Background The Foreign Account Tax Compliance Act (FATCA) was enacted in 2010 by the US to target non-compliance by US taxpayers using foreign accounts. FATCA essentially requires foreign financial institutions to report information about financial accounts held by US taxpayers, or by foreign entities in which such taxpayers hold a substantial ownership interest, to the IRS. Until now, FATCA has largely impacted US taxpayers with specified foreign financial assets.
Author: Nyasha Musviba
Donating to Public Benefit Organisations
Public benefit organisations (‘PBOs’) provide invaluable healthcare, education, poverty alleviation, housing, conservation, environmental, cultural and religious services in South Africa. The important role that these organisations play in our society is recognised by the legislature which has provided PBOs with a number of tax advantages.
Are Gains From the Sale of Share Scheme Shares Being Correctly Taxed?
This article, which examines the taxation treatment that results from the sale of share scheme shares, concludes that it is advisable to hold any shares for a period of at least three years before disposing of them – including shares acquired in terms of an employer’s share incentive scheme. Section 8C of the Income Tax Act (‘the Act’) taxes gains and allows for the deduction of losses arising on the vesting of ‘equity instruments’ that are acquired by virtue of employment, or office of director of any company, or from any person by arrangement with the taxpayer’s employer. The most common type of ‘equity instrument’ encountered is an equity share acquired by the taxpayer in his or her employer company – for example, in terms of a share incentive scheme.
STC Credits to Expire on 31 March 2015
Companies should take note of the fact that Secondary Tax on Companies (STC) credits that they have accumulated up to 31 March 2015 will expire on that date. The implication is that companies with STC credits should take advantage of the credits by paying dividends on or before 31 March 2015. The benefit of STC credits is only enjoyed at the point where dividends are distributed to shareholders who are not exempt from the Dividends Tax – for example where dividends are paid to shareholders who are natural persons. Therefore multi-tier groups of companies will have to pay dividends all of the way up and out of the group on or before 31 March 2015 for the non-exempt shareholders to experience a benefit. The benefit derived by a non-exempt shareholder from an STC credit is that the effective rate of Dividends Tax payable is reduced.
Important Notice: 60 Day Time Limit Placed on Section 6quin Rebate
It has come to our attention that there are still taxpayers who are unaware of the fact that they have to notify SARS within 60 days (from the date the foreign tax was withheld) if they intend to use the section 6quin rebate for foreign withholding taxes paid. The Taxation Laws Amendment Act No. 24 of 2011 (TLAA) introduced subsection (3A) to section 6quin of the Income Tax Act in January 2012.
Challenges for corporate taxpayers and the role of advisors
Author: Pieter van der Zwan (North-West University) Being a corporate taxpayer in an environment with constant developments in legislation and regulations coupled with complex tax issues that arise on a regular basis is not an easy task. One need not look further than a number of cases that appeared before the courts over the past year to see evidence of this. It is submitted that the nature of the challenges faced highlights the fact that the role of a corporate tax advisor’s involvement in the tax affairs of a client has evolved to be much more than merely assisting to complete an income tax or provisional tax return just before the submission deadline arrives. This article deals with four of the challenges that a corporate taxpayer in South Africa may face as well as the role that a corporate tax advisor could, and arguably should, be fulfilling in addressing these Read More …
The case of GB Mining v Commissioner: SARS
Author: Erich Bell (SAIT Technical) This case stems from disallowed and partially disallowed objections raised against revised assessments for the 2003-2006 tax years of the appellant, GB Mining, where the matter went on appeal through the Pretoria Tax Court which dismissed the appeal except for certain management fees which do not form part of the appeal to the SCA. This case clearly highlights the importance of supporting information submitted with a return and the burden of proof on the taxpayer when disputing an assessment.
Tax advisory work in the context of Mergers and Acquisitions
Author: Stephen Zaaiman (Renmere) It is difficult to define the term ‘Mergers and Acquisitions’ or ‘M&A’ as an abstract concept. Whereas most commercially-minded practitioners ‘know it when they see it’, it often seems that no single definition quite succeeds in capturing the concept within four corners. This is particularly true in the field of tax where it is not uncommon for the resident M&A practitioner to declare jurisdictional authority over anything ranging from a residential lease agreement to a capital allowance review.
Relief from transfer pricing for controlled foreign companies
Author: Arnaaz Camay (ENSafrica) The current transfer pricing provisions contained in section 31 of the Income Tax Act, 58 of 1962 came into effect on 1 April 2012 and are applicable for years of assessment commencing on or after that date. In terms of section 31(2), where:
Government improves customs efficiency but holds off on tax increases
Author: Kayn Woolmer (Deloitte) The draft Customs Duty Bill and Customs Control Bill have been under development for almost six years now. As such it was expected that the Minister of Finance would make some mention as to when these bills would be promulgated into legislation thereby paving the way for enhanced customs controls and potentially improved customs management techniques and opportunities for both SARS and businesses in his Budget Speech earlier this year.