission is no longer more than 50% of their total remuneration under the exceptional circumstances of the Covid-19 pandemic. Who is a commission earner? Commission earners who earn more than 50% of their total remuneration as commission income are not limited in the type of business expenses they can claim, as long as these are incurred in the production of their income and are not capital or personal in nature.

Tax Filing Season 2020 for Individuals

In support of the Presidents call to the Covid-19 pandemic, that Social Distancing be observed at all times and that we should at most stay indoors and limit movement, SARS is responding by rapidly enhancing its efforts to further simplify the tax return filing requirements for individual taxpayers and removing the need to travel to our Branches in 2020. Through the increased use of third-party data, SARS will be completing your tax return for you more accurately than ever. Where we have the required information we will provide you with a proposed assessment without the need to file a tax return. This enables you to view, accept or edit your proposed assessment from the comfort of your home or place of work using eFiling or SARS MobiApp.

SARS lifts tax return threshold from R350 000 to R500 000

The SA Revenue Service announced on Tuesday that it has lifted the tax return threshold from R350 000 to R500 000. This means that people who earn less than R500 000 per year, and meet certain other criteria, will not need need to file tax returns, commissioner Edward Kieswetter said at a media briefing in Pretoria. SARS explained that taxpayers who meet the following criteria will not need to file returns.

Travel e-log book- SARS Logbook used to claim a deduction on personaltax

When can you claim for travel? If you receive a travel allowance from an employer or principal, you can claim a deduction on assessment of your annual income tax return for the use of a private motor vehicle for business purposes. What do I need to do? Firstly, record your motor vehicles odometer reading on 1 March, i.e. on the first day of a tax year.

A creature of statute: A decision about the Tax Courts power to increase understatement penalties

Authors: Louise Kotze and Louis Botha. In the recent judgment of Purlish Holdings (Proprietary) Limited v The Commissioner for the South African Revenue Service (76/18) [2019] ZASCA 04, the Supreme Court of Appeal (SCA) had to pronounce on the South African Revenue Services (SARS) entitlement to impose understatement penalties on Purlish Holdings (Proprietary) Limited (Taxpayer) and the quantum thereof.

The Tax Dos and Donts of SBCs

Author: Esther van Schalkwyk , BDO Tax Manager. A Small Business Corporation (or SBC) may qualify for favourable tax treatment if it meets certain requirements in the Income Tax Act (ITA). The benefits, requirements, and common pitfalls are summarised below. Benefits Companies (including close corporations) are generally subject to a flat rate income tax of 28%. SBCs are subject to more favourable tax rates on taxable income up to R550 000. The SBC tax rates for financial years ending between 1 April 2018 and 31 March 2019 are:

SARS prescription only starts once tax return has been submitted

Author: Eric Madumo, a Candidate Attorney and Joon Chong, a Partner at Webber Wentzel. In the recent case of CSARS v Char Trade, the Supreme Court of Appeal (SCA) that prescription begins to run against CSARS when a return for secondary tax on companies (STC) is submitted to SARS by a taxpayer. In the Char Trade case, a return for STC had not been submitted by the taxpayer. Due to this, prescription had not begun to run against CSARS. The result of this is that CSARS was able to make an assessment in 2012 of the taxpayer’s liability amounting to ZAR 1,812,609 for the 2007 cycle.

Tax non-compliance status may be inaccurate

Authors: Joon Chong, a Tax Partner, Nina Keyser, a Tax Partner, Nirvasha Singh, a Tax Partner & Carryn Alexander, an Associate at Webber Wentzel. SARS replaced the Tax Clearance Certificate (TCC) system with the enhanced Tax Compliance Status (TCS) system on eFiling in April 2016. The new TCS system is aimed at improving tax compliance as taxpayers can better manage their TCS and remedy any non-compliance through the “My Compliance Profile” (MCP) function on eFiling.