Author: Jerome Brink. The nature of the business of many multinational companies requires them to send their employees to other countries across the globe in order to, among other things, manage and assist with special projects, implement firm-wide systems and ensure a standard level of quality in operations. Such seconded employees are often subject to tax in their host country, yet remain tax residents in their home country.
Author: Nyasha Musviba
A step in the right direction: small business corporations regime extended to personal liability companies
Authors: Gigi Nyanin and Mark Morgan. On 8 July 2016, National Treasury (Treasury) released a draft Taxation Laws Amendment Bill (TLAB) and specific draft regulations related thereto, all of which aim to give effect to the various tax proposals announced in the 2016 National Budget Speech. One of these proposals relates to the extension of the small business corporations (SBCs) tax regime to personal liability companies (PLCs).
The donations tax consequences of a transaction to introduce a BEE shareholder into a group
On 19 October 2016, the South African Revenue Services (SARS) issued a binding private ruling (BPR 253) which deals with the donations tax consequences in respect of a transaction which has the effect of introducing a Black Economic Empowerment (BEE) shareholder into a group of companies in order to benefit all the entities within the group in respect of their BEE scorecard ratings and increase the profitability of the Applicant (X), a South African resident company.
Amendments to the Special Voluntary Disclosure Programme
Author: Mareli Treurnicht. On 24 February 2016 the Minister of Finance announced the Special Voluntary Disclosure Programme (SVDP) as part of the 2016 Budget Speech. On the same date, the draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill (First Draft Revenue Laws Bill) and the draft Rates and Monetary Amounts and Amendment of Revenue Laws (Administration) Bill were released. These bills contained the proposed provisions in respect of the SVDP. Following input from the public, National Treasury released the amended draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill (Second Draft Revenue Laws Bill) and the amended draft Rates and Monetary Amounts and Amendment of Revenue Laws (Administration) Bill (Second Draft Revenue Laws Administration Bill) on 19 July 2016. An Explanatory Memorandum and a media statement on the SVDP accompanied these bills.
Value-added tax: SARS takes away on take-away
Author: Ben Strauss. Recently the Cape Tax Court handed down an important judgment about value-added tax (VAT). The taxpayer (D) was a registered VAT vendor. It operated a foods delivery business. D contracted with food outlets and restaurants to advertise their menus in booklets which D had printed and delivered to households. Customers who wished to place orders for food phoned an operator at D’s premises who took the orders. D’s staff would then pass the details of the order to the relevant food outlet and despatch a driver to collect and pay for the food that had been ordered. The driver then delivered the food to the customer. D’s branding was on the drivers’ uniforms.
Good news for employers: increase in thresholds for exemption of employer-provided bursaries
On 8 July 2016, the National Treasury (Treasury) released the draft Taxation Laws Amendment Bill 2016 (TLAB). The TLAB aims to give effect to the various tax proposals announced in the 2016 National Budget. By way of background, s10(1)(q) of the Income Tax Act, No 58 of 1962 (Act) exempts from taxable income, any “bona fide” scholarship or bursary granted to assist or enable any person to study at a recognised educational or research institution. However, if such scholarship or bursary has been granted by an employer to an employee or relative of such employee, the exemption will not apply:
Where there’s smoke there’s fire (and carbon tax) – National Treasury releases the Draft Regulations: Carbon Offsets
In November 2015, the Draft Carbon Tax Bill (Draft Bill) was published by National Treasury, setting out the framework within which carbon tax would be levied. We reported on the main tenets of the Draft Bill in our Tax Alert of 20 November 2015 (Carbon tax in South Africa). On 20 June 2016, flesh was given to this framework with the release of the Draft Regulations: Carbon Offsets (Draft Regulations), which were published in terms of clause 20(b) of the Draft Bill. The Explanatory Note for the Draft Regulations on Carbon Offset (Explanatory Note) was released at the same time. Section 4 of the Draft Bill states that carbon tax will be levied in respect of greenhouse gas (GHG) emissions resulting from:
Exchange control circular issued in respect of special voluntary disclosure programme
Author: Mareli Treurnicht. On 13 July 2016 the Financial Surveillance Department (FinSurv) of the South African Reserve Bank (SARB) issued exchange control circular no. 6/2016 (Circular) regarding details and information required in an application for exchange control relief submitted as part of the joint tax and exchange control Special Voluntary Disclosure Programme (SVDP) which was announced by the Minister of Finance in the 2016 Budget Speech.
About mines and houses: a ruling on expenditure incurred to implement a housing scheme
In our Alert of 29 April 2016, we discussed the Ruling dealing with the tax consequences of a housing scheme carried out by a mining company, specifically whether such a housing scheme would give rise to a fringe benefit in the hands of the beneficiaries of the scheme (Every house has a story: Does employer-provided accommodation always constitute a fringe benefit?). In this article, we discuss another Ruling dealing with certain tax consequences from the perspective of the mines which implement the housing scheme. On 10 June 2016, the South African Revenue Service (SARS) issued Binding Private Ruling 239 (Ruling) which deals with the income tax consequences resulting from cash contributions to be made by the Applicant (as a party to a mining joint venture) to a special purpose vehicle established to provide housing for the employees of the joint venture and the Applicant’s group of companies.
Beware of tax on dividend stripping and manipulation of dividend rights
Author: Ben Strauss. Dividends paid by local companies are generally exempt from income tax in the hands of shareholders and, in certain cases, are either exempt from dividends tax or subject to a reduced rate of dividends tax. Taxpayers may be tempted to enter into transactions where they either do “dividend stripping”, or manipulate the right to receive dividends to avoid income tax, capital gains tax (CGT) or dividends tax.