The situation is likely to get tougher for consumers in the immediate future, economists warn, with tax increases being seen as one of the most obvious solutions open to Finance Minister Pravin Gordhan. They believe that finding more ways to cut back on government spending and raising taxes are the only immediate options open to Gordhan, who is presenting the annual budget at the end of this month. The South African consumer is already stressed, dealing with the side effects of a weakened rand, higher interest rates, inflation increases and now high petrol prices, which resulted in motorists rushing to fill tanks before the price hike to R13.96 a litre came into effect on February 5.
Month: February 2014
New tax treatment of medical expenses
Johannesburg – 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. David Warneke of BDO SA explains what this means for taxpayers. Currently contributions to medical aids or medical expenses by the taxpayer’s employer are a taxable fringe benefit in the hands of the employee.
Applications to rescind a judgment secured by SARS by way of filing a statement with clerk
The judgment reported as Kakodia v CSARS (2013) 75 SATC 313 (KNHC) is a decision of the KwaZulu-Natal High Court in which the applicant taxpayer unsuccessfully applied to court for rescission of a “default judgment” granted against him in terms of section 114(1)(a)(ii) of the Customs and Excise Act 91 of 1964. The judgment was in respect of an alleged underpayment of customs duty and value-added tax amounting to R171 731.
Interpreting a judgment of the Supreme Court of Appeal – C:SARS v South African Custodial Services (Pty) Ltd 74 SATC 61 (SCA)
The South Gauteng Tax Court has recently had to make a determination of the effect of a direction given in a judgment handed down by the Supreme Court of Appeal in referring an assessment back to the Commissioner of the South African Revenue Service for correction. The matter that was heard by the SCA (C:SARS v South African Custodial Services (Pty) Ltd 74 SATC 61 (SCA)) had principally been concerned with whether improvements made to State property in terms of a public-private partnership constituted trading stock of the taxpayer. The costs incurred by the taxpayer had been claimed as a deduction on the basis that they were part of the cost of construction. Included in these costs were costs in respect of certain financial arrangements.
FAQ – What are available options for a lump sum earned offshore?
I am not sure what to do with his money earned while working offshore. He writes: I work offshore and, therefore, my income is not taxable in SA. I have resigned from my company to move to another. The new company does not have a retirement/saving plan that I have been contributing into. It is Fidelity in the UK. As it was a company plan, I cannot continue with it and I am now going to get paid out this lump sum of $170 000. I want to invest this for retirement. What is the best way? Bring it into SA due to current favourable exchange rates and pay off my house, because it is about the same amount that is owed on the house?
Sars guns for Krejcir manager
Money Point business manager Ivan Savov, accused of fraud and money laundering, appears in the Johannesburg Commercial Crimes Court. Picture: Werner Beukes/SAPA Johannesburg – Czech businessman Radovan Krejcir’s Money Point business manager Ivan Savov has been accused of fraud by Sars, the Johannesburg Specialised Commercial Crime Court heard on Tuesday.The SA Revenue Service’s allegations are separate from those of fraud and money laundering Savov is already facing with three co-accused.Prosecutor Richard Chabalala said: “After the matter against (Savov), Sars opened three other dockets of fraud, alleging Savov and
Firms seeking tax benefits face legal repercussions
THE tax consequences of decisions made in the boardroom have been highlighted in some recent court cases, where judgments were made against parties who had entered into transactions that were motivated by the potential tax benefits it would bring rather than the profits they would generate. A judgment laid down in the case of ABC vs the South African Revenue Service (SARS) heard in the Western Cape Tax Court last year reiterated the importance of paying attention to the details of a transaction as reflected in the financial statements, including related taxes. ABC acquired land with a forest on it and carried on forestry activities on the land. It then sold the land together with the forest for a specific amount, of which R144.7m related to the forest. The question before the court was whether the R144.7m should be included in ABC’s gross income.
On South African tax compliance, tax morality and taxpayers’ freedom to do tax planning – Canada, Ireland and South Africa are not worlds apart
The upcoming Budget Speech comes against the backdrop of a depressing South African growth rate, stubbornly high unemployment, a depreciating Rand (with more US tapering still to come), continued strikes in the mining sector, deadly service delivery protests and declining tax revenues. On a more positive note: In November 2013 Minister Gordhan pointed to the continued growth in tax compliance by South Africans and said: “… the ability to collect tax revenue …to finance the provision of public services and socioeconomic infrastructure has been a cornerstone of our democracy these 20 years.”
Amalgamation transactions following asset-for-share transactions
The South African Revenue Service (SARS) recently released Binding Private Ruling 159 (Ruling), which deals with the disposal of assets, being shares, in terms of an amalgamation transaction immediately after having acquired those shares in terms of an asset-for-share transaction. The facts were that companies A and B are controlled by various shareholders (individuals and family trusts). The shareholders wanted to hold their investments through a single company and not through both companies A and B.
Sars takes on South African billionaire
Pretoria – South African billionaire Mark Krok’s local assets, worth R298m, were placed under curatorship by the North Guateng High Court in Pretoria on Friday. The SA Revenue Service (Sars) obtained a final preservation order against the businessman. Judge Hans Fabricius confirmed a provisional preservation order granted in February last year against Krok’s South African assets. The assets include a large portfolio of shares in JSE-listed companies such as African Bank, BHP Billiton, Bidvest, First Rand, MTN, Vodacom, Sasol, SABMiller, and Tsogo Sun. They also include a plot in Plettenberg Bay, a R40m property in Clifton and a Jeep Sahara.