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

BPR 316 Amalgation of companies in terms of Business Rescue Plan

This ruling determines the income tax and value-added tax effect of an amalgamation transaction for consideration involving the assumption of liabilities only.

SARS
Interpretation Note 43 (Issue 7) – Circumstances in which certain amounts received or accrued from the disposal of shares are deemed to be of a capital nature

This Note provides clarity on the interpretation and application of section 9C, which deems the amount derived from the disposal of specified shares held for a continuous period of at least three years to be of a capital nature

SARS
Income Tax Act, 1962

Two Interpretation Notes were uploaded:

  • Interpretation Note 109 – Lease agreements
  • Interpretation Note 110 – Leasehold improvements
SARS

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: Publication of the 2018 Tax Acts and Accompanying Documentation

The President has signed into law three 2018 tax bills, that give legislative effect to the tax proposals announced by the Minister of Finance in his annual National Budget Speech delivered on 21 February 2018.

  • Rates and Monetary Amounts and Amendment of Revenue Laws Act, 2018 (Act No. 21 of 2018) (2018 Rates Act)
  • the Taxation Laws Amendment Act, 2018 (Act No 23 of 2018) (2018 TLAA) and
  • the Tax Administration Laws Amendment Act, 2018 (Act No 22 of 2018) (2018...
National Treasury
2018 Tax Acts

Click here to view the 2018 Amendment Acts that were promulgated on 17 January 2019.

National Treasury
42172_17-1-2019_TaxationLawsAmendAct23of2018

enactments. ACT To amend the Income Tax Act, 1962, so as to amend

http://www.gpwonline.co.za/Gazettes/Gazettes/42172_17-1-2019_TaxationLawsAmendAct23of2018.pdf...

Ursula Vercueil

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

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
REQUEST FOR SUBMISSIONS: REVIEW IN TERMS OF S16(1)(B OF THE TAA 2011 (SUBMISSION DEADLINE HAS BEEN EXTENDED TO 30 NOVEMBER 2018)

The Tax Ombud Judge Bernard Ngoepe is conducting an investigation into Fluidity of the Pay as you earn statements of accounts and SARS’s disregard of the timeframes prescribed by the Rules for the resolution of disputes. Stakeholders are requested to make submissions on the investigation which follows the recent approval by the then Finance Minister for the Tax Ombud to investigate the South African Revenue Service (SARS) in relation to systemic and emerging issues arising from taxpayers and...

Tax Ombud

International and Regional News
(OECD and ATAF)

Mauritania joins international efforts against tax evasion and avoidance

At the OECD Headquarters in Paris, H.E. Aichetou Mint M’Haiham, Ambassador of Mauritania to France, signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (the Convention) in the presence of the OECD Deputy Secretary-General Ludger Schuknecht. Mauritania is the 127thjurisdiction to join the Convention.

OECD
Signatories and parties to the multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting

This document contains a list of signatories and parties to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting. Under the provisions of the Convention, each jurisdiction is required to provide a list of reservations and notifications (the “MLI Position”) at the time of signature.

OECD
Armenia joins the Inclusive Framework on BEPS

The Inclusive Framework on BEPS welcomes Aruba, bringing to 128 the total number of countries and jurisdictions participating on an equal footing in the Project.

OECD

CPD Events

PROFESSIONAL INSIGHT

Dutch Supreme Court hands down long-awaited judgment in ‘most favoured nation’ clause dispute

The wait is finally over. On 18 January 2019 the Dutch Supreme Court (Hoge Raad) found in favour of the taxpayer in its judgment under case number 17/04584, (Hoge Raad Judgment) pertaining to the interpretation of the ‘most favoured nation’ provision (Dutch MFN Clause) in the double taxation agreement (DTA) between South Africa (SA) and the Netherlands dated 10 October 2005, as amended by the Protocol concluded on 8 July 2008 and which entered into force on 28 December 2008 (SA/Netherlands...

Mareli Treurnicht - Cliffe Dekker Hofmeyr
PWC Tax Alert -  Foreign earned income

There has been, and still is, considerable concern among South African nationals working abroad relating to the impact of legislated changes to the exemption available to them in respect of remuneration earned by them while working abroad. Essentially, the current exemption is uncapped (i.e. all remuneration earned from services rendered abroad is exempt). With effect from years of assessment commencing on 1 March 2020, only the first R1 million of such remuneration will be exempt.

PWC
A special dispensation: SARS ruling about special trusts

In recent times, the issue of mental health and the importance of caring for vulnerable persons with mental illnesses has become more prominent. Of course, the effect of mental illness on persons may differ depending on the nature of the illness. In the case of very serious forms of mental illness, a person may not be able to look after their own affairs any longer. From a tax perspective, the Income Tax Act, No 58 of 1962 (Act), makes provision for the creation of so-called special trusts,...

Louis Botha - Cliffe Dekker Hofmeyr
How viable are VCCs now?

What happened in the 12J space in 2018? Our article takes a close look at the 2018 amendments to the VCC regime and gauges their effect on the viability of venture capital companies.

Mansoor Parker, Pierre Botha & Anuschka Wischnewski - TaxTalk Magazine
VAT deductions by holding companies

We look at the position of companies that acquire subsidiaries when it comes to the deductibility of VAT inputs in different scenarios.

Gerhard Badenhorst - TaxTalk Magazine
The 12L energy efficiency tax incentive

Our article looks at the role of the energy efficiency tax incentive to encourage more efficient use of a scarce resource. Can it help businesses to save on energy costs and on their tax bills?

Pieter de Villiers - TaxTalk Magazine
Share repurchases and dividend stripping: Where are we?

We look at dividend stripping, anti-avoidance provisions and the state of play in disposing of shares in a deferral transaction.

Heinrich Louw - TaxTalk Magazine
How to complete your provisional tax return

With the deadline for second provisional tax returns and payments fast approaching, we provide you with information and tips to help you prepare in good time.

Nicci Courtney-Clarke - TaxTalk Magazine
Policy formulation and the 4 seasons of tax law

The cyclic tax law process, much like the seasons, is ever changing, but how exactly it changes can seem mysterious. SAIT’s CEO and former National Treasury insider explains the overall legislative process and then takes a closer look at how policy is formulated.

Keith Engel - TaxTalk Magazine

Tax News In The Press

Helen Zille’s tax revolt: Could it work?

A large-scale tax revolt would require a highly concerted and coordinated effort, which would be difficult to institute successfully given the significant powers of collection the South African Revenue Service (Sars) already has, a tax expert has argued.

Ingé Lamprecht - Moneyweb
A tax revolt is already happening in South Africa

Western Cape premier Helen Zille has sparked controversy by volunteering to lead a tax revolt in South Africa if the government fails to take action against those implicated in corruption – or if they are again elected into government. A tax revolt is a political struggle to repeal, limit, or roll back a government-imposed tax.

Business Tech
Earning foreign income? Prepare for new tax now or get hit hard later

Under the new legislation, SA tax residents abroad will be required to pay tax of up to 45% of their foreign employment income.

Ruaan van Eeden - Moneyweb
24 January 2019 - SARS concerned about tax evasion allegations at commissions of inquiry
There’s more to Section 12J than ‘45% immediate tax relief’

With the tax year end just more than a month away, there has been a growing marketing effort aimed at luring investors to Section 12J venture capital and private equity investments.

Ingé Lamprecht - Moneyweb
Section 12J industry body established to ensure industry sustainability

South Africa’s private equity and venture capital (VC) sector are gearing up for a final push to raise millions of rands from wealthy investors for the SA Revenue Service’s (Sars) Section 12J VC tax incentive before the end of the current tax year on 28 February.

Stephen Timm - Ventureburn