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

FAIR PLAY ISSUE 10 – SPECIAL EDITION

Welcome to the tenth issue of the Office of the Tax Ombud’s stakeholder newsletter (Fair Play), a special edition commemorating “Five Years of Fairness. Click the link below to read the full newsletter or find it on our Publications Page.

Tax Ombud
Interpretation Note 104 – Exemptions – Foreign pensions and transfers

This Note provides clarity on the interpretation and application of section 10(1)(gC)(ii) to a lump sum, pension or annuity received by or accrued to any resident from a source outside the Republic.

SARS
One month to file tax returns

Operating hours extended to Saturdays in October:   Individual taxpayers have 30 days left to file their personal income tax returns.  Tax Season closes on 31 October for non-provisional taxpayers and for those provisional taxpayers who opt to file at a branch.  Provisional[i]  taxpayers ordinarily have until 31 January 2019 to file on eFiling only.

 

The focus this filing...

SARS News

TAX CASES

Commissioner for the South African Revenue Service v ABC Holdings Limited (IT14294) (11 July 2018)

Tax Court – Practice – Exception; Rule 32 Statement.

SARS Court Cases
CSARS vs KWJ Investments Service Pty Ltd - 31 May 2018

Gross income – whether a cession of a dividend right constitutes a receipt or accrual for the purposes of gross income – if so, does a practice generally prevailing in terms of provision (iii) to s 79 (1) of the Income Tax Act 58 of 1962 apply.

SARS Court Cases
TCIT 13626 JHB 17 May 2018

Income Tax; trading stock; whether there was a diminution in value of the Appellant’s trading stock for the relevant years of assessment.

SARS Court Cases

Legislative & Policy
(National Treasury & Parliament)

National Legislation​

2018 Draft Taxation Laws Amendment Bill, 2018 Draft Explanatory Memorandum on the 2018 Draft TLAB, 2018 Draft Tax Administration Laws Amendment Bill, 2018 Draft Memorandum on the objects of 2018 Draft TALAB & Media Statement. 

National Treasury
Draft dispute resolution rules under Section 103

SAIT has commented on the draft dispute resolution rules under Section 103 of the Tax Administration Act.

SAIT Tax Policy
Consequential amendment to definition of "permanent establishment"

SAIT has commented on the consequential amendment to the definition of "permanent establishment" in the Income Tax Act.

SAIT Tax Policy

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

Income Tax Act, 1962  

Draft IN 93 (Issue 2) –​ The taxation of foreign dividends. Next due date for comments: 29 June 2018.

SARS
Income Tax Act, 1962  

Draft IN 93 (Issue 2) –​ The taxation of foreign dividends. Next due date for comments: 30 June 2018 New!​

SARS
Mineral and Petroleum Resources Royalty Act, 2008​

Draft IN on the meaning of "bulk" in Schedule 2. Next due date for comments: ​18 May 2018.

SARS

International and Regional News
(OECD and ATAF)

OECD and SAT hold joint workshop on the experience of country-by-country reporting of tax information

ax officials from 21 jurisdictions* met this week in Yangzhou, People's Republic of China, to share experiences from the first year of country-by-country reporting and explore how information can be used most effectively in the tax risk assessment of MNE groups. The workshop, organised jointly by the OECD and the Chinese State Administration of Taxes (SAT), also included representatives of large MNE groups headquartered or with major operations in China and the Asia-Pacific region.

OECD
TIWB to release its Annual Report 2017/18 on 4 October

Ensuring that multinational enterprises pay their fair share of tax is a growing concern worldwide. Tax Inspectors Without Borders (TIWB) - a joint initiative of the OECD and UNDP – has been working with developing countries since 2013 to improve auditing and compliance worldwide.

OECD
Few countries are pricing carbon high enough to meet climate targets

Governments need to raise carbon prices much faster if they are to meet their commitments on cutting emissions and slowing the pace of climate change under the Paris Agreement, according to a new OECD report.

OECD

CPD Events

PROFESSIONAL INSIGHT

PWC Tax Alert: VAT apportionment: annual adjustment

All vendors that are required to apportion input VAT must recalculate (within 6 months of the financial year-end) the apportionment ratio applied in the previous financial year using the audited financial statement of that year. Following the VAT rate increase on 1 April 2018, performing your annual apportionment adjustment has just become significantly more complex.

PWC
Nigeria is ready for transfer pricing, are you?

Many of our readers have an exposure to transfer pricing risk in Nigeria, it being the largest African economy by GDP in 2017. So I thought I would share an update on Nigeria’s transfer pricing.

Marcus Stelloh - Transfer Pricing
More than one way to skin a cat? The High Court considers the power of SARS to issue reduced assessments

In terms of s93 of the Tax Administration Act, No 28 of 2011 (TAA), there are five circumstances under which SARS may issue a reduced assessment, so as to reduce a person’s tax liability. While s93, therefore, makes it possible to “skin a cat”, ie reduce a tax liability, in more ways than one, taxpayers should be mindful of the requirements that need to be met and the correct process to follow, in order to achieve the desired result.

Louis Botha - Cliffe Dekker Hofmeyr
CFCs: Have we gone too far?

Controlled foreign company rules were introduced in 2001 to counter tax avoidance by preventing the use of low tax jurisdictions to shift income outside South Africa. Our authors ask whether it is time to review the old rules.

Cor Kraamwinkel and Wesley Grimm for TaxTalk Magazine
Expat Aftershock: Surviving without the exemption

Since 2001, employment income received by South African tax residents for services rendered outside the country was exempt from income tax. In terms of a 2017 amendment to the law, the exempt amount will be capped at R1 million. We look at the effect on employees and employers alike.

Arlette Manyi for TaxTalk Magazine
Interest-free loans to trusts: Does the compliance burden outweigh the benefits?

In the past, issuing of interest-free loans to discretionary trusts was widely used as a tool for domestic estate planning. We look at whether the benefits are worth the bother.

Hanneke Farrand for TaxTalk Magazine
Shaking the barren money tree: Collections during legal tax disputes

Our authors argue that during a dispute, proper administration of the Tax Administration Act will help to find the right balance between the interests of taxpayers and the fiscus, and may also increase collections of tax revenue.

Nirvasha Singh Nogueira and Wesley Grimm for TaxTalk Magazine
Tax morality and the tax gap

Our authors explore the concepts of “tax morality” and “tax gap” in the context of declining tax revenues.

Ruaan Van Eeden and Johanci Meintjes for TaxTalk Magazine
New tripartite pact underpinned by tax technology beckons

Our authors take a critical look at restoring trust, the promises of fintech and the role of data in creating tax value.

Marcus Botha and Tim Dearden for TaxTalk Magazine

Tax News In The Press

SARS to impose penalties for outstanding corporate income tax returns

SARS has warned taxpayers that administrative penalties will be imposed for outstanding corporate income tax (CIT) returns from December this year.

Business Tech
‘Pay now, argue later’ Sars rule under scrutiny

The South African Revenue Service’s “pay now, argue later” rule is justified in certain circumstances, particularly when taxpayers with deep pockets try to drag out their dispute with the tax authority for as long as possible, says Tax Ombud Bernard Ngoepe.

Amanda Visser - IOL
Sugar tax millions should be used for diversification in the industry

It seems only right that a tax that originates from the sugar industry should be applied to explore ways to enable this huge employer of South Africans to keep up the good work.

Francois Baird - Daily Maverick
Beware of potential double estate tax on your offshore property

For South Africans who have invested in offshore property, estate planning can be challenging given the legal and tax frameworks of another country.

Carin Smith - Fin24
Tax Ombud to probe Sars (again)

The Tax Ombud has received approval to launch two separate investigations into the South African Revenue Service (Sars).

Ingé Lamprecht - Moneyweb
Vat zero-rating: ‘Alternatives should be considered’

The inclusion of all six items recommended by the Vat panel in the zero-ratings basket will be an expensive exercise that will only provide some relief to the poor and other alternatives should also be considered, the Tax Indaba has heard.

Ingé Lamprecht - Moneyweb