The Commissioner of Taxation in Australia, in his key-note address at the Atax Conference in Sydney this month, reiterated that taxpayers should pay their fair share of tax. In South Africa, our Commissioners in the past made similar calls on taxpayers.

Although it is expected that revenue authorities engage on this issue, the question is, what is really meant by this statement? In different political and economic jurisdictions, the meaning may differ substantially. On the one hand it may be a call to be compliant and pay no more than the law requires, and on the other hand it may be a socialistic call to pay an amount of tax that is affordable to the taxpayer, provided it is no less than what the law requires.

Either way, directors of companies may find themselves in a difficult position. Directors’ primary duty is to seek to maximise the wealth of shareholders. In seeking this goal, they must ensure they find and exploit manageable risks and opportunities. This task is made more difficult each year with increased regulation.

The fact that one of the primary duties of a revenue authority is to collect all revenue which is due, the statement to pay a “fair share of tax” is in essence a potential call to pay more tax than the law provides – thus taking it too far.

Yours truly,
Stiaan Klue

Binding Private Ruling 012 concerns a South African resident company (“the taxpayer”) which carried on business as an auctioneer and agent for the sale of livestock.

The event that triggers a potential capital gains tax liability is the disposal or deemed disposal of an asset. In terms of para 11(1) of the Eighth Schedule a disposal includes any “variation … of an asset”. A right under a contract falls within the definition of an “asset”. The question therefore arises as to whether any and all amendments to a contract which result in a variation of the parties’ rights will constitute a “disposal” for capital gains tax purposes.

Recipients of company cars may see an increase in their take-home monthly pay, consultancy Ernst & Young said on Tuesday. In a statement Vedika Andhee, director for tax, said the provision of a company car had a fringe benefit tax attached to it. "It was announced earlier this year that the SA Revenue Service (Sars) will be reconsidering the value of the fringe benefit."

This ruling deals with the question as to whether an agreement in terms of which a shareholder, who is not a “resident” as defined in section 1 of the Act, agrees to have shares held in a company, which is a “resident” as defined in section 1 of the Act, bought back by such company for no consideration will result in donations tax being levied, in relation to the market value of those shares being cancelled, in the hands of that shareholder.

Practitioners will now be able to email and fax queries to new addresses based upon the region in which their taxpayer is registered. These email addresses will be manned by dedicated staff in each region, and an immediate acknowledgement of receipt, together with a tracking number will be sent back to the practitioner.