Many South Africans use foreign trust structures for tax-efficient asset protection and estate planning. Consequently, the recent amendment to section 7C of the Income Tax Act 58 of 1962 (ITA), in the context of low or interest-free loans to a foreign trust by a connected person, is critical to ensuring that such trusts achieve their intended objectives without contravening the trust anti-avoidance provisions.
Tax News
Objecting to an additional assessment: When playing possum isnt an option
When a taxpayer is aggrieved by an assessment raised by the South African Revenue Service (SARS), the first step in disputing this is to file an objection under section 104 of the Tax Administration Act 28 of 2011 (TAA). In the recent case ofDr X and Dr X Inc v Commissioner, SARS(52/2023), the Tax Court dealt with the importance of complying with the requirements of Rule 7(2)(b) of the dispute resolution rules promulgated under section 103 of the TAA (Rules) in order for an objection to be valid. The Tax Court also clarified some of these prescribed requirements.
Better late, or better never? Government wants to tighten rules on taxpayers incurring losses
For a very long time, residents have been required to obtain prior approval from the Financial Surveillance Department of the South African Reserve Bank (SARB) when making payment of royalties or fees to related non-residents.
Better late, or better never? Government wants to tighten rules on taxpayers incurring losses
In the dynamic world of corporate taxation, section 42 of the Income Tax Act 58 of 1962 (ITA) stands as a beacon for persons looking to restructure without immediate tax consequences. This provision provides a mechanism for tax-neutral asset-for-share transactions in terms of which a person can transfer an asset to a resident company in exchange for shares in that company without immediate tax consequences, provided certain conditions are met.
When a grant isnt free: Understanding the tax treatment of government grants under section 12P
Government grants play an important role in supporting South African businesses, particularly in sectors targeted for development or transformation. However, the assumption that such grants are automatically tax free is incorrect. In terms of the Income Tax Act 58 of 1962 (Act), government grants could be included in gross income unless a specific exemption applies or they are of a capital nature.
Game-changing ruling: Companies in business rescue just scored a major victory over SARS
In a landmark decision delivered on 12 May 2025, the Supreme Court of Appeal (SCA) ruled that the South African Revenue Service (SARS) cannot apply set-off of value-added tax (VAT) refunds resulting from trading activities post business rescue, against tax debts that were incurred before the commencement of business rescue proceedings. This ruling came inHenque 3935 CC t/a PQ Clothing Outlet v Commissioner for the South African Revenue Service(846/2023) [2025] ZASCA 56, a case that has significant implications for companies undergoing business rescue.
Court or nought? The status of the Tax Court revisited
Considerable uncertainty has arisen about the status of the Tax Court. Despite the name and the nature of its presiding officers, unlike other specialist courts established by Parliament to consider matters in specific areas of law, recent judgments have commented that the Tax Court is currently neither a court of law nor a judicial tribunal, but rather functions as an administrative tribunal. In light of the debatable justification for this state of affairs, this article posits that it may be worth reconsidering the composition and function of the Tax Court.
Avoiding unexpected tax liabilities in property investment
Property investment is a popular topic of discussion, often accompanied by various anecdotes, tips, and cautionary tales. However, while the potential for profit is frequently emphasised, the importance of tax implications is often overlooked. This article explores some of the different property investment options available in South Africa, their associated tax treatment, and common pitfalls to avoid.
Rule 56, default cures and fairness: SCA confirms substance over procedure in tax disputes
In Commissioner for the South African Revenue Service v Virgin Mobile South Africa (Pty) Ltd [2025] ZASCA 77 (4 June 2025), the Supreme Court of Appeal (SCA) delivered important guidance on the procedural interplay between Rule 56 of the Tax Court Rules (Rules) and the requirement for condonation under Rule 52. This ruling provides important clarity on how late filings should be approached, particularly where the defaulting party acts within the grace period afforded under Rule 56. Background Under Rule 31 of the Tax Court Rules, the South African Revenue Service (SARS) must file its statement of grounds of assessment and opposing appeal within 45 business days after receiving the taxpayers Rule 10 notice of appeal. If SARS fails to meet this deadline, the taxpayer may invoke Rule 56(1)(a), placing SARS on terms to remedy the default within 15 business days or face default judgment in terms of section 129(2) Read More …
South African Budget 2025- Important tax proposals
Important tax proposals to note: 1. Employment Tax Incentive: Government proposes to maintain the current value of the employment tax incentive. However, effective from 1 April 2025, the formula to calculate the incentive and the eligible income bands will be adjusted, in part due to adjustments of minimum wages since the last increase in the value of the incentive in 2022. 2. Cross-border tax treatment of retirement funds: The current treatment of cross-border retirement funds may have resulted in double non-taxation, particularly where South Africa is granted the taxing right by treaty. It is proposed that changes be made to the rules that currently exempt lump sums, pensions and annuities received by South African residents from foreign retirement funds for previous employment outside South Africa, with amendments in the current legislative cycle. 3. Government aims to expand South Africas tax treaty network and renegotiate some existing treaties to strengthen economic Read More …