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

Notice 684 GG 42464 17 May 2019 Notice to submit EMP501
Register of all Binding Class Rulings

The latest register for all class ruling.

Guide to the employment tax incentive (Issue 3)

The updated guide to the employment tax incentive (Issue 3).

SARS

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

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)

Reforms in a few countries drive a decline in average OECD labour taxes

Income tax and social security contributions declined slightly for the average worker across the OECD in 2018, driven by major reforms in a handful of countries, according to a new OECD report.

OECD
OECD invites public comments on draft report on tax morale

As part of the ongoing work on tax morale, the OECD is seeking public comments on itis forthcoming publication What is driving tax morale? An empirical analysis on social preferences and attitudes towards taxation.

OECD invites public comments on draft report on tax morale

As part of the ongoing work on tax morale, the OECD is seeking public comments on itis forthcoming publication What's driving tax morale? An empirical analysis on social preferences and attitudes towards taxation.

CPD Events

PROFESSIONAL INSIGHT

PWC Synopsis: March 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
Africa tax in brief

AFRICA: African Continental Free Trade Area Agreement developmentsThe Parliament of Zimbabwe and the Ethiopian House of Representatives approved the African Continental Free Trade Area Agreement (“ACFTA”) on 14 March and 21 March 2019, respectively. The Moroccan Council of Government approved the ACFTA on 21 February 2019.

Celia Becker - ENSafrica
Further amendments to the VAT electronic services regulations

Revised regulations to prescribe and clarify the electronic services (e-services) supplied by foreign suppliers to South African consumers which are subject to VAT were proposed in 2018, which significantly broadened the scope of ‘e-services’. The Minister of Finance, in the 2019 Budget Review then announced that further amendments would be made to the e-services regulations to address certain oversights.

Gerhard Badenhorst and Varusha Moodaley - Cliffe Dekker Hofmeyr
Frivolous disputes: Taxpayers beware

The Tax Court judgment in XYZ CC v C:SARS (ITC 13 868) (“XYZ case”) was recently delivered as a stern reminder to taxpayers who only follow the objection process as a method to purposely delay the payment of tax, where there appears to be no valid basis to do so. The unlucky result for the taxpayer in XYZ case was that default judgment was granted and SARS’ assessment was confirmed, without the option of any further Objections or Appeals being delivered by the...

Natasha Wilkinson - Tax Consulting South Africa
VAT on the supply of electronic services

On 18 March 2019, the long-anticipated regulations prescribing the electronic services that are subject to South African Value-Added Tax (VAT) were published by the National Treasury. The regulations will be effective from 1 April 2019. Unfortunately, the delay by National Treasury in finalising the regulations has left foreign companies with very little time to register for VAT and implement any changes necessary to commence charging VAT on the supply of electronic services.

PWC
Proposed amendments to clarify income tax treatment of statutory mergers

Sections 113 and 115 of the Companies Act, 2008 provide for an automatic statutory merger of two companies. The transfer occurs by way of operation of law, and barring any express prohibition to the contrary in a contractual arrangement, no third party consent is generally required to implement the merger. This type of transaction may typically give effect to a desired corporate reorganisation, in terms of which an existing company is liquidated, wound up and/or deregistered. 

Robert Gad, Megan McCormack and Jo-Paula Roman - ENSafrica
Reportable arrangement: proposed reporting burden on mining companies and rehabilitation trusts

The reportable arrangement provisions were established by the South African Revenue Service (“SARS”) with the objective of obtaining information on certain types of transactions. The circumstances under which a person should report an “arrangement” to SARS, as defined in section 34 of the Tax Administration Act, 2011 (the “TAA”), are contained in sections 34 to 39 of the TAA. Essentially, if an arrangement has certain characteristics as listed in section 35(1) of the TAA or if SARS has...

Kristel van Rensburg and Emile Cronje - ENSafrica
A creature of statute: A decision about the Tax Court’s power to increase understatement penalties

In the recent judgment of Purlish Holdings (Proprietary) Limited v The Commissioner for the South African Revenue Service (76/18) [2019] ZASCA 04, the Supreme Court of Appeal (SCA) had to pronounce on the South African Revenue Service’s (SARS) entitlement to impose understatement penalties on Purlish Holdings (Proprietary) Limited (Taxpayer) and the quantum thereof.

Louis Botha & Louis Kotze - Cliffe Dekker Hofmeyr
Africa tax in brief

AFRICA: African Continental Free Trade Area Agreement developments

Celia Becker - ENSafrica

Tax News In The Press

When tax becomes a turning point for people to stay or leave

A change to the taxation of foreign trusts means any repatriated income or capital gains will now be taxed.

Amanda Visser - Moneyweb
Treasury might want to ease up on Sars

Consistently setting unachievable revenue collection targets is unlikely to help the turnaround.

Tertius Troost - Moneyweb
Africa is being left out of the digital tax loop

It’s a tricky issue. Tech companies are able to operate internationally very effectively, zooming down fibre optic cables from their tax havens. Should they be taxed in a different way? It’s now a leading topic on the global agenda, and African tax experts are hustling to join the discussions. Governments around the world have proposed varying solutions. Africa, however, is not necessarily happy with the progress, but potential solutions are out there.

Ruan Jooste - Daily Maverick
A to-do list for the new Sars Commissioner

The President has entrusted Edward Kieswetter as the new Commissioner for the South African Revenue Service (Sars).

Jean du Toit - IOL
Our heavy tax burden

The amount we pay in indirect taxes can equal the amount we pay in income tax, effectively doubling the average taxpayer’s tax rate.

Adriaan Kruger - Moneyweb
Harvesting low-hanging fruit will not lift Sars out of the doldrums

Internal cracks were developing before Moyane.

Barbara Curson - Moneyweb