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Frequently Asked Questions Faced by Tax Practitioners

10 April 2008   (0 Comments)
Posted by: Author: Philip Kotze
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Frequently Asked Questions Faced by Tax Practitioners
 
Accrual system and marriage out of community of property

Question
My client is married out of community of property with the accrual system.He acquired a property, registered in his name, after he got married and now wants to sell the property.My client wants advice with regard to the capital gains tax consequences on the sale of the property.Will he be liable for 100% of the capital gains tax, or can he apportion it between him and his wife; considering the marriage was concluded out of community of property with the accrual system, and the property was acquired after he got married. 

Answer
The Matrimonial Property Act 88 of 1984 makes the accrual system automatically applicable to a marriage out of community of property unless its application is specifically excluded in the antenuptial contract.Under the accrual system, a claim will arise on death or divorce in the hands of one spouse against the other for the difference in growth of the estates of the spouses.For example, if the growth in value of spouse A’s estate during the marriage is R100, and the growth in value of spouse B’s estate is R50, spouse B will have a claim of R25 against spouse A on dissolution of the marriage.

The accrual system does not result in a splitting of capital gains and losses between spouses.capital gain or loss on disposal of an asset by a person married out of community of property must be accounted for by the spouse who owns the asset.A claim under the accrual system only arises on death or divorce of a spouse or under an order of court.It does not affect the tax treatment of the spouses during the subsistence of the marriage or even on its termination.This is a claim for a sum of money, not a pre~ existing entitlement to specific assets or income of the other spouse.The accrual claim is thus contingent on death or divorce and its quantum also depends on the value of the estates of the spouses at the time of those events.It might happen, for example, that gains accumulated earlier in a marriage are later lost or expended.It does not, therefore, have any impact on the incidence of an accrual of an amount of gross income or proceeds on disposal of an asset.

Learnership allowance and transfer of learnership contract

Question
Will the ‘completion of learnership’ allowance be available with respect to a trainee moving to another firm during his third year of the learnership?

Answer
Section 12H(4) of the Income Tax Act No.58 of 1962 prohibits the deduction of the allowance where: 
•an employer which is party to an existing registered learnership agreementis substituted by another employer (and that employer does not form part of the same group of companies as that original employer).Neither the employer nor the substituting employer may claim the allowance in respect of the completion of the learnership and the substituting employer may not claim the allowance in respect of entering into the learnership.
 
E-File returns and signatures

Question
Does an e-File return require a signature from the taxpayer if submitted by a tax practitioner?

Answer
The e-File return does not require a signature.The tax practitioner must, however, obtain a power of attorney from the client to act on behalf and represent the client in the e-Filing process.Alternatively, the tax practitioner can submit printed hard copy returns signed by the client.The tax practitioner should also ensure that a formal letter of engagement, which sets forth the terms and conditions and the nature and scope of services of the engagement, exists between the tax practitioner and the client.Provisional tax returns not issued

Question
My client wants to know whether he is still liable for provisional tax, because the South African Revenue Service (SARS) did not issue him with a provisional tax return for his most recent provisional tax period.
 
Answer
The onus is on the taxpayer, assisted by the tax practitioner, to determine whether the taxpayer is liable for provisional tax and to submit provisional tax returns.In the past, SARS issued the returns automatically, if the taxpayer was registered for provisional tax or ought to be registered for provisional tax. With recent changes, it is now the responsibility of the taxpayer, assisted by the tax practitioner, to request provisional tax returns.his can be done by registering for e-Filing, calling the SARS contact centre or visiting the nearest  SARS branch. 
 
Source: By Philip Kotze (TaxTALK)




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