Section 24I of the Income Tax Act (“the Act”) governs the income tax treatment of exchange gains or losses made in respect of both realised and unrealised foreign exchange transactions. Unrealised exchange differences on foreign denominated debts between connected persons have been subject to an array of income tax treatments over the past few years. Realisation of the exchange difference is triggered to the extent that the related debts have been repaid, setoff or settled in any other manner. Previous tax treatment of unrealised exchange differences Unrealised exchange differences that arose in respect of foreign denominated capital loans and advances between connected persons, before November 2005, are included, or
Author: Nyasha Musviba
THE Employment Tax Incentive (ETI) calculations explained
Formulas are sometimes difficult to understand so we have step-by-step examples and a handy ETI calculator. The examples and the ETI calculator are intended to help you work out your incentive amount which may be claimed. We draw your attention to the following: Disclaimer: What is contained in this calculator is intended as a guide only and is not considered to be a legal reference nor is it a binding ruling. The calculator does not take the place of legislation and readers who are in doubt regarding any aspect of the information displayed in the questionnaire should refer to the relevant legislation, or seek a formal opinion from a suitably qualified individual. More information Contact us It remains the responsibility of the employer to ensure the information provided, when using the ETI calculator, is accurate and the requirements are met for the employer and the employees to qualify. [spoiler title=”Example Read More …
An important judgement for public benefit organisations
Author: Ben Strauss (Cliff Dekker Hofmeyer) Fiscal policy, as manifested in the Income Tax Act, No 58 of 1962 (Act), is that philanthropy should be encouraged. The Act achieves this objective by providing that, subject to certain criteria being met and subject to limitations, charitable organisations enjoy a very favourable tax regime and taxpayers who make donations to such organisations may deduct the donations for income tax purposes. To qualify for the favourable dispensation, an organisation must be approved as a public benefit organisation (PBO) by the South African Revenue Service (SARS).
International Financial Reporting Standards (IFRS) tax implication – Part II
Construction contracts The current practice for determining contract revenue by FIRS shall be sustained. Only costs attributable to certified work done shall be allowed for tax purposes in line with provisions of CITA. Other incomes in the nature of incentive payments would be taxed accordingly. The expected loss recognized as an expense shall be disallowed until the loss is actually incurred. Interest received on advanced payment placed in an interest yielding account shall be treated as other income and be subjected to tax at the time it is earned. Retention income shall be subjected to tax at the time it is earned. Future cost shall not be allowable as expense for tax purposes IAS 12 – Income taxes Taxpayers shall furnish FIRS with all deferred tax disclosures as contained in the standard.
SARS eyes R10bn from tax evaders
Author: Jacques Pauw (City Press) The SA Revenue Service’s (Sars’) special investigations unit has in the past 10 years recovered, or is busy retrieving, an estimated R10bn in unpaid taxes from South Africa’s most notorious gangsters and tax evaders. Among their scalps is Economic Freedom Fighters (EFF) leader Julius Malema, Ponzi supremo Barry Tannenbaum and the who’s who of the underworld: Radovan Krejcir, Glenn Agliotti, Cyril Beeka, Lolly Jackson and Colin Stansfield. The men and women of Sars’ Tax and Customs Enforcement Investigations unit (TCEI) comprise old Sars hands and young graduates, with a sprinkling of former Scorpions, Hawks, police crime intelligence and National Intelligence Agency officers.
Changes to tax treatment of medical expenses from 1 March – worked example
At present taxpayers aged under 65 years are on a hybrid system with regard to the income tax treatment of their medical expenses. While contributions to medical aids are subject to credit relief, medical expenses in excess of 7.5 % of taxable income are claimed as a deduction. On the other hand, taxpayers aged 65 years or older are on a deduction-only system. From 1 March 2014, all taxpayers regardless of age will be on a credit-only system. As is currently the case, contributions to medical aids or medical expenses by the taxpayer’s employer are a taxable fringe benefit in the hands of the employee but the amount of the fringe benefit is treated as if it was a contribution or expense paid by the employee for purposes of the conversion to credits referred to below.
Fight graft by taking leaf from tax books of Ancient Greeks
The tax debate, internationally and in South Africa, is progressively focusing on closing perceived tax loopholes (in order to boost collections) and increasing self-assessment through vigorous auditing by the tax authorities. In pursuing this goal, Finance Minister Pravin Gordhan has appointed Judge Dennis Davis as the chairman of the Davis Tax Committee. Davis has been quoted as saying that the challenge for the committee is to design a tax system that, among other things, achieves “the spending needs of the government and its distributional ambitions”. The collection of taxes is important but addresses only one part of the equation.
Ethical taxpaying: how does a company ascertain the “right amount of tax”?
Author: Matthew Hodkin – Norton Rose Fulbright LLP Tax has been much in the news recently. This is not the first time that tax has risen to the top of the political agenda but now public mood has shifted towards the idea that people should be paying more tax. Historically, tax has caused all manner of protests, uprisings and even wars but there has also previously been sustained public outcry that people just aren’t paying as much tax as they ought. This developing perception of tax as a moral or ethical obligation creates difficulty with which existing corporate processes are not always well-equipped to cope.
Bikini model says SARS ruined her life
Author: NASHIRA DAVIDS and PHILANI NOMBEMBE MODEL CITIZEN: International swimwear model Candice van der Merwe arrives at the Cape Town High Court with SARS aiming to haul her and her father before an inquiry for tax fraud Picture: Swimwear model Candice van der Merwe’s life has been “devastated” by the “draconian” South African taxman. Yesterday the Cape Town High Court ordered that she could be hauled before a SARS tax inquiry. Her father, Cape Town businessman Gary van der Merwe, has been involved in tax fraud litigation amounting to millions of rands for almost a decade. The 21-year-old model claimed late last year that an unknown Arab admirer gave $15.3-million (about R168.3-million) after she caught his eye at a private Seychelles resort.
High court sequestrates Agliotti estate over R77m tax debt
Author: ERNEST MABUZA Convicted drug dealer Glenn Agliotti’s estate has been sequestrated over a R77-million tax debt. File photo Convicted drug dealer Glenn Agliotti’s estate has been sequestrated over a R77-million tax debt. Yesterday, the Pretoria High Court confirmed a provisional order it made in November, after Agliotti, 57, failed to show why it should not be made permanent. Agliotti, who was not present in court, did not oppose the matter. The application was made by the South African Revenue Service, which accused Agliotti of failing to pay more than R77-million in income tax and VAT.