Authors: Robert Gad, Anneke Meiring and Jadyne Devnarain The purpose of the Tax Administration Act No. 28 of 2011 (“the TAA”), is to ensure the effective and efficient collection of tax, by aligning the administration of the tax Acts to the extent practically possible, prescribing the rights and obligations of taxpayers and other persons to whom the TAA applies, prescribing the powers and duties of persons engaged in the administration of a tax Act, and generally giving effect to the objects and purposes of tax administration.
Tax News
What is “interest” anyway? section 24J and interest deductions
Author: Morongoa Matlala Introduction Sections 11(a) and 23(g) of the Income Tax Act No. 58 of 1962 (“the Act”) are commonly referred to as the “general deduction formula”. As the name suggests, it is in terms of these sections of the Act that tax deductions in general are sought to be claimed by taxpayers. The Act does, however, contain provisions which are specially tailored for the deduction of specific expenditure. Section 24J of the Act (“section 24J”) is one such provision and allows taxpayers to claim a deduction specifically for interest expenditure.
South African tax legislation: proposed amendments in an international tax context
Authors: Lavina Daya and Yani van der Merwe and Liesl Visser This article sets out a brief summary of some of the proposed amendments introduced by recent South African draft Tax Bills. The article focuses on amendments in the context of international taxation. The draft Taxation Laws Amendment Bill, 2015 (“draft TLAB”) and the draft Tax Administration Laws Amendment Bill, 2015 (“draft TALAB”) were released by National Treasury on July 22, 2015. These draft Bills aim to provide the necessary legislative amendments required to implement most of the tax proposals outlined in the 2015 Budget Review. Specifically, the draft TLAB deals with more substantive changes to tax legislation and the draft TALAB deals with administrative provisions of tax legislation currently administered by the South African Revenue Service (“SARS”). We consider proposed amendments in an international tax context below.
Africa tax in brief
Author: Celia Becker (ENSafrica) ANGOLA: Amendments to Consumption Tax Presidential Legislative Decree (“PLD”) No. 5/15 was enacted and entered into force on 21 September 2015. The PLD amends the applicable rates of consumption tax and customs duties applicable on imports and exports. Amendments to the applicable rates and taxable products include: an increase of the maximum rate of consumption tax on imports from 30% to 80%; an increase of the maximum rate of consumption tax on domestic production from 30% to 65%; and an introduction of consumption tax at the rate of 2% or 5% on various petroleum products.
Action plan to stem tax avoidance is a good start
Author: Mzukisi Qobo (BDlive) The brunt of tax avoidance by big corporations falls heavily on poor countries, with long-term effects on growth and social stability. African countries are the poorer for it. The recent Organisation for Economic Co-operation and Development (OECD) action plan on base erosion and profit shifting, adopted by Group of 20 (G-20) finance ministers in Peru a week ago, has been hailed as groundbreaking. The measures it proposes create an important basis for evolution of new norms on international tax treaties and to curb aggressive tax planning by companies.
Court case puts SARS on the spot over ‘rogue’ unit
Author: Natasha Marrian (BDlive) An alleged tax offender, who was also suspected of drug smuggling, is taking the South African Revenue Service (SARS) to court over millions he paid in penalties in a case that tests the lawfulness of the work of a covert unit of the agency. Martin Wingate-Pearse has argued in court papers that information on his case was obtained through unlawful means, in particular through the work of the alleged “rogue unit” whose existence came to light last year. The case is set to shed further light on the activities of the unit and places SARS in an awkward position as it is forced to defend the actions of a unit it has already found to be unlawful.
Invalidity of emolument attachment orders
A recent, much publicised decision in the Western Cape High Court declared certain provisions in the Magistrates’ Court Act (MCA) relating to the issuing of emolument attachment orders (EAO) to be invalid and unconstitutional. In the matter of University of Stellenbosch Legal Aid Clinic and Others v Minister of Justice and Correctional Services and Others (Case No. 16703/14) application was made to have EAOs issued against a number of clients of the applicant declared invalid. An EAO permits the attachment of a debtor’s earnings and obliges the debtor’s employer (garnishee) to pay a specified amount out of the debtor’s earnings to the creditor or the creditor’s attorney until the debt and legal costs have been fully paid.
Large business tax strategy behaviour – a UK research study
On 22 July 2015, Her Majesty’s Revenue and Customs (HMRC – the United Kingdom’s counterpart to SARS) published a 35-page consultation document containing the results of research undertaken by a well-known London-based research organisation, entitled Exploring Large Business Tax Strategy Behaviour The study set out to gain an understanding of how large businesses develop and adjust their tax strategies. HMRC regards such knowledge as key to its effectiveness in improving compliance. Overall aim of the research
Seven reasons to get your trust in order
Author: Sumesh Somaroo, audit and assurance partner, BDO Durban Durban, September 2015. There are several common mistakes made in the operation of trusts that have been set up for estate planning purposes, to protect assets from creditors and for potential tax savings. So says Sumesh Somaroo, a partner at the Durban office of audit, advisory and tax firm, BDO South Africa, who warned that the verification of trust tax returns by SARS was on the increase and that it was important for people to get their trusts in order.
Six ways to spend your tax rebate responsibly
Figuring out how you want to spend your tax rebate will be easier if you already have a list of financial goals. Whenever you get a pay-out, it helps enormously in resisting those impulses if it is already ‘mentally allocated’. You may be tempted, but the refund is less likely to be wasted. This is according to Lisa Griffith, Associate Director at BDO Wealth Advisers, who recommends that those who receive a tax refund must ask themselves what they are wanting to achieve in the forthcoming year? “Do you want to save for a deposit on a house? Or perhaps save for retirement? Maybe you are trying to pay off debt,” she says. Griffiths gives some guidance on key objectives that you should consider putting your tax rebate toward: