Category: Income Tax

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 on individuals with outstanding income tax returns.

This announcement follows a media release earlier in November 2018 which stated that SARS is once again embarking on a nationwide awareness campaign to reinforce taxpayers’ obligations to submit outstanding tax returns, specifically targeting companies.

In this regard, the fixed amount penalties in terms of section 211 of the Tax Administration Act range from R250 (where the company is in an assessed loss position) to R16,000 (in instances where the company’s taxable income exceeds R50 million) for each outstanding return. Once the penalty has been imposed, the penalty will increase by the same amount for every month that the non-compliance continues.

In order to determine the amount of the penalty to be imposed, SARS will consider the year of assessment immediately prior to the year of assessment during which the penalty is assessed.

The penalties will furthermore be imposed by way of a penalty assessment. Any unpaid penalties will be recovered by means of the debt recovery steps.

According to the media release, the administrative non-compliance penalties will be imposed for outstanding CIT returns for years of assessment ending during the 2009 and subsequent calendar years. Please note that this will also apply to dormant companies with no receipts or assets.

SARS will, however, issue the relevant company with a final demand which will grant the company 21 business days from the date of the final demand to submit the outstanding returns before the penalties will be imposed.

Companies may request remittance of the penalties imposed from SARS and have the right to lodge an objection via eFiling should the request for remittance be unsuccessful.

The takeaway is that all companies with outstanding CIT returns (whether these companies have assessed losses for those outstanding years or not) should complete and submit these returns as soon as possible in order to avoid the administrative non-compliance penalties being imposed.

[1] No. 28 of 2011

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)

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Verskillende rentekoerse in belasting

Die Inkomstebelastingwet[1] bevat definisies vir verskillende rentekoerse. Hierdie rentekoerse dien as die basis vir renteberekeninge in inkomstebelasting in verskillende omstandighede en kan breedweg in drie hoofareas gekategoriseer word. Kennis van die verskil tussen hierdie onderskeie tipes rentekoerse kan ’n wesenlike impak hê op die bedrag rente wat deur belastingbetalers verskuldig of ontvangbaar is, asook die wyse waarop hulle transaksies struktureer, beïnvloed.

Wat is die verskillende tipes rentekoerse en wanneer is hulle van toepassing? SAID onderskei tans tussen twee “voorgeskrewe tariewe” en ’n sogenaamde “amptelike rentekoers”. Die voorgeskrewe tariewe is administratief van aard en van toepassing op belastingskulde, terwyl die amptelike rentekoers meer substantief van aard is en die basislyn bepaal waarteen die billikheid van rentekoerse op transaksies gemeet word.

  • Eerste voorgeskrewe koers: Hierdie is die rentekoers wat van toepassing is op enige belastingskuld deur belastingbetalers aan SAID betaalbaar, of belastingterugbetalings deur SAID aan belastingbetalers verskuldig op grond van suksesvolle appèlle en sekere vertraagde terugbetalings. Die koers word bepaal deur ’n kennisgewing in die Staatskoerant ingevolge die Wet op Openbare Finansiële Bestuur[2]. Sedert 1 Julie 2018, staan ​​hierdie koers op 10% (die hoogste was 19% in 1999!).
  • Tweede voorgeskrewe koers: Hierdie koers is van toepassing op die oorbetaling van voorlopige belasting en is gekoppel aan die eerste voorgeskrewe koers. Ongelukkig is hierdie koers wat slegs in belastingbetalers se guns is, 4 persentasiepunte onder die eerste voorgeskrewe koers, dus tans 6%.
  • Amptelike rentekoers: Die amptelike koers vir Rand-gedenomineerde skuld is gekoppel aan die terugkoopkoers plus 100 basispunte. Die amptelike koers word aangepas aan die begin van die maand wat volg op die maand waarin die Suid-Afrikaanse Reserwebank die terugkoopkoers verander (tans 7,5% sedert 1 April 2018).

Dit is belangrik om daarop te let dat die voorgeskrewe koers tans nog deur die Wet gereguleer word. Daar word al lank voorgestel dat dit gereguleer word ingevolge die Wet op Belastingadministrasie. Die relevante bepalings is reeds in die Wet op Belastingadministrasie vervat, maar die effektiewe datum moet nog bepaal word. Dit lyk egter nie asof dit, ten minste uit ’n waardeperspektief, enige wesenlike impak sal hê nie.

“Rentekoers” in inkomstebelasting kan meer as een betekenis aanneem, afhangende van die spesifieke omstandighede. Dit is dus van kritieke belang dat belastingbetalers eerstens bewus is van watter wetgewing op enige tydstip van toepassing is en tweedens watter tipe rentekoers in hul spesifieke omstandighede van toepassing is.

[1] No 58 van 1962

[2] No 1 van 1999

Hierdie artikel is ʼn algemene inligtingsblad en moet nie as professionele advies beskou word nie. Geen verantwoordelikheid word aanvaar vir enige foute, verlies of skade wat ondervind word as gevolg  van die gebruik van enige inligting vervat in hierdie artikel nie. Kontak altyd ʼn finansiële raadgewer vir spesifieke en gedetailleerde advies. (E&OE)

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TAX ALLOWANCES AGAINST ASSETS USED FOR PURPOSES OF TRADE

The Income Tax Act[1] allows for various income tax allowances to be claimed in respect of moveable assets used for purposes of a taxpayer’s trade.

