Author: Beric Croome Under the provisions of the Tax Administration Act, the Commissioner: South African Revenue Service (‘SARS’) is entitled to request that a taxpayer submits relevant material that SARS requires in terms of section 46 of the Tax Administration Act No. 28 of 2011 (‘TAA’). Section 1 of the TAA in turn defines ‘relevant material’ as meaning:
Author: Nyasha Musviba
Branch vs. Subsidiary: Key tax considerations
Author: Wendy Lumsden Foreign investors frequently face the decision of whether to conduct operations in South Africa as a branch or whether to setup a subsidiary for undertaking South African activities. This article highlights the key South African tax consequences of a Branch as opposed to those of a Subsidiary and considers some of the other key considerations, such as legal liability.
Capital gains tax, savings and inflation
Author: Ben Strauss of DLA Cliffe Dekker Hofmeyr Consider the following example: A taxpayer bought shares for R100 000 on 1 June 2004, and sold them on 1 June 2014. Assume that: the in?ation rate during the period the shares were held was 6% per year compounded; the value of the shares grew at a (generous) rate of 10% per year compounded; the taxpayer has no other capital gains during the tax year ending 28 February 2015 and has no assessed capital loss; and the taxpayer pays income tax at the highest marginal rate of 40%.
Allowances in respect of public private partnerships
Authors: Nicole Paulsen and Gigi Nyanin of DLA Cliffe Dekker Hofmeyr On 17 July 2014, the National Treasury released the draft Taxation Laws Amendment Bill (TLAB) which aims to give effect to the various tax proposals announced in the 2014 Budget.
Remedy for declined tax clearance certificate
On 18 February 2014 the North Gauteng High Court delivered a judgment on the remedies available when a tax clearance certificate (‘TCC’) is declined by SARS. What is clear from the judgment is that when a taxpayer is dependent on a TCC for financial or business purposes and it gets declined by SARS, the potential impending economic harm that may come to a taxpayer from such refusal does not entitle the taxpayer to a court order compelling SARS to issue such a TCC sought.
Discussion paper on the assumption of contingent liabilities in a going concern acquisition
SARS released the above discussion paper in December 2013 and it was open for comment to 31 March 2014. It deals with the treatment of so-called ‘free-standing’ contingent liabilities from the points of view of the seller as well as the purchaser, where the contingent liabilities are assumed by the purchaser as part settlement of the purchase price for the acquisition of the assets of a going concern. It distinguishes between valuation provisions, ‘embedded’ obligations and free-standing contingent liabilities. A valuation provision, for example a provision for doubtful debts and an embedded obligation, for example the statutory duty to reforest timber plantations after harvesting, have an impact on the market value of the asset to which they are attached.
Binding Ruling on leasehold improvements
The South African Revenue Service (SARS) released binding private ruling 177 (Ruling) on 31 July 2014. The Ruling concerned a lease and a sublease and SARS was asked to rule on the income tax consequences for, inter alia, the landlord in circumstances where there is an obligation on the sub-lessee to make improvements to the land.
Securities transfer tax and “earnout” provisions
Often parties to a sale of shares agreement agree to an ‘earnout’ or ‘agterskot’ clause: a provision that part of the price will be paid in future if certain conditions are met. For example, the parties may agree that, while the seller must transfer ownership of all the shares to the purchaser at the time of the sale, the purchaser will pay a part of the purchase price only if the company reaches specified financial targets in future.
SARS revelations: Lawyer silent on spy claims
The lawyer who laid a complaint against SARS group executive Johann van Loggenberg after their relationship ended refused on Sunday to comment on reports that she was a State Security Agency spy. “I don’t want to comment and I will be issuing a summons against City Press,” Belinda Walter told Sapa.
Youth wage subsidy a delicate balancing act
Author: Talita Laubscher (Bowman Gilfillan Africa Group) The Employment Tax Incentives Act, 2013 (EITA), was signed into law on 18 December 2013 as one of government’s responses to the persistently high rate of youth unemployment. The EITA seeks to encourage the employment of younger workers by allowing a reduction in the mandatory pay as you earn tax (PAYE) that is payable by employers to the South African Revenue Service (SARS), in respect of employees who qualify in terms of the Act. The EITA has, however, not been without controversy.