Tax exemption of membership based organisations – time for a rethink?

Membership based organisations are fundamental to the sustainability and development of the economy of South Africa as they provide vital industry and professional support services to a wide range of important occupations and trades ranging from accountants, lawyers and doctors to artisans and engineers. The majority of these organisations operate on a non-profit basis for the benefit of their members and ultimately play an important role in increasing employment in South Africa and uplifting poor communities.

The European Commission upsets the Apple cart

On 30 August 2016, the European Commission (EC) issued a press release in which it announced that Ireland, a member of the European Union (EU), gave illegal tax benefits to certain companies in the Apple group worth up to €13 billion. The EC found that Ireland had contravened the “EU state aid rules because it allowed Apple to pay substantially less tax than other businesses. Ireland must now recover the illegal aid”.

Africa tax in brief

DEMOCRATIC REPUBLIC OF THE CONGO (DRC): Refund of input VAT credit suspended In terms of the DRC value added tax (“VAT”) legislation, export businesses, companies ceasing their activities, oil and mining companies (during the exploration phase) and companies making significant investments are entitled to request input VAT credit refunds. However, on 18 April 2016, the government announced the suspension of the refund of input VAT credits for all taxpayers in an attempt to bolster its decreasing tax revenues resulting from the decrease in commodity prices.

SARS’ constitutional obligations and taxpayers’ rights

Given media coverage of the various Constitutional Court challenges involving government institutions and the Presidency; the perceived power struggle between the Commissioner for the South African Revenue Service (SARS) and the Minister of Finance; as well as SARS’ continued pressure to collect revenue in difficult economic times that see corporate taxpayers endure declining revenues and increasing costs; it is useful to remind taxpayers and their shareholders of their constitutional rights and SARS’ constitutional obligations when it performs its functions in administering various taxation statutes. This topic is very complex and, accordingly, what follows is a very broad overview of these issues. Taxpayers and their shareholders are encouraged to obtain specialised legal advice or assistance when confronted with potential investigations or audits by SARS.

2015/2016 Annual Reconciliation Declaration (EMP501) and Employees Income Tax Certificates [IRP5/IT3(a)s] to SARS

Employer Annual Reconciliation Employers are required to submit their Pay-As-You-Earn (PAYE) Employer Annual Reconciliations between 18 April and 31 May 2016 to SARS, confirming or correcting payroll tax amounts which were declared during the 2015/2016 tax period. This year, employers are urged to accurately verify and update each employee’s personal and financial details before submitting their Annual Reconciliation Declaration (EMP501) and Employees Income Tax Certificates [IRP5/IT3(a)s] to SARS.

Vendor beware: capital gains tax on instalment sales

Taxpayers should take great care when selling assets where the price is paid in instalments as the transaction may trigger some tricky capital gains tax (CGT) consequences. Consider the case of New Adventure Shelf 122 (Pty) Ltd vs The Commissioner of the South African Revenue Service (7007/2015) [2016] ZAWCHC 9 (17 February 2016). In this case the taxpayer acquired immovable property in 1999. In the taxpayer’s 2007 tax year it sold and transferred the property to a third party for a profit. The buyer had to pay the price of the property in instalments over more than one tax year.

Breaking records – Thank you for your trust

“Yesterday, SA Tax Guide had 4325 visitors in one day on its website. This is a milestone for the founder, considering the humble beginnings we had. Thank you for your visit, thank you for helping reaching new heights. The last record was 2391 per day.” Nyasha Musviba

Budget 2016 – Special Voluntary Disclosure Programme in respect of offshore assets and income

Following recent rumours that the Minister may announce an amnesty in respect of offshore assets and income, National Treasury released a media statement earlier today announcing the introduction of such a Special Voluntary Disclosure Programme (VDP). According to the media statement, the purpose of the VDP is to give non-compliant taxpayers an opportunity to voluntarily disclose offshore assets and income. The media statement warned that, with a new global standard for the automatic exchange of information between tax authorities providing SARS with information regarding such offshore assets and income from 2017, time is running out for taxpayers who have not disclosed assets abroad. The VDP will provide both individuals and companies with an opportunity to regularise their tax and exchange control affairs through one joint process.

It’s called 9/12 – Gordhan remembers Nene

Cape Town – The Budget Speech might have been a tad boring without any red-bereted comedy, but what was lacking in humour in Parliament was made up for behind the scenes during the pre-budget press conference on Wednesday. Finance Minister Pravin Gordhan revelled in the knowledge that the room of over 120 journalists was there to hear how he would save South Africa from a ratings downgrade and change the economic course of the country. “Thank you for welcoming the new old guy in such numbers,” Gordhan told the journalists. “Thank you for your support.” Once his opening remarks were complete, Gordhan was ready to pounce with humour and wit to retort to the challenging questions posed by journalists.

South African Budget 2016/17 – 2016 BUDGET HIGHLIGHTS

• Personal income tax relief of R5.65 billion • Capital gains tax inclusion rate for individuals, special trusts and insurers’ individual policyholder funds increases from 33.3% to 40%, and for other taxpayers from 66.6% to 80% • Assets transferred through a loan to a trust are to be included in the estate of the founder at death and interest-free loans to trusts are to be treated as donations • General fuel levy increases by 30 cents per litre on 6 April 2016 • Excise duties on alcoholic beverages increase by between 6.7% and 8.5% • From 1 April 2016 the plastic bag levy is to increase from 6 cents to 8 cents per bag and the incandescent globe tax will Increase from R4 to R6 per globe • A tyre levy at R2.30 per kilogram is to be introduced on 1 October 2016 and a tax on sugar-sweetened beverages on … Continue reading