The transfer pricing regime in the Income Tax Act, 58 of 1962, is regulated by section 31 of that Act. It in essence requires that cross-border transactions be entered into on an arm’s length basis where connected persons transact with one another. The obvious mischief sought to be countered is for connected persons to chargeRead more about NEW TRANSFER PRICING DOCUMENTATION REQUIREMENTS[…]
Two significant rulings by SARS, both relating to non-executive directors’ remuneration, were published by SARS during February 2017. The rulings, Binding General Rulings 40 and 41, concerned the VAT and PAYE treatment respectively to be afforded to remuneration paid to non-executive directors. The significance of rulings generally is that it creates a binding effect uponRead more about NON-EXECUTIVE DIRECTORS’ REMUNERATION: VAT AND PAYE[…]
The provisional tax regime 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, estimatesRead more about PROVISIONAL TAX WHEN YOU SELL YOUR PROPERTY[…]
According to the South African Revenue Service (SARS), South Africa has a residence-based tax system, which means residents are, subject to certain exclusions, taxed on their worldwide income, irrespective of where their income was earned. By contrast, non-residents are taxed on their income from a South African source. In an increasingly global society where individualsRead more about TAX RESIDENCE FOR INDIVIDUALS[…]
It is an established principle that registered VAT vendors may claim a deduction for input tax on goods or services acquired for use in the course of making taxable supplies as part of carrying on an enterprise.[1] For example, a VAT vendor purchases trading stock from another vendor for the purpose of sale to itsRead more about GOODS AND SERVICES ACQUIRED BY VAT VENDORS ON CREDIT[…]
The recent introduction of section 7C to the Income Tax Act[1] brought the taxation of trusts, and the funding thereof specifically, under the spotlight again. Briefly, section 7C seeks to levy donations tax on loans owing by trusts to connected parties (typically beneficiaries or the companies they control). To the extent that interest is notRead more about INTEREST FREE LOANS AND TRUSTS[…]
Year on year the personal income tax tables are adjusted and based on which individuals are taxed based on an increasing sliding scale based on their income earned and therefore into which tax bracket they would fall. The annual adjustments are partly to provide for tax relief or an additional burden on certain salary earners,Read more about BRACKET CREEP, VAT AND THE 2017 BUDGET[…]
A consideration of the tax consequences of interest free loans will be incomplete if not also considered in the context of interest free debt funding being provided cross-border. Typically, when “cheap debt” is encountered it is in the form of low interest or interest free loans being provided to related parties (or “connected persons” asRead more about INTEREST FREE LOANS CROSS BORDER[…]
Provisional tax effects all corporate taxpayers since it is the mechanism used to collect income tax during the course of the year. Provisional tax payments are based on estimates of taxable income to be made by the taxpayer. The requirements for these estimates are contained in paragraph 19 of the Fourth Schedule. Interpretation Note 1Read more about PROVISIONAL TAX ESTIMATES[…]
The deductibility of interest for income tax purposes recently came under scrutiny in Mr X v CSARS,[1] and specifically the application of SARS’ Practice Note 31. As a general rule, expenditure would be deductible for income tax purposes if it meets all of the requirements in section 11(a) of the Income Tax Act, 58 ofRead more about PRACTICE NOTE 31 IN THE SPOTLIGHT[…]