Pravin Gordhan stated in the budget speech that National Treasury will balance its books by having SARS focus more vigilantly on tax law compliance.

In addition to better tax compliance as a means to increase revenue collection, the taxable value of the travel allowance increased from 60% to 80% effective 1 March 2010. There appears to be some uncertainty as to what to do about those extra benefits relating to travel. This includes petrol cards, reimbursive kilometres, maintenance and insurance.

Fixed travel allowances are subject to monthly employees' tax, and must also be disclosed on employees' IRP5 certificates at the end of the tax year. Although the Act did not change that drastically, the portion of the travel allowance which needs to be taken into account, for the purpose of calculating monthly PAYE deductions, did increase from 60 – 80%. In addition, the deeming provision against which one could claim travel expenses on assessment were removed - this means that all individuals who have a travel allowance will be required to keep a logbook in order to prove their business expenses on assessment.

Tax practitioners play an important role in educating their clients on the uncertainties relating to the extra benefits employees receive from employers.

Yours truly,
Stiaan Klue

Binding private ruling BPR 076, issued by SARS on 3 February 2010, deals with the question whether dividends that are received by or which accrue to a trust and which thereafter vest in a trust beneficiary retain their character as dividends in the hands of that beneficiary, thereby qualifying for exemption from tax in the latter’s hands in terms of section 10(1)(k)(i).

A recent High Court judgment, Vacation Exchanges International (Pty) Ltd v C:SARS, has given much needed clarity as to the liability of an employer for employees’ tax when the value of a fringe benefit has been understated by the employer. This article analyses the judgment and its implications for both employers and employees in relation to tax on fringe benefits.

Section 27(1) of the Value-Added Tax Act No. 89 of 1991 ("the VAT Act"), provides that every tax period for VAT purposes ends on the last calendar day of a month. However, section 27(6) allows vendors to end their tax period on any day that falls within 10 days before or after the last calendar day of a month, provided the Commissioner has granted approval in this regard. Vendors were therefore required to obtain written approval from the Commissioner if they wanted to make use of this concession.

It seems unworldly that judges of the second highest court in the land should be called upon to concentrate their collective and formidable intellects on the question whether “wefts” which are attachable by braiding or weaving into a person’s natural hair, or by gluing them to the scalp, are items used for making up a wig or are completed or finished products.

The SAIT Chief Executive, Stiaan Klue, has recently been appointed as a Board member of the Southern African Institute for Business Accountants (SAIBA). His primary duties as Chief Executive remains unchanged, but he will serve SAIT members as a non-executive Board member of SAIBA.

The SAIT National Technical Committee submitted detailed comment on the draft Tax Administration Bill to SARS. The Chief Executive attended a SARS workshop with stakeholders on 11 March 2010 to discuss the comments received.

The SAIT National Technical committee prepared a submission on the 2010 Budget Speech delivered by Minister Pravin Gordhan on 17 February 2010.

The SAIT AGM will be held on 1 April 2010 at Avianto, Muldersdrift, Johannesburg. All members in good standing are allowed to attend.

SARS this week released a PAYE 2010 test (Beta) e@syFile™ Employer software version which employers can use to test their readiness for Tax Season 2010. The test version will allow employers to check whether or not the CSV files generated for the PAYE reconciliation process are in the correct format.

SARS extended the deadline to register for turnover tax for the 2010 tax year to 30 April 2010.

Strengthening our economies for the future in key areas such as jobs, competition and taxation must now replace crisis management, says the OECD’s latest Going for Growth report.

The Bahamas this week signed agreements allowing for exchange of tax information with the seven Nordic economies (Denmark, the Faroe Islands, Finland, Greenland, Iceland, Norway and Sweden).