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FAQ - 12 August 2015

12 August 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

1. Is a school principal a ‘holder of a public office’ as defined in the Income Tax Act?

Q: My client who is a school principal was informed that his income from his school (not the department) can be structured as a holder of a public office to qualify for deductions.

I do not think that this is true. Am I correct?

A: In terms of section 8(1)(e)(iii) (and for the purposes of paragraph (d)) the holder of a public office includes … a person occupying the office of president, chairman or chief executive officer of any non-profitmaking organization which is organized on a national or regional basis to represent persons with common interests and the funds of which are derived wholly or mainly from subscriptions of members or donations from the general public.

The allowance must then be used to "to enable him (her) to defray expenditure incurred by him (her) in connection with such office”. 

We agree with you that even if the school is a "non-profitmaking organization which is organized on a national or regional basis” it doesn’t "represent persons with common interests and the funds” thereof are not "derived wholly or mainly from subscriptions of members or donations from the general public.” 

The general meaning of "public office” (Oxford dictionary) is "a position of authority or service involving responsibility to the public, especially within the government”. 

The service offered by SAIT is limited to guidance and we can’t give an opinion.  You may want to provide your client with an opinion or obtain one from SARS.  

2. What are some of the tax issues involved when somebody is sequestrated? 

Q: If a client’s personal estate was sequestrated during April 2015:

Will he still be liable to complete his 2015 personal tax return on his old tax reference number?

If upon assessment, the 2015 return results in a liability due, will it be payable by the client, or would it have been included in the sequestration?

Going forward, will the client be required to obtain a new tax reference number and submit returns and payments due on the new number? 

A: The client will still have to submit a return of income in respect of the year of assessment ending on the last day of February 2015.  The client’s status as a taxpayer will only change when the sequestration order becomes final and a new tax registration number will then have to be obtained.  A return of income, from 1 March 2015 until that date, will have to be submitted as well – will probably be done by the trustee.  The tax due in respect of both these assessments are claims against the insolvent estate and will handled by the trustee. 

3. Do all non-profit organisations have to get an income tax number? 

Q: Can you please advise if all non-profit organisations have to get a tax number?

A: We accept that the "non-profit organisation” is not part of a group of organisations sharing a common purpose and carrying on a public benefit activity under the direction and supervision of a co-ordinating body, i.e. it doesn’t want to apply for group registration. 

We also accepted that the request relates to normal tax – not value-added tax. 

Irrespective of whether or not the "non-profit organisation” wants to apply to be approved as a public benefit organisation it will have to register with SARS if it is a:

company, trust or other juristic person, which is a resident;

company, trust or other juristic person, which is not a resident-

which carried on a trade through a permanent establishment in the Republic;

which derived income from a source in the Republic; or

which derived any capital gain from a source in the Republic;

Disclaimer: Nothing in these queries and answers should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answers, SAIT do not accept any responsibility for consequences of decisions taken based on these queries and answers. It remains your own responsibility to consult the relevant primary resources when taking a decision.  

WHY REGISTER WITH SAIT?

Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

MINIMUM REQUIREMENTS TO REGISTER

The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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