Author: Louis Botha (Associate at Cliffe Dekker Hofmeyr). In recent times, taxpayers have often been unsuccessful in their disputes with the South African Revenue Service (SARS), especially where the dispute involved the interpretation or application of the substantive provisions of tax legislation. However, where disputes have involved compliance with the procedural requirements of tax legislation, taxpayers have generally had greater success. The judgment in Mr A v The Commissioner for the South African Revenue Service (Case No. IT13726) (as yet unreported), falls into the second category and is the subject of this article.
Tax News
Demand loans, prescription and tax
Ben Strauss (Tax Director at Cliffe Dekker Hofmeyr). In South Africa, generally, debts prescribe within three years from the date on which they become due. If a person advances money or credit to another person without a fixed date for repayment, unless the parties agree otherwise, the debt becomes due on the date of the conclusion of the agreement. However, what is the position in the case of a so-called demand loan, that is, a loan agreement in terms of which the creditor has the power by making demand to unilaterally determine when the debtor must perform? That question was at issue in the Constitutional Court case of Trinity Asset Management (Pty) Ltd v Grindstone Investments 132 (Pty) Ltd 2018 (1) SA 94 (CC).
Employee share schemes: Tax deductibility of employer contributions
Ben Strauss (Director at Cliffe Dekker Hofmeyr). Many employee share incentive schemes work as follows: The employer company forms a scheme trust. The company pays a non-refundable cash contribution (or grant) to the trust (instead of, say, lending cash to the trust). The trust uses the cash to buy, or subscribe for, shares in the employer company or another related company. Eligible employees are given the opportunity to participate in the scheme by, say, acquiring units in the trust, subject to the employees continuing to comply with certain conditions over a number of years.
SARS speaks up: Some clarity provided on the taxation of cryptocurrencies in South Africa
Author: Candice Gibson (Senior Associate at Cliffe Dekker Hofmeyr). On 6 April 2018, the South African Revenue Service (SARS) announced that it will continue to apply normal income tax rules to cryptocurrencies and will expect affected taxpayers to declare cryptocurrency gains or losses as part of their taxable income.
Raising jurisdictional issues
Authors: Heinrich Louw and Louise Kotze (Cliffe Dekker Hofmeyr). Where a taxpayer is dissatisfied with the decision taken by the South African Revenue Services (SARS) regarding an objection made by the taxpayer to an assessment, the taxpayer is entitled to appeal against such decision to the Tax Court. The Rules of the Tax Court, promulgated under s103 of the Tax Administration Act, No 28 of 2011 (TAA), prescribe the procedure to be followed when proceedings are instituted in the Tax Court.
Its complete: The Davis Tax Committee releases its final reports
The final reports can be downloaded below: 20180329 DTC Closing Report(2) 20180417 BD Article on DTC wealth tax report 20180412 DTC Note on Territorial Taxation 20180412 DTC Media Statement – 4 Reports, Closing 20180412 Article on residence and source taxation 20180411 Final DTC CIT Report – to Minister 20180329 Final DTC Wealth Tax Report – To Minister 20180329 Final DTC VAT Report to the Minister 20180329 Final DTC PBO Report to the Minister 20180329 DTC Closing Report(2)
Its complete: The Davis Tax Committee releases its final reports
Author: Louis Botha (Cliffe Dekker Hofmeyr). On 12 April 2018, the Davis Tax Committee (DTC), issued a media statement (Media Statement) in which it announced the publication of four additional final reports and the conclusion of its work based on its Terms of Reference (ToR).
SARS issues new guide to understatement penalties – a march toward further certainty?
Author: Jerome Brink (Senior Associate at Cliffe Dekker Hofmeyr). The Tax Administration Act, No 28 of 2011 (TAA) was promulgated with effect from 1 October 2012. The rationale behind the introduction of the TAA was that it would streamline, modernise and align the previous tax administration provisions to ultimately lower the cost and burden of tax administration in South Africa. One of the key changes to the tax administration regime in South Africa pursuant to the promulgation of the TAA was the conversion from the imposition of additional tax by SARS to the understatement penalty regime.
Ignorance is not bliss: A recent judgment about understatement penalties and a caution to taxpayers
Author: Louis Botha and Louise Kotze (Cliffe Dekker Hofmeyr)In the recent matter of Mr A & XYZ CC v The Commissioner for the South African Revenue Service (Case Nos IT13725 & VAT1426, IT13727 & VAT1096), which involved four combined cases, the South African Revenue Service (SARS) issued assessments to Mr A and XYZ CC (Taxpayers) relating to income tax for the 2007 to 2012 years of assessment and Value-Added Tax (VAT) for the 2006 to 2013 periods.
Recent developments in the PBO arena – tax compliance in the religious sector and general tax provisions applicable to PBOs
Author: Louis Botha (Tax Associate at Cliffe Dekker Hofmeyr). On 26 January 2018 the South African Revenue Service (SARS) issued a media release (Media Statement) regarding its intention to investigate possible tax non-compliance in the religious sector. In this article we will discuss the issues raised by SARS in the Media Statement as well as some of the relevant legal provisions that have to be met in order for organisations, including religious organisations, to be approved as a public benefit organisation (PBO).