FAQ - 29 June 2016
28 June 2016
Posted by: Author: SAIT Technical
Author: SAIT Technical
1. What estate duty
exemptions apply to offshore assets held prior to becoming a South African tax
Q: Client was born in UK,
raised and worked there until she retired and moved to South Africa. Client has
been a South African resident for years. Client still has UK properties, bank
accounts and investment portfolios based in the UK at the time they moved to
South Africa. Client passed on 1/6/2016. We need clarity on whether there is
any exemption to Estate Duty calculation on the offshore assets held before
client become a RSA tax resident.
A: For purposes of the guidance that follows, we accepted that the treaty
(the estate duty one) between the RSA and UK doesn’t provide differently.
Estate Duty Act doesn’t provide for an exemption with respect to the assets
mentioned. Section 3(2)(c) – (h), however, provides that certain property
is not included in the estate (and effectively not subject to the tax (if the
dutiable amount is positive), but doesn’t apply in this instance. In
other words, these assets are included in the property of the estate. It
then is section 4(e) that provides that the net value of the estate must be
determined by making the following deductions from the total value of all
property included therein in accordance with section 3:
amount included in the total value of all property of the deceased as
representing the value of any right in or to property situate outside the
Republic acquired by the deceased:
(i) before he became ordinarily resident in the Republic for the first time; or
(ii) after he became ordinarily resident in the Republic for the first time, by:
(aa) a donation if at the date of the donation the donor was a person
(other than a company not ordinarily resident in the Republic; or
(bb) inheritance from a person who at the date of his death was not
ordinarily resident in the Republic; or
(iii) out of the profits and proceeds of any such property proved to the satisfaction
of the Commissioner to have been acquired out of such profits or
As it was
not required we didn’t comment on the deduction of the normal tax on the
capital gain implications of these assets.
2. Can I backdate a VAT application to claim the VAT on a property purchased?
Q: A company purchased a
property in August 2015 with the view of it being a rental property. At the
time of the transaction the company was not vat registered, and would like to
now register for VAT to claim the VAT paid on the property purchase. Should we make
the VAT liability date August last year on the VAT application or should the
VAT liability date be the current period that we are in?
A: Based on the information provided the
requirements of section 23(1) (a) or (b) didn’t apply in August 2015. In other
words, section 23(4) (b) doesn’t apply. The company should then have
applied for registration under section 23(3) and SARS then determines the
effective date of registration.
not sure why you want to backdate the registration in order "to claim the VAT
paid on the property purchase”. We accept it is not a scheme for
obtaining undue tax benefits – section 73. The registration of a person
as a vendor is a tax event envisaged by section 18(4), if the goods or services
acquired before the effective date will subsequently be applied for use in the
course of making taxable supplies. The requirement (in that section) is
that "tax has been charged in respect of that supply.” If it was not
acquired from a vendor section 18(4) (c) will apply – second hand
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.