Author: Lorys Charalambous (Tax-News.com) On December 17, the South African Revenue Service (SARS) issued an explanatory memorandum on the 2015 Tax Administration Laws Amendment Bill (TALAB). In particular, the memorandum looks at the TALAB provisions giving effect to the collection of information from South African financial institutions (FIs), and the associated obligation on the FIs to register with SARS regarding the Foreign Account Tax Compliance Act (FATCA) intergovernmental agreement (IGA) with the United States that was signed in July last year.
Tax News
Changes that are Likely to Impact your Payroll
The much-anticipated legislation to give effect to the tax harmonisation reforms of retirement funds has finally been signed into law by the President. The changes will be implemented with effect from 1 March 2016, as was anticipated prior the official publication of the legislation in the Government Gazette on 8 January 2016. Below is a short summary highlighting certain aspects of the changes:
Gordhan halts Sars plans to ‘assess situation’
Author: Matthew le Cordeur (News24). Cape Town – Finance Minister Pravin Gordhan in December instructed the SA Revenue Service (Sars) to halt its extensive restructuring plans, so he could assess the situation before allowing the process to continue. Treasury spokesperson Phumza Macanda told Fin24 on Thursday that Gordhan asked Sars commissioner Tom Moyane at a meeting in December to suspend his ambitious plans. “He met briefly with Sars management in December and yes, he asked that major initiatives be put on hold until he’s had time to assess the situation fully,” she said. “He is yet to be brought up to speed so there haven’t been any major decisions as yet,” she said.
Value-Added Tax – Even More Reason to Come Clean
Author: Erich Bell, Senior Tax Consultant at BDO South Africa. The VAT Act requires VAT to be levied by a vendor on the supply of goods or services in the course or furtherance of an enterprise carried on by the vendor. A vendor is any person who is or is required to be registered in terms of the VAT Act. The fact that a vendor includes any person that is required to be registered makes it clear that a person’s liability for VAT is not dependent on whether the person is in fact registered as a vendor but rather whether the person is required to be registered as a vendor.
The Valuation of Assets by Taxpayers – Lessons from Stepney Investments
Author: Esther van Schalkwyk, Tax Consultant at BDO South Africa. The Supreme Court of Appeal (SCA) recently handed down judgment in CSARS v Stepney Investments (Pty) Ltd in which it confirmed that valuations are not to be taken lightly by taxpayers. Stepney disposed of a pre-valuation date asset of 4.37% of the shares it held in Emanzini Leisure Resorts (Pty) Ltd. Stepney elected to use the market value of the shares on the valuation date as the method of determining the value as at 1 October 2001.
Think carefully before transferring your Retirement Annuities
Author: Lisa Griffith, an Associate Director at BDO Wealth Advisers. Paying penalties when you choose to transfer your retirement annuities has been a thorny issue for investors in RA’s for some time. The lure of a unit trust based retirement annuity, or concerns about mediocre performance, may prompt investors into switching to a new generation product. However, this process will not always result in the investor being in an improved position and so it may ultimately not be prudent to transfer after all.
Residential property and VAT
Author: Ben Strauss. Until recently it was smaller investors who bought and let residential property. But nowadays even listed Real Estate Investment Trusts (REITs) are building, buying and letting large portfolios of residential property. No doubt the investors are looking to satisfy the demand for residential property, and to realise better yields than may be achieved in commercial property. The value-added tax (VAT) rules on the building, buying, letting and selling of residential properties are not simple. It is worthwhile recapping some of the general principles that apply.
