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

Interpretation Note 15 (Issue 5) – Exercise of discretion in case of late objection or appeal (21/12/2018)

This Note provides guidance on the factors that a senior SARS official will take into account when deciding whether to extend the period for lodging an objection under section 104(4) or an appeal under section 107(2). It also serves to highlight that the period during which an objection or appeal may be lodged is limited

SARS
Interpretation Note 107 – Deduction in respect of commercial buildings (20/12/2018)

This Note provides guidance on the interpretation and application of section 13quin which provides for an allowance on any new and unused buildings or any new and unused improvements to any building, owned and wholly or mainly used by a taxpayer for purposes of producing income in the course of that taxpayer’s trade.

SARS
Taxpayer Education Workshops and Mobile Tax Units Schedules (January 2019)

Free tax education workshops are presented at most SARS branches across the country by the Branch Operations Engagement team. These workshops cover a wide range of topics and are presented on a regular basis. The aim is to provide taxpayers with information that would create a basic understanding of  the various tax types, how these taxes work and what is expected of taxpayers in order to be tax compliant at all times. To see the services Mobile Units offer and the documents you need to take...

SARS

TAX CASES

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
Sasol Oil v CSARS (923/2017) [2018] ZASCA 153 (9 November 2018)

Contracts for the sale of crude oil by one entity within the Sasol Group, to another, and the back to back sale of the same oil to yet another entity in the group, were not simulated in order to avoid a liability to pay tax; nor were they entered into solely for the purpose of avoiding the payment of tax for the purpose of s 103(1) of the Income Tax Act 58 of 1962.

SARS Court Cases with compliments of Webber Wentzel
Commissioner for the South African Revenue Service v Digicall Solutions (Pty) Ltd (927/2017) [2018] ZASCA 137 (28 September 2018)

Income Tax Act 58 of 1962 – s 103(2) – taxpayer company – successive changes in shareholding in consecutive tax years – sole purpose from time of first change in shareholding to preserve and utilise assessed loss for set-off against future income – assessed loss carried over to next tax year – second acquisition of shares – income thereafter received by taxpayer – income indirect result of first acquisition of shares – set-off of assessed loss against income disallowed.

SARS Court Cases

Legislative & Policy
(National Treasury & Parliament)

Budget Tips

The Minister of Finance would like to hear your thoughts, ideas and tips for the 2019 Budget. Click here to submit your tip.

 

National Treasury
Media statement: Warning regarding scammers

The Ministry of Finance would like to warn the public about scams which purport to be communication from the Ministry. In the latest of these scams, a person purporting to be the Deputy Minister of Finance has been asking people on Facebook for money in return for funding their projects or business plans. This person also asks for people’s full names, ID numbers, as well as home addresses. Neither the Ministry nor National Treasury assists individuals or businesses with the funding of their...

National Treasury
Media Statement: New Research on Profit Shifting and Corporate Tax Avoidance (20/12/2019)

A new SA-TIED research study estimates that South Africa loses about 7 billion ZAR a year due to profit shifting by multinational corporations; amounting to about 4% of total current corporate income tax receipts. While this assessment is comparable to reviews for other non-tax haven countries, the new study is unique in being the first to estimate profit shifting by firm size. The key finding suggests that 98% of the tax loss is associated with profit-shifting by the biggest 10% of...

National Treasury

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

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
Draft public notice relating to the incidences of non-compliance by a person in terms of section 210(2) that are subject to a fixed amount penalty in accordance with section 210 and 211

The incidences of non-compliance, that are subject to a fixed amount penalty in accordance with section 210(1) and 211 of the Act, are listed for public comment.Next due date for comments: 30 October 2018

SARS
​Income Tax Act, 1962

Draft list of qualifying physical impairment or disability expenditure & Draft ITR-DD Form – Confirmation of Diagnosis of Disability. Next due date for comments: 5 November 2018

SARS

International and Regional News
(OECD and ATAF)

The Cook Islands joins the Inclusive Framework on BEPS (03/01/2019)

Access the latest OECD member list of the Inclusive Framework on BEPS.

OECD
Malta and Singapore deposit their instruments of ratification for the Multilateral BEPS Convention (20/12/2018)

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
ATAF 2019 Calendar of Activities

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

African Tax Administration Forum (ATAF)

CPD Events

PROFESSIONAL INSIGHT

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
Important judgment on simulation handed down by Supreme Court of Appeal

On 9 November 2018, the South African Supreme Court Appeal (“SCA”) handed down an important judgment in which it upheld Sasol Oil (Pty) Ltd’s appeal against a judgment of the Gauteng Tax Court. The facts of the case were complex, but concerned certain back-to-back supply transactions entered into by a number of entities, including Sasol Oil, which the South African Revenue Service (“SARS”) contended were simulated. An Isle of Man company in the Sasol group (“SOIL”) sold oil to a UK group...

By the ENS tax department
Practical considerations in managing transfer pricing across Africa

Applying globally determined transfer pricing policies can be challenging on the African continent, with its diverse markets and unusual business models. Our authors review the challenges of being compliant in a shifting landscape.

Michael Hewson & Lisa Di Domenico for TaxTalk Magazine
Transfer pricing observations and reflections

Our article provides the perspective of a relative newcomer to Africa on the transfer pricing scene in our continent.

Marius Leivestad for TaxTalk Magazine

Tax News In The Press

3 big South African pension fund changes coming in 2019

New default regulations to the Pension Funds Act will be implemented from 1 March 2019. This is according to Carlyle Field, a partner at law firm Shepstone Wylie, who notes that retirement funds are scrambling to ensure that they will be compliant by that date.

Business Tech
What South Africans need to know about tax and their finances before emigrating

While South African citizens temporarily working overseas are still subject to South African tax laws, individuals who wish to permanently emigrate to a new country need to ensure that they follow the correct steps to enable them to take their savings with them and avoid running up against unnecessary tax problems down the line.

Business Tech
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