Welcome to the second edition of TaxTime!

Last week has been a very busy week in the tax arena. In order to cover all these developments, this issue of TaxTime was postponed until today (Monday 29 June 2009).

Filing season for individuals:

On Wednesday, 1 July 2009, filing season commence for individuals. SARS released two guides this week relating to eFiling, namely:

1. Administration of the New Access Rights Functionality on eFiling.
2. New functionality for access rights on eFiling.

For more information, see below under SARS news.

Case law summary by Professor Lynette Olivier

TaxTime would like to thank Juta for making the case law summaries of Professor Lynette Olivier available to our readers. The two cases discussed in last week's TaxTime was reproduced from the May 2009 Juta Tax Law Review newsletter. SAIT members can subscribe to the Juta Tax Law Review newsletter at a nominal fee per annum by contacting the editor, Louis Gaigher, at LGaigher@juta.co.za.

This week we also added our monthly case law summary by Professor Bob Williams.

Yours truly,
Stiaan Klue
Chief Executive

The Minister of Finance, Pravin Gordhan, gave a brief overview of National Treasury’s main functions and programmes to Parliament’s Standing Committee on Finance on Tuesday 23 June 2009. The purposes of the state entities under the Ministry’s auspices were also outlined.

Mr Oupa Magashula, Acting Commissioner of SARS on Tuesday addressed Parliament’s Standing Committee of Finance on SARS’ strategic plan on how SARS would respond to the shortfall in income. He pointed out that there would most likely be a sharp decline in tax revenue collected for the current tax year.

The Standing Committee on Finance this week held public hearings on the draft Taxation Laws Amendment Bills, 2009. Various stakeholders, including SAIT, SAICA, Deloitte, PwC and other law firms addressed the Standing Committee on Finance (SCOF) on the proposed legislation. National Treasury invited the stakeholders to a round-table on 30 June 2009 to discuss the concerns raised. National Treasury and SARS will then brief the SCOF on 8 July 2009 on the outcome of the round-table and the possible changes to the draft legislation.

A small business owner who contacted MoneywebTax.co.za was so distraught by Sars's delay in paying out his VAT refund that he asked if Sars had run out of cash?

Section 32 of the constitution provides for the right to access to information as follows: (1) Everyone has the right of access to: (a) any information held by the state; and (b) any information that is held by another person and that is required for the exercise or protection of any rights.

(2) National legislation must be enacted to give effect to this right and may provide for reasonable measures to alleviate the administrative and financial burden on the state.

The Municipality of Cape Town and A entered into a lease agreement in respect of a site know as the Major's Garden. A successfully claimed, as a deduction for income tax purposes, a lease premium paid as well as the cost of certain improvements to the property.

The High Court put it beyond doubt that SARS is bound by the Promotion of Administrative Justice Act 3 of 2000 ("PAJA"). In this case the court was called upon to adjudicate on the correct tariff classification for television sets and video monitors. The classification made by SARS was set aside as SARS did not comply with the provisions of PAJA inter alia because SARS:

The decision of the Western Cape Tax Court on 11 May 2009 in XYZ Radio (Pty) Ltd v CSARS concerned the disallowance by SARS of a claim by XYZ Radio (Pty) Ltd for a deduction in terms of section 11(gA) of the Income Tax Act for the tax years 1997 – 2001 in respect of expenditure incurred in the acquisition of the trademark of a certain radio station.

The decision of the Federal Court of Australia in Commissioner of Taxation v Star City (Pty) Ltd, handed down on 6 March 2009, is a reminder, if one were needed, that although rental expenditure is usually of a revenue nature, and therefore deductible in terms of the general deduction formula (provided that the other pre-requisites for deductibility are satisfied) this is not a fixed or invariable rule.

The Chief Executive of SAIT, Stiaan Klue, was quoted in the Business Day of 25 June 2009 on his presentation to Parliament’s Standing Committee of Finance.

SAIT, SAICA and SAIPA, together with representatives of the University of Pretoria met with National Treasury on 26 June 2009 to discuss the challenges of the new presumptive tax regime for micro businesses.

The National Technical Committee, chaired by Professor Jackie Arendse, recently made a detailed submission to National Treasury following the public hearings on 24 June.

SAIT recently launched the live broadcasting of seminars. The objective is to make CPD seminars accessible to all our members. In the current economic environment, the main challenge with presenting seminars in remote areas is the time and expense.

SAIT recently published, through Juta, the SAIT legislation compendium. This user-friendly resource is an up-to-date collection of tax legislation and supplementary material specifically selected for tax practitioners, students, accountants and tax attorneys.

The Events department recently launched an advanced registration facility for CPD seminars and events. The objective of the facility is to ensure that members’ registration experience is effortless.

The Institute will again be hosting the National Tax Conference on 8 and 9 September 2009 at Indaba Hotel, Fourways Johannesburg.

The South African Revenue Service (SARS) has since 24 June 2009 issued penalty letters to about 7 000 employers in the country who failed to submit their payroll information to SARS by this year’s deadline of 31 May.

SARS released a new guide for tax practitioners: Administration of the New Access Rights Functionality on eFiling. The manner in which the administrative rights worked has changed significantly.

This week SARS launched a new way of granting user access rights on eFiling. To help tax practitioners to navigate the new process, SARS released a comprehensive guide.

Minister Pravin Gordhan announced in the Government Gazette of 26 June 2009 yet another change in the official interest rate for the purposes of paragraph (a) of the definition of "Official rate of interest" to 8.5% from 1 July 2009.

The 2010 Project Team is happy to report progress on SARS’s preparations for the FIFA Soccer World Cup to be held in South Africa next year. Among the latest developments in the project is the finalisation of the make-up of the project team, decision of the source for its budget requirements, as well as the special measures that SARS has put in place as per FIFA 2010 SWC requirements.

SARS’s strategic plan for 2009/10 outlines the organisation’s priorities and deliverables for the next fiscal year, in response to the challenges and opportunities posed by the ever changing global and national environment.

The five most frequently asked questions; as reported by the SARS call center.

Addressing a conference organised by the French and German governments in Berlin on the fight against tax fraud and evasion, OECD Secretary-General Angel Gurría welcomed progress in implementing international standards of transparency and exchange of information for tax purposes.

The ATO is inviting "decision makers" within small to medium sized enterprise (SME) to join and participate in a new online forum in Australia.

At a meeting in Berlin on 23 June hosted by France and Germany, ministers from 19 countries reviewed progress in the fight against international tax evasion, welcoming recent moves by significant financial centres, including four OECD member countries, towards implementation of the OECD standard on transparency and exchange of information in tax matters.

This OECD report sets out the conclusions of the OECD’s study on tax compliance within the High Net Worth Individuals (HNWI) taxpayer segment.