Section 42: Asset-for-share transactions
It is often the case that South African tax resident shareholders wish to reorganise their South African group of companies, for a multitude of commercial reasons, without the ultimate shareholders changing. One of these could potentially be to create a single holding company structure. Various group relief provisions are contained in the Income Tax Act […]
Analysing tax exemption for dividends
Dividends are a valuable part of many shareholders’ income, but even though they are exempt from regular income tax, it does not mean that they are completely exempt from tax. A dividend can be defined as any local or foreign dividend paid by a resident company of South Africa or a foreign country, provided that the […]
Arbitrary practices by SARS when issuing assessments
The Tax Administration Act provides for the audit and verification of taxpayers’ tax returns for all taxes administered by the Commissioner for the South African Revenue Service (SARS). In many instances, such requests for information are general, boiler-plate letters received by taxpayers, not indicating specifically what additional information SARS requires in the circumstances and which supporting […]
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 […]
ADDITIONAL MEDICAL EXPENSES TAX CREDIT
Section 6B of the Income Tax Act[1] provides for an additional medical expenses tax credit (“AMTC”) which is calculated against qualifying “out of pocket” medical expenses. This tax credit reduces the amount of income tax a natural person (hereinafter referred to as the “taxpayer”) is liable to pay. The AMTC is granted in addition to […]
FURTHER REFINEMENTS TO THE ATTACK ON INTEREST FREE LOANS TO TRUSTS
We previously reported on the introduction of section 7C of the Income Tax Act, 58 of 1962. In terms of this targeted anti-avoidance provision, National Treasury sought to attack interest free loans granted to trusts by connected persons of that trust. Typically, these loans would have arisen by virtue of an individual that would sell […]
PROVISIONAL TAX WHEN YOU SELL YOUR PROPERTY
The pregime operates as a continuous cash flow mechanism in favour of Government whereby tax on income earned is paid over provisionally in anticipation of the final tax liability to be calculated when a person is finally assessed to income tax. Where a person is required to be registered for provisional tax, estimates of taxable […]
THE VAT CONSEQUENCES OF CHANGE IN INTENDED USE OF GOODS
It happens ever so often that a business would purchase goods, and subsequently apply those goods in a different manner than it had initially intended to at the time that those goods were acquired. For example, a sole proprietor dealing in motor vehicles may decide to take one of those vehicles and apply it towards […]
EXEMPTION FOR FOREIGN SALARY EARNERS
South African tax resident individuals are liable to income tax on their worldwide income. In other words, where a South African tax resident individual were to earn a salary for employment which may from time-to-time be exercised outside of the borders of the Republic, that income earned is still included in that South African tax […]
SO WHAT IS THE FUTURE OF TRUSTS?
One of the questions that we are most confronted with by our clients is what the future of trusts are in South Africa. Some questions even point to the misconception that the trust instrument itself as legal form is on the verge of being scrapped in South Africa altogether! The current debate raging is not […]
