SARS last week released the draft Tax Administration Bill for public comment. The drafting of the TAB was first announced in the Budget Review 2005 as a project “to incorporate into one piece of legislation certain generic administrative provisions, which are currently duplicated in the different tax Acts. These provisions include, for example, the objection and appeal procedures, search and seizure provisions, provisions relating to secrecy and collection processes.”

Apart from consolidating and harmonising existing provisions, the TAB seeks to provide a foundation for further modernisation of the administration of the tax Acts and to close certain gaps. From a preliminary review of the draft Bill, it is clear that the Bill seeks to provide a single body of law that outlines common procedures, rights and remedies and to achieve a balance between the rights and obligations of both SARS and taxpayers in a transparent relationship. However, certain provisions appear to provide special powers to SARS officials. For example, a SARS official will be able to search and seize documents and assets without obtaining a warrant from a judge. The concern is that taxpayers may perceive such powers as a contravention of a person’s Constitutional right to privacy and in turn cause serious harm to the already low tax morality of South African taxpayers.

Yours truly,
Stiaan Klue
Chief Executive

The Minister of Finance Mr Pravin Gordhan, presented the Medium Term Budget Policy Statement (MTBPS) to Parliament on Tuesday 27 October 2009.

Companies face a daunting task collecting, updating and collating information on their employees to ensure that their employee tax certificates are not rejected at the start of the 2009-2010 tax year employers’ filing season commencing in April next year.

The rates of tax and rebates for individuals, which were foreshadowed in the Budget speech of the Minister of Finance on 11 February 2009, were finally promulgated in the Taxation Laws Amendment Act 17 of 2009 on 30 September 2009.

The most notable absentee on the list of medium-term aims as set out by the finance minister in his otherwise pragmatic budget speech was a commitment to reduce the tax burden that is crippling growth and stifling the creation of jobs.

A separate tax is to be imposed on taxpayers to fund the development of broadcasting and the cash-strapped South African Broadcasting Corporation (SABC), it is proposed in the draft Public Service Broadcasting Bill.

On 1 September 2009 the South African Revenue Service released the final specifications for PAYE 2010, outlining the obligations and requirements for employers in respect of employees’ tax for the current tax year.

On Friday SARS achieved a significant milestone in the ongoing modernisation programme with the release of the draft Customs Bills relating to the customs control over people and goods moving across the borders of the Republic and the imposition, assessment and collection of customs duties.

The drafting of the TAB was announced in the Budget Review 2005 as a project “to incorporate into one piece of legislation certain generic administrative provisions, which are currently duplicated in the different tax Acts. These provisions include, for example, the objection and appeal procedures, search and seizure provisions, provisions relating to secrecy and collection processes.”

Under section 18 of the Income Tax Act, No. 58 of 1962 (the Act) natural persons may deduct certain medical-related expenses for income tax purposes. With a few exceptions, the deduction is limited to a pre-determined cap, which currently requires the expenses to exceed 7,5% of taxable income before it becomes a tax-deductible expense.

This ruling deals with whether a Foreign Limited Partnership will be a “company” and if so, will such company be a “controlled foreign company” as defined in section 9D of the Act.

This ruling deals with the income tax implication for vested beneficiaries entering into securities lending arrangements with the express purpose of facilitating “short sale” transactions.

This ruling deals with a sole trader who wishes to transfer the assets of his two businesses to companies and close corporations in terms of company formation transactions as envisaged in section 42 of the Act and the varying implications and effects ensuing therefrom.

This ruling deals with the tax implications linked to a restructuring process of a company whereby the business operations of that company are transferred into another company but with particular regard to ...

This ruling deals with the deductibility of interest incurred on a loan obtained to acquire the business of a company as a going concern to form part of its current operations through the acquisition of the shares of the company.

SARS released updated VAT guide for entertainment, accommodation and catering last week. The guide concerns the application of the value-added tax (VAT) law regarding supplies of goods or services which fall into the category of “entertainment” and serves as a supplement to the VAT 404 Guide for Vendors which deals with the general operation of VAT.

In his opening remarks to the ITD Global Conference, Angel Gurría, OECD Secretary-General, said that innovation in the financial sector creates particular challenges for tax policy makers and administrators, but also offers unique opportunities.