Author: Douglas Gaul, tax manager, Grant Thornton Johannesburg Paragraph (cA) of the definition of gross income was introduced into the Income Tax Act with the intention of preventing avoidance schemes whereby payment due to an employee was disguised as a capital payment for the so-called restraint of trade compensation. This inclusion has however had an impact on legitimate restraint of trade payments and is therefore being reconsidered again. Prior to the introduction of this paragraph, it may have been possible for an employee to avoid paying normal tax on such payments (at the maximum marginal rate of 40%), despite possibly paying capital gains tax at the significantly lower rate of 13.3%.
Category: Income Tax
Prof. Wanyana Oguttu – First black woman tax law doctorate in SA
The first black woman professor in UNISA’s College of Law is a recent recipient of a national “Distinguished Women in Science” Award presented to her by the then Science and Technology minister Naledi Pandor… Professor Annet Wanyana Oguttu met her husband James at Makerere University in their native Uganda while pursuing her bachelor’s degree in law. She graduated in 1993 and worked briefly as a legal assistant with Mayanja Nkangi and Company Advocates before relocating to Lesotho.
Prof Annet Oguttu – tax law pioneer
Author: Yolande Botha (Tax Talk Editor) Annet Wanyana Oguttu is one of the country’s most accomplished tax professionals. Professor Oguttu completed her doctorate in Tax Law at UNISA in 2008 and she is currently a professor of Tax Law at UNISA where she is the first black woman to hold the position of full professor in the College of Law. She talks to us about her career and her life beyond tax.
The new tax court rules
Author: Alan Lewis (ACBS) This article considers some of the new rules, and their possible impact, on the future litigation process in the tax court. On 11 July 2014, the Minister of Finance promulgated new rules, governing the procedures to lodge an objection and appeal against an assessment, and related matters (“the new rules”). These rules replaced the previous rules, which had been promulgated on 1 April 2003.
Private Binding Ruling on withholding tax on interest and the application of a treaty
Author: Heinrich Louw (DLA Cliffe Dekker Hofmeyr) The South African Revenue Service (SARS) issued Binding Private Ruling No 181 (Ruling) on 4 November 2014, which deals with the application of a treaty for the avoidance of double taxation to withholding tax on interest. The applicants were three companies incorporated and tax resident in South Africa, who intend to construct wind farms in South Africa. The Danish Government, through a funding scheme, intends to provide funding to the applicants for purposes of constructing the wind farms. Once the projects are complete, interest will become payable by the Danish Government (via the funding scheme) in respect of the funding, the term being a period of 15 years.
Draft Responses by National Treasury on the Excessive Interest Limitation Rules
On 15 October 2014, National Treasury and SARS stated in a Response Document (‘Document’) presented to the Standing Committee on Finance (‘SCoF’) that the ‘excessive interest limitation rules’ are in line with international practice and measure up well in light of current discussions at the OECD. Sections 23M and 23N were introduced in the 2013 Taxation Laws Amendment Act as measures to limit the amount of interest that a company can deduct, which the Document describes as a more reasonable level since debt finance was used to create opportunities for base erosion in the past.
INVITING TECHNICAL TAX PROPOSALS FOR ANNEXURE C OF THE 2015 BUDGET REVIEW
I. Background The National Treasury invites taxpayers, tax practitioners and members of the public to submit any technical proposals to improve or correct current tax legislation, including the closing of loopholes and addressing of unintended anomalies. Proposals received will be considered for possible inclusion in Annexure C of the 2015 Budget Review, released as part of the 2015 Budget Review.
SARS Interpretation Note 80 – Income Tax treatment of stolen money
1. Purpose This Note provides guidance on – • the deductibility of expenditure and losses incurred in a taxpayer’s trade when money is stolen through embezzlement, fraud or theft, including expenditure incurred on legal and forensic services to investigate such losses; • the inclusion in income of amounts recovered or recouped in respect of such expenditure and losses previously allowed as a deduction; and • the taxation of stolen money in the hands of the thief and the non-deductibility of such amounts when repaid.
Release of the 2014 Tax Statistics Bulletin
Joint Media Release by the National Treasury and the South African Revenue Service PRETORIA – The 2014 Tax Statistics bulletin was released today. This is the seventh edition of the publication. The objective of releasing the country’s Tax Statistics is to publicise available, comprehensive tax revenue data that can assist policy makers and provide insights on economic indicators to researchers, analysts, the media and the public in general. The 2014 Tax Statistics Bulletin provides an overview of tax revenue collection and tax return information for the 2009/10 to 2013/14 fiscal years, and the 2010 to 2013 tax years respectively.
Venture capital companies: part 2 – the investors
Author: by Mansoor Parker Introduction This is the second in my series of articles on venture capital companies. In this article I look at the conditions relating to the investors. In particular, I look at the way the investors are permitted to hold their investments in the venture capital company (‘VCC’) in order to qualify for the tax concessions available to them.