FAQ - 14 June 2016
14 June 2016
Posted by: Author: SAIT Technical
Author: SAIT Technical
1. Are administration, consultancy and
asset management fees tax deductible?
receive a monthly pension under Sanlam's Selector Income Option. Each month the
fees listed above are deducted. They are not deducted from my pension but
decrease the value of my capital amount. Are these fees tax deductible?
A: In order for a taxpayer to make a
deduction of these fees (or other expenses) it is necessary that the taxpayer
must be able to meet the burden of proof that a trade was being carried on, and
that the amount of the expense was incurred in the production of the
income. Judge Heher of the Supreme Court of Appeal made the following
obiter comment in the Scribante case:
addition, borrowing money and re-lending it at a higher rate of interest,
thereby making a profit, constitutes the carrying on of a trade...” The
Judge used the Burgess case as authority for this. Based on the facts we
can’t comment on whether or not the taxpayer will be able to prove that a trade
is carried on in this respect. It may well be the passive investment of
funds which would not constitute a trade.
issue is section 23(f). In terms of this no deduction is possible in
respect of the income (or part thereof) that is exempt from normal tax – the
dividend will not be income or of a foreign dividend the deduction will be
denied. The fees expense will therefore have to be apportioned and only
deducted from the "income” portion. Section 23(g) may also present a
problem in this instance.
aware that SARS’s Practice Note: No 37 (13 January 1995) states the following:
case of a pensioner whose financial affairs (pensions, annuities, investment
income, etc.) are administered by a banking institution, board of executors or
similar institution the administration fees, including any fees for the
completion of tax returns, paid to the institution will qualify for deduction.
paid will only be allowed as a deduction to the extent that they do not create
taxpayer receives income from exempt interest, other interest and dividends,
the fees will be allocated on the income basis between the various sources of
2. Under what circumstance are days
extended when appealing?
will the days be extended when objecting to an assessment or SARS outcome?
A: The current practice generally prevailing
is that a senior SARS official may extend the date for lodging an appeal by –
business days, if satisfied that reasonable grounds exist for the delay; or
to 45 business days, if exceptional circumstances exist that justify an
extension beyond 21 business days.
to that practice "each case must be considered according to its own merits in
order to determine whether the reason for requesting an extension of more than
21 business days is exceptional and therefore justifies the requested
believes that, "although not directly relevant to section 104(5), section 218
nevertheless provides an indication of the type of things which, taking into
account the particular facts and circumstances, may constitute exceptional
circumstances for purposes of section 104(5). For example, exceptional
circumstances may include –
natural or human-made disaster;
civil disturbance or disruption in services;
serious illness or accident; and
emotional or mental distress.
existence of one of these factors is not sufficient. The taxpayer would need to
demonstrate that the factor was the reason for the delay.”
3. Must a medical doctor issue a VAT
credit note for an adjustment to the value of a VAT invoice?
medical doctor is a registered VAT vendor and issues VAT invoices for medical
procedures performed. In some cases the value of the procedure needs to be
altered because of a number of reasons, for example an incorrect medical aid
tariff code used or a discount allowed. Can an adjustment be made to the
A: Section 21 of the Value-Added Tax Act
applies "where, in relation to the supply of goods or services
nature of that supply has been fundamentally varied or altered; or
previously agreed consideration for that supply has been altered by agreement
with the recipient, whether due to the offer of a discount or for any other
tax invoice has been provided, and the amount shown as tax charged in that tax
invoice exceeds the actual tax charged in respect of the supply concerned,
section 21(3) requires that the supplier must provide the recipient with a
credit note, containing the particulars set out in section 21(3).
actual tax charged in respect of the supply concerned exceeds the tax shown in
the tax invoice as charged, the supplier must provide the recipient with a
debit note containing the particulars set out in section 21(3).
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.