Author: Nicole Paulsen In our Tax Alert of 7 March 2014, we discussed how the energy landscape has developed over the last few years with the introduction of a number of private and public sector funded renewable energy projects, aimed at reducing the energy footprint of corporate taxpayers.
Author: Nyasha Musviba
Court sets ‘rules of the game’ for SARS audit
Author: Amanda Visser (BDlive) A judgment by the Supreme Court of Appeal sets out the “rules of the game” for an audit by the South African Revenue Service (SARS) on a taxpayer, in terms of the new Tax Administration Act that came into effect two years ago. In the judgment delivered last month the court found that raising additional assessments in the course of an audit should be based on “proper grounds” and that it was imperative for auditors to familiarise themselves with the business environment in which taxpayers operated.
Value Added Tax – Address on tax invoices
This ruling now clarifies that the address of the recipient and supplier to be reflected on a tax invoice, debit or credit note is either The physical address from where the enterprise is being conducted; The postal address of the enterprise; or Both the physical and postal addresses of the enterprise. With regard to branches or divisions that are separately registered for VAT in terms of section 50(1) of the VAT Act, the tax invoice, credit or debit note must reflect the address of the branch or division as listed above.
Tax Avoidance -Simulated transactions
In Roshcon (Pty) Ltd v Anchor Auto Body Builders CC [2014] ZASCA 40 (Roshcon) the Supreme Court of Appeal (SCA), in a unanimous judgment drafted by Wallis JA, has clarified the issues caused by its previous decision in SARS v NWK Limited [2011] SA 67 (NWK). Roshcon was not a tax case; it concerned supplier and floor plan agreements relating to the sale of trucks, with a reservation of ownership to a finance house as security until the trucks were fully paid for by the purchaser. On the assumption that NWK had transformed our law in regard to simulated transactions, counsel contended that the agreements in question were a disguise or simulation, amounting in fact to a pledge of the trucks without delivery or possession as required by law. In rejecting this argument, the SCA took great care to reaffirm the well-established principles relating to simulations, and to explain its Read More …
The ABC of Donations deductions
“Social responsibility is an ethical theory that an entity, be it an organisation or individual, has an obligation to act to benefit society at large.” When your moral compass and sense of social responsibility lead you to acts of benevolence, you could, in addition to the sense of wellbeing that comes from helping others, also qualify for a reduction in your tax bill. In recognition of the valuable role these donations from individuals and businesses play in these tougher economic times, government has legislated further concessions to allow greater tax relief in respect of such donations.
Deductions – Apportionment of holding company expenses
Mobile Telephone Networks Holdings (Pty) Ltd (the taxpayer) v Commissioner for the South African Revenue Service [2011]73 SATC 315, the taxpayer was the holding company of five directly held subsidiaries and a number of indirectly held subsidiaries and joint ventures, within a group of companies. The collective business of the operating companies within the group was the operation of mobile telecommunication networks.
Capital Gains Tax – Base cost of an interest-freenloan at a discount
Introduction The Eighth Schedule to the Income Tax Act No. 58 of 1962 (the Act) provides for a tax on capital gains colloquially known as capital gains tax. An interest free loan is regarded as an “asset” in terms of the definition in paragraph 1 of the Eighth Schedule as it is an incorporeal asset whereby the lender acquires a right to claim payment from the borrower. Where part of a loan is repaid it constitutes part of an asset disposed of and it will be necessary to allocate a part of the base cost of the loan to the part of the loan repaid in order to determine the capital gain or capital loss in respect of the disposal of that part. Where a loan is acquired for less than its face value, i.e. the base cost of the loan is less than the amount actually owed by the Read More …
South African government considers carbon offset scheme as part of carbon tax
The South African National Treasury has published proposals for a carbon offset scheme. The scheme aims to increase investments in projects that will reduce GHG emissions. It will also enable businesses to reduce their liability to carbon tax, which is due to be introduced in 2016.
Deductibility of audit fees
On 7th March 2014 the Supreme Court of Appeal delivered judgment in the as yet unreported case of Commissioner for the South African Revenue Service v Mobile Telephone Networks Holdings (Pty) Ltd, (966/2012) [2014] ZASCA 4 (7 March 2014) which dealt with the deductibility of audit fees incurred for a dual or mixed purpose and the apportionment thereof for tax purposes in the light of section 11(a) of the Income Tax Act 58 of 1962, as amended (‘the Act’) read with sections 23(f) and 23(g) of the Act.
Base erosion and profit shifting (“BEPS”) – do you know what is coming?
As a result of the global financial crisis, the necessity for growth has become paramount and fiscal consolidation non-negotiable. Private sector growth is fundamental for economic recovery and to reduce deficits. There is a general belief, even in developing countries, that governments are losing substantial tax revenues as a result of aggressive tax schemes which result in the eroding of the tax base or the shifting of profits into more favourable tax jurisdictions.