This private ruling from SARS deals with interest incurred on replacement loans and addresses whether such loans retain their initial business purpose for purposes of determining whether the interest incurred on the loans qualifies for a deduction under section 24J(2).
Author: Nyasha Musviba
Buy-back of ordinary shares by a company in excess of market value
SARS recently issued the above Binding Private Ruling which deals with the question whether the buy-back of ordinary shares by a company at an amount in excess of the market value of the shares, in circumstances where the purpose of the buy-back was to maintain the BBBEE status of the company, has donations tax effects or would invoke paragraph 38 of the Eighth Schedule.
Tax dispute resolution
Times have certainly changed. Ten years ago a tax query from a SARS assessor would find its way to the desk of the financial director or in-house tax advisor who would send it off to their auditors. The auditors would, in turn, give it to their tax department who would draft a reply to SARS and hope the matter went away. If not, an informal meeting between the financial director and tax advisor at the audit firm would usually settle the dispute.
Simulated transactions: welcome clarification from the Supreme Court of Appeal
In Roshcon (Pty) Ltd v Anchor Auto Body Builders CC (“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 (“NWK”). Roshcon was not a tax case; it concerned supplier and floorplan 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
Deductibility of audit fees – Commissioner for the South African Revenue Service v Mobile Telephone Networks Holdings (Pty) Ltd, (966/2012) [2014] ZASCA 4 (7 March 2014)
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 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.
Capital gains tax – method of valuation on the disposal of shares
Authors: Gigi Nyanin and Nicole Paulsen (DLA Cliffe Dekker Hofmeyr) Capital Gains Tax (CGT) is payable on the disposal of capital assets which were in the seller’s possession on, or were acquired after 1 October 2001 (valuation date). A capital gain or loss is determined by calculating the difference between the proceeds and the base cost of the disposed asset.
Reportable arrangements – a bad moon rising
Authors: Ruaan van Eeden and Danielle Botha (DLA Cliffe Dekker Hofmeyr) Draft Public Notice The South African Revenue Service (SARS) recently issued a Draft Public Notice (Draft Notice) listing transactions that constitute reportable arrangements (RA’s) for purposes of s35(2) of the Tax administration Act, No 28 of 2011 (TAA). The Draft Notice, once finalised, is intended to be supplementary to any previous notices issued with regard to RA’s and serves as an extension of the existing listed RA’s. Existing reportable arrangements include certain arrangements qualifying as hybrid equity instruments in terms of s8E and 8F of the Income Tax Act, No 58 of 1962 (ITA).
Chittenden NO & Another – HC 12795/14 NG – 18 Feb 2014
Introduction This case considers an application made by the second applicant (Kestrel Network Solutions (Pty) Ltd) to the North Gauteng High Court which arises from business rescue proceedings in respect of the second applicant and to which the first applicant (Grant Chittenden N.O) was appointed as business rescue practitioner on 30 May 2013. The Commissioner of the South African Revenue Services (CSARS), in his capacity as first respondent, opposed the business rescue
Multitude of taxes makes Africa expensive
Author: Amanda Visser (BDlive) Withholding taxes are giving rise to a vicious circle in Africa. As governments introduce higher and more withholding taxes on an ever-increasing range of services in an effort to protect their tax base, companies are developing complex structures to try to lower their tax liabilities. Ultimately the result is that doing business in Africa is becoming more expensive. Governments require local businesses that pay foreign multinational companies for interest, dividends, royalties, service fees and even the sale of real estate, to withhold a certain percentage of the payments and transfer that amount to the fiscus. The withholding taxes differ from country to country, and the rates fluctuate from 5% to 30%.
A Company & Two Others v Commissioner for SARS – 17 March 2014
Introduction This case considers an application made by three applicants to the Western Cape High Court for a declaratory order that certain content contained in the invoices between the first applicant and its attorneys is subject to legal advice privilege. This was asserted as the basis for the applicants’ refusal to disclose portions of the invoices (alternatively referred to as ‘fee notes’), when complying with a request by the Commissioner of the South African Revenue Service (SARS) in terms of section 46 of the Tax Administration Act No. 28 of 2011 (hereafter the “TA Act”).