March 20, 2021

Budget 2021: Corporate tax amendments

Finance Minister Tito Mboweni delivered his third annual budget address on 24 February 2021. The corporate tax rate reduction from 28% to 27% for years of assessment commencing on or after 1 April 2022 was arguably the most significant windfall for corporate taxpayers, although the actual cash benefits thereof will only be seen in the 2023 calendar year. Below, we highlight some of the other significant proposals, which will likely be contained in the Draft Taxation Laws Amendment Bill to be published for public comment in June or July this year. Refining the interaction between anti‐value shifting rules and corporate reorganisation rules The Income Tax Act curbs the use of structures that shift value […]
March 20, 2021

Auditing your tax compliance profile

Taxpayers who make use of the South African Revenue Service’s (SARS) electronic filing system (or as it is generally known, eFiling) will know that, in addition to containing a history of income returns, value-added tax, pay-as-you-earn, etc., a significant amount of personal and company data is stored on the platform. This includes information such as banking details, a person’s physical address, email addresses, and relevant contact persons for companies. Although the system can reportedly handle up to 150 000 returns per day during individual tax filing season, electronic filing usage is far below other countries such as the United States, where more than 90% of returns are filed electronically. The purpose of SARS’s access to personal […]
March 20, 2021

Budget 2021: Individuals and savings

Finance Minister Tito Mboweni delivered his third annual budget address on 24 February 2021. Below we highlight some of the significant proposals, which will likely be contained in the Draft Taxation Laws Amendment Bill to be published for public comment in June or July 2021. Applying tax on withdrawals of retirement interest when an individual ceases to be a tax resident When an individual ceases to be a South African tax resident, retirement funds are not always subject to withdrawal tax in terms of the Act. At issue is the tax treatment of retirement interest when an individual ceases to be a South African tax resident but […]
March 20, 2021

Budget 2021: What was missing?

Finance Minister Tito Mboweni delivered his third annual budget address on 24 February 2021. While there was plenty of information on both income and expenditure issues, as well as proposed tax amendments, some aspects were, concerningly so, not addressed at all. Exchange control In 2020, the Minister indicated that changes would be made to South Africa’s capital flow system regulated through the South African Reserve Bank’s exchange control regulations. Previously, the exchange control provisions restricted the use of so-called loop structures to protect the tax base. Such loop structures involved South African exchange control residents investing in South Africa from a non-common monetary area. The proposed policy was that, instead of an approval […]
February 9, 2021

Why you need to beware of withholding taxes when emigrating

Many South Africans who simultaneously emigrate and cease to be South African tax residents are faced with a situation where the sale of a fixed property has not been finalised by the time they cease to be tax residents. This may result in the unintended consequence of them becoming a non-resident seller of immovable property in South Africa. In terms of South African tax laws, any purchaser who must pay any amount exceeding R2 million to any other person who is not a resident (or to any other person for, or on behalf of, that seller), is required to withhold an amount equal to 7,5% of the amount payable if the seller is […]
February 9, 2021

Voluntary disclose: What it is and how to make use of it

Recently there has been a very positive uptick in activity at the Voluntary Disclosure Unit (VDP) of the South African Revenue Service (SARS). While public perception was previously that taxpayer’s matters were not attended to, practitioners have seen a welcome improvement in efficiency, turnaround time, and interaction with the VDP unit. Although SARS aims for a 201-day turnaround time, some recent applications have been settled in as few as 30 days. What is a VDP? The purpose of the VDP is to enhance voluntary compliance in the interest of good management of the tax system and the best use of SARS resources. The VDP aims to encourage taxpayers to come forward voluntarily to regularise their tax affairs with SARS […]
February 9, 2021

Capital gains tax – When does it come into play?

The distinction between amounts received of a capital nature as opposed to a revenue (or income) nature is essential for income tax purposes. Non-capital amounts received, such as from the disposal of trading stock, are subject to tax at a higher effective rate compared to capital profits. The primary intention with which an asset is acquired is generally conclusive as to the nature of the receipt arising from the realisation of a capital asset unless other factors intervene which show that it was sold in pursuance of a profit-making scheme. It is not uncommon though, that a person’s intention in […]
February 9, 2021

Wysheid vir besluite in die belastingseisoen

Die 2021 belastingseisoen lê voor die deur en ons het wysheid nodig om reg te kies in dié tyd. Een van die moeilike keuses waarmee belastingbetalers gekonfronteer word, is die besluit oor hoeveel hulle onderskeidelik tot ‘n uittree-annuïteit (UA) en tot ‘n belastingvrye spaarbelegging (TFSA) moet bydra. Vir lesers wie minder bekend is met die begrippe eers net kortliks die volgende – wat is ‘n uittree-annuïteit (UA)? Dit is eenvoudig gestel ‘n finansiële instrument waardeur jy met voorbelaste geld vir jou oudag voorsiening kan maak. Dan kan ‘n mens ook die vraag vra waarom dit belangrik is om by te […]
January 19, 2021

Insuring your tax position

In addition to tax liabilities (tax capital amounts), taxpayers are also subject to an array of penalties and interests in respect of late payments, understatements, specific punitive penalties, and compliance-related penalties in terms of various tax Acts, such as the Income Tax Act, and the Value-Added Tax Act. This is often the case when there are uncertain tax positions, where taxpayers had to take a view on specific interpretations on a tax Act, or where assessments have not been finalised and there is a potential threat of penalties. These uncertainties are often an impediment to the conclusion of transactions and deals, and one often finds in agreements that an […]