SARS this week confirmed that soccer T-shirts given to employees free of charge to wear on Fridays are taxable fringe benefits and employees must pay tax on the benefit.

Corporate taxpayers tried to be creative and provided their employees with T-shirts bearing company logos. SARS spokesman, Sibabalwenathi Mfabe, confirmed that the soccer jerseys worn on Fridays were not required to be worn as a condition of employment and could be distinguished from ordinary clothing under the income tax laws, hence no tax exemption. The effect of the R600 fringe benefit can be significant, especially to taxpayers in the 40% marginal tax bracket, having to pay R240 fringe benefit tax in support of Bafana Bafana.

It seems like the only option for the creative taxpayers are to pay the tax liability on behalf of their employees, or they may lose the support from the South African soccer fans.

Laduma!
Stiaan Klue

More often than not, taxpayers (especially large corporate taxpayers) conduct their business and tax affairs based on legal opinions received from their accountants and attorneys and often confirmed by senior counsel. Such opinions may be provided to the South African Revenue Service ("SARS"), or at least their existence is referred to, when information is requested from taxpayers or audits are conducted as justification for a taxpayer conducting itself in a certain manner.

Section 39(1) of the Value-Added Tax Act No. 89 of 1991 ("the VAT Act") provides for interest at a prescribed rate to be imposed on VAT payments which are not timeously made. Such interest is levied automatically by the South African Revenue Service ("SARS") when a VAT return and/or VAT payment is received late, or when SARS issues an additional VAT assessment.

This decision of the High Court in this case is an illustration of how valuable the Promotion of Administrative Justice Act 3 of 2000 (‘PAJA’) is proving to be for taxpayers who are aggrieved at what they conceive to be a lack of due process by the South African Revenue Service in making decisions affecting their tax liability.

Can the issuing of its own shares by a company, in consideration for the acquisition of an asset, constitute “expenditure actually incurred”, thereby paving the way for the company to claim a deduction under s 11(a) or some other provision of the Income Tax Act 58 of 1962, such as s 11(gA), that imposes that same criterion for deductibility?

The National Technical Committee recently made a detailed submission to SARS on 11 May 2010 on the draft VAT interpretation note on discounts and rebates.

National Treasury released the Draft Taxation Laws Amendment Bills, 2010 last week for public comment. SAIT annually comment extensively on the draft legislation and also participate in the Parliamentary hearings.

SAQA held a meeting with professional bodies earlier this month in a first attempt to consult with representatives from the professional body community.

SAIT attended the national stakeholders meeting on 4 May 2010 in Pretoria. The agenda included a discussion around e-filing, VAT, SSMO and the small business amnesty.

SARS released updated issue 3 of the comprehensive guide to CGT.

National Treasury releases for public comment a draft of the 2010 Taxation Laws Amendment Bills which give effect to the 2010 Budget tax proposals. The draft legislation and explanatory memorandum can be found on the National Treasury (www.treasury.gov.za) and (www.sars.gov.za) websites.

Average tax and social security burdens on employment incomes fell slightly in 24 out of 30 OECD countries last year as governments struggled to shore up faltering economies amid the worst recession in decades. But whether this trend will continue this year is uncertain given the widespread pressures on public budgets.

Rapid developments in information and communication technology have had a great influence on the way of doing business, particularly in relation to business and accounting systems. Developments include integrated accounting systems, Enterprise Resource Planning (ERP) systems, automated internal audit measures and E-invoicing. The OECD has released a package of standards, in the form of five guidance notes, that leverage off these development and which are aimed at reducing the costs of tax compliance for businesses.