Author: PwC International tax fugitives can run, but they are finding it increasingly difficult to hide. The author Somerset Maugham famously called Monaco a sunny place for shady people. In its early years as a British colony, Australia had something of the same reputation. Perhaps this is one of the reasons why several South African tax fugitives of recent years have chosen to take up refuge there. If so, Australia was a poor choice, for there is ample evidence of close co-operation between the Australian Tax Office (ATO) and SARS in harnessing to the full the provisions of the double tax agreement between the two countries entered into in terms of section 231 of the Income Tax 58 of 1962, read with section 231(2) of South Africa’s Constitution. The double tax agreement and a subsequent Protocol have been approved by the South African Parliament and published in the Government Gazette.
Tax News
Income tax and VAT consequences of e-tolls
Author: Beric John Croome – ENSafrica Introduction The levying of tolls for the use of certain highways in Gauteng, the so called e-tolls, took effect on 3 December 2013. It is therefore appropriate to consider the income tax consequences arising from the payment of e-tolls in those cases where an employee is reimbursed for business travelling or is provided with a vehicle owned by their employer or where an employee receives a travelling allowance to finance the expenditure incurred whilst travelling on the employer’s business. In addition, brief reference will be made to the income tax consequences facing fleet owners and cartage contractors.
Budget 2014 – Lump sum tax break for people who retire
Author: Stephen Craston ONE of the biggest bits of good news in this year’s budget is for those who are facing retirement. Most pensioners take a lump sum of one-third of their accumulated capital when they retire. The tax-free threshold for these lump sums has been increased from R315000 to R500000. Special national treasury adviser David McCarthy says it is inequitable that the lower-paid, who did not benefit from a tax deduction as they weren’t paying income tax, should have to pay tax on their lump sums. The wealthier will benefit as well, as the top rate of 36% now kicks in at R1,05m, up from R945000 in the past financial year. Government has also reduced tax on lump sums taken before retirement, with tax kicking in at R25000, up from R22500.
Budget 2014 – Tax relief favours small business
Author: Chantelle Benjamin High and low earners also found some cheer in a budget focused on stimulating growth. “We are dying here. It’s very hard for a small business to get funding or deal with the red tape,” one desperate small business owner said at a small, medium and micro enterprise (SMME) conference in Sandton a month ago — a plea that was heard by the government in the latest budget. Based on early recommendations by the Judge Dennis Davis committee looking into the present tax regime, efforts have been made to reduce the tax burden on micro enterprises and to reduce the complexity of compliance.
VAT registration of foreign online suppliers not limited to supplies of e-books
Authors: Varusha Moodaley and Seelan Moonsamy (ENS) The recent amendments to the VAT legislation introduced by the Taxation Amendment Act, No 31 of 2013, gives effect to government’s proposal that all foreign businesses supplying e-books, e-music and other digital goods and services in South Africa be required to register as South African value-added tax (“VAT”) vendors. Government indicated that the proposal is in line with international trends such as regulations adopted by the European Union requiring such suppliers to register for VAT in the country where the consumer resides. The amendment has the effect that from 1 April 2014, all persons supplying electronic services from a place outside of South Africa will be required to register as VAT vendors where they make supplies of electronic services to South African customers who are either tax resident in South Africa, or where payment for the services by such customers
Budget 2014 – Tax highlights of the 2014 budget proposals
Author: ENS The minister of finance read the budget speech on the 26th of February. It covers both immediate changes to the tax regime that will receive attention over the coming 1 or 2 years. In general terms, the current and future proposals are very modest in their scope and this could be regarded as the most low-key set of tax proposals to have been put forward for many years, at least from a technical perspective. It is noteworthy that the maximum marginal tax rates applicable to individuals, trusts, companies and dividends remain unchanged. Business Third party backed shares – Several changes are proposed in relation to the tax treatment of third party backed shares. In general terms these relax the hurdles which the taxpayer must overcome to avoid falling foul of the anti-avoidance rules (which re-characterise dividends as interest). Briefly, the changes affect the re-financing of such shares; or Read More …
Tax invoices, credit and debit notes – time limits are set
Author: Carmen Moss-Holdstock (Cliffe Dekker Hofmeyr) An amendment has been proposed in the 2014 Budget Speech relating to the time frame where debit or credit notes under s21(1) of the Value-Added Tax Act, No 89 of 1991 (VAT Act) are required to be issued. Background Under s16(2) of the VAT Act, a vendor can only claim an input deduction if he is in possession of a tax invoice or debit note or credit note. A ‘tax invoice’ is a document that needs to meet the requirements of s20(4) and s20(5) of the Act for the vendor to claim an input deduction. An ‘invoice’ on the other hand is a ‘document notifying an obligation to make payment’ and the issuing of which may affect the timing of supply.
VAT – Going concerns are going – no more uncertainty promised
Author: Carmen Moss Holdstock (Cliffe Dekker Hofmeyr) An amendment has been proposed in the 2014 Budget Speech which seeks to clarify Interpretation Note 57 on the VAT treatment of a going concern, specifically the requirement that a vendor must be a registered vendor at the time the sale agreement is concluded. Background The sale of a business as a going concern, in simple terms, means that the business (or part thereof) is capable of being operated as a stand-alone business in its own right. An example of such a sale would be where a purchaser conducts a letting enterprise from a property and has decided to exercise an option to acquire the property from the seller in terms of the lease agreement, or in the case of a property developer’s enterprise, the transfer of its developed and undeveloped properties (essentially constituting trading stock) to a third party.
Budget 2014: Tax Budget Summary
Finance Minister Pravin Gordhan delivered his 2014 Budget Speech on 26 February 2014. While we did not anticipate major Tax changes in the current year, the complexity and challenges of the existing Tax environment means that it is time for Tax to be a board room level topic again.
Budget 2014: Taxed for your sins
Cape Town – Consumers still trying to enjoy a few small pleasures in life would have to dig a bit deeper into their pockets once again. Excise duties on alcoholic beverages (especially beer, sparkling wine and spirits) will increase by between 6.2% and 12%. Finance Minister Pravin Gordhan, did, however, think it in order not to increase the excise duty on traditional African beer or beer powder. Consumers who like to take a smoke break, will have to cough up 68 cents per packet of 20 cigarettes more from now on, while those enjoying the luxury of a cigar will pay R5.11 more per 23g.