SAA Airbus swap deal goes Nene’s way Agency Staff | 22 December, 2015 07:08 SAA informed the Treasury that the board approved the execution of the transaction as directed and a process is underway to conclude it within the next few days, Treasury said in a statement late on Monday. File photo Image by: Gallo Images/foto24/Yunus Mohame South African Airways (SAA) chairperson Dudu Myeni has officially lost her battle to reconfigure the airline’s Airbus swap deal, which could have threatened the financial stability of SAA. Save & Share Tweet Email Print Related News The secret memo SAA did not want you to see The secret memo SAA did not want you to see SAA, media slug it out in court SAA, media slug it out in court SAA pilots won’t be intimidated by claims of sabotage against black colleagues SAA pilots won’t be intimidated by claims of sabotage against black colleagues SAA on gag order: Publication doesn’t waive privilege SAA on gag order: Publication doesn’t waive privilege SAA clips media’s wings on leaked Mpshe memo SAA clips media’s wings on leaked Mpshe memo Sticking to former minister Nhlanhla Nene’s approved plan from July this year, the transaction will see SAA swap the purchase of ten A320 aircraft for a lease of five A330-300 aircraft from Airbus. The implementation of the deal in this manner will mean that SAA will no longer be required to pay additional pre-delivery payments to Airbus, which would have amounted to about R603m. The SAA board conceded defeat to Treasury on Monday after Finance Minister Pravin Gordhan directed it to conclude the swap transaction with Airbus in line with approval granted by Nene. After his appointment, Gordhan gave SAA an opportunity to make further representation, following which he decided that the airline must go ahead with executing the A320/A330 swap as had been approved by Nene, Treasury said. Treasury in contact with Airbus Treasury has also been in direct contact with Airbus to ensure that all the required actions are executed smoothly to conclude the deal, it said on Monday. “Airbus has indicated that they are amenable to the implementation of the transaction and have required that all legal documentation be in place by 28 December 2015,” said Treasury. “The National Treasury will work closely with Airbus and SAA to finalise the swap transaction.” “Also, as the airline takes delivery of each of the A330s, the pre-delivery payments that have already been paid, which total just more than $100m, will be refunded by Airbus. “SAA will not be required to recognise impairments, as it will no longer be acquiring aircraft. It had been estimated that such impairments could have totalled in excess of R1bn.” “The implementation of the transaction will therefore improve the airline’s financial position by alleviating the cash flow pressure and improving its profitability. Further measures will be taken next year to stabilise the airline,” Treasury said. Fallout from Airbus deal Nene fell out with Myeni over the deal, with the former minister adamant that the deal continue as approved in July. Myeni and the SAA board wanted to amend the transaction to allow SAA to purchase the A330-300 aircraft and enter into a sale and lease back deal with a local lessor/s. Having studied SAA’s proposal on the matter, Nene told SAA on December 3 to implement the transaction structure in line with the approval that had already been granted. The SAA board allegedly ignored this request and on December 9, President Jacob Zuma – Myeni’s close friend – fired Nene and replaced him with the somewhat unknown MP David van Rooyen. Four days later, that changed too, with Gordhan rescuing Zuma from an economic crisis. The Airbus deal was the first major test for Gordhan since returning to Treasury last week.
SAA informed the Treasury that the board approved the execution of the transaction as directed and a process is underway to conclude it within the next few days, Treasury said in a statement late on Monday. South African Airways (SAA) chairperson Dudu Myeni has officially lost her battle to reconfigure the airline’s Airbus swap deal, which could have threatened the financial stability of SAA.
Treasury forges ahead with retirement reform – Tax harmonisation of retirement funds to be implemented March 1, 2016
Author: Ingé Lamprecht (Moneyweb). Tax harmonisation of retirement funds to be implemented March 1, 2016. JOHANNESBURG – National Treasury has confirmed that regulations to harmonise the taxation of contributions to pension funds, retirement annuities and provident funds will take effect on March 1 next year. This means that provident fund members will only be able to take one third of their pension benefit as a cash lump sum at retirement and that the remaining two thirds will have to be annuitised. However, this will only apply to contributions made after March 1, 2016 and for those below 55 years of age. Moreover, members will only be required to annuitise once their retirement savings exceed an increased amount of R247 500. The previously proposed threshold was R150 000.
Tax changes for retirement funds to be implemented from 2016
The tax harmonisation reforms for retirement funds will be implemented from 1 March 2016‚ the Treasury says. “This is in terms of the current law legislated in 2013‚ and amended in 2014 by shifting the effective date to 1 March 2016 (ie the Taxation Laws Amendment Act‚ No 39 of 2013‚ as amended by Act No 43 of 2014). The 2015 Taxation Laws Amendment Bill did not amend the scheduled implementation date‚ “but only amends the R150‚000 de minimis threshold to R247‚500; closes certain coverage gaps; and requires a review of the legislation after two years from the effective date‚ and to report this review to Parliament”‚ the Treasury said.