Government collected more tax revenue than expected for the last fiscal year, but it was tighter controls by the taxman on individuals that contributed to the increase.

Minister of Finance, Pravin Gordhan, announced at the start of the Easter weekend that some R8bn more had been collected in the 2009 tax year than reflected in the adjusted February revenue target of R590.4bn. This was despite periods of economic contraction in the year. He also announced that from February 2009 to February this year there was a budget deficit of R69bn.

Oupa Magashula, Commissioner of the South African Revenue Service (SARS), stated that in July last year measures were introduced to increase levels of collection, including an increase in administrative fines which helped raise compliancy among taxpayers.

The question is whether the administrative penalties helped raising compliance or whether it is just another way to increase the burden on registered taxpayers.

Yours truly,
Stiaan Klue

The Democratic Alliance has welcomed the lifestyle audits carried out by the SA Revenue Service (Sars) on individuals suspected of tax evasion. In a written reply to a parliamentary question by the DA's Dion George, Finance Minister Pravin Gordhan said Sars had conducted 4 787 lifestyle audits since 2007 on individuals suspected of tax evasion or tax fraud.

In a desperate attempt to prevent jobless growth, a problem now also afflicting America, South Africa will release a white paper next month, which will look at ways to deal with this burden. At a press briefing on Thursday, Finance Minister Pravin Gordhan revealed that growth alone is not good enough for SA, "we want growth that will be more labour absorbing like bringing the young into economy".

Earnings of South Africa's banking sector could be dented if a tax under investigation by the International Monetary Fund (IMF) is implemented. The tax is the brainchild of the G20, a committee of finance ministers and central bank governors, and is a means of recouping some of the capital pumped into the banking sector during the world financial crisis.

The issue before the Supreme Court of Appeal was whether mineral-bearing ore stockpiles constitute trading stock as described in section 1 read with section 22 of the Income Tax Act 58 of 1962. The appellant, the Commissioner of the South African Revenue Services contended that ore is not trading stock.

The Chief Executive, Stiaan Klue, represented SAIT at the Australian School of Taxation's Tax Administration Conference last week. He delivered a paper with the Pro Vice Chancellor of Curtain University, Professor Duncan Bentley. The title of the research paper is: Bridging the revenue/tax practitioner gap: lessons from best practice and South Africa.

The Chief Executive, Stiaan Klue, this week visits the sister Institute in Australia. The purpose of the secondment is to interact with key management of the TIA to obtain best practice strategies for implementation in South Africa to the benefit of SAIT members.

SARS issued an updated ABC guie on Capital Gains Tax.

A newsletter was issued by SARS to clarify the functionality of the two e@syfile products that are available to Tax Practitioners.

SRelaxed validations were included in the updated Business Requirements Specifications: PAYE Reconciliation 2010 document published on the SARS website in December 2009 and February 2010.

SARS issued a guidance notice to practitioners on the new VAT registration process.

Any gain or loss made by an employee as a result of the vesting of any equity instrument during any year of assessment must be included in or deducted from the income of the employee. Section 8C prescribes the requirements, circumstances, exclusions, valuation methodology as well as procedural matters relating to the inclusion or deduction of amounts that relate to the vesting of equity instruments in the hands of employees and holders of the office of director. Excluded from the operations of section 8C are "qualifying equity shares" acquired under a broad-based employee share plan contemplated in section 8B.

This Note sets out the requirements that a vendor must satisfy in order to issue recipient-created tax invoices, credit and debit notes. A vendor that satisfies these requirements does not have to apply for prior approval from the Commissioner to issue recipient-created tax invoices, credit and debit notes, as the binding general ruling contained within this Note will serve as approval from the Commissioner.

The supply of an enterprise or of a part of an enterprise is a taxable supply which should be subject to VAT at the rate of 14%. However, provision is made in section 11(1)(e) for the supply of an enterprise or part of an enterprise which is capable of separate operation to a registered vendor, to be subject to VAT at the rate of zero per cent. The requirements of section 11(1)(e) are discussed in this Note.

This updated Note incorporates the latest amendments made by section 66(1) of the Revenue Laws Amendment Act, No. 60 of 2008, which introduces a definition of a “personal service provider”, and limits the definition of a “labour broker” to natural persons.

As a result of the implementation of the new VAT registration process within SARS as well as the updating of the VAT application forms following recent legislative amendments, the need has arisen for certain clarity or guidance to be provided with regard to the supporting documentation that must accompany a VAT registration application.

The OECD and the Council of Europe have agreed on an update to an international treaty that aims to help governments enforce their tax laws, as part of the worldwide drive to combat cross-border tax evasion.

Over the last year the international tax environment has changed dramatically. The OECD standard on information exchange, developed in large part by Working Party No. 8, has gained worldwide acceptance. More than 80 countries including all major financial centres have committed to the standard and are now in the process of implementing it. More than 150 tax information exchange agreements have been signed and progress is being made in updating tax treaties to reflect the OECD standard. The current financial and economic crisis, the growing public deficits and the political support from G20 have accelerated these developments, as the need to improve tax compliance has become paramount.

SWISS regulators are probing whether investors are buying life insurance to hide undeclared assets from tax authorities as the dispute over banking secrecy widens. "We are checking selectively if there is a need for regulator action," said Alain Bichsel, a spokesman for the Swiss Financial Market Supervisory Authority, known as Finma, in Bern.