Author: Amanda Visser (IOL). The different tax treatment of lump sum withdrawals following retrenchment seems at odds with efforts to give relief in difficult times. In March 2011 the Income Tax Act was changed, treating severance benefits similar to lump sum payments from pension or provident funds. However, it appears as if policy is not taking heed of the dire employment situation in the country.
Category: Taxation Laws Amendments
South Africa signed two new double tax agreements with Kenya and Hong Kong
Readers will note from SARS Watch that a new double taxation agreement between South Africa and Kenya was recently published in the Gazette. Subsequent to this, a further agreement, this time with Hong Kong, was published in the Gazette on 24 November 2015. Both of these agreements come into effect in South Africa as from 1 January 2016. In Kenya, the DTA also takes effect on 1 January 2016, whereas the agreement with Hong Kong will be effective in that jurisdiction from 1 April 2016.
Customs and excise legislation gets much needed overhaul
Author: Georgia Mavropoulos (EY). New legislation will affect customs systems, processes and policies. International conventions, best practice, globalisation, and technology have assisted in giving the South African customs legislative framework a make-over. This resulted in changes to systems, processes and policies affecting importers and service providers. The current Customs and Excise Act 91 of 1964 is over 50 years old, and is getting a long overdue overhaul.
Interest(ing) withholding tax
Author: Michael Reifarth (Tax Executive at ENSafrica). The Taxation Laws Amendment Act of 2015 (“Amendment Act”) was promulgated on 8 January 2016 and contains a number of legislative changes to the Income Tax Act, 58 of 1962 (“the Act”). The Amendment Act contains some long-awaited amendments to the provisions that regulate the interest withholding tax (“IWT”). This article examines two of the more important changes that should be borne in mind by parties affected by the IWT.
Unilateral extension of prescription in certain specific tax matters
Author: Carmen Gers and Chris de Bruyn (ENSafrica). Section 99 of the Tax Administration Act, 28 of 2011 (“Tax Admin Act”), which regulates prescription in relation to tax assessments, provides that a three-year prescription period applies where the South African Revenue Service (“SARS”) has had a previous opportunity to assess a taxpayer (e.g. income tax) and a five-year prescription period applies in the case of self-assessment (e.g. value added tax and employees’ tax). In an ENSafrica article dated 19 August 2015, we addressed the proposed unilateral extension of prescription by SARS as was provided for in the draft Tax Administration Laws Amendment Bill (“Draft Bill”), a copy of which can be found here.
Exemption from Security Transfer Tax for collateral
Authors: Magda Snyckers and Kelle Gagné (ENSafrica). For years, the South African securities lending industry has been lobbying for an exemption from securities transfer tax (“STT”) for the outright transfer of listed equity securities as collateral. On 8 January 2016, the Taxation Laws Amendment Act 25 of 2015 was promulgated, which includes the long-awaited introduction to the Securities Transfer Tax Act 25 of 2007 (the “STT Act”) of such an exemption. This is very good news for the South African securities lending market and others, but parties will need to clear a few hurdles before availing themselves of the exemption.
GEPF not affected by new tax legislation
Author: BDlive. The Government Employees Pension Fund (GEPF) has assured its members and pensioners that the new Taxation Laws Amendment Act will not affect their pensions or benefits. The fund is SA’s largest pension fund and investor, with about 1.2-million members and more than R1-trillion in assets under management. It pointed out on Monday that as a defined benefit pension fund‚ the benefits of the fund were already taken as a one-third lump sum gratuity and the remaining two-thirds were taken as a pension.
The ins and outs of retirement reform
Author: Michelle Acton. A Q&A for provident fund and pension fund members As the reforms related to tax harmonisation of retirement funds is set to become a reality on1 March – or T-day, as it has become known – it is vital members are communicated with in order to avoid hasty, and potentially damaging actions. There has been much uncertainty from members as to how they will be impacted. The below Q&A aims to assist provident fund and pension fund members understand the latest amendments and to what extent they are impacted by the changes.
Absolving of employer from an employees’ tax liability process to be formalised
The Taxation Laws Amendment Act, No 23 of 2015 (TLAA) contains an amendment to a somewhat odd provision, that has seemingly stood the test of time since the introduction of the Fourth Schedule into the Income Tax Act, No 58 of 1962. Paragraph 5(2) of the Fourth Schedule, dealing with absolving an employer from liability in respect of employees’ tax, has now been amended to provide a more formal approach, when compared to its previous version, which is still riddled with discretionary powers.
Draft bill on carbon tax released
Author: Heinrich Louw (International Law Office). Having been the subject of various discussion papers since 2011, the introduction of a carbon tax in South Africa is becoming a reality with the release of a draft carbon tax bill earlier this month. It has been clear since at least 2013 that South Africa would opt for a carbon tax in order to price carbon, as opposed to an emissions-trading scheme. The draft bill sets out the mechanics of the carbon tax. Greenhouse gas levy Essentially, the carbon tax will be levied in respect of the greenhouse gases that result from: