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SARS NOTICE: MARCH 2018 VAT SUBMISSIONS

As you are aware the Minister of Finance announced an increase in the VAT rate from 14% to 15% as of 1 April 2018. The South African Revenue Service (SARS) would like to remind you that your March 2018 VAT201 submission is not affected by this change in the VAT rate. The March return you will receive on your SARS eFiling profile will be the same as the return you would have completed for February 2018, as well as any other VAT201 return which was due when the 14% VAT rate was still...

SARS
Women in Tax Survey

This survey is closed. Thank you to all participants who took part in the survey and provided us with their valuable feedback. Look out for the results in the May/June 2018 edition of TaxTalk.

TaxTalk Magazine
Size limit for the upload of supporting documents on eFiling increased

Taxpayers that have to upload supporting documents (relevant material) using eFiling should make sure the documents meet the standards and best practices.

SARS

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

BPR 305 registration of units in the name of beneficial owners

This ruling determines the consequences of the transfer of units in an equity fund registered in the name of a nominee for the beneficial owner.

SARS
Notice 600 GG 41704 15 June 2018

 The Notice has been published in terms of section 25 of the Tax Administration Act, 2011, read with section 66 of the Income Tax Act, 1962, specifying persons to submit 2018 income tax returns and the periods for submission

SARS
BPR 303 Tax implications of a group restructuring transaction

This ruling determines the tax consequences of a group restructuring transaction which includes the discharge of debt by way of set-off, the disposal of shares in a subsidiary to unconnected persons and the tax implications of a replacement loan.

TAX CASES

Ruling by Tax Court - Employment exercised in SA in terms of DTA (TCIT 14218)

Whether the foreign income earned by the Appellant is taxable in South Africa.

SARS Court Cases
S G Taxpayer v Commissioner for the South African Revenue Service (IT14264) [2018] ZATC 1 (9 May 2018)

The central issue in this matter is whether, as the appellant (“the taxpayer”) contends, there is a sufficiently close connection between the contribution of R48 million (“the expense”) paid by it to a certain Trust in respect of its own employee management share incentive scheme (“the scheme”), and its production of income during the 2005 to 2012 years of assessment (“the income”) for purposes of s 11(a) of the Income Tax Act.

SARS Court Cases
TCIT 13492 JHB 01 March 2017

The appellant is an entity called AB CC which made various loans to its related close corporations and companies during the years of assessment which are relevant to this appeal – namely the years 2007 – 2011.

SARS Court Cases

Legislative & Policy
(National Treasury & Parliament)

Terms of reference for the Independent panel of experts for the review of current list of VAT zero rated food items

The Value-Added Tax (VAT) rate was increased from 14 to 15 per cent on 01 April 2018, as was announced in the February 2018 National Annual Budget. The increase of the VAT rate by one per cent is expected to raise additional revenue in the amount of R22.9 billion in 2018/19. 

National Treasury
Rates and Monetary Amounts and Amendment of Revenue Laws (“VAT”) Bill: Briefing & Public Hearings; Davis Tax Committee

The Standing Committee on Finance, jointly with the Select Committee on Finance, held public hearings on the Rates and Monetary Amounts and Amendment of Revenue Laws Bill. National Treasury highlighted that the Rates Bill was published on Budget Day and dealt with key rate monetary threshold changes, and more complex tax proposals would be dealt with in Tax Laws Amendment Bill (TLAB) and Tax Administration Laws Amendment Bill (TALAB) to be published in July for public comments. Tax proposals...

Parliamentary Monitoring Group
Terms of Reference for the Independent Panel of Experts for the Review of Current List of VAT Zero Rated Food Items

The Value-Added Tax (VAT) rate was increased from 14 to 15 per cent on 01 April 2018, as was announced in the February 2018 National Annual Budget. The increase of the VAT rate by one percentage point is expected to raise additional revenue in the amount of R22.9 billion in 2018/19. The decision to increase the VAT rate was taken to protect the integrity of the public finances by narrowing the budget deficit, stabilising government debt and laying the foundation for new investment and...

National Treasury

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

Tax Administration Act, 2011

Draft notice about returns to be submitted by a person in terms of section 25:  Persons specified in the Schedule to the Notice must submit returns for the 2018 year of assessment, as defined in the Schedule, within the periods specified in the Schedule. Next due date for comments: 23 May 2018

SARS
​Income Tax Act, 1962

Draft Guide on the calculation of the tax payable on lump sum benefits (Issue 3). Next due date for comments: 29 June 2018 New!​​

SARS
Income Tax Act, 1962  

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

SARS

International and Regional News
(OECD and ATAF)

Liberia signs the Multilateral Convention on Mutual Administrative Assistance in Tax Matters

Liberia today signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, making it the 122nd jurisdiction to join the world’s leading instrument for boosting transparency and combating cross-border tax evasion.

OECD
Serbia deposits its instrument of ratification for the Multilateral BEPS Convention

Today, Serbia 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, therewith underlining its strong commitment to prevent the abuse of tax treaties and base erosion and profit shifting (BEPS) by multinational enterprises.

OECD
Paraguay joins international efforts against tax evasion and avoidance

Paraguay signed today the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, making it the 119th jurisdiction to join the world’s leading instrument for boosting transparency and combating cross-border tax evasion.

OECD

CPD Events

PROFESSIONAL INSIGHT

VAT effect on leasehold improvements

We discuss the new provisions regulating the VAT effect on the supply of leasehold improvements and the VAT position of both lessees and lessors.

Leanie Groenewald & Herman Viviers - NWU for TaxTalk Magazine
Imposing understatement penalties: Adopting the right approach

The approach being adopted by the Tax Court in the hearing of appeals against understatement penalties is questionable.

Advocate Kevin Burt for TaxTalk Magazine
Trust regimes and offshore trusts

We look at the ongoing changes in the South African trust regime and its effects on offshore trust and company structures.

Nicky Combrinck - PSG for TaxTalk Magazine
Tax on Womanhood

There was some disappointment that the recent hike in VAT was not used as an opportunity to zero rate essential female sanitary products, thereby limiting the financial cost to females of managing monthly periods throughout their menstruating life cycle.

Preshnee Govender - KPMG for TaxTalk Magazine
Tax(ing) consequences of marriage contracts

Getting married has implications for a couple’s finances and taxes. We look at different types of marriage contracts and what difference they make during a marriage and also when it ends in divorce or death.

Shohana Mohan - TaxAuditor for TaxTalk Magazine
Dividends as proceeds on disposal of shares

Since the introduction of the Taxation Laws Amendment Bill of 2017, the landscape for the use of subscription and buy-back as a tax planning tool has changed and dividends are to be treated as proceeds on disposal of shares.

Michele Benetello - ENSafrica for TaxTalk Magazine
Applying VAT to e-commerce

Supplies of goods and services are subject to VAT. However, levying VAT can be challenging when the supplies are made via e-commerce. This is even more complicated when transactions take place across borders.

Ferdie Schneider - BDO for TaxTalk Magazine
Refining rules for debt-financed acquisitions of controlling interest in an operating company

Section 24O of the Income Tax Act 58 of 1962 (ITA) was introduced in 2012 and was aimed at discouraging the use of so called "debt push-down" structures (using section 45) by deeming interest incurred on a loan used by a taxpayer to acquire shares in a resident operating company (as defined in section 24O), to be incurred in the production of the income of that taxpayer and laid out for the purposes of its trade. This deeming provision allowed such taxpayer to claim interest expenses as a...

Kyle Beilings - Webber Wentzel
Treatment of trading profits realised by collective investment schemes

Paragraph 61 of the Eighth Schedule of the Income Tax Act 58 of 1962 (ITA) provides that a holder of a "participatory interest" in a portfolio of a collective investment scheme (other than a portfolio of a collective investment scheme in property), must determine a capital gain or capital loss in respect of the participatory interest only upon the disposal of that participatory interest. Any capital gain or capital loss in respect of the disposal of an asset by a portfolio of a collective...

Graham Viljoen & Lisa Lumley - Webber Wentzel

Tax News In The Press

SARS to host BRICS Tax Experts and Heads of Tax Administrations

The South African Revenue Service (SARS) will host the tax experts and heads of tax administrations from BRICS member countries, namely Brazil, Russia, India China and South Africa, in Sandton next week.

SARS
#datamustfall: Is zero-rating the answer?

Unlikely that such a proposal will succeed, experts say.

Ingé Lamprecht - Moneyweb
South Africa: Staff Concluding Statement of the 2018 Article IV Mission

An International Monetary Fund (IMF) team led by Ana Lucía Coronel visited South Africa in May 28-June 11, 2018 to conduct its regular Article IV surveillance activities. Discussions focused on measures and reforms to reignite growth and reduce poverty and inequality.

National Treasury
SARS's new service charter may repair trust, but taxpayer bill of rights is needed

A service charter that will enable taxpayers to keep the South African Revenue Service (SARS) accountable on its service promises will soon be released to the public.

Amanda Visser - Business Live
The unintended consequences of offshore trusts – an SA-UK perspective

A number of South African residents have set up foreign trusts as they look to mitigate their risks that are peculiar to South Africa, be it politically, economically, or to ensure some protection for their assets and for succession planning. In a world in which people are becoming increasingly mobile, we often find that the ultimate beneficiaries of the trust are not resident in South Africa at the time they become entitled to the benefits thereof. We come across this situation often...

Niel Pretorius - BIZNEWS
VAT zero-rating may be a dead end

The bottom line is that there is no entirely satisfactory way to protect the poor from the VAT increase. And that draws attention to a larger procedural issue about the constitutionality of current legislation (the VAT Act) that allows the Minister of Finance to effectively impose a VAT increase without public consultation or parliamentary approval. 

Sean Muller - Daily Maverick