Author: Nyasha Musviba

Understatement Penalties in hindsight

Nyasha Musviba

Some 20 months after the introduction of Understatement Penalties, it is worth taking stock of where taxpayers find themselves following their introduction, and highlighting some of the challenges they are experiencing. Many taxpayers have become all too familiar with this Understatement Penalty Percentage Table (fig. 1 below) contained in section 223 of the Tax Administration Act No 28 of 2011 (“the TAA”), which was mercifully amended earlier this year by the reduction of some of the penalty percentages:

The golden goose’s burden

Nyasha Musviba

Over the past few years, we have regularly raised concerns about the future of South Africa’s golden goose, the taxpayer. However, as this year’s tax season kicks off, our fears remain unabated, especially when we consider facts such as these recently highlighted by Economist Mike Schüssler: • According to the World Bank, South Africa has the seventh highest tax revenue to GDP ratio when social security taxes such as unemployment insurance and compulsory pensions are left out.

SARS targets R1 trillion in tax collections

Nyasha Musviba

The SA Revenue Service intends collecting nearly R1 trillion during the 2014/15 tax season, which began on Tuesday. Tax revenue was expected to grow by 10.4% to R993.6 billion, with R899.8 billion collected last year, after refunds, Finance Minister Nhlanhla Nene told reporters in Pretoria. Nene said Sars’s ability to collect revenue had been one of the cornerstones of South Africa’s 20-year-old democracy as it affected government’s ability to deliver public services.

Tax break offers opportunity to reduce under-insurance

Nyasha Musviba

Author: Kristy Jooste (Cape Business News) From March 2015, an amendment to the Income Tax Act will standardise the tax treatment of insurance policies that offer protection against death and disability. Currently, premiums on policies that pay out a lump sum on disability are not tax-deductible, but lump sums paid are tax-free. However, premiums on income-protection policies are tax-deductible, but monthly income on payout is taxed.

Deductibility of audit fees

Nyasha Musviba

Author: Beric Croome (Tax ENSight) 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.

Interpretation of the Tax Administration Act in the context of SARS' powers to recover tax

Nyasha Musviba

Author: Caroline Rogers (Tax ENSight) The Tax Administration Act 28 of 2011 (“Tax Administration Act”) came into effect on 1 October 2012 (save for certain provisions that are still to come into force). This important piece of legislation seeks to incorporate into one Act all those administrative provisions (except for customs and excise) that are generic to all tax Acts and that were previously duplicated across all the different tax Acts.

Default judgement in tax litigation

Nyasha Musviba

Author: Robert Gad and Jadyne Devnarain (ENSAfrica) In terms of the current Tax Court rules published under the Income Tax Act No. 58 of 1962, where the Commissioner for the South African Revenue Service (“SARS”) did not comply with the prescribed time frames in respect of dispute resolution, practically, there was little that a taxpayer could do. This could change in terms of the proposed new Tax Court rules expected to come into force later this year.