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Shareholders' Loans Capitlisation to Equity 2 G. Patron Thank you for your thoughts and opinion.   I seem to be requested to look at potential tax issues on transactions that do not seem to be too clear cut in terms of the Act.   Kind regards Guy  
by G. Patron
25 July 2012
Trading Stock Valuation (s 22 of the ITA) 2 G. Patron Hi,   Thank you for your opinion. The stock was property held for resale and each property was costed / valued individually.   I will look at the referred text book as well.   Thank you and regards Guy  
by G. Patron
20 July 2012
LEASEHOLD IMPROVEMENTS 1 D. van der Walt Normal 0 false false false EN-ZA X-NONE X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin-top:0cm; mso-para-margin-right:0cm; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0cm; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} Broomberg on Tax Strategy (Lexis Nexis 4th edition) has devoted entire chapter (chapter 9- pages 91 to 100) on the subject of leasehold improvements. In short the lessor‘s position is: he is taxed on the total amount of the improvements which lessee is obliged to effect. Secondly at the discretion of SARS the lessor may be granted relief via an allowance in the year that improvements have been completed (page 92).That is, it is not spread over the period of the lease. The effect of the relief granted is that lessor is taxed on the present value of the improvements discounted at 6%pa (page 97).  
by M. White
16 July 2012
tax Practioners 0 B. Taylor Your recent email regarding the need to register as a tax practioner brings to mind the current practice that SARS personnel are allowed to provide the service of completing tax returns. I would assume that these SARS staff members are not registered as tax practioners.The questions are Are they qualified to perform such a service ? If there are errors, is there some form of recourse to SARS? Why should they be allowed to do it under uncontrolled circumstances when we are rigidly controlled and where both SARS and our clients have recourse to us for errors and/or poor work. It is my contention that ther this practice should cease and only registered tax practioners or their staff can complete tax returns or some element of perhaps limited pro bono work should be undertaken by the profession. Further I believe that SARS in the their advertising diminishes the skill required to properly complete a tax return and in a way create extra work for themselves due to poorly completed returns
by B. Taylor
13 July 2012
Tax treatment of dividends received by companies 0 F. Joubert I want to set up a company as an investment holdings vehicle to buy and sell shares. It would have a mix of trading and investing (long and short term positions), and I envision receiving dividends.What would the following tax implications be compared to investing in my personal capacity:1. Capital gains tax2. Dividends tax and treatment of dividends if paid out directly to me or if the are kept in company and reinvested immediately3. Would I be paying higher or lower tax (income tax) over the long run by using a company?4. What would I be able to write off as expenses on the company (Trading platform fee, telephone, data, educational material?)?
by F. Joubert
10 July 2012
De Beers Vat case 0 M. White Normal 0 false false false EN-ZA X-NONE X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin-top:0cm; mso-para-margin-right:0cm; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0cm; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} The majority of the court held at paragraph 52 that  DBCM "…is not a dealer in shares, the holding of shares …does not fall within the definition of enterprise...It must be found that DBCM’s enterprise for the purposes of the Act ,consisted of mining ,marketing and selling diamonds”. Hence as the vat claimed was not incurred for its mining…enterprise(making of taxable supplies), it was not deductible for Vat purposes. However,even if DBCM was a  dealer in shares ,such activities would constitute exempt supplies(section 2(1)(d) read with s 12(a)of Vat Act) which are excluded from the definition of enterprise( see paragraph   20 of decision).Hence the vat claimed should be disallowed in any case. My question is why  would  the court  make this distinction if the same result is achieved either way.
by M. White
10 July 2012
INDEPENDENT CONTRACTOR & SEC 23(m) 1 D. van der Walt Normal 0 false false false EN-ZA X-NONE X-NONE MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin-top:0cm; mso-para-margin-right:0cm; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0cm; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} It should be noted too, that should an independent contractor employ three full time unconnected (not related to him) persons throughout the tax year, his income received from his client (employer) will be deemed not to be "remuneration”  for purposes of the 4th schedule. This is important since there can be no argument from the tax authorities that he is not an independent contractor.
by M. White
07 July 2012
help with student tax.. 6 mohammed sabi Normal 0 false false false EN-ZA X-NONE X-NONE MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin-top:0cm; mso-para-margin-right:0cm; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0cm; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} As previously indicated it seems that your category of employment falls within the "standard employment " definition .Hence as Dieter has indicated you need to inform your employer accordingly  in writing .He then should apply the tax deduction tables appropriately resulting in a significantly lower deduction of tax as already indicated. Although you say that you will not be working again this year(tax year ends in Feb 2013), who knows that this will be the case. Maybe you will earn other income or other income will accrue to you or be received by you from other sources. Hence the situation can only assessed after year end to see if you qualify for a refund. Probably not the reply you will be happy with. Good luck for your studies for 2012.  
by M. White
06 July 2012
Deemed Input on Fixed Propety 2 S. Truter Regarding s18 adjustments ,a deemed input tax deduction may be claimed but it would be based on the amount of the consideration paid.As the property would have been acquired for no consideration the input tax deduction would be 14/114 xnil = nil input tax .
by M. White
06 July 2012
Commission Earners: Section 23(m) 4 D. van der Walt Normal 0 false false false EN-ZA X-NONE X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin-top:0cm; mso-para-margin-right:0cm; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0cm; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} Another spin off would be that SARS would possibly benefit from the increased taxable income of the employer.Hence a win -win situation for all the parties concerned.
by M. White
04 July 2012
PROVISIONAL TAX: UNDER ESTIMATION 3 D. van der Walt This matter is a point of discussion at the National Stakeholders meeting to be held with SARS on 17 July 2012.
by D. van der Walt
03 July 2012
Process similiar to manufacturing 7 Justin Meyer The following source may be useful: Practice Note 42 (attached) ITC 1006 COT v Processing Enterprises (Pvt) Ltd 1975 (2) SA 213 (RAD) SIR v Safranmark (Pty) Ltd,1982 (1) SA 113 (A)  (as noted above)   SAIT Technical  
by H. van Dyk
28 June 2012
Tax opinion needed 1 J. van Eck Dear Jaco Due to the comprehensive nature of the information provided, I would suggest obtaining a formal tax opinion from a technical tax consultant. Regards Herman SAIT Technical
by H. van Dyk
28 June 2012
JSE Listed Shares Valuation Date 1 October 2001 2 G. Patron Hi,   Thanks for the reply. The previous public officer submitted the tax computation for the company using the weighted average method of accounting for the base cost of the listed shares. He based his calcs on his auditors recommendation not taking into account the rules of the Act for listed shares.It may seem that the TAB method of calculation should have been rather utilised. Reading the Act (paragraphs 26 and 27) and the "kink test" I am still not 100% sure that one could utilise the TAB as the market share price went down from approximately R 25-00 per share on purchase in 1999 to about R 8 on 1 Oc tober 2001.    
by G. Patron
01 June 2012
Objection and Appeal, ADR process 1 K. Muller I must agree with you. In terms of section 81 of the Income Tax Act, SARS must inform the taxpayer in the event of the disallowance of an objection. Stating that it is SARS practise to disallow an objection is not a reason. In practise I have also experienced that some times an objection will be disallowed with no reasons provided. This is definitely something to take up with SARS.
by D. van der Walt
30 May 2012
BTW registrasie sertifikate vir boere 2 S. Truter Baie dankie. Sal die proses begin
by S. Truter
25 May 2012

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