March 16, 2023
You could improve your return by selling the share instead of waiting for the dividend payout—but there are caveats. I was recently asked an interesting question about dividends. The person concerned was curious as to whether—from a tax and return perspective—it is better to take the dividend itself, or sell the share and take the profit prior to the dividend payout. It is therefore important to understand how the declaration and subsequent payment of a dividend impact the share price, all else being equal. The easiest way to explain how this works is through a real-life example—that of thermal coal […]
February 24, 2023
Condonation for the late filing of legal documentation depends on whether the interests of justice will be served by the court granting such condonation In taxpayer M v CSARS (Case Number VAT1826) heard by the Gauteng Tax court, Windell, J handed down an important decision regarding the validity of a default notice (and the resultant impact on the default judgment application) and the application of judicial precedent to the facts under consideration for condoning an application for the late filing of court documents. This article sets out the facts before the court and the applicable legal principles considered by the […]
February 24, 2023
What happens to the VAT that was paid over to SARS? Vendors often provide goods or services to clients on credit. In the current economic climate, clients are more likely to acquire goods or services on credit and may thereafter be unable to settle these debts. Other factors, for example disputes, may also result in vendors being unable or unwilling to make payment of debts. This results in the vendor having to write off this debt as ‘bad’ or irrecoverable. In this article we take a closer look at the VAT implications of bad debts. Legislative provisions The Value-Added Tax […]
December 15, 2022
The sale of a business is often a complex venture and requires consideration of various facts in examining the financial reality behind the sale. From the outset, it is important to consider historical transactions and how they may have a detrimental impact on the current sale being considered. For purposes of this article, several factors are highlighted to consider in pursuance of the sale of a business. These factors, amongst others, include: Clawback provisions of the corporate restructuring rules: These rules, as contained in sections 41 to 47 of the Income Tax Act No. 58 of 1962 (“the Act”), potentially […]
December 15, 2022
Is the proposed two-pot retirement system ‘stirring the pot’ in the retirement fund industry? The draft tax legislation released by National Treasury on 29 July 2022 contains details of the much anticipated two-pot retirement system. The proposed changes are quite far-reaching—although there will also be criticism that the changes do not go far enough. The intention is for the changes to address the following two concerns: The inability of households in financial distress to access their retirement savings prior to withdrawal or retirement; and The failure to preserve funds for retirement, in those instances where members withdraw from their pension […]
October 24, 2022
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
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
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
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 […]