August 13, 2021

Personal liability of directors of non-profit organisations

I am a director of an NPO. Can I be held liable in my personal capacity for damages caused by or debt incurred by the organisation? I thought that I was doing something good. What does it mean to carry on business recklessly? Can I be held accountable if I knew about dodgy transactions but it was not my signature on the documentation? In South Africa non-profit organisation (NPO) can be registered in one of three ways: a voluntary association; trust; or company. If the NPO is registered as a non-profit company, it will be regulated in terms of the Companies Act 71 of 2008 (the Act). In this article, the focus will be on the personal liability […]
August 13, 2021

Why employers should be careful when using ETI schemes

In a Binding Private Ruling issued on 6 July 2021, SARS has made strict ruling on an Employment Tax Incentive Act (ETI) scheme that has been doing the rounds. It is not often that negative rulings get published and it is therefore a unique situation that should serve as a warning to those participating in ETI schemes. The ruling determines that students in the proposed training programme are not considered “employees” as contemplated in the ETI Act and that the applicant in this case will not be entitled to claim an employment tax incentive in respect of any of them. The basic tenets of […]
August 13, 2021

Understand your tax liability when selling a residence

The Eighth Schedule of the Income Tax Act, which deals with capital gain tax, allows for exclusion from liability on any gains realised on the sale by a taxpayer of a primary residence on the first R2 million of such gains. There are, however, several more complex matters that often arise in the determination of any gain, and we examine some of those in more detail below. How often do you qualify? There is no limit on the number of times a person can qualify for the exclusion of R2 million, even during the same year of assessment. It applies each time a primary residence is disposed of, and there is no […]
August 13, 2021

Home office expenses: Do I qualify?

Tax practitioners have been inundated with queries from clients on the possible relief offered by the South African Revenue Service (“SARS”) on the possibility of deducting from their taxable income home office expenses due to the shift in working policies by many employers. SARS recently hosted a webinar on the matter (the summary of which is available on the SARS website). Below, we explore the most pertinent matters. When will I be able to claim home office expenses? If you are an employee who works from home and have set aside a room to be occupied for the purpose of “trade” (i.e. work […]
July 19, 2021

What to look out for when submitting your VAT invoice

All value-added tax (VAT) vendors that have gone through a VAT verification from the South African Revenue Service know how frustrating the delays on input VAT refunds can be when supporting documents do not meet the requirements for a valid tax invoice. Below, we revisit some of the necessary key elements to ensure proper compliance in this regard. The VAT Act identifies different transactions that each requires different types of tax invoices: If the consideration for the supply is more than R5 000 (including tax), a full tax invoice must be issued. If the consideration for the supply is more than R50 but not less […]
July 19, 2021

Explained: Dividends according to the Income Tax Act

Although there are several exclusions to the general rule, South Africa applies a withholding tax on dividends declared by companies at a rate of 20%. It is essential to appreciate that such a withholding obligation for companies do not arise only on “ordinary” dividends but that the concept of what constitutes a dividend, goes much wider. The Income Tax Act defines a “dividend” as: “any amount transferred or applied by a company that is a resident for the benefit or on behalf of any person in respect of any share in that company, whether that amount is transferred or applied—  (a) by way of a […]
July 19, 2021

What is a “transaction” for transfer duty purposes?

According to reports, given current low interest rates, there have been an uptick in property transactions. Therefore, it is worthwhile considering the potential impact of any transfer duty taxes to be imposed on such transactions. The Transfer Duty Act imposes a transfer duty on the value of any property acquired by any person by way of a transaction, or in any other manner, or on the value by which any property is enhanced by the renunciation of an interest in or restriction upon the use or disposal of that property. For this reason the underlying concept of acquisition and important definitions in establishing whether there is a liability for transfer duty must be […]
July 19, 2021

The A-Z of POPI compliance

The Protection of Personal Information (POPI) Act came into full effect on the 1st of July 2021. If you still haven’t implemented your POPI compliance strategy, it is strongly advisable that you take quick and decisive steps to do so as non-compliance could carry hefty penalties. To ensure that you get your (POPI) act together, we’ve put together a handy list of A-Z* terms that you should consider in your quest for information protection. A – Accountability: One of the 8 conditions for processing personal information, which governs that  both the means and the purpose thereof must be determined before processing can take place. B – Big data: With modern data-practices where large quantities […]
June 4, 2021

Tax neutral liquidation distributions

The Income Tax Act contains various provisions in terms of which transactions can occur between specified parties without adverse tax consequences being incurred in respect of those transactions. These provisions are contained in sections 41 to 47 of the Income Tax Act and are generally known as the “group relief provisions”. Apart from certain value-shifting and general anti-avoidance provisions, the group relief mechanisms override all other sections of the Income Tax Act to the extent that there are any inconsistencies. These transactions are asset-for-share transactions, amalgamations, intra-group transactions, and liquidation distributions. It is critical to know in which circumstances which transactions apply. In what follows, we highlight one of the particular types of […]
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