Author: Beric Croome and Gerhard Badenhorst (Tax Executives at ENSafrica). The South African National Treasury indicated in the 2016 Budget Review that there are differing views as to whether the remuneration paid to a non-executive director (NED) is subject to employees tax, that is, pay-as-you-earn (PAYE) and whether a NED should register for value-added tax (VAT). It was suggested that these issues be investigated to provide clarity. In its final response document on the Taxation Laws Amendment Bill, 2016, National Treasury and the South African Revenue Service (SARS) proposed that SARS address the uncertainties relating to VAT and PAYE in relation to NED remuneration in an interpretation note.
Author: Elsabe Strydom and Richard Wilkinson 9tax Associates at ENSafrica). Now that the final regulations relating to country-by-country reporting standards (the CbC Regulations) have been published by the South African Minister of Finance on 23 December 2016, it is important to take stock and consider the CbC Regulations in the context of various other South African developments regarding the implementation of the recommendations contained in the final Action 13 report issued by the Organisation for Economic Cooperation and Development (OECD) on transfer pricing documentation. Accordingly, we have summarised below the current status of the master file/local file returns that also form part of the OECDs Action 13 report, the Final Notice on Transfer Pricing Record Keeping Requirements, issued by the South African Revenue Service (SARS), as well as the transfer pricing disclosure requirements in the corporate income tax return (ITR14).
Author: Michael Reifarth (Tax Executive at ENSafrica). The hybrid debt rules were introduced into the Income Tax Act, 1962 (the Act) and came into effect in 2014 by way of specific anti-avoidance provisions contained in section 8F and 8FA of the Act. The provisions relating to hybrid debt instruments as contained in section 8F of the Act seek to identify and provide for specific tax treatment of certain debt instruments that contain equity-like features. In instances where section 8F applies to a hybrid debt instrument, the legislation disallows the deduction of the amounts of interest incurred by the issuer and furthermore deems such amounts to be dividends in specie declared and paid by the issuer.
Author: Magda Snyckers (Tax Director at ENSafrica). Before 1 April 2015, hedge funds were unregulated and were constituted (broadly speaking) as limited liability partnerships or trusts. For tax purposes, these structures functioned as flow-through entities with investors being responsible for the disclosure and payment of tax resulting from investment activities. As such, fund managers were not typically involved in the disclosure of and accounting for the tax resulting from investment activities.
Author: David Warneke, Head of Technical Tax, BDO SA. A bombshell hidden in the detail of the 2017 Budget review relates to the taxation of offshore trusts. It refers to the 2015 Budget review in which it was announced that measures would be introduced to the tax treatment of foreign companies held by interposed trusts. No specific countermeasures were however introduced and the 2017 Budget review proposes that such countermeasures be introduced to curb abuses.
Author: Ferdie Schneider, National Head of Tax at BDO SA. The Minister of Finance earlier today delivered his Budget Speech for 2017/18 amidst depressed GDP prospects, and negative balance of payment figures. GDP is estimated to be 0.5% in 2016, increasing to 1.3%, 2%, and 2.2% in 2017, 2018, and 2019, respectively. Consumer Price Index (CPI) inflation is estimated to be 6.4% in 2016 and 2017, and decrease to 5.7% and 5.6% in 2018 and 2019, respectively. The balance of payments current account as a percentage of GDP is expected to slightly decrease from 2016 at -4%, 2017 at -3.9%, 2018 at -3.7%, and 3.8% in 2019.
Author: Seelan Muthayan, VAT Director, BDO SA. Expanding the VAT Base In order to expand the current VAT base, it is proposed in 2018/19 that the supply of fuel will no longer be zero rated. This will no doubt have a direct impact on transport costs. Government will look at either freezing or reducing fuel levies in order to reduce the impact on transport cost. As part of the focus globally to deal with base erosion and profit shifting, more attention will be given to businesses providing foreign electronic services to South African Consumers. As previously mentioned in the 2015 budget the regulations dealing with which electronic services are subject to VAT will be updated with a view to removing any uncertainties and current practical difficulties being experienced.
Author: Ian Statham, Corporate Tax Partner and Keelen Snyders,Tax Trainee at BDO Tax Services The Minister of Finance, in his 2017 budget speech, announced an increase in the top marginal rate to 45% for personal income tax. This will apply to individuals earning a taxable income of more than R1,5m per annum. The budget highlighted that this will impact 100 000 taxpayers and contribute almost R10bn to the fiscus.
See how the changes in tax rates affect the various age groups per income level from last year 2016/7 to this year, 2017/18.
2018 tax year (1 March 2017 – 28 February 2018) – see changes from last year Taxable income (R) Rates of tax (R) 0 189 880 18% of taxable income 189 881 296 540 34 178 + 26% of taxable income above 189 880 296 541 410 460 61 910 + 31% of taxable income above 296 540 410 461 555 600 97 225 + 36% of taxable income above 410 460 555 601 708 310 149 475 + 39% of taxable income above 555 600 708 311 1 500 000 209 032 + 41% of taxable income above 708 310 1 500 001 and above 533 625 + 45% of taxable income above 1 500 000 2017 tax year (1 March 2016 – 28 February 2017) Taxable income (R) Rates of tax (R) 0 188 000 18% of taxable income 188 001 293 600 33 840 + 26% Read More …