The VAT process is fairly simple if you have a tax invoice to substantiate your entitlement to an input tax deduction. However, if the supplying vendor fails to issue you with a tax invoice, the question then arises as to whether you, as the recipient vendor, can rely on section 20(7) or section 16(2)(f) of the Vale-Added Tax Act No 89 of 1991 (the “VAT Act”) by using the contract between the parties to substantiate your entitlement to an input tax deduction? This was the question posed in an appeal in the Western Cape High Court case of South Atlantic Jazz Festival (Pty) Ltd v CSARS 2015. South Atlantic Jazz Festival (Pty) Ltd (the ”appellant”) held annual jazz festivals and had concluded sponsorship agreements with various companies (”sponsors”) in terms of which the sponsors paid money and provided goods and services to the festivals and, in return, the appellant provided branding and marketing. All parties were registered VAT vendors. The court Read More …
Tax News
A “how to guide” for SARS objections and appeals
Author: Anton Lockem of Shepstone & Wylie Attorneys As a taxpayer, if you receive an assessment from the Commissioner of the South African Revenue Services (“SARS”) that you disagree with, you can lodge an objection in line with the Tax Administration Act, No. 28 of 2011 (“the Act”). Under section 96(2) of the Act, the Commissioner has to supply the taxpayer with the grounds of the assessment. It is often the case that the taxpayer needs to demand that the Commissioner comply with this statutory obligation, as there have been many cases where grounds have not been supplied. Thetaxpayer is required to submit a request for grounds within 30 days of receiving an assessment. Once grounds have been supplied, the taxpayer has 30 days to submit an objection to the assessment. Taxpayers need to submit the correct documentation for their objection in order for it to be valid: For personal income tax payers a notice of objection or form NOO is required via efiling; For corporate Read More …
The Davis Tax Committee’s interim report on estate duty
The first interim report to the Minister of Finance by the Davis Tax Committee (Committee), in respect of estate duty was made public last week. The Committee’s frame of reference was to consider the continued role and relevance of estate duty in South Africa. The context of the Committee’s work was to provide a progressive tax base to address the structural inequalities in our society. RECOMMENDATIONS Capital Transfer Tax The tax imposed upon a person’s estate on transfer is commonly called capital transfer tax and is in essence a form of wealth tax.
South African Revenue Service – Voluntary Disclosure Programme
On 9 July 2015 the South African Revenue Service (“SARS“) issued a media statement informing allSouth African resident taxpayers, who hold foreign bank accounts, that an investigation was underway and taxpayers were therefore requested to make use of its Voluntary Disclosure Programme(“VDP“) to regularise their tax affairs. If you have a foreign bank account, and have used that bank account to evade your local or international tax obligations, you have until 12 August 2015 to declare this information under the VDP,after which time SARS will start their auditing process.
Constitutional Court judgment on the in duplum rule – does it limit interest payable on a tax debt?
The recent Constitutional Court judgment of Paulsen and Another v Slip Knot Investments 777 (Pty) Limited 2015 centered on the common law in duplum rule. The in duplum rule operates to protect debtors from becoming over-indebted to creditors by only allowing arrear interest to accumulate up to the capital amount loaned to a debtor. Interest ceases to run once the accumulated arrear interest equals the capital amount. In this case, the Constitutional Court held that the operation of the in duplum rule is no longer suspended for the duration of litigation.
Davis Tax Commission (“DTC”): First interim report on VAT
First interim report on South African VAT system : DTC confirms SA has efficient VAT system The South African tax system has changed significantly since the recommendations of the Katz Commission in 1995, shortly after the introduction of VAT which at the time, signalled a fundamental shift in South Africa’s taxation landscape. It was on this basis that in 2013 the then Minister of Finance, Mr Pravin Gordhan, announced the members of the Davis Tax Committee (“DTC”) that would assess the South African tax policy framework, and its role in supporting the objectives of inclusive growth, employment, development and fiscal sustainability.
The tax function must transform to become a strategic business asset: PwC report
Never before has tax been more important to governments, taxpayers and other stakeholders. Increased global compliance requirements, together with a greater need for robust controls to manage tax risks and a desire to use data analytics to assist in business wide decision making processes are all impacting tax functions and their investment decisions. To remain relevant to the business, tax functions will need to manage these growing external pressures and operational challenges by charting a course for continuous transformation that is immediate, holistic and practical.
Taxation of trusts revisited
Author: Hanneke Farrand – Tax Director at ENS africa The Davis Tax Committee’s First Interim Report on Estate Duty (“DTC Report”) was released for public comment on 13 July 2015. In essence, the DTC Report proposes that “a highly progressive tax that patches loopholes, helps provide equality of opportunity and reduces the concentration of wealth, must be implemented”. The DTC Report was released in draft and is, therefore, open to comment. Following from this, it is clear that the recommendations in the DTC Report will not necessarily find their way into draft tax legislation. South Africa has well established rules and case law dealing with the taxation of trusts. The South African Revenue Service (“SARS”) recently introduced new tax returns for trusts that require far more detailed disclosures by taxpayers in accordance with these principles.
Tax court rules on creation of permanent establishment in South Africa
Author: Dr Beric Croome – ENSafrica Tax Executive Where a foreign company renders professional services to a South African company in South Africa, it is important that the foreign entity considers whether, as a result of rendering such services, the foreign company will create a permanent establishment in South Africa. The reason why this becomes important is that where a foreign company creates a permanent establishment in South Africa, this country will under the provisions of a Double Tax Agreement (“DTA”) concluded with another country, be entitled to subject that foreign entity to tax on the profit attributable to that permanent establishment created in South Africa.
Don’t let anger shape your last Will and Testament
It is imperative to amend or update your Will to accommodate changes in financial or family circumstances. However, all too often people make impulsive changes to their Wills, either out of anger, or on a momentary whim. According to Peter Prentice, a specialist consultant in Estate Planning and Administration for audit, advisory and tax firm, BDO South Africa, this is something he sees often and unfortunately it can lead to a legacy of family division which no amount of money or compensation will heal.