Transfer of assets between spouses: What are the tax implications?
Section 9HB of the Income Tax Act provides for a roll-over of a capital gain or loss when an asset is transferred between spouses during their lifetimes. The roll-over is mandatory, and spouses do not have the option to elect out of it. The policy rationale for the roll-over is that the transferor spouse must benefit […]
Balancing your business’s losses and taxes
In line with the 2020 Budget Announcement, Government proposes to broaden the corporate income tax base by restricting the offset of the balance of assessed losses carried forward to 80% of taxable income. The proposal extends to the balance of assessed losses at the time of implementation, i.e. it is not only the accumulation of losses starting […]
Tax costs of barter transactions
Barter transactions are commonplace in today’s commercial environment. Parties exchange goods or services without a cash transaction underpinning it. The question is, “What happens when I sell the asset in future? Do I have a tax cost for it?” Paragraph 20(1)(a) of the Eighth Schedule to the Income Tax Act refers to ‘the expenditure actually incurred in respect […]
ETI schemes: SARS rules
In a Binding Private Ruling issued on 6 July 2021, SARS has made strict ruling on an Employment Tax Incentive Act (ETI) scheme that has been doing the rounds. It is not often that negative rulings get published and it is therefore a unique situation that should serve as a warning to those participating in […]
Know when your debt prescribes
As a general rule, prescription occurs when a debtor’s liability to pay a specific debt is extinguished as a result of the passing of a prescribed time period. As soon as a debt prescribes, a debtor is no longer under any obligation to pay it. It is still legal for the creditor to demand payment or even sue for a prescribed debt. The debtor […]
What constitutes a dividend?
Although there are several exclusions to the general rule, South Africa applies a withholding tax on dividends declared by companies at a rate of 20%. It is essential to appreciate that such a withholding obligation for companies do not arise only on “ordinary” dividends but that the concept of what constitutes a dividend, goes much wider. The Income Tax […]
How and when deposits are taxed
The South African Revenue Service recently published a new Interpretation Note relating to the taxation of deposits. In the ordinary course of business, taxpayers may receive money in advance in the form of deposits related to goods or services to be delivered or rendered at a future date. Having regard to the definition of “gross […]
Sweet tax breaks for diabetics
SARS provides individuals with two types of medical rebates. The first rebate is known as the section 6A rebate which is calculated in terms of your contribution to a medical aid scheme. The second rebate is the section 6B rebate which provides higher rebates to individuals with a qualifying disability. SARS accepts diabetes as a […]
It’s hunting season! Are you ready?
As the traditional winter hunting season approaches and South African borders are (somewhat) more open after the stricter COVID-19 lockdown, it is important revisit the Value-Added Tax (VAT) impact of the various goods and services generally supplied to foreign hunters. The general rule is that the supply of goods or services in the Republic by a vendor to a […]
Tax oddities and VAT frustrations
The Tax Administration Act provides for the audit and verification of taxpayers’ tax returns for all taxes administered by the Commissioner for the South African Revenue Service (SARS). In many instances, such requests for information are general, boiler-plate letters received by taxpayers, not indicating specifically what additional information SARS requires in the circumstances and which supporting […]