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

FAIR PLAY ISSUE 11

Welcome to the eleventh issue of the Office of the Tax Ombud’s stakeholder newsletter, Fair Play, a vibrant and informative newsletter which aims to keep stakeholders abreast of important matters affecting the Office and developments in the tax recourse sphere. Click the link below to read the full newsletter or find it on our Publications Page.

Tax Ombud
OTO GATEWAY MALL ACTIVATION

The Office of the Tax Ombud (OTO) will be in Durban as part of an ongoing awareness campaign to promote its free and impartial services. The campaign will create an interactive experience for taxpayers on how to lodge a complaint against SARS and the OTO service in general. In addition to the Gateway Mall Activation, the OTO will hold interactive engagements sessions with both private and public sector institutions to share information about the free and impartial services, as well as to...

Tax Ombud
REQUEST FOR SUBMISSIONS: REVIEW IN TERMS OF S16(1)(B OF THE TAA 2011 

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

TAX 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
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

Legislative & Policy
(National Treasury & Parliament)

Explanatory Memorandum: Regulations Prescribing Electronic Services for the Purpose of the Definition of "Electronic Services" in Section 1(1) of the Value-Added Tax Act, 1991
Treasury
Government Gazette: Regulations Prescribing Electronic Services for the Purpose of the Definition of "Electronic Services" in Section 1(1) of the Value-Added Tax Act, 1991
Treasury
Budget 2019

Over the medium term, spending reductions amount to R50.3 billion, 54 per cent of which comes from compensation budget adjustments. * Provisional allocations of R75.3 billion are budgeted over the 2019 medium-term expenditure framework (MTEF) period, mainly for Eskom’s reconfiguration plan. * Since the 2018 Medium Term Budget Policy Statement the contingency reserve has been increased by R6 billion in 2019/20 to respond to requests for fiscal support from smaller stateowned companies....

National Treasury

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

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
INVITATION FOR COMMENT ON THE DRAFT ANTI-AVOIDANCE OF TAX BILL, 2018

The Anti-Avoidance of Tax Bill aims to give SARS the necessary legal mechanisms to tackle aggressive and illegal avoidance.

Government Gazette

International and Regional News
(OECD and ATAF)

The Kingdom of the Netherlands and Georgia deposit instruments of acceptance or ratification for the Multilateral BEPS Convention

The Kingdom of the Netherlands has deposited its instrument of acceptance and Georgia has deposited its instrument of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (multilateral convention or MLI) with the OECD’s Secretary-General, Angel Gurría, underlining their strong commitments to prevent the abuse of tax treaties and base erosion and profit shifting (BEPS) by multinational enterprises.  With its...

OECD
Leading global tax administrations agree collective actions on tax certainty, co-operation and digital transformation

The Forum on Tax Administration (FTA), the 53 leading global tax administrations, met in Chile on 26-28 March and agreed an ambitious agenda focused on tax certainty, enhanced tax co-operation and the collective challenges of digital transformation.

OECD
Global tax community welcomes new measures to enlist online marketplaces in the collection of VAT/GST in e-commerce

Delegates from over 100 jurisdictions, including regional and international organisations, have unanimously endorsed new rules that will ensure the collection of additional VAT/GST revenues and will level the playing field between operators in traditional and online markets.

CPD Events

PROFESSIONAL INSIGHT

Cliffe Dekker Hofmeyr - Special Edition: Budget Speech Alert

Our experts' views on today's Budget Speech.

Cliffe Dekker Hofmeyr
Cliffe Dekker Hofmeyr: Tax & Exchange Control Alert 15 February 2019

SALE OF LEASE RIGHTS AND LEASE PREMIUM: The tax treatment of lease premiums continues to be a vexing issue.

A DIVER’S QUANDARY: THE ROLE OF DOMESTIC LAW IN INTERPRETING DOUBLE TAXATION AGREEMENTS: In the international tax law arena, agreements for the avoidance of double taxation (DTAs) are, very simply, concluded between states with a view to prevent, mitigate or discontinue the levying of tax in respect of the same income, profits or gains or tax imposed in respect of the same...

Cliffe Dekker Hofmeyr
Africa tax in brief

AFRICAN UNION: African Continental Free Trade Area Agreement developments

Celia Becker - ENSafrica
New tax change taxes dividends in a collective investment scheme

Dividends declared by South African resident companies or non-resident companies, the shares of which are listed on a South African exchange, are subject to dividends tax of 20%. The tax liability in the case of a cash dividend is that of the beneficial owner of the dividend. The beneficial owner is the person entitled to the benefit of the dividend attaching to a share. If it is a cash dividend, then the company declaring the dividend has to withhold the dividends tax and pay it over to the...

Magda Snyckers - ENSafrica
Win for the employer: Judgment on the Employment Tax Incentive Act

In the recent case of ABC (Pty) Ltd v The Commissioner for the South African Revenue Service (Case No 14426) (as yet unreported), the Tax Court was required to decide whether ABC (Pty) Ltd (Taxpayer) could claim the employment tax incentive (ETI) in terms of the Employment Tax Incentive Act, No 26 of 2013 (Act) in respect of certain periods. In deciding the matter, the court not only considered the provisions of the Act, but also considered and applied various principles of South...

Louis Botha & Louis Kotze - Cliffe Dekker Hofmeyr
Finality to Debt Benefit Rules

The Taxation Laws Amendment Act, 2018 (“TLAA”), which was promulgated on 17 January 2018, amended South African tax legislation by overhauling two provisions relating to the reduction of debt, (the “Debt Benefit Rules”), namely section 19 of the Income Tax Act, 1962 (the “ITA”) and paragraph 12A of the Eighth Schedule to the ITA (the “Eighth Schedule”). This article will examine the notable areas where the legislation per the TLAA differs and the importance of the timing of the application...

Siyanda Gaetsewe - ENSafrica
PWC Tax Alert - Carbon tax developments

On Tuesday, 5 February 2019, the Standing Committee on Finance adopted the Carbon Tax Bill. The Bill will now head towards the parliamentary vote process. In addition, the draft Customs and Excise Amendment Bill will be tabled in parliament on 20 February 2019 along with the 2019 Budget.

PWC
PWC Synopsis: Tax Today - January 2019

A monthly journal, published by PwC South Africa, that gives informed commentary on current developments in the tax arena, both locally and internationally. Through analysis of and comment on new laws and judicial decisions of interest, Synopsis helps executives to identify developments and trends in tax law and revenue practice that may affect their business.

PWC
When must a reportable arrangement be disclosed to SARS?

Under the Tax Administration Act, No 28 of 2011 (TAA) persons who enter into certain types of transactions must report the details of those transactions to SARS. These types of transactions are called “reportable arrangements”.The list of transactions that must be reported are set out in s35(1) of the TAA, and in s35(2) of the TAA as read with a SARS notice issued pursuant to that provision.

Ben Strauss - Cliffe Dekker Hofmeyr

Tax News In The Press

Expat tax: Financial emigration could cost you - and it's not so simple, experts warn

South Africans working abroad should not opt for financial emigration as a knee-jerk reaction to new expatriate tax laws, cautions Gavin Smith, global financial solutions firm deVere Acuma's head in Africa.

Carin Smith
SA extends its Vat net to cover the globe

The scope of regulation pertaining to the value-added tax (Vat) treatment of electronic services supplied by a foreign company to a South African company or individual has widened.

Amanda Visser
No change to policy intent on capping tax-free foreign income

It is clear that the policy decision to cap tax-free foreign income from remuneration at R1 million is set to stay, but the administration of and practicalities around the amendment are still open for discussion.

Amanda Visser
Technical glitch in the zero-rating of sanitary products

Strangely narrow definition in pending legislation will limit the intended relief and cause problems for retailers and the customs system.

Amanda Visser - Moneyweb
Understanding travel allowance and capital gains tax

What’s best: a travel allowance or mileage reimbursed?

Business Live
Airlines plead for exemption from carbon tax

The airline industry made a strong plea in parliament on Tuesday to be exempted from the proposed carbon tax saying it will undermine its competitiveness.

Linda Ensor - Business Live