The requirements for claiming VAT when importing goods to South Africa have always been contentious and the affected VAT vendors are often unsure about the documentary evidence they need to retain to survive a SARS VAT audit. Even SARS offices interpret or enforce the provisions of the VAT Act differently. For example, some allow the clearing agent’s invoice as proof of import and others accept payment to the clearing agent as proof that VAT has been paid. Even the timing for claiming the input tax deduction has been disputed. These uncertainties have resulted in many VAT vendors receiving significant assessments, penalties and interest charges from SARS.
Category: Interpretation Notes
Liquidation applications on a disputed tax debt and the applicability of section 177(3) of the Tax Administration Act 28 of 2011
Judge Andre van Niekerk handed down an interesting judgment in the High Court of South Africa (North Gauteng Division) on 30 September 2013. In my respectful opinion the judgment is insightful and is correct. The facts are fairly simple. Miles Plant Hire (Pty) Ltd (MPH) had a tax liability of R37 441 090.59 to the commissioner of the South African Revenue Services (SARS). SARS had levied a tax assessment in this amount on MPH, which included penalties and interest. When MPH failed to pay the assessment, SARS brought a liquidation application against it, which was opposed on two grounds.
Disposals by share incentive trusts
Author: Heinrich Louw (DLA Cliffe Dekker Hofmeyr) The South African Revenue Service (SARS) issued Binding Private Ruling 174 (Ruling) on 29 July 2014. The applicant was a share incentive trust established by a local company for the benefit of its employees in senior management. It was proposed that the company would make cash contributions to the trust and the trust would use the cash to purchase shares in the company on the open market.
Tax implications of expenditure funded by government grants
By Christel du Preez, Senior Tax Manager, Grant Thornton Johannesburg Section 12P was introduced into the Act to deal with government grants received by taxpayers and applies to years of assessment commencing on or 1 January 2013. As a result, taxpayers are now facing potentially complex rules that could have an adverse effect on their tax planning efforts.
New binding private ruling on plant used in the production of renewable energy
SARS released BPR 172 on 25 June 2014. The ruling deals with the question of whether various items used in the production of solar energy qualify for the section 12B allowance. By way of background, section 12B(1)(h) read with section 12B(2) of the Income Tax Act allows a deduction on a 50:30:20 basis over three years of any ‘machinery, plant, implement, utensil or article owned by the taxpayer … and which was or is brought into use for the first time by that taxpayer for the purpose of his or her trade to be used by that taxpayer in the generation of electricity from:
SARS issues new binding private relating to debt SARS issued Binding Private Ruling 173 on 2 July
SARS issued Binding Private Ruling BPR 173 on 2 July. The ruling purports to deal with a thorny issue which has been the cause of uncertainty but unfortunately raises more questions than answers. The issue is whether the debt reduction provisions of the Income Tax Act, namely section 19 or paragraph 12A of the Eighth Schedule, would be invoked where a company issues shares and utilises the proceeds from the share issue to repay debt.
SARS extends list of non-resident persons having to file an income tax return
On 25 June 2014 SARS issued its annual notice (‘Notice’) to specify which persons must file income tax returns for the 2014 year of assessment. The Notice was issued in terms of section 66 of the Income Tax Act (the ‘Act’), read together with section 25 of the Tax Administration Act. The 2014 year of assessment generally runs from 1 March 2013 to 28 February 2014.
New binding private ruling on plant used in the production of renewable energy
SARS released BPR 172 on 25 June 2014. The ruling deals with the question of whether various items used in the production of solar energy qualify for the section 12B allowance. By way of background, section 12B(1)(h) read with section 12B(2) of the Income Tax Act allows a deduction on a 50:30:20 basis over three years of any ‘machinery, plant, implement, utensil or article owned by the taxpayer … and which was or is brought into use for the first time by that taxpayer for the purpose of his or her trade to be used by that taxpayer in the generation of electricity from:
SARS issues new binding private relating to debt SARS issued Binding Private Ruling 173 on 2 July
SARS issued Binding Private Ruling BPR 173 on 2 July. The ruling purports to deal with a thorny issue which has been the cause of uncertainty but unfortunately raises more questions than answers. The issue is whether the debt reduction provisions of the Income Tax Act, namely section 19 or paragraph 12A of the Eighth Schedule, would be invoked where a company issues shares and utilises the proceeds from the share issue to repay debt.
Should the South African Revenue Service adopt a Taxpayer Bill of Rights?
Author: Beric John Croome A Taxpayers’ Charter setting out the rights and obligations of taxpayers in South Africa was published for the first time during 1997. That Charter contained a statement of intent insofar as taxpayers’ rights in South Africa is concerned. On 19 October 2005 the SARS Client Service Charter was released setting out the levels of service that taxpayers could expect in their dealings with the South African Revenue Service (‘SARS’). Currently, neither the Taxpayers’ Charter nor the SARS’ Service Charter Standards can be located on the SARS website and it would appear to be a matter of ‘out of sight out of mind’.