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Tax Conference

Tax Administration & Interpretation
(SARS and Office of the Tax Ombud)

CLOSURE DURING THE FESTIVE SEASON HOLIDAYS

Kindly be informed that the Office of the Tax Ombud will close from 21 December 2018 until 2 January 2019. We wish you a safe and enjoyable festive season and a happy new year.
 

Tax Ombud
Draft IN on no-value rule in respect of the rendering of transport services by any employer

This Note provides clarity on the no-value provision in respect of the rendering of transport services by an employer to employees in general, and must be read with BGR 42 dated 22 March 2017 “No-value provision in respect of transport services”.

Draft BGR on no-value rule in respect of the rendering of transport services by any employer

This BGR provides clarity on the no-value provision in respect of the rendering of transport services by an employer to employees in general, and must be read with BGR 42 dated 22 March 2017 “No-value provision in respect of transport services”.

TAX CASES

Tax Payer v Commissioner for the South African Revenue Service (VAT1558) [2018] ZATC 3 (5 December 2018)

This matter is concerned with the interpretation and application of s 8(15) of the Value-Added Tax Act 89 of 1991 (‘the Act’). It takes the form of an appeal against additional Value-Added Tax (‘VAT’) assessments raised by the respondent, the Commissioner for the South African Revenue Service (‘CSARS’), against the appellant, …, in the amount of R3 444 764 for its 06/2009, R4 631 620 for its 06/2010 and R5 932 209 for its 06/2011, VAT periods and interest.

SARS Court Cases
Supreme Court of Appeal - CSARS v Big G Restaurants

Income tax – s 24C of the Income Tax Act 58 of 1962 – whether income of taxpayer in years of assessment received or accrued in terms of franchise agreement – used to finance future expenditure incurred by taxpayer in the performance of obligations under that agreement – income and obligations must originate from the same contract.

SARS
Supreme Court of Appeal - Milnerton Estates Ltd v CSARS

Income Tax – purchase price of erven in a township sold by developer – sales occurring in one tax year and all suspensive conditions fulfilled in that year – transfer registered and purchase price received in following year – whether purchase price deemed to have accrued in year that sale agreements concluded – s 24(1) of Income Tax Act 58 of 1962 – stare decisis

SARS

Legislative & Policy
(National Treasury & Parliament)

Media statement: Extension of SARS Acting Commissioner’s Term
Treasury
National Legislation

Amendments were made to the Tax Administration Laws Amendment Bill [Bill 39—2018] as tabled by the the Minister of Finance in the National Assembly on 24 October 2018. Tax Administration Laws Amendment Bill: Tax Administration Laws Amendment Bill [B39—2018]...

SARS
MTBPS 2018

The Minister of Finance, Hon. Tito Mboweni presented the 2018 Medium Term Budget Policy Statement (MTBPS) to Parliament. Click here to view all the documents relating to the MTBPS, the Minister's speech and webcast. 

National Treasury

Call For Comment
SAIT member comments can be directed to taxpolicyadmin@thesait.org.za

Income Tax Act, 1962

This BGR provides clarity on the no-value provision in respect of the rendering of transport services by an employer to employees in general, and must be read with BGR 42 dated 22 March 2017 “No-value provision in respect of transport services”. Next due date for comments: 21 January 2019 New!

SARS
Media Statement and related documents: Publication of the Draft Carbon Tax Bill for public comment

The Minister of Finance recently announced the implementation of the carbon tax effective from 1 June 2019. The Draft Carbon Tax Bill makes provision for the carbon offset allowance in terms of Section 13. The National Treasury today publishes the Draft Regulation on the Carbon Offset for a second round of public comment and further consultation. Next due date for comments: 14 December 2018

National Treasury
Inviting technical tax proposals for Annexure C of the 2019 Budget Review

 

National Treasury invites taxpayers, tax practitioners and members of the public to submit tax proposals of a technical nature (and not of a policy nature) to be considered for possible inclusion in Annexure C of the 2019 Budget Review. Next due date for comments: 23 November 2018.

SARS & National Treasury

International and Regional News
(OECD and ATAF)

ATAF 2019 Calendar of Activities

Access the ATAF activity calendar here to facilitate planning in 2019.

African Tax Administration Forum (ATAF)
Tax revenues continue increasing as the tax mix shifts further towards corporate and consumption taxes

Tax revenues in advanced economies have continued to increase, with taxes on companies and personal consumption representing an increasing share of total tax revenues, according to new OECD research.

OECD
Qatar signs landmark agreement to strengthen its tax treaties

Qatar signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the Convention), becoming the 85th jurisdiction to join the Convention, which now covers nearly 1 500 bilateral tax treaties.

OECD

CPD Events

PROFESSIONAL INSIGHT

Is the Office of the Tax Ombud doing its job?

Since its establishment in October 2013, under Section 15 of the Tax Administration Act (28/2011) the Office of the Tax Ombud (OTO) has been expected to enhance South Africa's tax administration system.

