In Anglo Platinum Management Services v SARS,(1) the Supreme Court of Appeal (SCA) recently ruled in favour of the taxpayer in respect of a motor vehicle salary sacrifice scheme. The judgment underlines the importance of employers and employees properly agreeing, understanding and implementing any remuneration structures that contain a salary sacrifice component. Background A ‘salary sacrifice’ or ‘salary substitution’ arrangement is essentially the substitution of a cash component of an employee’s overall cost-to-company remuneration package for a non-cash benefit, generally resulting in a lower amount subject to the deduction of employees’ tax.
Tax News
Absolving of employer from an employees’ tax liability process to be formalised
The Taxation Laws Amendment Act, No 23 of 2015 (TLAA) contains an amendment to a somewhat odd provision, that has seemingly stood the test of time since the introduction of the Fourth Schedule into the Income Tax Act, No 58 of 1962. Paragraph 5(2) of the Fourth Schedule, dealing with absolving an employer from liability in respect of employees’ tax, has now been amended to provide a more formal approach, when compared to its previous version, which is still riddled with discretionary powers.
Converting loans into equity: another SARS ruling
Author: Ben Strauss. The issue of ‘converting’ loans into share capital remains a vexing one. The matter was again the subject in Binding Private Ruling 213 (Ruling) issued by the South African Revenue Service (SARS). The facts of the Ruling are common. To fund its operational expenditure, a company resident in South Africa borrowed money from its non-resident holding company and other non-resident companies related to the holding company. The holding company proposed to subscribe for further ordinary no par value shares in the local company. The subscription price would be equal to the total amount of the local company’s indebtedness to the holding company and the related companies. Notably, the subscription price would be paid in cash. The local company would then use the cash to settle the capital of, and the interest on, the loans. SARS ruled as follows in relation to the proposed transaction: The issue of Read More …
Draft bill on carbon tax released
Author: Heinrich Louw (International Law Office). Having been the subject of various discussion papers since 2011, the introduction of a carbon tax in South Africa is becoming a reality with the release of a draft carbon tax bill earlier this month. It has been clear since at least 2013 that South Africa would opt for a carbon tax in order to price carbon, as opposed to an emissions-trading scheme. The draft bill sets out the mechanics of the carbon tax. Greenhouse gas levy Essentially, the carbon tax will be levied in respect of the greenhouse gases that result from:
Zuma moves to calm waters over provident funds
Author: Ingé Lamprecht (Moneyweb). President Jacob Zuma has moved to calm the waters after the Congress of South African Trade Unions (Cosatu) demanded that the new regulations that will compel provident fund members to annuitise be scrapped. Zuma signed the Tax Administration Laws Amendment Act and the Taxation Laws Amendment Act into law earlier this month. The regulations, which will harmonise the taxation of contributions to pension funds, retirement annuities and provident funds, will take effect on March 1.
Gordhan moves to calm workers over new pension laws
Author: Jenni Evans (Fin24). Controversial new pension laws only apply to money saved from 1 April this year, Finance Minister Pravin Gordhan said on Thursday. “Anything you saved up to March this year is not touched. The old rules still apply,” Gordhan said at a post-Cabinet briefing broadcast from Pretoria. Panic and anger set in among workers when President Jacob Zuma signed the new tax laws such as the 2015 Tax Laws Amendment Act and the Tax Administration Laws Amendment Act into force.
Gordhan’s SARS move in the nick of time
Author: Financial Mail The reappointment of Pravin Gordhan as finance minister has been welcomed, going some way to ease market jitters caused by President Jacob Zuma’s axing of Nhlanhla Nene. Gordhan’s appointment was, however, less well received in the executive corridors of the SA Revenue Service (SARS). This is predictable, considering that commissioner Tom Moyane, appointed by Zuma at the end of 2014, quickly took it upon himself to systematically unravel the work done by Gordhan during his own tenure at SARS.
Tax: Luring tax back home
Author: Fiona Forde (Financial Mail) IN an anaemic economy, SA’s treasury officials are looking for ways to draw in more revenue, and offshore bank accounts are prominent targets. One likely route is an overhaul of the voluntary disclosure programme (VDP) to collect tax owed. An announcement could be made in the budget speech next month. There has been a sense among officials for some time that not enough is being done to rope in tax evaders and avoiders, particularly those with vast wealth stashed overseas.
The tax risks of cross-border employment
Author: Shohana Mohan (KPMG) The issues relating to the international hiring out of labour, personal tax considerations and what to look out for when structuring contractual arrangements. The world has become increasingly globalised, and cross-border mobilisation is high on the agenda for many countries and companies. Any multi-national company worth its salt has a global mobility policy framework in place, which sets out the parameters for cross-border employment.
Pravin Gordhan: We will win the trust of South Africans
Author: Sarah Evans (Mail & Guardian) In his first press conference since being reappointed finance minister, Gordhan has pledged to ensure “sound fiscal management”. The newly appointed minister of finance, Pravin Gordhan, sought to reassure the country and nervous investors on Monday in a press conference where he promised that “sound fiscal management” would be the ministry’s priority. Gordhan was appointed to the position, which he previously held from May 2009 to March 2014, in a surprise announcement on Sunday night.