By Sarah Evans Treasury will increase funds to the National Student Financial Aid Scheme, which is likely to help more than 500 000 students per year. With some universities across the country currently besieged by student protests over exorbitant fees and a shortage of bursary funds, national treasury announced on Wednesday that it will increase funds to the National Student Financial Aid Scheme (NSFAS). Government expects this to assist more than 500 000 students per year. The South African Students Congress (Sasco) called for mass protests this year over a shortage of NSFAS funds, which it said has excluded millions of poor students from the higher education system.
Month: February 2014
Budget 2014: We have heard your pleas, says Gordhan
Finance Minister Pravin Gordhan’s final Budget speech before elections in May is a masterplan to please the masses. On the eve of an election in the historically significant 20th year of South African democracy, Finance Minister Pravin Gordhan sang a carefully crafted song. It was not the voice of a sycophantic public servant; nor was it the voice of a self-congratulatory bureaucrat. Instead, he adopted the voice of the listener: the voice of the disgruntled electorate. He spoke for those who had voted his party into power five years ago, and those who had recently publicly booed the president of the same. Read Gordhan’s full speech (PDF) A foray near the end of his speech best summed up his tone. “Puso e utlwa dillo tsa maAfrika Borwa! Ons het gehoor! Korrupsie moet gestop word! [We have heard you! Corruption must be stopped!] MaAfrika Borwa deserves better … Read More …
Taxation on unrealised accounting profits
By Nico Theron, Senior Tax Consultant, Grant Thornton Johannesburg In South Africa, income tax is usually payable on actual receipts and accruals, but for every rule, there are always exceptions. One exception to this rule applies to companies that deal in instruments, interest rate agreements, or option contracts. The exception allows them, if they so choose, to pay tax on a market-valuation basis. This means, irrespective of actual receipts and accruals, the interest and amounts payable or receivable on option contracts and interest rate agreements are taken into account for tax purposes, according to changes in the market value of the underlying instruments over a period.
Taxation of Income protection policies
By Doné Howell, Tax Partner Grant Thornton Johannesburg The latest in the wave of changes that affect the taxation of insurance policies that exist for the benefit of an employee, but are paid by the employer, is the recent legislation regarding the taxation of income protection policies. Although the effective date of this legislation is 1 March 2015 (the 2016 tax year), it is important for employers to be aware of the impending changes to the PAYE system and to consider the possible review and renegotiation of your policies in the next year.
Section 24I(10A) – unrealised exchange gains and losses on loans between connected persons
Section 24I of the Income Tax Act (“the Act”) governs the income tax treatment of exchange gains or losses made in respect of both realised and unrealised foreign exchange transactions. Unrealised exchange differences on foreign denominated debts between connected persons have been subject to an array of income tax treatments over the past few years. Realisation of the exchange difference is triggered to the extent that the related debts have been repaid, setoff or settled in any other manner. Previous tax treatment of unrealised exchange differences Unrealised exchange differences that arose in respect of foreign denominated capital loans and advances between connected persons, before November 2005, are included, or
THE Employment Tax Incentive (ETI) calculations explained
Formulas are sometimes difficult to understand so we have step-by-step examples and a handy ETI calculator. The examples and the ETI calculator are intended to help you work out your incentive amount which may be claimed. We draw your attention to the following: Disclaimer: What is contained in this calculator is intended as a guide only and is not considered to be a legal reference nor is it a binding ruling. The calculator does not take the place of legislation and readers who are in doubt regarding any aspect of the information displayed in the questionnaire should refer to the relevant legislation, or seek a formal opinion from a suitably qualified individual. More information Contact us It remains the responsibility of the employer to ensure the information provided, when using the ETI calculator, is accurate and the requirements are met for the employer and the employees to qualify. [spoiler title=”Example Read More …
An important judgement for public benefit organisations
Author: Ben Strauss (Cliff Dekker Hofmeyer) Fiscal policy, as manifested in the Income Tax Act, No 58 of 1962 (Act), is that philanthropy should be encouraged. The Act achieves this objective by providing that, subject to certain criteria being met and subject to limitations, charitable organisations enjoy a very favourable tax regime and taxpayers who make donations to such organisations may deduct the donations for income tax purposes. To qualify for the favourable dispensation, an organisation must be approved as a public benefit organisation (PBO) by the South African Revenue Service (SARS).
International Financial Reporting Standards (IFRS) tax implication – Part II
Construction contracts The current practice for determining contract revenue by FIRS shall be sustained. Only costs attributable to certified work done shall be allowed for tax purposes in line with provisions of CITA. Other incomes in the nature of incentive payments would be taxed accordingly. The expected loss recognized as an expense shall be disallowed until the loss is actually incurred. Interest received on advanced payment placed in an interest yielding account shall be treated as other income and be subjected to tax at the time it is earned. Retention income shall be subjected to tax at the time it is earned. Future cost shall not be allowable as expense for tax purposes IAS 12 – Income taxes Taxpayers shall furnish FIRS with all deferred tax disclosures as contained in the standard.
SARS eyes R10bn from tax evaders
Author: Jacques Pauw (City Press) The SA Revenue Service’s (Sars’) special investigations unit has in the past 10 years recovered, or is busy retrieving, an estimated R10bn in unpaid taxes from South Africa’s most notorious gangsters and tax evaders. Among their scalps is Economic Freedom Fighters (EFF) leader Julius Malema, Ponzi supremo Barry Tannenbaum and the who’s who of the underworld: Radovan Krejcir, Glenn Agliotti, Cyril Beeka, Lolly Jackson and Colin Stansfield. The men and women of Sars’ Tax and Customs Enforcement Investigations unit (TCEI) comprise old Sars hands and young graduates, with a sprinkling of former Scorpions, Hawks, police crime intelligence and National Intelligence Agency officers.
Changes to tax treatment of medical expenses from 1 March – worked example
At present taxpayers aged under 65 years are on a hybrid system with regard to the income tax treatment of their medical expenses. While contributions to medical aids are subject to credit relief, medical expenses in excess of 7.5 % of taxable income are claimed as a deduction. On the other hand, taxpayers aged 65 years or older are on a deduction-only system. From 1 March 2014, all taxpayers regardless of age will be on a credit-only system. As is currently the case, contributions to medical aids or medical expenses by the taxpayer’s employer are a taxable fringe benefit in the hands of the employee but the amount of the fringe benefit is treated as if it was a contribution or expense paid by the employee for purposes of the conversion to credits referred to below.