National Treasury yesterday released the draft bills for public comment, which once approved will serve to effect the legislative amendments announced as part of the 2019 Budget Review. Of interest to the individual taxpayer and especially one whom has surplus funds available for investment is the proposed changes to cap the tax deduction available in respect of investments to the section 12J Venture Capital Companies (VCC). It is proposed to introduce a cap of R2.5million per annum per investor.
The concept of reasonable period within the ambit of the tax legislation seems to be topical one day and then the next loses impetus for whatever reason without ever settling the issue. This question of time is exceptionally important and relevant for the sections in the tax legislation which deal with the situation where SARS has requested a taxpayer to render to it relevant material as part of SARS powers of information gathering.
When the legislature introduced a fifth fund to the already burdensome four fund approach to the Long-Term Insurance legislation in 2016, many wearied tax managers and practitioners shoulders slumped further. On closer investigation the introduction of the fifth fund, or Risk Policyholder Fund (RPF), brought apparent administrative relief to many, as most of their policies could be lumped into this one fund leaving them with two funds, together with the ever present Corporate Fund, instead of four or a dreaded five to administer.
Some clarification is seen on the original intention of the Special Economic Zone (SEZ) legislation, since the release of the Draft Taxation Laws Amendment Bill on 21 July. It is proposed, as intended by the SEZ legislation, to attract new and expanded manufacturing businesses, that only new companies or expansions of existing companies would qualify for the SEZ income tax benefits.
Authors: Mareli Treurnicht and Emil Brincker. On 12 June 2019 the Cape Town Tax Court delivered its judgment in the dividends tax test case between ABC Pty Ltd (Taxpayer) and the South African Revenue Service (SARS). The case pertained to SARSs refusal to refund dividends tax overpaid by the Taxpayer following the Taxpayers interpretation of the most favoured nation provision (MFN clause) in the double taxation agreement (DTA) between South Africa (SA) and the Netherlands (SA/Netherlands DTA) (Dutch MFN clause), read with the MFN clause in the SA/Sweden DTA (Swedish MFN clause) and the SA/Kuwait DTA.
Authors: Kelsey Biddulph and Tessmerica Moodley.The South African Real Estate Investment Trust (REIT) structure is a listed property investment vehicle, similar to internationally recognised REIT structures, where a tax dispensation ensures a flow through of net property income to investors. A REIT is essentially a company that owns and operates income-producing immovable property.
Authors: Emil Brincker and Louise Kotze. In a litigious context, the doctrine of legal professional privilege provides that communications between an attorney and a client are protected from disclosure in litigious proceedings. The protection afforded to a litigant in terms of this doctrine is aimed at encouraging and protecting the full and honest disclosure of information by clients to their legal advisors when seeking legal advice, which is necessary for the proper functioning of the South African adversarial system of litigation.
Authors: Tsanga Mukumba and Louis Botha. Recently, the South African Property Owners Association (SAPOA) released its Office Vacancy Report for the first quarter of 2019. According to one of the key findings of the report, there has been a quarter on quarter decline in SAPOAs assessment of the square meterage of commercial property under development from 559,000 sqm to 404,000 sqm.
Authors: Tsanga Mukumba and Louis Botha. Section 46 of the Income Tax Act, No 58 of 1962 (Act) provides tax relief where a company (Unbundling Co) wishes to unbundle its shareholding in a subsidiary (Unbundled Co), to the companys own shareholders. The Unbundling Cos shareholders indirect shareholding in the Unbundled Co is converted to a direct shareholding, in proportion to their shareholding in the Unbundling Co.
Authors: Louise Kotze and Louis Botha. In terms of s30 of the Income Tax Act, No 58 of 1962 (Act), an entity can only become a public benefit organisation (PBO) if it meets the requirements in that section and is approved by the South African Revenue Service (SARS) as a PBO. In practice, to be approved as a PBO, an application must be submitted to SARSs Tax Exemption Unit (TEU).