Tax News

Reportable arrangement: proposed reporting burden on mining companies and rehabilitation trusts

The reportable arrangement provisions were established by the South African Revenue Service (SARS) with the objective of obtaining information on certain types of transactions. The circumstances under which a person should report an arrangement to SARS, as defined in section 34 of the Tax Administration Act, 2011 (the TAA), are contained in sections 34 to 39 of the TAA.

Proposed amendments to clarify income tax treatment of statutory mergers

Sections 113 and 115 of the Companies Act, 2008 provide for an automatic statutory merger of two companies. The transfer occurs by way of operation of law, and barring any express prohibition to the contrary in a contractual arrangement, no third party consent is generally required to implement the merger. This type of transaction may typically give effect to a desired corporate reorganisation, in terms of which an existing company is liquidated, wound up and/or deregistered.

A creature of statute: A decision about the Tax Courts power to increase understatement penalties

Authors: Louise Kotze and Louis Botha. In the recent judgment of Purlish Holdings (Proprietary) Limited v The Commissioner for the South African Revenue Service (76/18) [2019] ZASCA 04, the Supreme Court of Appeal (SCA) had to pronounce on the South African Revenue Services (SARS) entitlement to impose understatement penalties on Purlish Holdings (Proprietary) Limited (Taxpayer) and the quantum thereof.

SA Budget 2019/20 – Tax Budget Proposals

Author: Dave Honeyball. In line with expectations Finance Minister Tito Mboweni did not increase tax rates for income tax, Vat and capital gains tax. For the first time in many years, tax rates have remained unchanged from prior years and the only relief available to individual taxpayers has been a very small increase in the primary, secondary and tertiary rebates. The effect of this is that the tax threshold for individual taxpayers has increased from R78 150 to R79 000. Taxpayers who are fortunate enough to receive inflationary remuneration increases will for the first time in many years not benefit from any tax bracket relief and may in fact move into a different tax bracket by virtue of their increases.

The Tax Dos and Donts of SBCs

Author: Esther van Schalkwyk , BDO Tax Manager. A Small Business Corporation (or SBC) may qualify for favourable tax treatment if it meets certain requirements in the Income Tax Act (ITA). The benefits, requirements, and common pitfalls are summarised below. Benefits Companies (including close corporations) are generally subject to a flat rate income tax of 28%. SBCs are subject to more favourable tax rates on taxable income up to R550 000. The SBC tax rates for financial years ending between 1 April 2018 and 31 March 2019 are:

Does a trust require an independent trustee

Often, when dealing with our clients trust matters, we are asked whether the clients brother/sister/closest friend would be a suitable independent trustee for their trust. Although not required in terms of the Trust Property Control Act, it has become practice because of various case law and rulings, to appoint a truly independent trustee. This challenges the way most family trusts have historically functioned.

Tax compliance is crucial for Public Benefit Organisations (PBOs) and their donors

South Africas Public Benefit Organisations (PBOs) do invaluable work uplifting communities and benefiting underprivileged people across our country. Sadly, most of these entities do not have the resources to ensure that they are fully tax compliant. However, the tax status of a SARS approved Public Benefit Organisation (PBO) is crucial to its ability to raise funds and attract donors, who along with wanting to be philanthropic, are attracted by the tax deductions that come with donations to such organisations. These entities are often exempt from paying income tax and are entitled to issue Section 18A certificates to donors. A lack of tax compliance can see these PBOs lose their tax exemption status, prejudicing themselves, the communities they serve, as well as the companies and individuals that donate to them. Once a charitable or community organisation is no longer tax compliant, it may become liable to pay income tax on the Read More …

SA BUDGET 2019 – A Review

Author: Ferdie Schneider , BDO National Head of Tax and Tax Partner. The Minister of Finance, Mr Tito Mboweni, delivered his National Budget Speech today. An eloquent touch by the Minister was his placing and contextualising of the Faith of the Country, South Africans, and the Economy, on Scripture and opened with a quote form Zechariah 8 verse 12: For the seed shall be prosperous; the vine shall give her fruit; and the ground shall give her increase, and the heavens shall give their due; and I will cause the remnant of this people to possess all these things.