FAQ 17 October 2013
17 October 2013
Posted by: Author: SAIT Technical
Author: SAIT Technical
1. SARS decline the request to
transfer credit from income tax to SDL
Q: SARS activated the SDL of one of my clients a year after
the business became liable and an assessment was raised. The company have a
credit on income tax, I requested that the outstanding amount must be transferred
from income tax to SDL. The company are still using the same bank account since
Can this transfer be made?
A: Allocation of payments
S 166 of the
Tax Administration Act deals with allocation of payments and states the
Allocation of payments.—(1) Despite anything to the contrary contained in a tax
Act, SARS may allocate any payment made in terms of a tax Act against the
oldest amount of tax outstanding at the time of the payment, other than
(a) for which
payment has been suspended under this Act; or
(b) that are
payable in terms of an instalment payment agreement under section 167.
(2) SARS may
apply the first-in-first-out principle described in subsection (1) in respect
of a specific tax type or a group of tax types in the manner that may be
prescribed by the Commissioner by public notice".
important to note that this section deals with the allocation of payments, not
necessarily the application or refund of excess payments (which appear to be
the case in your query).
which deals with this states: "If a taxpayer has an outstanding tax debt,
an amount that is refundable under section 190, including interest thereon
under section 188 (3) (a), must be treated as a payment by the taxpayer that is
recorded in the taxpayer’s account under section 165, to the extent of the
amount outstanding, and any remaining amount must be set off against any
outstanding debt under the Customs and Excise Act." (emphasis added)
SDL as tax and tax debt
S 1 of the
Tax Administration Act – definition "tax”:
purposes of administration under this Act, includes a tax, duty, levy, royalty,
fee, contribution, penalty, interest and any other moneys imposed under a tax
The term 'tax
Act' is defined as Acts administered by the Commissioner in terms of the SARS
Act - this includes the Income Tax Act and the Skills Development Levy Act.
allows (but does not require) SARS to allocate certain payments received. There
is however no indication that an income tax credit can be equated to a payment.
It is therefore submitted that this section would not provide authority for the
view that SARS must apply your income tax credit against the SDL debt.
however states that any amount refundable must be treated as a payment by the
taxpayer if the taxpayer has outstanding tax debt. If your client therefore had
outstanding SDL debt, this section provides authority to require SARS to
utilise the income tax credit as payment of the SDL debt (which is a tax debt
as discussed above). You must however ensure that the income tax amount is
refundable (as opposed to being an assessed loss).
2. Unable to claim input VAT since instalment
sale agreement does not contain client’s VAT number
Q: I have a problem with the finance houses not showing the
client's VAT number on the instalment sale agreement. When I approached them about it they said it
was on the invoice of the dealer but the invoice is not made out to the client
but to the finance house. The finance
house in turn issues the instalment sale agreement which must have the client’s
VAT number on to enable us to claim the VAT input. If the VAT number is not on
the instalment sale agreement SARS disallows the VAT input which results into
penalties and interest for the client.
Is there any way that the finance houses can be made aware of this so we
don't have endless trouble with them having to correct the instalment sale
agreements all the time?
A: The vendor should ensure that their VAT number is stated
on the agreement when the agreement is concluded. The onus that an amount of
VAT is claimable is with the vendor and not SARS or the relevant financial
You may refer the bank to the requirements of
s 20(4)(b) and (c) of the Value Added Tax Act. The bank may also be at risk –
the bank makes a supply but does not issue an invoice as required in terms of s
3. How do I verify my practitioner details?
Q: I phoned SARS to verify my practitioner details
and they referred me back to SAIT as the only avenue is through tax
practitioner e-filing profiles. I do not have one; all my clients have their
own profiles, including myself. How can I update my information with SARS?
A: 240. Registration of tax practitioners.—(1)
Every natural person who—
(a) provides advice to another person with
respect to the application of a tax Act; or
(b) completes or assists in completing a
document to be submitted to SARS by another person in terms of a tax Act, must
register with SARS as a tax practitioner, in such form as the Commissioner may
determine, within 30 days after the date on which that person for the first
time provides advice or completes or assists in completing any such document.
A person who must register as a tax
practitioner must do so by means of following the processes and procedures:
You should now be registered as a
practitioner, but if you are not as yet, you need to:
Log onto our eFiling website at
www.sarsefiling.co.za and register as an eFiler. Once registered as an eFiler
you can register as a tax practitioner online. (You do not need to send any
returns on eFiling even if you have registered as an eFiler, and you can
therefore register as an eFiler simply for purposes of registering as a tax
You can also follow the link below: http://www.sars.gov.za/ClientSegments/Tax-Practitioners/Pages/Register-as-a-tax-practitioner.aspx
You have to register as a tax practitioner in
such a form and manner as the Commissioner may determine.
4.SBC status of a CC of which an individual member is a beneficiary of a trust
Q: Three individual Family members own a Close Corporation
business, but they have a trust of which the mother is a trustee and two sons
are beneficiaries. The one son wants to start another business and remove
himself from current business but he is not sure if the CC is going to be
classified as a SBC if he is still a beneficiary of the trust.
Does a CC get
disqualified as a Small Business Corporation if the individual member is a
beneficiary of a trust? The trust is a shareholder in a company which owns a
property (all other SBC conditions are met).
A: S 12E(4)(a)(ii)
(ii) none of
the shareholders or members at any time during the year of assessment of the
company, close corporation or co-operative holds any shares or has any interest
in the equity of any other company as defined in section 1, other than—
A share or
interest held in another company or close corporation as trustee or as nominee
will generally not be regarded as the holding of any shares or interest in the
equity of any other company for purposes of this section as such shares are
held in a fiduciary capacity. If the person is a beneficiary in a trust which
holds shares a number of factors may have to be considered:
nature of the person's interest in the trust as beneficiary. If the person has
a vested right to shares, it it submitted that this may well constitute an
interest in equity shares. If the person however has a contingent right to
shares held by a discretionary trust which may or may not vest in him, it is
unlikely that this spes would constitute an interest in equity of a company.
specific assets to which a person has or does not have a vested right should be
considered. In particular, a distinction must be made between a right to trust
capital and income from the assets.
of the provision must also be considered in interpreting the specific
requirement - this prohibition was included in the legislation to prevent a
person from splitting income from a business between a number of entities which
are owned by that person in order for each entity to fall below the gross
income threshold. The fact that a person who has a spes rather than a vested
right to a share held by a trust would be unlikely to move income to an entity
which he may or may not own would support the above view.