COVID-19:  HOME OFFICES AND TAX DEDUCTIONS

COVID-19: HOME OFFICES AND TAX DEDUCTIONS

The media is rife with comments regarding the economic impact of the outbreak of the COVID-19 virus (the so-called “Coronavirus”) in South Africa. Many people have been asked, or is required, to work from home in order to curb the spread of the virus. Is there at least some form of tax break associated with working from home? Imagine Mr X. Mr X is a salaried employee who usually works at the offices of his employer, during normal office hours. Due to the outbreak of COVID-19, Mr X’s employer has requested or required Mr X to work from home for...

Financial emigration, tax residency and SA Budget 2020: has the cat been let out of the bag?

Financial emigration, tax residency and SA Budget 2020: has the cat been let out of the bag?

Many seem to be surprised by comments in the 2020 Budget Review documents released on 26 February 2020 to the effect that financial emigration status and tax residency status are not synonymous. There also seems to be confusion about the impact on a person’s tax residency status if, as mentioned in the 2020 Budget, the financial emigration process is phased out. The reason for the surprise and confusion appears to be the belief that financial emigration automatically results in and is directly connected to a change in tax residency status from resident to non-resident.  Nothing could be further from the...

‘TIS THE SEASON FOR SARS AUDIT FINDINGS

‘TIS THE SEASON FOR SARS AUDIT FINDINGS

January marks not only the beginning of the new year but also, in our experience, sees an increase in audit findings issued by SARS. The reason for this, we can only speculate, is that March is the fiscus’ year end, fiscal targets must be reached and targets are more likely to be reached when additional assessments are issued. Given the fact that the Tax Administration Act, No. 28 of 2011 (“the TAA”) requires of SARS to allow a taxpayer 21 business days to respond to a letter of audit findings before an additional assessment can be raised (and therefore targets...

TAX CLEARANCE CERTIFICATES: LAW CHANGES

TAX CLEARANCE CERTIFICATES: LAW CHANGES

The importance of a tax clearance certificate for most businesses cannot be overstated. It often happens though that SARS raises an assessment giving rise to an unexpected tax liability that affects the business’ tax standing. This, in turn, almost always adversely affects the business. Simply paying the extra tax assessed to ensure the business is in good standing again is not always an option, especially if the taxpayer intends disputing the underlying assessment. Where a taxpayer intends disputing the assessment, the taxpayer can request SARS to suspend the payment of the tax liability pending the outcome of the dispute. As...

TRANSFER DUTY EXEMPTION AND CORPORATE TRANSACTIONS: ASSET FOR SHARE AND UNBUNDLING TRANSACTIONS

TRANSFER DUTY EXEMPTION AND CORPORATE TRANSACTIONS: ASSET FOR SHARE AND UNBUNDLING TRANSACTIONS

The Income Tax Act, No. 58 of 1962 (“the ITA”), contains certain provisions colloquially referred to as “the corporate roll over provisions”. In short, these provisions allow certain transactions to take place without triggering immediate adverse income tax (including capital gains tax), VAT, Transfer Duty or Securities Transfer Tax consequences. The taxes that would have had to be paid were it not for these special rules is effectively deferred until a later stage provided all requirements are satisfied. These provisions include section 42 (asset for share transactions), 44 (amalgamation transactions), 45 (inter group transactions), 46 (unbundling transactions) and 47 (liquidation...

TAX LAW IN ACTION – LATE OBJECTIONS AND EXCEPTIONAL CIRCUMSTANCES

TAX LAW IN ACTION – LATE OBJECTIONS AND EXCEPTIONAL CIRCUMSTANCES

An individual taxpayer recently realised that he should have been assessed to a refund in respect of his 2017 year of assessment.  This is associated with the so-called “183/60 day exemption”. Instead of a refund, SARS assessed the taxpayer to a liability.  The trouble was that the assessment against which an objection lied was more than two years old (but not more than three years old). On the facts of the case there appeared to be no exceptional circumstances that could justify the delay in submitting the objection.  Therefore an objection would almost certainly be rejected. After closer scrutiny of...

TAX TIPS – FOREIGN TRUSTS

TAX TIPS – FOREIGN TRUSTS

South African beneficiaries of foreign trusts who receive distributions from those trusts are, in most cases, liable to tax in respect of such distributions. The anti-avoidance measures in section 25B and paragraph 80 of the Eighth Schedule to the Act also specifically provide for distributions out of trust capital to SA beneficiaries to beneficiaries to be taxable in certain instances. Applying these anti-avoidance measures require of taxpayers to deemed the foreign trust a resident of South Africa and then establishing if the trust would have paid tax in SA on the receipts that created the capital from which the distribution...