November 9, 2020

Tax obligations while incarcerated

Decisions of South Africa’s courts are an essential source of law. The courts uphold and enforce the Constitution and develop common law that is consistent with the values of the Constitution, and the spirit and purpose of the Bill of Rights. In a taxation context, court decisions assist in how legislation must be interpreted or confirm the rights and obligations of taxpayers and the South African Revenue Service alike. One therefore cannot appreciate the tax landscape, without having regard for the decisions of our courts. Recently, one Joseph Nyalunga (the Applicant) brought an application to review and set aside two […]
November 9, 2020

Re-allocation of surplus retirement fund assets

Binding Class Rulings (BCR) are issued in response to applications by a specific class of taxpayers (usually persons that will have the same tax consequences apply to them from a transaction) and clarifies how the Commissioner for SARS would interpret and apply the provisions of the tax laws relating to a specific proposed transaction. BCR 068 determines the very technical consequences of transferring surplus retirement fund assets between funds and allocating assets from employer surplus accounts to retirement fund member accounts of members. Employers that are part of retirement funds should take note of the ruling and consult where necessary. The ruling considers sections 1(1) (specific definitions in the “gross income” definition), 11F and paragraph 2(l) of the Seventh Schedule of the Income Tax Act (dealing with […]
November 9, 2020

Dispute season – Know to what you are objecting

With the 2020 tax filing season in full swing, many taxpayers will likely engage in dispute proceedings as SARS issues their income tax assessments. This will particularly be the case where errors are contained on the so-called “auto-assessments” (which in itself is a misnomer). But how should the dispute process begin? When an assessment is issued by SARS, they (usually) provide a short description of the reason for the assessment. Importantly, the SARS official is often restricted in what he/she can include on such an assessment as a reason (such as a selection from a “drop-down” list). For example, for additional VAT assessments (VAT217), taxpayers often find the following: “Burden of […]
November 9, 2020

Clearing loan accounts through dividends

In terms of the Tax Administration Act, the South African Revenue Service (“SARS”) can issue, in response to an application, Binding Private Rulings (“BPR”) and clarifies how the Commissioner would interpret and apply the provisions of the tax laws relating to a specific proposed transaction. BPR 346 determines the income tax and dividends tax consequences of the redemption of intra-group loans by way of set-off against dividends payable. The ruling was made in connection with the interpretation and application of section 19 and section 64F(1)(a) of the Income Tax Act, dealing with debt waivers and dividends tax. The below-mentioned companies belong to the same “group of companies” and are the parties to the ruling: […]
October 15, 2020

Shareholding in SA companies: Beware of residency changes

In 2001, South Africa, like many other countries, introduced capital gains tax aimed at levying capital gains tax on the gain made from the disposal of certain assets. When a South African tax resident company redomiciles abroad and changes its tax residency to another tax jurisdiction, such a company ceases to be a tax resident for South African income tax purposes (regardless of whether the assets of such a company are still located in South Africa or whether the company still continues to do business in South Africa or not). Generally, the cessation of South African tax residency is deemed to be a disposal for capital gains tax purposes and triggers capital […]
October 15, 2020

The unfortunate timing of BGR55 for developers

In terms of the Tax Administration Act, the South African Revenue Service (“SARS”) can issue Binding General Rulings (“BGR”) on matters of general interest or importance and clarifies the Commissioner’s application or interpretation of the tax law relating to these matters. BGR55 (issued on 10 September 2020) clarifies the VAT consequences of the sale of fixed property consisting of dwellings, by a developer, pursuant to such dwellings being deemed to have been supplied by the developer under section 18(1) or 18B(3) of the VAT Act. The issue As a result of so-called “change in use adjustments” catered for in the VAT Act, property developers that applied […]
October 15, 2020

Interest on delayed VAT refunds: The “materiality” question

Section 45 of the Value-Added Tax Act makes provision for the payment of interest on delayed VAT refunds. In terms of section 45(1) of the Act, the South African Revenue Service (“SARS”) must, within 21 business days after the date on which the vendor’s return in respect of a tax period is received, refund the vendor. This is provided that the VAT return is complete and not defective in any material respect. The Tax Court recently considered the concept of “materiality” in such cases in the case of ABC Trading CC v the Commissioner for the South African Revenue Service (VAT case no 1712). SARS was liable to refund the […]
October 15, 2020

Bursaries and scholarships: The tax rules are changing

Over the past several years, many employers and employees have made use of the beneficial tax treatment of bursary and scholarship schemes, as provided for in the Income Tax Act. The Act contains provisions that provide an exemption in respect of bona fide bursaries or scholarships granted by employers to employees or relatives of qualifying employees, subject to certain monetary limits and requirements stipulated in the Act. Essentially, an employee is not taxed on an amount granted to him/her when it meets the criteria as set out in the Act. In the case of a bona fide bursary or scholarship […]
September 17, 2020

A brief history of T. Roos

T. Roos was started more than 60 years ago, when Mr Roos ventured into something new as he started his own business under the name T. Roos (CC) Since then, T. Roos has established itself as a dynamic tax and accounting firm with a large client base, composed mainly of clients in the Free State. This is the story of T. Roos (CC) The year was 1956, April, when Mr Roos had just resigned from the Department of Inland Revenue after discovering talk that he was to be transferred to Johannesburg. Not eager to move up north, it was then […]
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