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FAQ - 9 September 2015

09 September 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

1. Removing clients from efiling profile: are you still responsible for non-compliance?

Q: The taxpayer appointed us as the prescribed officer for a certain year.  He then does not comply with the tax laws and doesn’t submit returns for the next few years.  We then remove the taxpayer from our efiling profile. Can we as tax practitioners be held liable under the prescribed officer concept?

A:The concept of a ‘prescribed officer’ is a Companies Act term and the liability of prescribed officers is set out in section 77 of that Act.  It is outside the scope of the service offered by SAIT to comment or provide guidance on that Act.

We assume that you are referring to the appointment as public officer, being an officer referred to in section 246(1), (2) and (3) of the Tax Administration Act, and accept that you were not appointed as representative taxpayer.  A public officer is responsible for all acts, matters, or things that the public officer's company must do under a tax Act, and in case of default, the public officer is subject to penalties for the company's defaults. 

Removing the taxpayer from your efiling profile does not constitute a change in the appointment as public officer.  You will remain public officer until the company appoints a new public officer. You may want to inform SARS that you have resigned as the public officer. 

2. Are schools automatically exempt from income tax?

Q: Do schools (including kindergardens) need to be registered for income tax?  If so, are they automatically exempt from income tax so we can therefore apply to the Tax Exemption Unit for exemption?

Is there any need to register them for income tax in the first place?

A: We are not sure if the school/kindergarden is a public school - we assume so.  Paragraph 7.4.1.1 (of SARS’s Tax Exemption Guide for Public Benefit Organisations in South Africa) explains it very well and we copy that below:

"Public schools, as defined in terms of the SA Schools Act, 1996, fall under the jurisdiction of provincial legislation, are funded by the State and established in terms of the relevant statute law. A public school is a juristic person but is not established, formed or incorporated as a company, trust or association of persons and it is also not brought into existence in terms of a founding document such as a constitution, memorandum of association or trust deed. It is therefore not a PBO and can therefore not be approved as such in terms of section 30 of the Act. However, being established under law, it may qualify for exemption from income tax in terms of section 10(1)(cA)(i) of the Act.” 

The form E1 (Application for exemption from income tax in terms of section 10(1)…) is used for the application and is submitted to the tax exempt unit.  They will register the school for tax purposes.  It is not, for tax purposes, necessary to register as an NPO. 

The tax exempt unit can be contacted at teu@sars.gov.za and you can contact them regarding the information that they require in support of the application.

3. Must a SA company rendering services in lesotho register for VAT there?

Q: Are there certain circumstances in which a SA company delivering services in Lesotho must register for VAT in Lesotho?

My client (SA Company) exports goods to Lesotho. According to me this is a zero rated transaction. The importer will however pay input VAT on the Lesotho side. However the client also delivers a service in Lesotho (construction of the product imported). From a SA VAT perspective that is also zero-rated, in my opinion. However, if I understand it correct if the services are rendered in Lesotho by the SA company, then the SA Company should also register for VAT in Lesotho. According to me if the turnover threshold is reached in Lesotho the SA company may need to register for VAT in Lesotho, what however concerns me is what the implication is on the rest of the taxes.

A: We agree with you that the export of goods, if done in terms of section 11(1) and supported by documentary proof, to a recipient in Lesotho will be at the rate of zero per cent.  It is outside the scope of the service offered by SAIT to comment on the tax laws of other countries, but we agree that there may well be VAT payable on the importation of the goods by the Lesotho resident. You can find detail in the Lesotho VAT Act – available on the Lesotho Revenue Authority’s web site.  http://www.lra.org.ls/ Note there are specific requirements relating to the invoice that the RSA vendor must issue, such as the stamp by the Revenue official. There are some specific arrangements between the RSA and Lesotho with regard to this, but again the Lesotho law will have to be considered in order to answer this.  The VAT threshold may not apply in this instance, but again must be determined from the Lesotho Act.  The RSA threshold limit is not relevant. The VAT registration in Lesotho may not on its own impact on the other taxes.  It would depend on whether or not the RSA has a permanent establishment.  We don’t have enough information here to comment.  You will have to determine that from the treaty – the new one is not in force yet.   

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. 



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