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 Returns
Withdrawal of foreign tax credits for South African-sourced income
Johannesburg, 23 July 2015 – The 2015 Budget announced by Finance Minister Nene included a number of measures to bolster tax revenues from an international perspective. According to David Warneke, a Director and Head of Tax Technical with BDO South Africa, these measures include potentially removing tax relief currently afforded to South African companies on service income received from outside South Africa. This could negatively impact foreign direct investment into South Africa. “This was originally introduced to relief South African companies of withholding taxes (sometimes in contravention of the Double Taxation Treaties) imposed by foreign entities that became unrecoverable,” says Warneke.
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.
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.
Tax Administration – Tax compliance status
Tax clearance certificates (TCCs) are issued by the South African Revenue Service (SARS) to, inter alia, validate the status of a taxpayer and confirm that such taxpayer’s tax affairs are in order. TCCs are, almost without exception, required for tender or bid applications, to reflect good standing, foreign investment and for emigration purposes. A TCC is only valid for one year from the date of issue in respect of a tender and/or good standing, provided the taxpayer remains compliant with SARS requirements.
Tax Administration – Interpreting statutory provisions
SARS has investigated, and in many cases raised assessments in respect of, share incentive schemes where the employee had accepted an offer to purchase shares at a fixed price prior to 26 October 2004, subject to delivery and payment taking place at a future date. The law relating to these schemes (known as deferred delivery schemes or DDS schemes) was amended with effect from that date. The Supreme Court of Appeal has now delivered its judgment in the matter of C: SARS v Bosch [2014] ZASCA 171 (19 November 2014) and provided clear guidance on the application of the Income Tax Act No. 58 of 1962 (the Act) in relation to deferred delivery share incentive schemes, where the employee had exercised the right to acquire the shares prior to 26 October 2004.
Suspension of payment of tax due
When the Tax Administration Act No. 28 of 2011 (TAA) was promulgated on 1 October 2012 it introduced rather aggressive provisions empowering the South African Revenue Service (SARS) to collect tax more effectively, including the retention of the pay-now-argue-later principle. However, section 164 of the TAA allows a taxpayer to request a suspension of the obligation to pay an amount of tax or a portion thereof under an assessment where the taxpayer disputes or intends to dispute the liability to pay that tax under the dispute resolution provisions contained in Chapter 9 of the TAA. Previously, section 164(3) of the TAA provided that a senior SARS official may suspend payment of the disputed tax or a portion thereof, having regard to:
Has your tax return prescribed? SARS’ powers reach to infinity and beyond
Author: Hylton Cameron (Grant Thornton Johannesburg) In the recent case of Ackermans Ltd v CSARS the issue of prescribed tax returns was re-visited in Pretoria in the 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. In this case however, SARS only raised additional assessments some seven to thirteen years after the original assessments, sparking concern about SARS’ almost infinite reach to reassess tax returns.
Amending a statement of grounds of assessment
Judgment was delivered by the Tax Court in the matter between ABC (Pty) Ltd v Commissioner for SARS (case number 13238/2008, as yet unreported) on 8 December 2014. The matter concerned, among other things, an application by the South African Revenue Service (SARS) to amend its statement of grounds of assessment. Rule 13 of the previous rules of the Tax Court and rule 35 of the new rules allow parties to amend their pleadings on application. The question is, however, to what extent the court will allow for such amendments.
A preservation order is not of itself a ‘tax collection’ measure
A preservation order is not of itself a ‘tax collection’ measure – but it may well be followed by tax collection processes On 1 December 2014 the Pretoria High Court confirmed a provisional preservation order that had been granted in terms of section 163 of the Tax Administration Act 28 of 2011 against Africa Cash and Carry (Pty) Ltd and various members of the Hathurani family in their personal capacities and in their representative capacities as trustees of trusts. (The judgment – thus far published only on the SARS website – is reported as Commissioner for the South African Revenue Services, as applicant, and 19 respondents, including trustees of the Edrees Hathurani Family Trust; case 49274/2014.)