Curbing the abuse of the employment tax incentive scheme Changes were made to the Employment Tax Incentive Act (2013) in 2021 and 2023 to curb abuse of the employment tax incentive from aggressive tax schemes, which used training institutions to claim the incentive for students. It is proposed that punitive measures to support those amendments be refined in the legislation to address the abusive behaviour of certain taxpayers towards the incentive. Amending the definition of remuneration proxy in section 1 In 2013, the definition of remuneration factor in the Seventh Schedule to the Income Tax Act (1962) was replaced by a new definition of remuneration proxy in section 1. The new definition of remuneration proxy refers to an associated institution in relation to the employer without referencing paragraph 1 of the Seventh Schedule, where this term is defined. It is proposed that the definition of remuneration proxy be amended to Read More …
Tax News
Sin Tax: Vaping, smoking and drinking will cost Mzansi much more – Budget 2025
Finance Minister Enoch Godongwana has proposed an increase on excise duties on alcoholic beverages by between 6.7 and 7.2% for 2024/25. Treasury stated in its 2024 Budget Review that the guideline excise tax burdens for wine, beer and spirits are 11%, 23% and 36% respectively of the weighted average retail price. So what does this mean? A can of beer will increase by 14 cents A can of cider and alcoholic fruit beverages will go up by 14 cents A bottle of wine will go up by 28 cents A bottle of fortified wine will go up by 47 cents A bottle of sparkling wine will cost an extra 89 cents and lastly A bottle of spirits, including whiskey, gin or vodka will increase by R5.53 Godongwana has noted that excise duties have increased more than inflation in the last few years and this has resulted in a higher tax Read More …
SA Budget 2025 – Rates of tax for individuals
On this page you will see Individuals’ tax table, as well as the Tax Rebates and Tax Thresholds – scroll down. 2025 tax year (1 March 2024 to 28 February 2025) Taxable income (R) Rates of tax (R) 1 – 237 100 18% of taxable income 237 101 – 370 500 42 678 + 26% of taxable income above 237 100 370 501 – 512 800 77 362 + 31% of taxable income above 370 500 512 801 – 673 000 121 475 + 36% of taxable income above 512 800 673 001 – 857 900 179 147 + 39% of taxable income above 673 000 857 901 – 1 817 000 251 258 + 41% of taxable income above 857 900 1 817 001 and above 644 489 + 45% of taxable income above 1 817 000 Tax Rebates 21 February 2024 Budget Speech No changes from last year Read More …
The VAT treatment of supplies made are you an agent and can you prove it?
In the recent case of KEN CC v CSARS, VAT2218 (VAT) [2023] ZATC CPT, the Tax Court (Cape Town) was tasked with deciding the dispute that had arisen between KEN CC (the vendor) and SARS concerning the vendors supply of services to foreign tour operators (FTOs) incorporated outside of South Africa. The vendor argued that it provided a single supply of tourism package assembly services to its non-resident FTO customers and that such services were zero-rated under section 11(2)(l) of the Value Added Tax Act, 1991 (VAT Act). This was on the basis that the FTO customers were not residents of South Africa and were not located in South Africa when the package assembly services were rendered. As part of its package assembly services, the vendor was appointed on behalf of the FTOs to contract with local third-party service providers for inter alia accommodation, guides, and greeting services. These local Read More …
PAYE obligations for Foreign Employers
Following the 2023 National Budget on 21 February 2023, draft legislation was published on 28 July 2023 where it was proposed by National Treasury (NT) that all foreign employers would be required to register for Employees Tax (PAYE) and make the necessary payments to the South African Revenue Service (SARS) in respect of remuneration paid to any employees located in South Africa (SA). Many commentators made submissions and engaged in the stakeholder meetings with NT advising that this would significantly increase the administrative burden on foreign employers and potentially increase unemployment levels in SA as foreign employers would look to employ personnel in other countries.
Concept clarification: Zero-rated vs exempt supplies
Confused? Confusion is good. Its an excellent place to learn something new from. Henna Inam Although seemingly simple, the value-added tax (VAT) concept of zero-rated supplies vs exempt supplies is often confused and misused. The importance of distinguishing between these concepts is, however, crucial for purposes of determining the VAT liability of a vendor as well as a vendors entitlement to claim input tax deductions in respect of expenses incurred. The distinction between these concepts as well as the importance behind the distinction is unpacked below.
A game changer for taxpayer confidentiality: The Constitutional Court decides in a narrow 5-4 split decision
While public interest litigation is a common occurrence in South Africa, it seldom involves the area of tax law. However, pursuant to the Constitutional Courts judgment in Arena Holdings (Pty) Ltd t/a Financial Mail and Others v South African Revenue Service and Others [2023] ZACC 13, handed down on 30 May 2023, this might become a more regular occurrence and something the taxpayer and tax advisory community may see more of in future.
Capital vs Revenue: Swapping assets doesnt swap their nature
Section 42 of the Income Tax Act 58 of 1962 (ITA) is a cornerstone of the so called corporate rules in the ITA. Should certain conditions be met, this section provides roll-over relief to a taxpayer where that taxpayer exchanges an asset for shares in a company. At a glance Section 42 of the ITA provides that where a taxpayer holds an asset as a capital asset and disposes of this asset to a company in exchange for that company issuing the taxpayer equity shares. In order for section 42 to apply, the taxpayer must hold at least 10% of the equity shares in the company to which the taxpayer transfers the asset following the transaction. Section 42 also provides that where a taxpayer holds an asset as a capital asset, the company acquiring that asset in exchange for issuing shares to the taxpayer will acquire that asset as a Read More …
A sensible outcome: SARS ruling regarding special trusts
At a glance In Binding Private Ruling 384 (BPR 384) a question arose regarding the donations and capital gains tax consequences resulting from the beneficiary (applicant) of a special trust ceding his loan account against the trust, to that trust. SARS ruled that the cession by the applicant of his loan account to the special trust does not constitute a donation in terms of section 54 of the Income Tax Act 58 of 1962. SARS also ruled that the proceeds in respect of the cession of the loan account will be equal to the face value of the loan account. Consequently, no capital gain or loss will be realised by the applicant from the cession of the loan account.
At it again: Capital v revenue
The capital versus revenue debate is as old as tax law itself. The benefits, advantages or consequences of an amount being considered capital or revenue in nature has motivated taxpayers and the South African Revenue Service (SARS) alike to characterise amounts as one or the other. More often than not, the task of distinguishing between the two has fallen to the courts, as it did once again in the case of A Taxpayer v Commissioner for the South African Revenue Service (IT45638) [2023] ZATC 13, where judgment was handed down on 19 July 2023 (IT 45638). At a glance In IT 45638 ZATC CPT (19 July 2023) the Tax Court had to once again address how to determine if expenditure is capital or revenue in nature. In this instance the Tax Court found that a new company established to export grapes to a European retail chain through the taxpayer was Read More …