In order for the ownership of assets to pass from a seller to a buyer it is necessary that the parties agree three essential elements: price, terms and structure. These three elements are interdependent in any transaction. For instance, after agreeing the price of a transaction, i.e. the number of rands or rand value of the consideration the seller will receive, the parties will need to agree the terms such as whether the price will be paid by means of cash, debt and/or shares as well as the timing of these payments.
Category: Capital Gains Tax
UK capital gains tax ‘is bad news for SA’
SOUTH Africans with property in the UK will in future be liable for capital gains tax there once they sell their property, following an announcement last month that the tax will be introduced in the UK from April next year. The South African economy is likely to lose revenue because of the step, as the UK would in future be getting the tax instead of South Africa, Michael Honiball, partner in the tax department of law firm Webber Wentzel, said on Tuesday. South Africa’s domestic laws,
International Tax – Exit charge CGT – Section 9H
The Taxation Laws Amendment Bill 39 of 2013 (the Bill) was tabled by the Minister of Finance on 24 October 2013. One of the interesting amendments in the Bill to the Income Tax Act 58 of 1962 (the Act) relates to the exit charge on interests in immovable property, especially in light of the recent amendments to the double tax treaty between South Africa and Mauritius, concluded on 17 May 2013.
The taxation of employer-provided low cost housing: A step in the right direction, but not yet a leap for mankind…
Introduction As part of Government’s anti-poverty objectives, Government is seeking to provide low-income South African’s with low cost housing and more specifically, ownership of residential property. In this regard, Government appears to be supportive of employers who provide low cost housing to low-income employees with the aim of enabling these employees with the opportunity to acquire ownership of the housing.
Income Tax Deductions v Value-Added Tax Deductions
Broadly speaking, in their ordinary business operations, certain entities are entitled to claim certain deductions for income tax and value-added tax (“VAT”) purposes. In this article we discuss the tests used by South African courts and in practice, for income tax and VAT purposes, in order to determine whether a taxpayer will be entitled to such deductions. Consideration will be given specifically to the deduction of legal expenses incurred by a taxpayer in terms of section 11(c) of the Income Tax Act No. 58 of 1962 (“Income Tax Act”) and the deduction of input tax in respect thereof in terms of section 1 read with section 7 of the Value-Added Tax Act No. 89 of 1991 (the “VAT Act”).
Capital Gains Tax: Trusts vs Individuals
Author: Rigard Sevenster (Fiduciary Specialist at Glacier by Sanlam.) Many financial planners, and the general public at large, have expressed concern regarding when and to what extent they or their trust is liable for capital gains tax (CGT). Knowing the different tax treatments will assist in choosing how to structure your estate and trust more effectively. In this article we highlight some of the most important differences in CGT from either a trust or an individual’s perspective.
Taxpayer's rights on SARS audits
The Tax Administration Act, Act 28 of 2011 (the TAA) came into effect on 1 October 2012. Its promulgation brought with it many changes to not only taxpayers’ rights and obligations but the reciprocal rights and obligations on the part of the South African Revenue Service (SARS) in its continuous business of revenue collection. Some of the amendments and repeals of sections previously contained in the Income Tax Act No. 58 of 1962 (the Act) have seen a welcome improvement in taxpayers’ rights. One of these improvements is contained in section 42 of the TAA.
Render unto Caesar – Harsh Tax Penalties Reviewed
JOHANNESBURG – Taxpayers who accidentally reduce their tax liability due to a reasonable mistake without any intent to defraud the Taxman, won’t be subjected to harsh understatement penalties in future. The Tax Administration Laws Amendment Bill was introduced in the National Assembly last week and revises regulations to such an extent that the South African Revenue Service (Sars) won’t impose penalties in cases where the understatement by the taxpayer “results from a bona fide inadvertent error”. This follows criticism from tax practitioners and taxpayers on the harsh penalties previously imposed even where taxpayers had no intention of deceiving Sars.
SARS to fight for its fair share of the tax pie
Earlier this year Minister Pravin Gordhan (“the Minister”) announced the members of the Tax Review Committee (“the committee”) as well as the committee’s terms of reference. The terms of reference for the committee include inquiring into the role of the South African tax system in the promotion of inclusive economic growth, employment creation, development and fiscal sustainability. The committee is required to take into account recent domestic and global developments and, in particular, the long-term objectives of the National Development Plan (NDP) and thereafter make recommendations to the Minister. Any tax proposals arising from these recommendations will be announced as part of the normal budget and legislative processes.
Securities lending – tax implications arising from the taking of cash collateral
South African residents are taxed on their worldwide income. In particular, the Income Tax Act includes in “gross income” any amount received or accrued that is not of a capital nature. Based on case law, an amount “accrues” to a taxpayer when the taxpayer becomes unconditionally entitled to receive it (CIR v Genn and Company (Pty) Ltd, (20 SATC 113)).