Author: Erich Bell, Senior Tax Consultant at BDO SA Johannesburg, xx August 2015 – The 2015 Tax Administration Laws Amendment Bill (TALAB) proposes to amend the provisions regarding reduced assessments in the Tax Administration Act (TAA). If promulgated, this would affect taxpayers by reducing the time allowed for them to to request reduced assessments through the so-called ‘request for correction’ function on SARS’ eFiling to six months from date of assessment. A possible further six months’ extension could be granted in exceptional circumstances.
Tax News
Considering the VAT effect of dividends
Author: Herman Viviers (North-West University) “A dividend in specie generally constitutes a distribution made to the beneficial owner of a share in any form other than in cash” Considering the VAT consequences for a VAT vendor who declares dividends to its shareholders, may at first appear to be simple. However, the VAT treatment seems to become more complex as soon as one tries to justify it in terms of the provisions contained within the Value-Added Tax Act (89 of 1991) (“VAT Act”). The purpose of this article is to take a closer look at the VAT consequences where a VAT vendor declares dividends (either in cash or in specie) to the beneficial owners of its shares and to justify it in terms of the provisions of the VAT Act.
A review of section 6quin
Author: Pieter van der Zwan (NWU) Pieter van der Zwan revisits the economic reasons for the introduction of section 6quin. Section 6quin was introduced into the Income Tax Act by the 2011 Taxation Laws Amendment Act as a measure to enable entities to provide services into Africa in a manner that such services were commercially viable. With the section having been in effect for more than 3 years now, it was indicated in the 2015 Budget Review that the concession contained in section 6quin would be withdrawn due to the significant compliance burden that it places on SARS and taxpayers as well as the fact that it is being exploited by some taxpayers.
Few Cape Town developers cashing in on inner city tax rebate scheme
Author: Bekezela Phakathi (BDlive) There have been few takers of the Urban Development Zone tax incentive in Cape Town. The scheme also appears to have done little to boost the availability of affordable housing in the city’s CBD. The scheme, introduced in 2003, is an incentive administered by the South African Revenue Service (SARS) aimed at revitalising inner city areas by attracting capital investments in commercial and residential property through a tax rebate.
Voluntary disclosure relief to be widened
Author: Ruaan van Eeden (Director at Cliffe Dekker Hoffmeyr The Tax Administration Act, No 28 of 2011 (TAA) currently provides for various forms of relief in respect of disclosures made by qualifying taxpayers of their tax defaults under the Voluntary Disclosure Programme (VDP). The recently published Tax Administration Laws Amendment Bill 2015 (TALAB) makes a welcome proposal to widen the scope of available relief to qualifying taxpayers, to include any penalties relating to the late payment of tax.
Davis Tax Committee: First interim report on mining
Authors: Gigi Nyanin and Nicole Paulsen The Davis Tax Committee (Committee) was established by the Minister of Finance (Minister) to give effect to government’s tax review and assessment of the tax policy framework and its role in supporting the objectives of inclusive growth, employment, development and fiscal sustainability, as proposed in the 2013/14 National Budget. The Committee submitted the First Interim Report on Mining (Report) to the Minister on 1 July 2015, and it was released for public comment on 13 August 2015. This Report is a provisional interim report and a useful point of departure for engaging with stakeholders before final and conclusive recommendations are made to the Minister, who will then determine any further steps to be taken with regard to the Report.
Beware of VAT zero-rating on sale of commercial property
Author: Ben Strauss (Cliffe Dekker Hofmeyer) If commercial immovable property is sold as a going concern and if certain requirements are met, then the sale can be zero-rated for value-added tax (VAT) purposes, in terms of s11(1)(e) of the Value-Added Tax Act, No 89 of 1991 (VAT Act). Among other things, it is a requirement that (i) the seller carries on an enterprise in relation to the property and (ii) the enterprise is an income-earning activity on the date of transfer of the enterprise. The term ‘enterprise’ is defined widely in s1 of the VAT Act and it is trite that the leasing of commercial immovable property is an enterprise for purposes of the definition.
Improved tax allowance for photo voltaic power plants
The 2015 Taxation Laws Amendment Bill (TLAB) proposes an amendment to s12B of the Income Tax Act, No 58 of 1962 (Act) in respect of the accelerated tax allowance available to photo voltaic (PV) power plants. The proposal, which comes into operation on 1 January 2016, allows for a 100% accelerated tax allowance in respect of embedded PV power plants, generating up to 1MW for self-consumption. As a general principle and provided the requirements of s12B of the Act are met, a taxpayer is permitted to deduct the cost of qualifying assets (including structures of a permanent nature), used in the generation of electricity from renewable resources, on a 50 / 30 / 20 basis (ie over a three year period). As s12B of the Act currently stands, solar power is classified as a single concept without distinguishing between the sub-categories of photo voltaic and concentrated solar power (CSP). The Read More …
Import VAT – When and how to claim
Author: Cliff Watson, Tax Director Grant Thornton Johannesburg The question of when to claim the VAT paid when importing goods has been on the mind of all importers in recent years, as so many have been getting this wrong and suffering penalty and interest charges as result. The question has also been on SARS’ radar and became one of its focus areas when doing VAT audits. The main issue driving these concerns is that VAT legislation was amended twice in a 12-month period. Situation prior to 1 April 2014 Up to 30 March 2014, a vendor was entitled to claim the VAT paid on the value of goods imported to South Africa only when the goods have been invoiced or paid, whichever was the earlier, during that tax period.
Employment Tax Incentive: Reminder
Author: Lloyd Ponter, Tax Consultant Grant Thornton Johannesburg The Employment Tax Incentive (“ETI”) was introduced from January 2014 and is scheduled to end on 31 December 2016, when its effectiveness will be reviewed to determine whether it should continue beyond this date. Despite the possible termination looming, employers still have an opportunity to benefit from this incentive. In summary, the ETI is available to “eligible employers” as defined in the Employment Tax Incentive Act and can be claimed in respect of “qualifying employees.” The ETI is aimed quite specifically at the private sector and its intention is to encourage the employment of employees of a certain profile. This includes employees who inter alia: