October 19, 2023

Is a maintenance payment a ‘donation’?

Helping someone out may be exempt from donations tax—but as always, the devil is in the detail… Donations tax is one of those strange taxes where people often question its existence.  After all, why would SARS be so mean as to want to tax someone’s generosity?  The main reason is estate duty—or, more specifically, the potential avoidance thereof. In fact, if donations tax did not exist, this would open a massive estate duty loophole.  Since estate duty is levied at 20% of the taxable value of one’s estate exceeding R3.5 million (and at 25% of the portion exceeding R30 million), […]
August 15, 2023

Testamentary trusts still have their place

How you can protect your assets from predators—including SARS Trusts have received a lot of bad press over the past few years, what with SARS taking a dim view of the use of trusts as a means of avoiding tax. A 2008 case involving a property trust, where the beneficiaries were changed in the hope of avoiding the payment of transfer duty, is but one example of SARS’ increased vigilance when it comes to trusts.  In this particular case the loophole was closed, and the court found that transfer duty was in fact payable. So does this mean that trusts […]
June 13, 2023

Securing your business’s future: FICA compliance in South Africa made simple

To thrive in South Africa’s ever-changing economic landscape, it is crucial to have a thorough understanding of your regulatory responsibilities, including compliance with the Financial Intelligence Centre Act (FICA). Recognised not just as an additional requirement to your current protocols, but rather as a fundamental component in upholding your business’s integrity, FICA ensures transparency and diligence in your financial operations. One of FICA’s central requirements is appointing a compliance officer responsible for anti-money laundering (AML) and combatting the financing of terrorism (CFT). This individual, formally appointed by senior management or the board of directors, ensures adherence to FICA’s protocols within […]
April 13, 2023

Flying towards a tax saving: Double Tax Agreement, or financial emigration?

Having visited over 12 international locations in 2022, and engaging with South African expatriates, we can attest to a recent report issued by the United Nations, which found that around 900 000 South Africans are already living and working overseas—and indeed, this may well be an understatement. The common misconception amongst expatriates, however, is that getting on a plane and leaving South Africa will trigger SARS to automatically regard them as non-resident taxpayers. This is certainly not the case, as the correct process must be followed to cease one’s South African tax residency status.  If not, SARS may audit the misinformed […]
April 13, 2023

What you need to know regarding home office expenses

The way we work on a day-to-day basis changed significantly since the Covid-19 pandemic with many employers adopting a more hybrid working model. This new economic environment and new ways of working created an environment where SARS and taxpayers had to adapt accordingly with new focus on salaried employees working from home to claim certain expenditure from their respective income taxes. With time passing by after the worldwide pandemic SARS again adapted to circumstances and changed legislation that includes changes to home office expenses and the deductibility thereof in future. So what now? Are home office expenses still deductible for […]
March 16, 2023

Render unto Caesar: Shares and the SARS slice

Whether you are a share trader or a long-term investor, when you make a profit, SARS will want its slice of the pie Ever since biblical times, there has been a tug-of-war between governments trying to extract as much as possible from their citizens in the form of taxes, and individuals trying to keep as much of their income and wealth away from those very same governments. In South Africa, owners of shares have not historically needed to worry too much about the tax man—especially if they considered themselves to be long-term investors.  This is because any profits made when […]
March 16, 2023

How SARS catches tax-dodgers

SARS auditors employ methods that most people wouldn’t have even considered How does the South African Revenue Service (SARS) catch those who do not contribute their fair share to state coffers? Here are some tests that SARS auditors perform to see if you are being somewhat economical with the truth. Comparing VAT returns to your income tax return When you submit your IT14 company tax return, you are required to make certain disclosures—including your company’s turnover. But according to Mark Twain, if you tell the truth, you don’t have to remember anything. If you are cooking the books, at least […]
February 24, 2023

Follow due process, yes – but be reasonable!

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

VAT treatment of irrecoverable debts

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 […]
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