October 24, 2022

Lenders of money are not all ‘money lenders’

Taxpayers’ actions need to back up what they claim to be In many groups of companies, intra-group loans make sense as a way of funding the operations of the group. If the funds are sourced from outside the group by a borrower entity and then on-lent to other companies within the same group as the borrower, the question is whether the interest incurred by the borrower entity is deductible in terms of section 24J(2) of the Income Tax Act No 58 of 1962 (the Tax Act)? This question was once again considered in Taxpayer H v Commissioner of the South African […]
October 24, 2022

Is your business covered for loss of income?

It’s all well and good being paid out for your assets, but what about the foregone earnings in the meantime? Small business owners who have a short-term commercial insurance policy are often not aware that they may not be covered for the loss of income, under a standard commercial policy. Although a standard short-term insurance policy can assist SMEs to replace, repair or reinstate various assets following a loss, it does not provide cover against the loss of income as a result of a business being non-operational or not being able to provide a service following a covered loss. Business […]
October 24, 2022

When SARS requests supporting documents

E-filing doesn’t allow ‘secured’ or password-protected documents to be uploaded—but there is a solution Following SARS Commissioner Edward Kieswetter’s announcement that he intends to rebuild SARS’ enforcement capabilities as part of his quest to become the scourge of recalcitrant taxpayers, there has been a noticeable increase in requests from SARS for the submission of supporting documents. However, thanks to e-filing, the days of having to photocopy reams of documents and pop them in the post, fervently praying that they will arrive at SARS’ offices, reach the right department, and be received and logged with-in the 21 working-day window, are long […]
October 24, 2022

How trusts preserve generational wealth

The estate duty savings are compounded over several generations Articles on trusts are often aimed at settlors or donors to highlight the benefit of trusts and the role they play in estate planning at the ‘first-generation’ level.  In this article, the author aims to illustrate to second-generation beneficiaries the effect of the decisions their parents took on their behalf to establish a trust in which to grow their assets. The scenario Client X retired 10 years ago, withdrew the tax-free portion of his retirement fund, and added this to other funds he held.  He then placed the total amount on […]
October 14, 2022

Travel claims, but no allowance?

For commission-earners and the self-employed, the rules are slightly different—but travel costs can be claimed. The common mistake that I make when writing articles about travel allowances is that I tend to forget that not all of us are ‘wage slaves’.  Indeed, there are many taxpayers for whom the saying, “If a man will not work, he shall not eat” is a daily reality—those who are self-employed, as well as those who derive their earnings from commission. But the very fact that they don’t earn a regular salary means that they also do not receive a fixed travel allowance.  And […]
October 14, 2022

Testamentary trusts still have their place

How you can protect your assets from predators—including SARS. Trusts have received a lot of bad press over the past few years, what with SARS taking a dim view of the use of trusts as a means of avoiding tax. A 2008 case involving a property trust, where the beneficiaries were changed in the hope of avoiding the payment of transfer duty, is but one example of SARS’ increased vigilance when it comes to trusts.  In this particular case the loophole was closed, and the court found that transfer duty was in fact payable. So does this mean that trusts […]
October 14, 2022

Bribes, penalties, and fines: Don’t expect help from SARS

Deductions are disallowed under Section 23(o)—but it’s not quite cut and dried… The meeting went on longer than you expected, and now you’re rushing to get to your next appointment.  It’s a new client, and a successful deal will be lucrative both for your company and this month’s commission cheque.  But not five minutes after you get onto the freeway, some plod with a hairdryer in his hand is waving you over to tell you what your speedometer already knows—if only you’d bothered to look. Then the next day your boss comes into your office, informing you that your territory […]
October 14, 2022

Beware the ‘Ides of SARS’

Telephonic audits are on the rise “A soothsayer bids you beware the ides of March”.  These famous Shakespearean words forewarning the misfortune of Roman emperor Julius Caesar (which Caesar ultimately ignored and led to his demise) may not be as archaic as appears at first sight—especially in the realm of tax, and when SARS’ new ‘audit strategy’ is considered. In recent months we have seen a substantial spike in SARS contacting taxpayers directly (even with the appointment of a registered tax practitioner or legal representative), either telephonically, or via email correspondence, seeking additional information / confirmations from the taxpayer. A […]
September 9, 2022

Ceasing tax residency: Changes on the horizon for interest and capital gains

Section 9H of the Income Tax Act provides that a natural person’s year of assessment is deemed to have ended on the date immediately before the day on which that person ceased to be a resident for South African tax purposes. Furthermore, that person’s subsequent tax year is deemed to commence on the day that person ceased to be a tax resident for South African tax purposes. This effectively creates two years of assessment during a single 12-month tax period which would ordinarily constitute a single year of assessment beginning on 1 March and ending at the end of February […]
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