Authors: Louis Botha and Jessica Osmond.The Income Tax Act, No 58 of 1962 (Act) states that where a non-profit company, trust or association of persons meets certain requirements in the Act, it can be approved by SARS as a public benefit organisation (PBO), which enjoys certain tax benefits. To obtain approval a PBO is required, amongst other things, to carry on public benefit activities (PBAs) with a philanthropic intent and in a non-profit manner. However, it may happen that a PBO has excess funds that it would like to invest to earn interest, for example, which interest it would then also use to carry on public benefit activities.
Author: Jerome Brink. In its simplest form, s22 of the Income Tax Act, 58 of 1962 (Act) is a timing provision which ensures that the cost of trading stock in the hands of a taxpayer matches the income earned in respect of that trading stock sold, or otherwise disposed of. The 2019 Draft Taxation Laws Amendment Bill (2019 Draft TLAB) proposes a key amendment to the manner in which taxpayers can write trading stock down at the end of any year of assessment which will have far-reaching implications for many taxpayers.
Authors: Jessica Osmond and Louis Botha. In terms of South African tax law, where a taxpayer wishes to object or appeal against an assessment issued by or decision made by the South African Revenue Service (SARS), it must do so in the manner prescribed in the Tax Administration Act, No 28 of 2011 (TAA). Where a dispute is not resolved pursuant to an objection lodged by a taxpayer, the taxpayer can appeal the decision to the Tax Court.
Authors: Jessica Osmond and Louis Botha. To encourage employment across specific sectors in South Africa, the Employment Tax Incentive Scheme (ETI Programme) was introduced. Since 2014, this ETI Programme was structured in a way which mutually benefits both the employee and the employer. This mutually beneficial relationship was achieved by offering an employer an employees tax incentive if the employer employed anyone within the definition of qualifying employees in the Employment Tax Incentive Act, No 26 of 2013 (ETI Act).
National Treasury yesterday released the draft bills for public comment, which once approved will serve to effect the legislative amendments announced as part of the 2019 Budget Review. Of interest to the individual taxpayer and especially one whom has surplus funds available for investment is the proposed changes to cap the tax deduction available in respect of investments to the section 12J Venture Capital Companies (VCC). It is proposed to introduce a cap of R2.5million per annum per investor.
The concept of reasonable period within the ambit of the tax legislation seems to be topical one day and then the next loses impetus for whatever reason without ever settling the issue. This question of time is exceptionally important and relevant for the sections in the tax legislation which deal with the situation where SARS has requested a taxpayer to render to it relevant material as part of SARS powers of information gathering.
When the legislature introduced a fifth fund to the already burdensome four fund approach to the Long-Term Insurance legislation in 2016, many wearied tax managers and practitioners shoulders slumped further. On closer investigation the introduction of the fifth fund, or Risk Policyholder Fund (RPF), brought apparent administrative relief to many, as most of their policies could be lumped into this one fund leaving them with two funds, together with the ever present Corporate Fund, instead of four or a dreaded five to administer.
Some clarification is seen on the original intention of the Special Economic Zone (SEZ) legislation, since the release of the Draft Taxation Laws Amendment Bill on 21 July. It is proposed, as intended by the SEZ legislation, to attract new and expanded manufacturing businesses, that only new companies or expansions of existing companies would qualify for the SEZ income tax benefits.
Authors: Mareli Treurnicht and Emil Brincker. On 12 June 2019 the Cape Town Tax Court delivered its judgment in the dividends tax test case between ABC Pty Ltd (Taxpayer) and the South African Revenue Service (SARS). The case pertained to SARSs refusal to refund dividends tax overpaid by the Taxpayer following the Taxpayers interpretation of the most favoured nation provision (MFN clause) in the double taxation agreement (DTA) between South Africa (SA) and the Netherlands (SA/Netherlands DTA) (Dutch MFN clause), read with the MFN clause in the SA/Sweden DTA (Swedish MFN clause) and the SA/Kuwait DTA.
Authors: Kelsey Biddulph and Tessmerica Moodley.The South African Real Estate Investment Trust (REIT) structure is a listed property investment vehicle, similar to internationally recognised REIT structures, where a tax dispensation ensures a flow through of net property income to investors. A REIT is essentially a company that owns and operates income-producing immovable property.