From time to time, listed companies unbundle shares to their shareholders. It is important for the shareholders to understand the tax implications which may arise upon the receipt of the shares.
Tax News
Offshore Trusts: the basic considerations and recent amendments
A new world The world of offshore trusts is now more dynamic than ever. The benefit of trusts as effective tools for the preservation of assets for future generations has been commonly known and accepted for decades. Globally, the trust environment has changed significantly due to the introduction of the Common Reporting Standards and resulting Automatic Exchange of Information between various revenue authorities around the world. The identities of original funders and beneficial owners are no longer protected.
Inbound interest bearing loans section 31 versus section 23M of the Income Tax Act
There can be no objection in principle to the deduction of interest on loans in suitable cases. Loan capital is the life blood of many businesses but the mere frequency of its occurrence does not bring about that this type of expenditure requires different treatment. Whilst these words of Hefer JA in the well-known judgment of Ticktin Timers CC v The Commissioner for Inland Revenue (1999 (4) SA 939 (SCA) at 942I) are still apposite two decades later, there has been increased focus by National Treasury on cross-border financing and how it may lead to tax avoidance, base erosion and profit shifting. As a result of this scrutiny, sections which are intended to have an effect on the deductibility of interest incurred in respect of cross-border loans have been included in the Income Tax Act No. 58 of 1962 (the Act). For the current purposes, we have only focused on Read More …
High Court litigation against SARS: Changes coming?
Author: Louis Botha. On 17 September 2019, the South African Revenue Service (SARS) released a Media Statement regarding the steps that SARS has taken in implementing the Nugent Commission (Commission) recommendations (Media Statement).
Binding Private Ruling: Roll-over relief can also apply to transactions involving non-resident companies
Authors: Louise Kotze and Louis Botha. The Income Tax Act, No 58 of 1962 (Act) provides for roll-over relief in respect of any capital gains that would normally be realised pursuant to the disposal of an asset, provided the requirements of the relevant roll-over relief provision in the Act are met. For example, in terms of s47 of the Act, transactions relating to the liquidation and winding-up of companies, can qualify for roll-over relief so that the capital gains liability that may arise in the normal course of the transaction will be deferred and no capital gains tax (CGT) will be payable at the time that the transaction in concluded.
Sharing is caring – ruling on disposal and acquisition of shares by a PBO
Authors: Louis Botha and Jessica Osmond.The Income Tax Act, No 58 of 1962 (Act) states that where a non-profit company, trust or association of persons meets certain requirements in the Act, it can be approved by SARS as a public benefit organisation (PBO), which enjoys certain tax benefits. To obtain approval a PBO is required, amongst other things, to carry on public benefit activities (PBAs) with a philanthropic intent and in a non-profit manner. However, it may happen that a PBO has excess funds that it would like to invest to earn interest, for example, which interest it would then also use to carry on public benefit activities.
Methods used by taxpayers to write down trading stock to be rewritten?
Author: Jerome Brink. In its simplest form, s22 of the Income Tax Act, 58 of 1962 (Act) is a timing provision which ensures that the cost of trading stock in the hands of a taxpayer matches the income earned in respect of that trading stock sold, or otherwise disposed of. The 2019 Draft Taxation Laws Amendment Bill (2019 Draft TLAB) proposes a key amendment to the manner in which taxpayers can write trading stock down at the end of any year of assessment which will have far-reaching implications for many taxpayers.
Fora(ging) for tax relief a judgment about reviewing a SARS assessment or decision
Authors: Jessica Osmond and Louis Botha. In terms of South African tax law, where a taxpayer wishes to object or appeal against an assessment issued by or decision made by the South African Revenue Service (SARS), it must do so in the manner prescribed in the Tax Administration Act, No 28 of 2011 (TAA). Where a dispute is not resolved pursuant to an objection lodged by a taxpayer, the taxpayer can appeal the decision to the Tax Court.
Proposed amendments to the Employment Tax Incentive Act: A win-win for employers and employees
Authors: Jessica Osmond and Louis Botha. To encourage employment across specific sectors in South Africa, the Employment Tax Incentive Scheme (ETI Programme) was introduced. Since 2014, this ETI Programme was structured in a way which mutually benefits both the employee and the employer. This mutually beneficial relationship was achieved by offering an employer an employees tax incentive if the employer employed anyone within the definition of qualifying employees in the Employment Tax Incentive Act, No 26 of 2013 (ETI Act).
Investments in venture capital companies not looking so attractive anymore
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.