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True to its mandate, the Davis Tax Committee (DTC) has been hard at work reviewing the South African tax system. Since its formation in 2013, it has already issued reports on small and medium enterprises (SMMEs), Base Erosion and Profit Shifting (BEPS) and VAT. It also compiled a macro analysis of the South African tax system, a World Bank study on the effective tax burden in South Africa and presented carbon tax proposals. However, on 13 July the committee issued the “Estate Duty Report” which deals with a variety of topics sure to spark outcry and fierce debate, especially from more wealthy taxpayers. Whatever the outcome of the report may be following consultations, taxpayers will need to review their estate and tax plans to accommodate the impending changes.

Author: Lesedi Seforo (SAIT) Lesedi Seforo urges tax professionals to apply their minds when estimating the taxable income for the purpose of calculating the second professional tax payment. Over the past few months, SAIT has received numerous queries from members regarding what the Fourth Schedule to the Income Tax Act (No. 58 of 1962) (Act) describes as the “penalty for underpayment of provisional tax as a result of underestimation”. As far as this particular penalty is concerned, the challenge for some tax practitioners appears to be two-fold:

The amendments to the Labour Relations Act, No 66 of 1995 (LRA), ushered in an era of greater protection for employees on fixed-term contracts where the employees earn below the earnings threshold (currently R205,433.30) published annually in terms of the Basic Conditions of Employment Act, No 75 of 1997 (BCEA). Amongst the advantages offered to fixed-term contract workers receiving a salary of less than R205,433.30 per year is the fact that, under some circumstances, they may now also lay claim to a new statutory payment at the conclusion of a fixed-term contract.

Author: Jerome Brink of ENSafrica The world economy is still in a fragile state and battling to gain momentum as many developed countries continue to feel the after-effects of the global financial crisis and several developing nations continue to grapple with inherent inefficiencies. South Africa is no different, with The South African Reserve Bank’s forecast growth outlook for 2015 being revised down from 2.5 per cent to 2.2 per cent, and that for 2016 from 2.9 per cent to 2.4 per cent. Concomitant to this is the 2012 figures from the World Bank, which ranks South Africa as having the ninth highest tax: GDP ratio at 26.5% of GDP. Notwithstanding the further domestic issues such as corruption and wasteful expenditure, it is clear that SARS is coming under increasing pressure to collect more revenue to fund government spending. With this increased pressure comes the propensity for SARS to perhaps utilise Read More …

Author: Sophia Brink (University of Stellenbosch) This article highlights principles that might be used for the tax treatment of client loyalty programme transactions in the hands of the supplier.  Function and types of client loyalty programmes A client loyalty programme is a programme through which the clientele and loyalty of members is retained by awarding them points or miles (usually accumulated on membership cards) as reward for the acquisition of goods or services from qualifying suppliers participating in the loyalty programme. These points or miles can accumulate on a membership card or a cash back reward is issued for a predetermined number of points or miles. The points, miles or cash back rewards are linked to a specific rand value and may later be exchanged for goods, services or a discounton the future acquisition of goods or services from the same qualifying suppliers. The supplier will incur an expense in supplying Read More …

Author: SAIT Earlier this year, most farmers had quite a shock when they’ve heard that National Treasury, through the draft Taxation Laws Amendment Bill, 2014, proposed to remove the zero-rating for VAT purposes that they receive when they buy goods that are consumed for agricultural purposes. A simple showing of a VAT 103 certificate, indicating that the farmer qualifies for the zero-rating was all that it took to ensure that the goods are received at selling price less 14 per cent VAT.

Author: Lisa Brunton (DLA Cliffe Dekker Hofmeyr) The Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Sharing (BEPS) Action Plan, approved by the OECD Committee of Fiscal Affairs (CFA) in June 2013 and endorsed by the G20 Heads of Government in September 2013, was formulated to combat international tax avoidance by multinational enterprises (MNEs) through artificially shifting profits to low tax jurisdictions and eroding the tax bases of their primary high tax jurisdictions of operation.

Dear readers and subscribers, The SA Tax Guide Website is now up and running. The ISP had assured us that service wont be interrupted again.  

(Full Statement by President Jacob Zuma) The Minister of Finance, The Governor and Deputy Governor of the South African Reserve Bank, Ladies and gentlemen of the media, In terms of the Constitution, the primary objective of the South African Reserve Bank is to protect the value of the currency in the interest of balanced and sustainable economic growth in the Republic. The Reserve Bank must perform its functions independently and without fear, favour or prejudice. During the past five years, the Bank performed its functions in the context of a tough global financial crisis and challenging domestic economic factors. The institution registered excellent performance during this difficult period, under the capable leadership of the Board, the Governor, Ms Gill Marcus and the Deputy Governors.

The lawyer who laid a complaint against SARS group executive Johann van Loggenberg after their relationship ended refused on Sunday to comment on reports that she was a State Security Agency spy. “I don’t want to comment and I will be issuing a summons against City Press,” Belinda Walter told Sapa.