TAX TIP:  R&D APPROVAL AFTER TAX RETURN SUBMISSION

TAX TIP: R&D APPROVAL AFTER TAX RETURN SUBMISSION

To claim a deduction of 150% under section 11D of the Act, the taxpayer needs approval from the Minister of Science and Technology. Without the approval, the deduction cannot be claimed under section 11D. It often happens in practice, however, that approval is granted only after the taxpayer’s year of assessment for which the deduction is sought and after the tax return for that year has been submitted. In these cases, taxpayers are allowed to request SARS to allow the deduction in the year of assessment to which the expenditure relates under section 11D(20) of the Act. In fact, a...

TAX LAW IN ACTION:  TAX REFUNDS

TAX LAW IN ACTION: TAX REFUNDS

A taxpayer was assessed to a refund (corporate income tax) in respect of its 2017 year of assessment in the amount of roughly R8m and in respect of its 2018 year of assessment in the amount of roughly R6m. The 2018 year of assessment was under audit. The 2017 refund came about in a reduced assessment consequent upon a successful dispute process. SARS refused to release the 2017 refund on the basis of the 2018 audit. The taxpayer formally requested the 2017 refund. This was rejected by SARS on the basis of the ongoing 2018 audit. The approach adopted and...

KNOW YOUR ENEMY

KNOW YOUR ENEMY

Sun Tzu, author of the Art of War, was a Chinese General who is credited with imparting the wisdom of “knowing your enemy”. According to General Tzu, “if you know the enemy and yourself, you need not fear the result of a hundred battles”. In our experience, this rings true thousands of years after the general’s death in the context of battles with SARS also.  Whilst SARS should perhaps not properly be classified as “the enemy” they can, in the case of a tax dispute, be properly classified as “the opponent”. So then, what should you know about SARS as...

Tax Tips – What if SARS makes a decision against you and you cannot object?

Tax Tips – What if SARS makes a decision against you and you cannot object?

SARS is afforded a discretion in the various tax acts which impower them to make decisions. Not all of these decisions are subject to objection and appeal. Examples include: A decision not to issue a reduced assessment in terms of section 93 of the TAA A decision not to issue a tax clearance certificate/pin; A decision not to grant suspension of payment pending objection and appeal; A decision not to grant VDP relief; and A decision to disallow an objection. The list above is not exhaustive and can go on for pages. If you are not happy with the decision...

Tax Law in Action – Employers’ Tax Obligations

Tax Law in Action – Employers’ Tax Obligations

It unfortunately often happens that employers do not comply with their employees’ tax obligations. Typically these employers do not issue IRP5’s, often leaving the employee in a precarious position when he/she needs to file their tax returns. What to do? Simply put, the employee needs to declare his/her salary on the tax return and for most part, it appears SARS is not too worried about that. The problems normally start when the employee wants SARS to take into account employees’ tax withheld by the employer (bear in mind that only disclosing the nett amount paid to the employee would constitute...

SARS AUDIT: HOW FAR BACK CAN THEY GO?

SARS AUDIT: HOW FAR BACK CAN THEY GO?

Imagine SARS is conducting an audit on a company for the most recent year of assessment. The company has a loan payable to a shareholder which originated in the 1980’s. SARS decides to extend the scope of the audit to the shareholder in order to establish whether the amount of money lent to the company in 1980 reflects/represents an after-tax amount, effectively resulting in an audit in respect of the 1981 year of assessment, some 38 years after the 1981 tax year ended. Can SARS extend its audit this far back?   Selection for audit Section 40 of the Tax...

Tax appeals – how long can SARS take?

Tax appeals – how long can SARS take?

SARS is known for taking their time when it comes to processing appeals against assessments, especially if the appeal is not destined for litigation from the outset. Whilst there may be various reasons for these delays, the fact of the matter is that there are prescribed timelines within which certain steps in the appeal process must be completed and SARS must abide by those timelines. In our experience, the SARS call centre will have taxpayers believe that SARS has 90 days from date of submission of the appeal to finalise it. This is simply incorrect. The time periods prescribed in...