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Technical FAQs: Febriuary 2013

Thursday, 21 February 2013   (0 Comments)
Posted by: Stiaan Klue
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Q: Section 10(1)(o)(ii), will the remuneration earned during the days while a person is on leave in the Republic not be taxable for purposes of this section of the Act?

A: Only to the extent that the remuneration is attributable to the number of vacation or sick leave days credited to the employee in respect of and during the period of service outside South Africa.

Q: Can a director of a company claim the relief in terms of Section 10(1)(o)(ii) of the Act?

A: A director receives "remuneration” as defined for purposes of the Fourth Schedule to the Income Tax Act, therefore the provisions of s 10(1)(0)(ii) may apply to the director, same as a normal employee.

Q: I am self employed, can I claim travelling expenses by way of the deemed cost method of calculation – s 8 of the Act?

A: The deemed costs may only be claimed if an employer pays an allowance to an employee. A self employed person must claim the expenses in terms of section 11 of the Act (actual expenses).

Q: What triggers Donations Tax?

A: Any gratuitous disposal of property, including any gratuitous waiver or renunciation of a right” – section 55(1) of the Income Tax Act.

Q: Can I claim the input VAT on the excess of my insurance claim, I did not receive a VAT invoice?

A: current general practise is that where the sum insured is stated in the policy as VAT-inclusive, and the excess is calculated as a percentage of the value of the claim, the excess payment would be deemed to include vat.

Q: Can I avoid registering as a VAT vendor if I split my operations into different entities?

A: A person who operates several enterprises, or who operates an enterprise in branches or divisions cannot avoid the liability to register for VAT by considering the turnover of each branch or division individually. In such cases, the turnover of all the enterprises/divisions/branches must be added together to determine the total value of the supplies. Only associations not for gain (including welfare organisations) can apply to be excluded from this rule. Section 23 of the Act relates to the business activities of the "enterprise” and not a company/association/person in its own capacity.

Q: Could you please confirm that a PBO is not allowed to claim the input tax deduction on the purchase of a minibus. (PBO’s do benefit from other input tax deductions, but there is no such benefit on the purchase of a minibus).

A: You are correct, 17(2)(c) of the Value Added Tax Act does not make any distinction between a vendor who is welfare organisation and one that is not. This means that the vendor, be it a welfare organisation or not, will not be able to claim an input tax on a vehicle which falls within the definition of a "motor car” – the Act simply does not allow for this.



Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

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