February 5, 2020

Do you have tax debt?

With the tax filing season for individuals now closed, taxpayers may find themselves with tax debt that is due. This may be due to administrative penalties as a result of the non-submission of tax returns, the submission of a return without payment, only partial payment or debt arising from an audit assessment. The South African Revenue Service (“SARS”) provides assistance to taxpayers in managing their tax debt. As an initial phase, SARS will remind taxpayers of the amount of tax due before the due date. This is done by way of an assessment with the relevant due date indicated thereon […]
August 27, 2019

SARS dispute: What are the reasons?

Generally, disputes with the South African Revenue Service (SARS) are the result of an assessment which has been issued by SARS to a taxpayer. An assessment is the determination of an amount of a tax liability or refund, by way of self-assessment by the taxpayer (such as in the case of VAT) or assessment by SARS (such as in the case of income tax). If taxpayers are not satisfied with an assessment, the Tax Administration Act provides for dispute resolution mechanisms, in terms of which taxpayers can object to the assessment, and subsequently appeal, if objections are not maintained. Although […]
January 17, 2019

ADMIN PENALTIES FOR OUTSTANDING CORPORATE INCOME TAX RETURNS

In general, all registered companies must submit corporate income tax (“CIT”) returns within 12 months of the end of the company’s financial year-end. This is applicable to all companies that are resident in South Africa, that receive source income in South Africa, or that maintain a permanent establishment or a branch in South Africa. On 29 November 2018, the South African Revenue Service (“SARS”) issued a media release confirming that SARS will soon start imposing administrative non-compliance penalties as provided for in Chapter 15 of the Tax Administration Act[1] for outstanding CIT returns. To date, these penalties were only imposed […]
September 18, 2018

BAD DEBTS AND VAT

While there is currently a focus on the income tax considerations of bad and doubtful debts (given that National Treasury has proposed changes to section 11(j) of the Income Tax Act[1] to allow for an allowance of 25% of impairments in respect of doubtful debts), the Value Added Tax (VAT) aspect of bad debts is often overlooked. Section 22 of the Value Added Tax Act[2] determines that a VAT vendor who accounts for VAT on the invoice basis may deduct input tax in respect of debts which have become irrecoverable and written off. To be able to claim the input […]
May 9, 2018

“BOOKING” CAPITAL LOSSES ON SHARES IS NOT THAT EASY

There is a number of techniques that taxpayers use to reduce their capital gains tax (CGT) exposure on long-term share investments. A common practice is to utilise the annual exclusion of R40 000 provided for in paragraph 5 of the Eighth Schedule of the Income Tax Act[1] by selling shares that have been bought at a low base cost, at a higher market value and then immediately reacquiring those shares at the same higher value, thereby ensuring that the investments’ base cost is increased by as much as R40 000 per year. If the gain on those shares is managed and […]
January 25, 2018

OUTSTANDING TAX RETURNS

Individuals who filed personal income tax returns and found that they owe money to SARS are encouraged to make their outstanding payments by 31 January 2018. This is for taxpayers who filed their returns during the 2017 Tax Season. Acting SARS spokesperson, Mr Sicelo Mkosi expressed that taxpayers who fail to oblige with the deadline will face penalties, interests as well as criminal processes. Penalty charges range from R250 to R16 000 per month. Payments must be made through one of these three main channels: eFiling Bank EFT If the individual will not be able to pay the outstanding debt […]
October 19, 2017

THIRD PROVISIONAL TAX PAYMENTS

Provisional taxpayers are required to submit two returns annually: one after six months from the start of the relevant year of assessment, and again one on the last day of the relevant tax year.[1] Since provisional taxpayers are taxpayers who earn income in a form other than salaried income (and from which PAYE is deducted every month), the fiscus relies on the provisional tax regime to ensure a steady cash flow throughout a tax year by requiring provisional taxpayers to file returns twice during the course of the year of assessment. By virtue of returns being filed during the course […]
September 8, 2017

GONE ARE THE DAYS OF TAX-FREE SALARIES ABROAD

Many South African taxpayers earning a salary abroad have for many years been able to benefit from so-called “double non-taxation”. This would be the case where salaries are earned in countries where the employer country would not tax salaries earned in that country, and where a domestic South African income tax exemption would also be available to such South African employees. The UAE for example is renowned therefore that it levies very little, if any, taxes on non-resident employees employed in that jurisdiction. This regime interacts quite well with the South African exemption from income tax provided to South African […]
July 5, 2017

THE VAT CONSEQUENCES OF CHANGE IN INTENDED USE OF GOODS

It happens ever so often that a business would purchase goods, and subsequently apply those goods in a different manner than it had initially intended to at the time that those goods were acquired. For example, a sole proprietor dealing in motor vehicles may decide to take one of those vehicles and apply it towards personal use. So too a property developer may decide to rather use one of its properties, up for sale, as new office premises for itself. It is often said in tax circles that Newton’s law (that every action has a reaction) should be extended: every […]
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