FAQ – 4 December 2013
04 December 2013
Posted by: Author: SAIT Technical
Author: SAIT Technical
1. Definition of a
Personal Service Provider
Q: A CC is not a PSP if the CC has 3 or more independent
employees besides the member rendering the personal service.
The question that I now have:
these 3 or more independent employees deliver the same service as the member
the CC have the member and 2 employees rendering the service and an
administrative person or secretary as 3rd independent employee?
Most of the opinions I have received said option 2 would
qualify as well as a CC NOT being a PSP.
A: Below please find an
example as per Interpretation Note: No. 35. From this is it is clear the 3 or
more full time employees need not be directly involved in rendering the
specific service, but must be actively involved engaged in the
business of such company or trust of rendering any such service. An
administrative person would therefore qualify provided that all other
requirements have been met.
Example 1 – Classification of
a personal service provider
X is the only member of ABC
Close Corporation (the CC). She providesinformation technology
consulting services. The CC employs two other consultants and an administrative
assistant, all of whom are employed on a fulltime basis for the full year of
assessment and none of whom are connected persons in relation to X.
Because the CC employs three
full-time employees for the full year ofassessment, who are not members
of the CC or are not connected persons inrelation to X, the CC will not
be classified as a personal service provider.
though an administrative person may not be directly involved in the income
generating service provided by a company or trust, that person is still
actively involved in the business of that company or trust.
2. Interest on
Q: If we do
online tax for a provisional taxpayer, the 2013 returns only have to be in by
the end of January 2014. From which date will the taxpayer pay interest?
A: This payment is also
known as "additional” or "topping-up” provisional payment. If such a payment is
made; it must be paid not later than the ‘effective’ date.
- Where the year of assessment ends on 28/29 February the effective
date is seven months after the financial year end, which is 30 September.
- For an approved financial year end which ends on a date other
than 28/29 February, the effective date will be six months after the
financial year end e.g. financial year end is 30 April 2013, the effective date
will therefore be 31 October 2014.
- The payment in the third period is a voluntary payment
which any provisional taxpayer can make. However taxpayers (other than
companies) with a taxable income more than R50 000 or companies with a taxable
income of R20 000 or more, may make a third voluntary payment to avoid interest
in terms of section 89quat(2) being levied on any underpayment of tax on
- The purpose of this payment is therefore to enable taxpayers to
pay the difference between employees’ tax and provisional tax already paid for
the year and the total tax liability for the year of assessment.
3. Definition of a financial
instrument & Small business asset exclusion
Q: This question relates to the valuation of assets for a company
which owns shares and receives dividends which is its main business. Can I
claim the R1.8 million small business exemption as if it’s a financial
instrument? SARS declined the claim. Are shares financial instruments for tax
purposes - for Accounting IAS, shares are a financial instruments. SARS seem to
say that a financial instrument is an interest bearing instrument and not
A: A ‘financial instrument’
is defined in s 1 of the Income Tax Act and includes inter alia loans,
options, forward exchange contracts, shares, participatory interests in
collective investment schemes, index linked investments and bank deposits.
57(1) contains two definitions that apply for the purposes of par 57.
an asset which constitutes immovable property, to the extent that it is used
for business purposes; or
an asset (other than immovable property) used or held wholly and exclusively
for business purposes,
a financial instrument; and
an asset held in the course of carrying on a business mainly to derive any
income in the form of an annuity, rental income, a foreign exchange gain or
royalty or any income of a similar nature.’
exemption will not be available to your client as shares are regarded financial
instruments and are therefore not "active business assets”.
4. Interpretation Note
31 (Issue 3): Documentary proof required for the zero-rating of goods or
Q:Has the SARS VAT 262 Form been withdrawn and if so what document
must be used to zero-rate repair services?
temporarily imported into SA should fall under 11(2)(l)(ii)(aa) ("in
connection with movable property (excluding debt securities, equity securities
or participatory securities) situated inside the Republic at the time the
services are rendered, except movable property which—(aa) is exported to
the said person subsequent to the supply of such services...").
Interpretation Note 31 (Issue 3) requires the normal information as well as
proof of the export and it would seem that that the proof of export should not
be proven on any specific form.