Tag: Tax
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Turnover tax deregistration
The Sixth Schedule of the Income Tax Act details the workings of the turnover tax system applicable to micro-businesses. Turnover tax is an optional system (with preferential tax rates) and is essentially a simplified tax system that is available for micro-businesses (businesses with a qualifying turnover of R1 million or less). The Sixth Schedule deals…
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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…
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Section 24C future expenditure
The South African Revenue Service (“SARS”) issued a binding private ruling (“BPR 315”) in accordance with sections 78(1) and 87(2) of the Tax Administration Act[1] on 10 January 2019. This ruling determines the application of the definition of “future expenditure” in section 24C(1) of the Income Tax Act[2] to a commodities purchase agreement. The applicant…
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Zero-rating of services to non-residents
South African value-added tax (VAT) vendors are often unsure of the tax consequences of issuing invoices to foreign customers or clients and whether such services should be invoiced at the standard rate of 15% or be zero-rated. As is generally the case with tax (especially VAT), the answer is that it depends on the circumstances.…
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Correction of tax invoices
Since it is illegal to issue more than one tax invoice per taxable supply, and another tax invoice may not be issued to alter any consideration in respect of an original tax invoice issued, the Value-Added Tax Act[1] prescribes very specific circumstances in which vendors may issue credit notes in respect of tax invoices that…
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Tax on retirement lump sums
Determining the tax consequences in respect of any lump sum benefits from retirement funds can be complex and various legislative changes have been incorporated over the last few years, to regulate and align the tax treatment of these benefits. Lump sum benefits are included in “gross income” in terms of paragraph (e) of the definition…
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Valuation of preference shares
In income tax, the question of valuation of shares often causes a great deal of uncertainty, especially where shares are not traded on a recognised exchange. Although the Eighth Schedule to the Income Tax Act[1] in paragraph 31 gives some guidance on the market value of certain assets, the ‘catch-all’ method is the price that…
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Value Added Tax (VAT) Rates Change
Effective Date: 1st April 2018 The Minister of Finance Dr. Moeketsi Majoro in his budget speech delivered in Parliament on 28 February 2018 announced changes in rates of Value Added Tax (VAT) on the supply of goods and services. Legal Notice No 27 has been published in the Government Gazette No 24 of 23 March…
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Medical scheme fees tax credit
Section 6A of the Income Tax Act provides for a medical scheme fees tax credit (“MTC”), or rebate, which reduces the amount of income tax payable by a natural person (hereinafter referred to as the “taxpayer”). The MTC applies to the fees paid by the taxpayer to a registered medical scheme for his or her…
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Borrowing to purchase listed shares – 100% tax ineffective?
Where a person borrows money to purchase shares, the general rule would be that the interest paid on the funds borrowed to fund that acquisition would not be deductible for tax purposes, the reason being that the interest expense is not incurred in the production of “income”. Similarly, interest paid cannot be said to be…
