Property investment is a popular topic of discussion, often accompanied by various anecdotes, tips, and cautionary tales. However, while the potential for profit is frequently emphasised, the importance of tax implications is often overlooked. This article explores some of the different property investment options available in South Africa, their associated tax treatment, and common pitfalls to avoid.
Tax News
Rule 56, default cures and fairness: SCA confirms substance over procedure in tax disputes
In Commissioner for the South African Revenue Service v Virgin Mobile South Africa (Pty) Ltd [2025] ZASCA 77 (4 June 2025), the Supreme Court of Appeal (SCA) delivered important guidance on the procedural interplay between Rule 56 of the Tax Court Rules (Rules) and the requirement for condonation under Rule 52. This ruling provides important clarity on how late filings should be approached, particularly where the defaulting party acts within the grace period afforded under Rule 56. Background Under Rule 31 of the Tax Court Rules, the South African Revenue Service (SARS) must file its statement of grounds of assessment and opposing appeal within 45 business days after receiving the taxpayers Rule 10 notice of appeal. If SARS fails to meet this deadline, the taxpayer may invoke Rule 56(1)(a), placing SARS on terms to remedy the default within 15 business days or face default judgment in terms of section 129(2) Read More …
South African Budget 2025- Important tax proposals
Important tax proposals to note: 1. Employment Tax Incentive: Government proposes to maintain the current value of the employment tax incentive. However, effective from 1 April 2025, the formula to calculate the incentive and the eligible income bands will be adjusted, in part due to adjustments of minimum wages since the last increase in the value of the incentive in 2022. 2. Cross-border tax treatment of retirement funds: The current treatment of cross-border retirement funds may have resulted in double non-taxation, particularly where South Africa is granted the taxing right by treaty. It is proposed that changes be made to the rules that currently exempt lump sums, pensions and annuities received by South African residents from foreign retirement funds for previous employment outside South Africa, with amendments in the current legislative cycle. 3. Government aims to expand South Africas tax treaty network and renegotiate some existing treaties to strengthen economic Read More …
South African Budget 2025 – Tax Proposals
Tax Proposals Corporate Income Tax Rate:Remains the same at 27%. Personal Income Tax:Personal income tax brackets remain unchanged. The primary, secondary and tertiary rebates also remain unchanged. National Treasury anticipates that additional revenue will be raised by not adjusting these brackets for inflation. It is interesting to note that the initial Budget Documents that related to the original February Budget did propose increases to these thresholds. VAT:Increases by 0.5 percentage points with effect from1 May 2025and a second 0.5 percentage point increase will take effect from1 April 2026. Therefore, the VAT rate increases from 15% to 15.5% on1 May 2025and to 16% on1 April 2026. The basket of items that are zero-rated for VAT will be expanded to include specific edible offal, specific meat cuts, unflavoured dairy liquid blends and specific canned vegetables to assist poor households. Capital Gains Tax:No changes are proposed in respect of Capital Gains Tax. Medical Read More …
SARS Company Income Tax Return changes
16 September 2024 The following Corporate Income Tax enhancements were implemented based on legal and form changes: Tax treatment of an asset acquired as government grant in kind: If a taxpayer acquires an asset as or with a government grant, wear and tear cannot be claimed on the asset. This also means that even if the taxpayer uses the grant to buy another asset, that something cannot be depreciated either (for tax purposes). Credit Agreements and Debtors Allowance: A new field for Credit agreement and debtors allowance (lay-by) (s24) will be added to the ITR14 return. This is an allowance that can be claimed in the current year, but it needs to be reversed in the following year. Additional deduction in respect of learnership agreements: A deduction for learnership agreements can only be allowed if the agreement was entered into before 1 April 2024 and therefore a new validation question Read More …
New tax requirements for foreign employers in South Africa: PAYE withholding obligations
Effective 22 December 2023, new South African tax legislation requires non-resident employers with a permanent establishment (PE) in the country to register as employers for employees tax (PAYE) purposes and to withhold PAYE from remuneration paid to their employees. This change could have a significant impact on employers with employees that opt to work in South Africa remotely, a situation that has become common recently. This new legislation means that foreign employers need to take greater care to ensure compliance with regard to their remote working population.
Navigating tax assessments and objections in South Africa: A legal roadmap
Receiving a tax assessment from SARS is often the starting point for a complex journey for taxpayers. In South Africa, taxpayers have the right to contest an assessment if they believe it to be incorrect, but this process comes with its own set of rules and challenges. Understanding the grounds of assessment and the burden of proof Upon receiving a tax assessment, it is crucial for taxpayers to carefully review the details. If they disagree with the assessment, they have the right to lodge an objection. However, understanding the grounds on which the assessment was made is key. Unfortunately, there are instances where SARS fails to provide adequate reasons for its assessments, leaving taxpayers in the dark. In such cases, taxpayers can request the grounds for assessment within 30 business days from the date the assessment was issued. Once it has received the requested grounds for the assessment, the taxpayer Read More …
The VAT refund process
A VAT refund is an amount of VAT that is payable by SARS to a vendor. In terms of section 1 of the VAT Act No. 89 of 1991 (the VAT Act), a vendor means any person who is or is required to be registered under the VAT Act, provided that where the Commissioner has under section 23 or 50A determined the date from which a person is a vendor, that person shall be deemed to be a vendor from that date.
A new enhanced Corporate Income Tax Return with new challenges
On 16 September 2024 SARS released an enhanced Corporate Income Tax Return (ITR14) on its website. This new version of the ITR14 must be submitted by all companies with effect from this date. Amongst a number of changes to the ITR14 is the requirement that all companies are now required to provide detailed information of the individuals that are regarded as their beneficial owners. Failure to comply with these requirements can result in penalties and compliance notices. The aim is to enhance transparency and combat money laundering and terrorism financing by ensuring the identity of ultimate beneficial owners is known. The concept of beneficial ownership has been integrated into the corporate income tax return process to enhance transparency and combat illicit activities such as money laundering and terrorism financing. The following key points should be noted: a. Definition – Beneficial ownership in respect of a company means, an individual who, Read More …
Bad and doubtful debts – income tax issues
In the current economic climate, especially given the high interest rates, businesses often experience financial difficulties. This often results in an inability to settle outstanding debts owed and conversely, to recover debts due by customers. Irrecoverable or doubtful debts owed by or to a taxpayer may respectively result in an additional or reduced income tax liability. It is important to bear income tax principles in mind when dealing with these situations. This article focusses on the key income tax considerations for taxpayers relating to irrecoverable and doubtful debts. Banks and other types of moneylenders will generally be subject to other forms of tax treatment that are not covered here. A taxpayer may become entitled to a section 11(i) deduction for bad debts when a debt owed to that taxpayer becomes irrecoverable. Such a deduction can only be claimed in the year of assessment that the debt first becomes irrecoverable. This Read More …