Section 24I(10) of the Income Tax Act 58 of 1962 (ITA) has been replaced by a new provision for years of assessment commencing on or after 1 January 2013. Section 24I(10) of the ITA deferred unrealised exchange gains and losses on exchange items between connected persons and groups companies until they were realised. However, section 24I(10) has been deleted and replaced with section 24I(10A)with effect from years of assessment commencing on or after 1 January 2013.
Author: Nyasha Musviba
VAT Alert – Homeowners Associations to deregister for VAT
In the past Home Owners Associations (HOAs) were not exempted from VAT and had to charge VAT on their levies, whereas sectional title body corporates were generally exempt from VAT. SARS is now of the view that the supply of services by an HOA to its members is not a business enterprise but merely a cost sharing arrangement and the law was amended accordingly. As from 1 April 2014 the levies payable by members to HOAs will also be exempt from VAT. However, the effect of this amendment is that many HOAs will have to deregister for VAT purposes as from 1 April 2014 which will have certain financial and administrative implications.
Tax Alert – Employment Tax Incentive
The Employment Tax Incentive Act 26 of 2013 (ETI) was promulgated on 18 December 2013. The purpose of the ETI is to encourage youth employment and reduce unemployment, and will remain in place until 1 January 2017. The ETI came into operation on 1 January 2014 and will apply to qualifying employees employed on or after 1 October 2013 by eligible employers, which in effect means that the first claims for the incentive will be submitted with the January 2014 employees’ tax monthly return on or before 7 February 2014.
2014/15 Budget could provide clarity on carbon tax – Deloitte
Author: Leandi Kolver Clarity on the design of South Africa’s carbon tax policy could be a feature of the 2014/15 National Budget to be presented by Finance Minister Pravin Gordhan in February, professional services firm Deloitte said at its pre-Budget event on Wednesday. “If announced, the new look carbon tax policy will probably present improved linkage between the proposed carbon tax pricing mechanism and the desired emission reduction outcomes (DEROs) proposed in the National Climate Change Response Policy,” Deloitte director Izak Swart said. Deloitte manager Barry Drotsche explained that the DEROs, as mentioned in the National Climate Change Response Policy, considered sectors that played a vital role in the
Amendments to the Tax Administration Act 2013
Author: Beric Croome (ENS) The Tax Administration Laws Amendment Bill, No. 40 of 2013 was introduced in Parliament on 24 October 2013. The President of the Republic of South Africa must still assent to the Bill and it must then be published in the Government Gazette before it becomes an Act. The Tax Administration Laws Amendment Bill (“TALAB”) contains various amendments of an administrative nature to various tax Acts administered by the Commissioner: South African Revenue Service. In this article it is not possible to deal with all of the amendments contained in the Bill and only the more important changes to the Tax Administration Act, No. 28 of 2011 will be dealt with.
Transfer Pricing adjustments: What are the consequences?
Author: Billy Joubert (Deloitte) South Africa’s transfer pricing rules changed radically for years of assessment starting on or after 1 April 2012. This means that the consequences of such an adjustment being made now are very different, depending on whether the adjustment relates to a year of assessment commencing before – or after – 1 April 2012. Perhaps the most fundamental change was in relation to the mechanics for making transfer pricing adjustments. As regards the consequences of TP adjustments, these are also now very different. Many of the TP adjustments currently being made or contemplated relate to years of assessment commencing before 1 April 2012. For ease of reference we shall refer to such years as old years.
Assumption of contingent liabilities
The South African Revenue Service (SARS) recently released its discussion paper (Discussion Paper) on the tax implications of the assumption of contingent liabilities in the context of a sale of business as a going concern and where the assumption of the contingent liabilities is in part settlement of the purchase price of the assets. Whereas the purchase price can generally be settled by, for example, a cash payment, the assumption of unconditional liabilities, loan account, or the issue of shares, the Discussion Paper specifically deals with the assumption of contingent liabilities.
Poorly drafted and implemented tax planning arrangements: rectification v “grin and bear it"?
CIR v Sunnyside Centre (Pty) Ltd 1997(1) SA 68 (A) clearly stated that South African taxpayers must sleep in the (contractual) beds they make: “When a scheme works, no tears are shed for the Commissioner. That is because a taxpayer is entitled to order his affairs so as to pay the minimum of tax. When he arranges them so as to attract more than the minimum he has to grin and bear it.”
Finance Minister Pravin Gordhan invites South Africans to send tips for budget 2014
Finance Minister Pravin Gordhan invites South Africans to send their tips on what they would like to see in the country’s budget. The Minister will present the 2014 Budget to Parliament on 26 February 2014 at 2pm. The Budget Tips is an on-going campaign to garner citizens’ views on economic matters. The public is encouraged to send through tips on matters relating to tax, how government can improve public finance management, boost economic growth and address unemployment.
2014 – The South African “Tax Year” Ahead In Perspective
Aurthor: Hugo Van Zyl (Cross Border Tax and Exchange Control Specialist) The first and very important note to make, in dealing with South African tax issues: tax year 2014 ends on the last day of FEBRUARY 2014. The South African tax year for most individuals, are 1 March until the last day of February in the next calendar year. Corporates can change their tax year-end to align with the last day of their financial year-end, yet Trusts partners in a JV or partnership, are obliged to file assuming a tax year-end on the last day of February, despite their financial year-end being the last day of another month. Yes, sadly this date, Friday 28th 2014, is not even listed on the SARS webpage on important dates, yet is an extremely important tax deadline.