07 June 2012
Posted by: SAIT Technical
PRE INCORPORATION EXPENSES
I recently formed a company and registered as a VAT vendor. Prior to
incorporation I personally incurred certain expenses on behalf of the
enterprise in my personal capacity. May I claim input VAT on those expenses?
Where a company
reimburses a person for the costs and purchases incurred before it was formed,
the company is deemed to be the recipient of the goods or services and to have
paid any VAT component. Accordingly the company can deduct that VAT as input
tax in the tax period during which the reimbursement is made. This will only be
allowed if the person was reimbursed by the company for the whole amount paid; and acquired the goods or
services for the purpose of an enterprise to be carried on by the company and
has not used the goods or services for any other purpose.
I have a retail
business and it recently became a requirement for me to register as a VAT
vendor. May I claim input VAT on assets and other goods held by my prior to
date of registration?
You may claim
input on all assets and goods held by you on the date that you became liable to
register as a VAT vendor. The input VAT is calculated as the lesser of the fair
market value or cost.
CGT/DT: DISPOSAL OF A RESIDENCE FROM A COMPANY OR
I have a second residential property which is held in a trust. The
property is rented out to a person whom in no way is connected to me. If the
trust disposes of the property, and it is transferred to my personal capacity,
will I qualify for the relief offered in terms of par 51A of the Eight Schedule
to the Income Tax Act?
A requirement is that the natural person who uses the residence mainly
for domestic purposes has to be a "connected person” in relation to the company
or trust at the time of disposal by the company or trust of the residence.
Therefore, in the event that the tenant is not a "connected person”, the
relief will not apply.
CGT/DT: DISPOSAL OF A RESIDENCE FROM A COMPANY OR
I have a holiday
home which is registered in a company. My family and I use it on a regular
basis as holiday accommodation. If the company disposes of the property, and it is transferred to my
personal capacity, will I qualify for the relief offered in terms of par 51A of
the Eight Schedule to the Income Tax Act?
Prior to the Taxation Laws Amendment Bill of 2011, the company would
not have qualified for the relief. A requirement of par 51A of the Eight
Schedule to the Income Tax Act was that the connected person who used the
property for residential purposes had ordinarily resided in that residence. The
wording; "...ordinarily resided in that residence during that
period..” has been removed from par 51A which means that a holiday home may well
qualify for the relief provided that the other requirements of par 51A have
DIVIDENDS TAX: FOREIGN DIVIDENDS
I receive dividends from a foreign company who has no business
interests, directly or indirectly in South Africa. Will these dividends be
considered as dividends for dividends tax purposes, and will I pay 15% tax on
Where a foreign dividend is received or accrued on or after 1 April
2012, it is specifically included in a person’s gross income under par (k) of
the definition of gross income. Foreign dividends (unless listed on the JSE) do
not qualify for "dividends tax”, and the taxable dividend (after
exemptions/exclusions/rebates) will be subject to tax at the normal statutory
rates for individuals.
INCOME TAX: INDEPENDENT CONTRACTOR
I am regarded as an independent contractor who receives ‘remuneration’
(common law test) for purposes of the Fourth Schedule to the Income Tax Act.
Will the fact that I receive ‘remuneration’ mean that the provisions of section
23(m) of the Income Tax will apply, and that I would be unable to claim certain
expenses in terms of section 11 of the Act?
Even though you are in receipt of ‘remuneration’, section 23(m) will
not apply as the provisions of section 23(m) will only limit deductions in the
event that the ‘remuneration’ is derived from employment, or the holding of an
INCOME TAX: DOMESTIC TAX LAW V DOUBLE TAX AGREEMENT
In the event that the Income Tax Act is in conflict with a Double Tax
Agreement, which law will apply?
A double-taxation agreement, once approved and adopted, has the force
and law and will prevail over the Income Tax Act.
SKILLS DEVELOPMENT LEVY: DIRECTOR DEEMED REMUNERATION
I am a director of a company and am of the opinion that my remuneration
is not subject to SDL as the "deemed remuneration” in terms of Paragraph 11C of
the Fourth Schedule to the Income Tax Act is specifically exempt from SDL in
terms of section 3(5)(c) of the Skills Development levies Act. Is this correct?
No, the exemption in terms of section 3(5)(c) of the Skills
Development levies Act is for purpose of ensuring that the levy is charged on
the actual amount of "remuneration” received by the director/member rather than
the "deemed remuneration” in terms of Paragraph 11C of the Fourth Schedule to
the Income Tax Act.