Author: Heinrich Louw (DLACliffeDekkerHofmeyr) An overhaul of the current retirement dispensation and the promotion of savings has been on the cards since at least the 2012 Budget when the Minister of Finance announced that a series of discussion papers would be released on these matters. It was revealed by National Treasury (Treasury) in a paper entitled Strengthening retirement savings (14 May 2012) that the reforms would include measures to encourage non-retirement household savings.
Author: Nyasha Musviba
Contributed tax capital in a company context
Author: Emil Brincker (DLACliffeDekkerHofmeyr) The creation of contributed tax capital (CTC) and the return thereof by a company to its shareholders has been the subject matter of some misconception over the years. The CTC of a company is a notional amount that is created pursuant to the subscription of shares by holders of a specific class of shares as consideration for the issue of those shares by the company. To the extent that a
Can SARS just say “Prove it”?
By Ian Wilson An important element in disputes between taxpayers and SARS is the burden of proof. This deals with identifying which of the parties must prove its case in order to succeed. In section 102(1) of the Tax Administration Act the burden of proof that an amount is exempt or is not otherwise taxable, or that an amount is deductible, rests on the taxpayer.
Where to with thin capitalisation?
The South African Revenue Service (“SARS“) believes that the current thin capitalisation rules are not aligned with the views of the Organisation for Economic Co-operation and Development (“OECD”) in that the thin capitalisation rules should form part of transfer pricing principles. Interest between connected parties should only be deductible to the extent that the underlying debt finance would have been granted if such funding was advanced by an unconnected party on an arm’s length basis. In other words, the extent of the debt must be measured against the arm’s length principle as a first test and only then should we consider whether the interest rate charged is an arm’s length price.
Transfer pricing changes in the Taxation Laws Amendment Bill, 2014
SARS issued a new draft Taxation Laws Amendment Bill, 2014 on 17 July 2014. The draft legislation gives effect to matters presented by the Minister of Finance in the Budget Review 2014, as tabled in Parliament earlier this year.
Recent exchange control developments in relation to "domestic treasury management companies"
During 2013, a treasury management company regime was introduced for exchange control purposes to encourage the establishment of group treasury management functions in South Africa and to further enhance South Africa’s position as a “gateway into Africa”.
Employment Tax Incentive – accounting and income tax treatment
It is no hidden secret that unemployment in South Africa remains considerably high. According to the World Economic Forum Global Risk 2014 Report, structural unemployment and underemployment appears second overall in the Ten Global Risks of Highest Concern as many people in both advanced and emerging economies struggle to find jobs. The youth and minorities are especially vulnerable. Youth unemployment rates hover around 50% in some countries and South Africa was listed among them.
OECD moves forward on BEPS Action Plan
The Organization for Economic Cooperation and Development (“OECD”) recently held its annual tax conference in Washington, DC focusing on the progress of implementation of its Action Plan on Base Erosion and Profit Shifting (the “BEPS Action Plan”).
Supreme Court considers administrative fairness in tax disputes
On June 12 2014 an interesting judgment was handed down in the Supreme Court of Appeal (SCA) in Commissioner for the South African Revenue Service v Pretoria East Motors (Pty) Ltd (291/12) [2014] ZASCA 91. Facts The taxpayer operated a car dealership in Pretoria. The South African Revenue Service (SARS) conducted an audit of the taxpayer in respect of its 2000 to 2004 years of assessments, and raised various additional assessments in respect of income and value added tax (VAT), among other things. SARS also imposed punitive additional tax of 200%. The taxpayer objected to the additional assessments, but SARS disallowed the objection. The taxpayer appealed to the Tax Court.
SARS tax audits, the Tax Administration Act and making an effort to understand the taxpayer’s business operations
The recent decision of the Supreme Court of Appeal (“SCA”) in the matter of SARS v Pretoria East Motors (Pty) Ltd (291/12) [2014] ZASCA 91 is important insofar as it deals with SARS’s obligations when conducting a tax audit. (The SCA judgment by Ponnan JA was delivered on 12 June 2014).