March 16, 2023
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
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
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 […]
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 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 […]
October 14, 2022
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 […]
October 14, 2022
Deductions are disallowed under Section 23(o)—but it’s not quite cut and dried… The meeting went on longer than you expected, and now you’re rushing to get to your next appointment. It’s a new client, and a successful deal will be lucrative both for your company and this month’s commission cheque. But not five minutes after you get onto the freeway, some plod with a hairdryer in his hand is waving you over to tell you what your speedometer already knows—if only you’d bothered to look. Then the next day your boss comes into your office, informing you that your territory […]