April 19, 2021

What are the requirements for self-invoicing?

As a result of the specific nature of goods, it is common practice that certain recipients of goods and services “self-invoice” when they receive goods or services from their suppliers. In other words, they do not receive an invoice from the suppliers – instead, they invoice themselves. This scenario is typically found where the volume or quality of goods can only be determined by the recipient. An example of this is where a farmer (the supplier) takes produce to a co-operative which will only be sold at a later stage (once the quality and quantity of the produce has been determined). Since […]
April 19, 2021

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 documents must be provided. In recent times, in respect of both income tax and value-added tax, SARS has taken an arbitrary approach in issuing additional assessments based on information provided by taxpayers in response to the inadequate (or vague at best) requests for information. Income […]
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 […]
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

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 […]
July 7, 2020

Meeting the requirements of export regulations

Interpretation Note 30 (“IN 30”) by the South African Revenue Service (“SARS”) explains the requirements that need to be adhered to and prescribes the documentary proof, acceptable to the Commissioner, that must be obtained and retained by a vendor in order to levy value-added tax (“VAT”) at zero rate on a supply of movable goods, where those goods are consigned or delivered to a recipient at an address in an export country. Should these requirements not be adhered to, exports could potentially be accounted for at the standard VAT rate of 15%, which will result in adverse tax (and commercial) […]
July 7, 2020

Rescission of judgments by SARS: Barnard Labuschagne Inc v SARS

The judgment deals with an application for rescission of a judgment by Barnard Labuschagne (Applicant), where SARS took judgment under the provisions of chapter 11 of the Tax Administration Act (TAA). SARS filed a certified statement in terms of Section 172 of the TAA with the Registrar of the Court, setting out an amount of liquid debt due by the Applicant in respect of PAYE, VAT, UIF and SDL, and payable to SARS. The Applicant is a law practice in the Western Cape and brought an application to rescind, based on various contentions. Over an extended time, the Applicant had […]
June 3, 2020

Can a third party collect my taxes?

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. In SIP Project Managers (Pty) Ltd v CSARS (29 April 2020), the Gauteng Division of the High […]