Author: Ruaan van Eeden As a basic principle, under s102(1) of the Tax Administration Act, No 28 of 2011 (TAA), the onus of proof that an amount is not taxable or that an amount is deductible, rests on the taxpayer, whereas under s102(2) of the TAA, the onus of proof pertaining to the facts upon which an understatement penalty is imposed, is upon the South African Revenue Service (SARS).
Tax News
Carbon tax in South Africa
Author: Heinrich Louw. After 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 the Draft Carbon Tax Bill (Draft 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 now sets out the mechanics of the carbon tax.
The importance of tax litigation strategy
Recently, the Kwazulu-Natal High Court had to consider whether it could adjudicate on papers put before it by SARS in motion proceedings, or, whether the matter ought to be referred for oral evidence given the fact that the taxpayer had raised material dispute of facts to the SARS’ allegations. What is of interest in this case is not what the Court ultimately decided, but rather its reasons for doing so. Within those reasons lie valuable lessons to be learnt when SARS or a taxpayer engages in litigation.
Notable reduction in employee’s take-home pay rectified in latest version of tax bill
The removal of a few words in the latest version of the Taxation Laws Amendment Bill, 2015, appears to have rectified a loophole contained in an earlier version of the Bill that would have resulted in a notable reduction in an employee’s take-home pay if they belonged to a retirement fund.
Contradictory legislation: VAT zero-rating of supplies to custom controlled areas / IDZ operators
Generally speaking, the export of movable goods qualifies for VAT zero-rating. The term ‘export’ is defined in the Value Added Tax Act, 1991 (“VAT Act) as inter alia that which is consigned or delivered by the vendor to the recipient at an address in an export country. An exception to the above zero-rating can be found in section 11(1)(m) of the VAT Act, where movable goods are supplied to a customs controlled area enterprise or an Industrial Development Zone (IDZ) operator in South Africa. According to this section of the Act, the VAT zero rating would be applicable if the goods are physically delivered to the enterprise or operator either by:
How must SARS issue a notice in terms of s172(1) of the Tax Administration Act?
One of the interesting Tax Administration cases of 2015 was Lifman and Others v The Commissioner of the South African Revenue Services and others (unreported), where the Western Cape High Court took a purposive approach to the interpretation of section 172(1) of the Tax Administration Act, No 28 of 2011 (“the Act”) i.e.: in light of the purpose for which it was enacted. The facts of the case are that during an inquiry in terms of section 50 of the Act into notorious Cape Town underground boss, Mark Lifman’s affairs, SARS found that Lifman and a number of close corporations (“CC’s”) of which he was the sole member, owed approximately R13 million in taxes.
Calculating a capital gain: current case law
Capital Gains Tax (CGT) is payable on the disposal of capital assets that were in the seller’s possession on, or were acquired after, 1 October 2001. In the recent Supreme Court of Appeal (“SCA”) judgement of The Commissioner for the South African Revenue Service v Stepney Investments (Pty) Ltd, the SCA considered the various valuation methods available in determining the value of a capital gain, namely the discount cash flow method (“DCF”) and the net asset value method (“NAV”).
Draft Carbon Tax Bill published for comment
Author: Mansoor Parker and Andrew Gilder (ENSafrica) On Monday, 2 November 2015, the South African National Treasury published a Draft Carbon Tax Bill (the “Bill”) for public comment, with the comment period commencing immediately and continuing until 15 December 2015. At first glance, the Bill does not stray too far from the carbon tax design that Treasury has been proposing since 2010 in various discussion papers, national budget speeches and their associated explanatory memoranda and responses to stakeholder commentary on the design. The Bill does not change the essentials, but it does progress certain of the detail while providing only a tantalising glimpse of some of the more interesting aspects of the design. While the proposed tax is vaunted as the carbon tax, this is not the only or the first carbon tax imposed in South Africa. Emissions on new vehicles are subject to emissions taxation and approximately five years Read More …
Multilateral Competent Authority Agreement
OECD, South Africa November 10 2015. Confronted with high tax rates in their countries of residence, individuals and multinational enterprises are increasingly developing global strategies in order to maximise profits. It is thus not surprising that taxpayers’ links with countries that have favourable tax climates are becoming more tenuous. Although many countries have legislation to curb the ensuing tax avoidance, this problem cannot be addressed only on a national level, as avoidance schemes are encouraged by the very existence of low tax and tax haven jurisdictions. These sovereign jurisdictions are entitled to promulgate their own tax legislation, however onerous (or not) the legislation may be. This issue therefore appears can only be addressed on an international level, if at all.
The opportunities of relaxed exchange controls
Recent relaxations of exchange controls in South Africa have encouraged growing cross-border investments and facilitated freer participation in global financial markets and opportunities. To understand the extent to which exchange controls in South Africa have been relaxed since their inception, it helps to look at their history, which can be broadly categorised into three phases: It all began in 1939 with the introduction of restrictions on the outflow of funds to non-sterling area countries. These were extended during 1961 to 1993 in response to the worsening internal political situation, the introduction of economic and financial sanctions against South Africa in the mid-eighties, and a moratorium on the repayment of South Africa’s foreign debt. The 1961-1993 era was characterised by a comprehensive system of exchange controls embracing both current and capital account transactions over residents and non-residents. The third phase commenced in 1993 and spearheaded a period of gradual relaxation of Read More …