Jessica Carr - International Law Office
In the end, there can be only one contract – the SCA considers section 24C of the Income Tax Act

On 3 December 2018, the Supreme Court of Appeal (SCA) handed down judgment in CSARS v Big G Restaurants (Pty) Ltd (157/18) [2018] ZASCA 179 (3 December 2018), concerning s24C of the Income Tax Act, No 58 of 1962 (Act).

Louis Botha - Cliffe Dekker Hofmeyr
Disallowance of use of assessed loss

In the recent case of Commissioner for the South African Revenue Service v Digicall Solutions (Pty) Ltd,(1) the Supreme Court of Appeal (SCA) was requested to consider whether the commissioner for the South...

Gigi Nyanin - International Law Office
What is meant by 'fit and proper'? The Australian Federal Court sheds some light

The concept of a ‘fit and proper’ person is a fundamental one in many professions, jurisdictions and organisations as it is used to determine a person’s honesty, integrity and reputation in order to confirm that they are fit and proper for the role they are undertaking. There is, however, no single infallible test regarding what constitutes a ‘fit and proper’ person and in some instances, this requirement is not defined in legislation.

Gigi Nyanin - Cliffe Dekker Hofmeyr
PWC Tax Alert - Addendum: Fixed non-compliance penalties imposed on Corporate Income Tax returns

The South African Revenue Service (“SARS”) has announced its intention to impose a fixed amount penalty in terms of sections 210 and 211 of the Tax Administration Act, 2011 (Act No.28 of 2011) (“the TAA”), in respect of Corporate Income Tax (“CIT”) returns. The noncompliance penalties will be imposed on CIT returns that are outstanding for years of assessment ending during 2009 and subsequent years.

PWC
Cruel accrual? An important judgment for taxpayers in the property development industry

It is an established tax law principle that an amount will form part of a person’s gross income, in the year of assessment in which the amount accrues to that person. However, as illustrated by a recent judgment, where property-related transactions are concluded, the parties must consider whether s24(1) of the Income Tax Act, No 58 of 1962 (Act) applies to their agreement.

Louis Botha and Heinrich Louw - Cliffe Dekker Hofmeyr
Income tax exemption for body corporates, share block companies and associations: Clarification in SARS’ latest issue of Interpretation Note 64

On 13 November 2018 the South African Revenue Service (SARS) published the fourth issue of Interpretation Note 64 (Interpretation Note) which seeks to provide guidance on the application and interpretation of s10(1)(e) of the Income Tax Act, No 58 of 1962 (Act).

Jessica Carr - Cliffe Dekker Hofmeyr
No tax on interest? Ruling pertaining to DTA between South Africa and Brazil

On 24 July 2006, the Convention between the Government of the Republic of South Africa and the Government of the Federative Republic of Brazil for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (DTA), came into force. The DTA, similar to other such double tax agreements, determines the taxing rights of each country where a resident of one contracting state earns income from a source in the other contracting state.

Louis Botha - Cliffe Dekker Hofmeyr
A burning issue: National Treasury releases the revised Draft Regulations on the Carbon Offset

On 12 November 2018, National Treasury (NT) published the revised Draft Regulation on the Carbon Offset (Draft Regulations) for a second round of public comment. The Regulations were published with the Explanatory Note for the Draft Regulation on the Carbon Offset (Explanatory Note) and a Media Statement dealing with the publication of the Draft Regulations and Explanatory Note (Media Statement). According to the Media Statement, the Minister of Finance recently announced the implementation...

Louis Botha - Cliffe Dekker Hofmeyr

Tax News In The Press

Executive ‘clawbacks’ may have unfair tax implications

If defined as restricted equity instruments, provisions could have ‘impractical, unbusinesslike or oppressive’ consequences.

Amanda Visser - Moneyweb
‘Unfair’ Sars penalty regime under fire

Many taxpayers have felt the pain of receiving administrative penalties that in some instances border on being unfair and may even be considered disproportionate to the “offence”.

Amanda Visser - IOL
Industry pleas for dialogue on capped foreign income exemption

Treasury is sticking to its amendment to limit the tax-free income South Africans earn outside of the country to R1m.

Amanda Visser - Moneyweb
Carbon tax will mean more trade, not less - Treasury

The National Treasury says the carbon tax will not have a negative effect on trade but will help protect South African companies against punitive trade actions for failing to reduce greenhouse gas emissions.

Melanie Gosling - Fin24
Don't hold SA's economy hostage to high-carbon companies

Despite having been consulted since 2010 when the Carbon Tax Bill was first mooted, the heavy emitters have reacted with predictable outrage and scare-mongering to the recent tabling of the Carbon Tax Bill. Yet two points are drowned out by what is essentially a distraction.

Louise Naudé - Fin24
29 November 2018 - Penalties for outstanding corporate income tax returns to kick in soon

SARS will soon impose administrative non-compliance penalties for outstanding Corporate Income Tax (CIT) returns.  Administrative non-compliance penalties will be imposed on companies that fail to submit an income tax return as required under the Income Tax Act, 1962, for years of assessment ending during the 2009 and subsequent calendar years, where SARS has issued that company with a final demand, and where the company fails to submit the outstanding return within 21 business days of the...