Apportionment of audit fees – Commissioner for the South African Revenue Service v Mobile Telephone Network Holdings (Pty) Ltd This appeal considered the deductibility of statutory audit fees incurred by a holding company that derived income comprising interest and dividends. The audit fees incurred in relation to exempt income, in the form of dividends, were held to be non-deductible for income tax purposes and the court had to decide the relevant method of apportionment.
Author: Nyasha Musviba
Not all hybrids are cost effective!
The provisions of section 8F became effective on 1 April 2014. In terms of this section any interest incurred on or after that date in respect of a “hybrid debt instrument” will be deemed to be a dividend in specie declared and paid on the last day of assessment by the company; and is not deductible for income tax.
Valuation of pre-valuation date shares
Valuation of pre-valuation date shares – ABC (Proprietary) Limited v The Commissioner for the South African Revenue Service ABC (Pty) Ltd (Appellant), a minority shareholder in D Entity, realised a capital gain when it disposed of small percentages of its shareholding in D Entity during the 2002 and 2003 years of assessments. D Entity held a casino licence, but was involved in litigation concerning the location of the casino and had consequently not commenced operation of the casino at the time of the disposal.
South Africa leading the pack towards global information exchange
On 9 June 2014, the South African Revenue Service (SARS) announced that South Africa and the United States (US) had entered into an inter-governmental agreement (IGA) which facilitates the implementation of the US Foreign Account Tax Compliance Act (FATCA), and signifies an important step in South Africa’s journey in a global movement towards the automatic exchange of information for tax purposes. The so-called “Model 1A” agreement has not yet been ratified by Parliament. However, Public Notices confirming its implementation have been gazetted.
Binding private rulings – Who bore the full cost of the fuel?
By Webber Wentzel Who bore the full cost of the fuel? Generally speaking, where a person uses his or her private vehicle to conduct business and receives an allowance or grant in respect of such usage, a deduction against the allowance may be made on assessment for normal tax.
2014 draft Taxation Laws Amendment Bill
By Webber Wentzel No surprises in the “first batch” 2014 draft Taxation Laws Amendment Bill What National Treasury have dubbed the “first batch” of the draft Taxation Laws Amendment Bill (TLAB) proposes two main sets of amendments, namely changes to the tax treatment of the risk businesses of long-term insurers, and clarification of the fringe benefit valuation rules with regards to defined benefit funds in terms of the suite of reforms to retirement savings coming into effect on 1 March 2015.
Additional changes made to SA’s transfer pricing legislation
After widespread criticism and various comments and submissions to National Treasury/SARS, it has been proposed, in terms of the 2014 Draft Tax Laws Amendment Bill, that South Africa’s transfer pricing legislation relating to Secondary Adjustments, be amended once again. Secondary adjustment The term Secondary Adjustment is explained as follows in the Organisation for Economic Co-operation and development’s Transfer Pricing Guidelines:
Litigation with SARS – levelling the playing field
New rules governing the procedures to be followed in respect of objections and appeals, which are now prescribed in terms of section 103 of the Tax Administration Act, were published in the Government Gazette on 11 July 2014. One of the frustrations experienced by taxpayers involved in litigation with SARS is the fact that SARS frequently fails to deliver documents or decisions within the time limits prescribed in the rules governing the conduct of disputes.
Rectification of an agreement in order to secure zero-rated VAT
The issue before the court in Milner Street Properties (Pty) Ltd v Eckstein Properties (Pty) Ltd [2001] ZASCA 95 was whether an agreement that was intended by the parties to be a zero-rated VAT disposal from one VAT vendor to another of an enterprise as a going concern but which failed to satisfy the formal requirements imposed by section 11(1)(e) of the Value-Added Tax Act 89 of 1991 could be rectified, with retrospective effect, so as to satisfy those requirements.
SARS must give proper reasons and have proper grounds
Author: Ben Strauss (DLA Cliffe Dekker Hofmeyr) The Tax Administration Act, No 28 of 2011 (TAA), together with the new rules for dispute resolution promulgated under the TAA on 11 July 2014 (Rules), govern the resolution of disputes between taxpayers and the South African Revenue Service (SARS). Generally, and in terms of s104 of the TAA, a taxpayer who is aggrieved by an assessment may object to that assessment.