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FAQ - 13 March 2014

Wednesday, 12 March 2014   (3 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

1. Diesel rebates

Q: My client has a subsidiary company with a fishing vessel. They rent fishing permits from fishing rights holders. SARS has audited the company in June 2013 and rejected the diesel rebate because the act states that you can only claim a diesel rebate if your fishing permit is issued in the name of the permit holder.

A: "Eligible purchases are only applicable in respect of fishing vessels -

(A) which are owned or chartered by a legal person registered in the Republic in accordance with the laws of the Republic and which has its place of effective management in the Republic, or by a natural person who is ordinarily resident in the Republic;

(B) which are registered or licensed in terms of the Merchant Shipping Act, 1951 (Act No. 57 of 1951);

(C) that are nominated on a valid commercial fishing permit issued by the Department of Agriculture, Forestry and Fisheries in terms of the Marine Living Resources Act. 1998 (Act No. 18 of 1998);

(D) which are used in fishing activities carried on with the aim of making a profit; and

(E) if used in an engine for the propulsion of, or operating of any equipment used on board, of such fishing vessels"

It is my understanding that SARS is correct in their application. You may however consider par (C) and investigate as to what a nomination for such a permit may entail for purposes of the Department of Agriculture, Forestry and Fisheries.


2. Tax return submitted to SARS with an incorrect value

Q: We have had continuous problems with SARS trying to sort a matter out for a client's  tax return for 2011 year of assessment. The client attempted to complete his own return,  when completing the PAYE he made a mistake and put in 1698 in place of 16986. He only became aware of the problem when SARS started calling him about his outstanding account.  He then approached our firm in May 2013 for assistance. We have filed several objections and asked SARS to fix the error to with no avail. 

A: You may request that the assessment be reduced in terms of s93 of the Tax Administration Act as it seems that the error relates to an "undisputed error”. The prescription rules in terms of s 104 does not apply (as you are not objecting to the assessment) and SARS may make a reduced assessment within 3 years after the date of the original or subsequent assessment.

93. Reduced assessments.—

(1) SARS may make a reduced assessment if—

(a) the taxpayer successfully disputed the assessment under Chapter 9;

(b) necessary to give effect to a settlement under section 149;

(c) necessary to give effect to a judgment pursuant to an appeal under Part E of Chapter9 and there is no right of further appeal; or

(d) SARS is satisfied that there is an error in the assessment as a result of an undisputed error by—

(i) SARS; or

(ii) the taxpayer in a return.

(2) SARS may reduce an assessment despite the fact that no objection has been lodged or appeal noted.


3. Donations tax exemption

Q: If an individual made donations during a specific tax year for example to his family trust to the amount of R100 000 and donations to amount of R20 000 to an approved PBO (Sec 18A), is the R20 000 still deductible in his personal capacity to (limited to 10% of taxable income before medical aid) or is he just limited to the R100 000 exemption?

Further, does the R100 000 exemption on donations for individuals (Sec56(2)(b)) include any donations made to a Sec18A Institution 

A: Donations to PBO’s are exempt from donations tax in terms of s 56(1)(h): "by or to any person (including any sphere of government) referred to in section 10 (1) (a), (cA), (cE), (cN), (cO), (d) or (e).

S 18A receipts may be issued to Public Benefit Organisations (ss 10(1)(cN) and  10(1)(cA) institutions).


Donald Cochran says...
Posted Friday, 14 March 2014
To my mind, because donations to approved PBO's are exempt from Donations Tax, they are excluded form the R100 000.
Abdul C. Khan says...
Posted Friday, 14 March 2014
i agree with K Blair in respect of the answer given for Q 3
Kelly Blair says...
Posted Friday, 14 March 2014
Question 3 was not answered, sections of the Act are just quoted. Why can these questions not be answered directly instead of hiding behind just quoting sections of the Act?



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