Author: Stephen Craston ONE of the biggest bits of good news in this year’s budget is for those who are facing retirement. Most pensioners take a lump sum of one-third of their accumulated capital when they retire. The tax-free threshold for these lump sums has been increased from R315000 to R500000. Special national treasury adviser David McCarthy says it is inequitable that the lower-paid, who did not benefit from a tax deduction as they weren’t paying income tax, should have to pay tax on their lump sums. The wealthier will benefit as well, as the top rate of 36% now kicks in at R1,05m, up from R945000 in the past financial year. Government has also reduced tax on lump sums taken before retirement, with tax kicking in at R25000, up from R22500.
Author: Nyasha Musviba
Budget 2014 – Tax relief favours small business
Author: Chantelle Benjamin High and low earners also found some cheer in a budget focused on stimulating growth. “We are dying here. It’s very hard for a small business to get funding or deal with the red tape,” one desperate small business owner said at a small, medium and micro enterprise (SMME) conference in Sandton a month ago — a plea that was heard by the government in the latest budget. Based on early recommendations by the Judge Dennis Davis committee looking into the present tax regime, efforts have been made to reduce the tax burden on micro enterprises and to reduce the complexity of compliance.
VAT registration of foreign online suppliers not limited to supplies of e-books
Authors: Varusha Moodaley and Seelan Moonsamy (ENS) The recent amendments to the VAT legislation introduced by the Taxation Amendment Act, No 31 of 2013, gives effect to government’s proposal that all foreign businesses supplying e-books, e-music and other digital goods and services in South Africa be required to register as South African value-added tax (“VAT”) vendors. Government indicated that the proposal is in line with international trends such as regulations adopted by the European Union requiring such suppliers to register for VAT in the country where the consumer resides. The amendment has the effect that from 1 April 2014, all persons supplying electronic services from a place outside of South Africa will be required to register as VAT vendors where they make supplies of electronic services to South African customers who are either tax resident in South Africa, or where payment for the services by such customers
Budget 2014 – Tax highlights of the 2014 budget proposals
Author: ENS The minister of finance read the budget speech on the 26th of February. It covers both immediate changes to the tax regime that will receive attention over the coming 1 or 2 years. In general terms, the current and future proposals are very modest in their scope and this could be regarded as the most low-key set of tax proposals to have been put forward for many years, at least from a technical perspective. It is noteworthy that the maximum marginal tax rates applicable to individuals, trusts, companies and dividends remain unchanged. Business Third party backed shares – Several changes are proposed in relation to the tax treatment of third party backed shares. In general terms these relax the hurdles which the taxpayer must overcome to avoid falling foul of the anti-avoidance rules (which re-characterise dividends as interest). Briefly, the changes affect the re-financing of such shares; or Read More …
Tax invoices, credit and debit notes – time limits are set
Author: Carmen Moss-Holdstock (Cliffe Dekker Hofmeyr) An amendment has been proposed in the 2014 Budget Speech relating to the time frame where debit or credit notes under s21(1) of the Value-Added Tax Act, No 89 of 1991 (VAT Act) are required to be issued. Background Under s16(2) of the VAT Act, a vendor can only claim an input deduction if he is in possession of a tax invoice or debit note or credit note. A ‘tax invoice’ is a document that needs to meet the requirements of s20(4) and s20(5) of the Act for the vendor to claim an input deduction. An ‘invoice’ on the other hand is a ‘document notifying an obligation to make payment’ and the issuing of which may affect the timing of supply.
VAT – Going concerns are going – no more uncertainty promised
Author: Carmen Moss Holdstock (Cliffe Dekker Hofmeyr) An amendment has been proposed in the 2014 Budget Speech which seeks to clarify Interpretation Note 57 on the VAT treatment of a going concern, specifically the requirement that a vendor must be a registered vendor at the time the sale agreement is concluded. Background The sale of a business as a going concern, in simple terms, means that the business (or part thereof) is capable of being operated as a stand-alone business in its own right. An example of such a sale would be where a purchaser conducts a letting enterprise from a property and has decided to exercise an option to acquire the property from the seller in terms of the lease agreement, or in the case of a property developer’s enterprise, the transfer of its developed and undeveloped properties (essentially constituting trading stock) to a third party.
Budget 2014: Tax Budget Summary
Finance Minister Pravin Gordhan delivered his 2014 Budget Speech on 26 February 2014. While we did not anticipate major Tax changes in the current year, the complexity and challenges of the existing Tax environment means that it is time for Tax to be a board room level topic again.
Budget 2014: Taxed for your sins
Cape Town – Consumers still trying to enjoy a few small pleasures in life would have to dig a bit deeper into their pockets once again. Excise duties on alcoholic beverages (especially beer, sparkling wine and spirits) will increase by between 6.2% and 12%. Finance Minister Pravin Gordhan, did, however, think it in order not to increase the excise duty on traditional African beer or beer powder. Consumers who like to take a smoke break, will have to cough up 68 cents per packet of 20 cigarettes more from now on, while those enjoying the luxury of a cigar will pay R5.11 more per 23g.
Budget 2014: Relief for taxpayers
Cape Town – Income tax relief of R9.3bn and massive future spending on social grants are among the main features of this year’s pre-election budget. Other highlights include a budget deficit that is expected to narrow to 2.8% of GDP by 2016/17, supporting a stabilisation of debt at 44.3% of GDP. Tabling his 2014 Budget in the National Assembly on Wednesday, Finance Minister Pravin Gordhan told MPs he expected a budget deficit of four percent of GDP for this year and next (2014/15). Tax revenue this year (2013/14) was expected to be R1bn higher than projected in the 2013 budget. Gordhan said real growth in non-interest spending should average 1.9% over the next three years. A spending ceiling committed government to a cap of R1.03trn in 2014/15, R1.11trn in 2015/16, and R1.18trn in 2016/17.
Budget 2014: Budget in a nutshell
Cape Town - Finance Minister Pravin Gordhan has tabled his fifth and probably last National Budget in Parliament, strongly emphasising acceleration of economic growth to the National Development Plan’s goal of economic growth of between 5% and 6% as he kept spending under control and still surprisingly had room for some personal tax relief (especially for lower income earners). It is a conservative budget with no big surprise. It will probably please most people with the coming elections in May in mind. The highlights are: