Authors: Ntsakisi Maswanganyi and Linda Ensor (BDlive) Higher than expected tax revenues and lower government spending has helped narrow the budget deficit and will bring down borrowing by the government. The main budget deficit — which covers all three spheres of government — is now estimated at 4.3% of gross domestic product (GDP) from 4.7%, the Treasury said on Thursday. This reduces the amount the government needs to borrow to finance its spending while satisfying ratings agencies that it was on track to bring down its large deficits. However, questions remain on how sustainable the narrowing was.
Category: Income Tax
Who is obliged to report a reportable arrangement?
The list of reportable arrangements was extended by the South African Revenue Service in a notice (SARS Notice) published on 16 March 2015 in terms of s35(2) and s36(4) of the Tax Administration Act, No 28 of 2011 (TAA). The SARS Notice has caused some consternation. However, if one considers the obligation to notify SARS of reportable arrangements, the effect of the SARS Notice is perhaps not as far-reaching as first appears.
Interpretation of exemption provisions
The Tax Court gave judgment in the matter of ABC (Pty) Ltd vCommissioner for the South African Revenue Service (case number 13512, as yet unreported) on 30 March 2015. Even though the case concerned secondary tax on companies (STC), which has been replaced by dividends tax, it is interesting to see how the court dealt with the interpretation of an exemption provision.
A preservation order is not of itself a ‘tax collection’ measure
A preservation order is not of itself a ‘tax collection’ measure – but it may well be followed by tax collection processes On 1 December 2014 the Pretoria High Court confirmed a provisional preservation order that had been granted in terms of section 163 of the Tax Administration Act 28 of 2011 against Africa Cash and Carry (Pty) Ltd and various members of the Hathurani family in their personal capacities and in their representative capacities as trustees of trusts. (The judgment – thus far published only on the SARS website – is reported as Commissioner for the South African Revenue Services, as applicant, and 19 respondents, including trustees of the Edrees Hathurani Family Trust; case 49274/2014.)
Challenge to SARS under the Promotion of Administrative Justice Act
Author: PwC South Africa In this issue we have focused on the SARS tactic of challenging the forum to which a taxpayer brings a dispute with SARS. These challenges illustrate that the selection of the procedure to be followed in a dispute with SARS may be critical to success. In the matter of Ackermans Ltd v Commissioner for the South African Revenue Service Case No 16408/2013 in the North Gauteng High Court, the taxpayer had elected to bring an application for a review of the actions of SARS as unconstitutional in terms of section 6 of PAJA. It should be mentioned that the taxpayer had also, on the merits of the dispute, noted an objection and appealed to the Tax Court against the disallowance of that objection.
South Africa’s use of fiscal policy and social spending as redistribution instruments
Author: Ferdie Schneider, National Head: Tax, BDO South Africa Since the outset of the new democracy, South Africa used its tax resources to expand social assistance and increase spending on education and health services thereby reducing poverty. Achieving greater income equality has however, remained a challenge. Household consumption inequality, measured by the Gini coefficient, increased from 0.67 in 1993 to 0.69 in 2011, which is among the highest in the world. This potentially ranks South Africa as one of the most unequal countries amongst middle-income countries.
SARS: THE 2015 Employer Annual Reconciliation
1 April is the start of the 2015 Employer Annual Reconciliation for the period 1 March 2014 to 28 February 2015. Don’t forget the following important details: Top Tip: Submission may only be sent from 1 April 2015 for the 201502 period. 1. The Employer Annual Reconciliation period is from 1 April – 29 May 2015. Get ahead and submit your reconciliation sooner, rather than later. This will give you time to resolve any discrepancies before the deadline.
Sars accuses Malema of lying, hits him with R14m bill – report
Pretoria – The SA Revenue Service (Sars) has accused Economic Freedom Fighters leader Julius Malema of lying about his source of income and hit him with an additional R14m tax bill, the Sunday Times reported. This was according to court papers filed in the North Gauteng High Court by Sars which has launched an application for Malema’s final sequestration. According to the report, Sars, in the court papers explaining why it had dumped its deal with Malema, said he had lied about the source of the funds used to settle part of his tax bill.
SARS’ new list of ‘Reportable Arrangements’
SARS’ list of reportable arrangements, as envisaged by section 35 of the Tax Administration Act, 2011 (TAA), has been widened extensively. The arrangements, deemed reportable, were published on 16 March 2015 in a public notice (‘the Notice’) in the Government Gazette. Reportable arrangements must be reported to SARS within 45 business days after becoming a participant in a reportable arrangement or 45 business days after the date on which an arrangement qualifies as a reportable arrangement. Every participant has the duty to disclose the prescribed information regarding the arrangement to SARS unless the participant obtains a written statement from another participant that the other participant has disclosed the arrangement.
SARS' new list of ‘Reportable Arrangements'
SARS’ list of reportable arrangements, as envisaged by section 35 of the Tax Administration Act, 2011 (TAA), has been widened extensively. The arrangements, deemed reportable, were published on 16 March 2015 in a public notice (‘the Notice’) in the Government Gazette. Reportable arrangements must be reported to SARS within 45 business days after becoming a participant in a reportable arrangement or 45 business days after the date on which an arrangement qualifies as a reportable arrangement. Every participant has the duty to disclose the prescribed information regarding the arrangement to SARS unless the participant obtains a written statement from another participant that the other participant has disclosed the arrangement.