Section 8C under the spotlight. The South African Revenue Service (Sars) issued Binding Private Ruling 147 (ruling) on 14 May 2013. It deals with the tax treatment of compensation received by an employee for the surrender of a right to acquire shares under s8C of the Income Tax Act, No 58 of 1962 (Act).
Category: Interpretation Notes
Taxman always rings twice
The government is gearing up to rake in a bigger share of multinational corporations’ profits. The Treasury and SARS yesterday invited public comment on their “Proposed limitations against excessive interest tax deductions” [excessive deductions of interest from taxable income].
When can Sars allege 'intentional tax evasion?
Johan van der Walt, Director, Tax, Cliffe Dekker Hofmeyr Understatement penalty explained. The Tax Administration Act, No 28 of 2011 (TAA) introduces the ‘understatement penalty’ in Chapter 16. Section 223 contains an ‘understatement penalty percentage table’. According to the Sars Short Guide on the TAA (Guide) the penalty will be determined by locating each case within the table that assigns a percentage to objective criteria. Sars carries the onus of proving that the grounds exist for imposing the understatement penalty.
Double taxation a headache for SA corporates
By Ingé Lamprecht African countries are turning to tax collection. JOHANNESBURG – After a number of years where some African countries have generally focused on attracting investment, developing infrastructure and creating jobs, a number of countries are now turning their attention to tax collection in an effort to supplement their state coffers.
Western Cape SARS Stakeholder Meeting: Minutes
On Wednesday the 20th of March, SAICA and SAIT had a meeting with the SARS to discuss operational issues raised by our Western Cape members. The meeting was very interactive and valuable insights were obtained from both the bodies and SARS.
VAT TREATMENT OF DEMONSTRATION MOTOR VEHICLES
When a car dealership acquires a motor vehicle purely for the purposes of demonstration use, the question that arises is whether it constitutes a taxable supply for purposes of Value-Added Tax (VAT).
Can interest really be claimed on share acquisitions?
It has become well known through case law and practice that interest on loans used to acquire shares may not be deducted by the taxpayer. This is because taxpayers earn exempt dividend income and it is impossible to show that the interest deduction is directly connected with the production of taxable income.
SARS Consults On Thin Capitalization Rules
The South African Revenue Service (SARS) is consulting on a draft interpretation note to provide taxpayers with guidance on the application of the arm’s length basis in the context of determining whether a taxpayer is thinly capitalized and, if so, calculating taxable income without claiming a deduction for the expenditure incurred on the excessive portion of finance.
Draft Interpretation Note: Deduction of expenditure incurred on repairs
SARS recently published Draft Interpretation Note on in which it seeks to provide guidance on the interpretation and application of section 11(d) which allows a deduction for expenditure incurred on repairs for the purposes of trade. Expenditure on repairs to an asset not comprising trading stock is likely to be of a capital nature, particularly when it is not incurred at regular intervals.
Draft Interpretation Note: determining a 'group of companies' for purposes of the corporate rules
This Draft Note when published as final one will provides guidance on the interaction of the definitions of a “group of companies” contained in sections 1(1) and 41(1). The corporate rules contain, amongst other things, special provisions relating to the income tax consequences (including capital gains tax consequences) of transactions between companies forming part of a “group of companies”. Under qualifying circumstances, the corporate rules make it possible for companies in such a group of companies to transfer assets between each other without adverse tax consequences.