Most commonly, section 11(e) provides for a deduction equal to the amount by which the value of any machinery, plant, implements, utensils and articles have diminished by reason of wear and tear during the tax year. Typically, these assets must be owned by the taxpayer, or must be in the process of being acquired. Where an asset was acquired during the year, the allowance provided for in section 11(e) is proportionally reduced according to the period of use during the year.

There are however various other specific asset allowances which may rather regulate whether a wear and tear allowance is available for tax purposes, depending on the nature of the specific asset or which specific industry the taxpayer operates in. Should the relevant requirements for these provisions rather be applicable, the section 11(e) allowance will not apply.

For example, section 12B provides for an accelerated allowance (generally split over three years on a 50/30/20 ratio) for certain plant, equipment and machinery used for farming purposes, the production of renewable energy such as bio-diesel or bio-ethanol products or the generation of electricity from wind, sunlight, etc. Section 12C again provides for a tax allowance in respect of assets used for manufacturing, co-operatives, hotels, ships and aircraft. Section 12E allows for a 100% write off of the cost of plant and machinery brought into use by a “small business corporation” in certain circumstances. Other (maybe lesser known) tax allowances include section 12F (providing for an allowance for qualifying airport and port assets) and section 12I (an additional investment and training allowance in respect of industrial policy projects). There are also various provisions in the Income Tax Act providing specifically for an allowance against which the value of buildings owned by a taxpayer and used for purposes of trade can be written down for tax purposes.

It is important to note that each of these provisions has very specific requirements regarding the type of qualifying assets that could potentially qualify for the allowance. This includes whether or not the specific asset is new and unused and if any improvements to the qualifying assets may also be taken into account. Other important considerations include who the relevant taxpayer is, when the asset was brought into use by that taxpayer for the first time and the costs to be taken into account in calculating the relevant allowance.

The take away is that taxpayers must continuously evaluate their asset registers to confirm that all assets are correctly classified for income tax purposes and that the correct tax allowances are claimed in respect of these assets. The most important consideration of all though is to ensure that available allowances provided for in the Income Tax Act are utilised where appropriate to do so.

[1] No. 58 of 1962

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)

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TAX DEDUCTIONS AGAINST SALARY EARNINGS

Our clients who earn only a salary will know that very few tax deductions are available against salary income for income tax purposes and whereby they may reduce the taxable income derived ultimately from such remunerations. Section 23(m) of the Income Tax Act[1] provides that none of the deductions ordinarily available to taxpayers in terms of section 11 are allowed against salary income, other than for a limited few. We set out these deductions which are available below:

  1. Contributions made by taxpayers to a pension fund, provident fund or retirement annuity fund may be deducted against salary income in accordance with the provisions of section 11F;
  2. To the extent that an individual incurs legal fees, wear and tear-related costs or bad or doubtful debts as part of his/her employment, such expenditure will be deductible.[2] (Although it is possible that a wear and tear-related allowance may be available against a laptop or textbooks acquired as example, it is in our experience practically highly unlikely for legal fees, bad debts and doubtful debts to arise from an employment trade);
  3. Where amounts received, either as a restraint of trade payment or as ordinary remuneration for employment services rendered, are refunded by the employee, those amounts refunded may be legitimately claimed as an income tax deduction;[3] and
  4. Expenses incurred towards rent of, cost of repairs[4] of or expenses in connection with any dwelling, house or domestic premises, those costs may be claimed as deductions, to the extent that it is incurred as part of the individual’s employment and on condition that it does not offend the provisions of section 23(b) which deal with “home office” expenses.

Other than for the above, very few other deductions are available for individual taxpayers earning only a salary. Outside the ambit of section 11, the only other deductions which we typically encounter are medical aid contributions incurred, amounts claimed against travel allowances received or donations made to qualifying public benefit organisations. Of late, investments in section 12J “venture capital companies” may also be claimed as income tax deductions against salary income.

The above limitations only apply to salaried income received from employment though. Where an individual is also engaged in another trade (such as the renting out of an apartment), the above limitations do not apply to that separate trade. In such case, section 23(m) will not make the deductions in section 11 unavailable, although this is only as relates to the separate (rental) trade.

[1] No. 58 of 1962.

[2] Sections 11(a), (c), (i) and (j) respectively.

[3] Sections 11(nA) and (nB) respectively.

[4] In terms of section 11(d).

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)

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WYSIGINGS AAN INKOMSTEBELASTINGOPGAWES VIR MAATSKAPPYE

As deel van die Suid-Afrikaanse Inkomstediens (SAID) se deurlopende pogings om doeltreffendheid en voldoening te bevorder, is verskeie wysigings op 26 Februarie 2018 aan die jaarlikse inkomstebelastingopgawes vir maatskappye (ITR14) aangebring.

Twee nuwe skedules is op die ITR14 bygevoeg. Eerstens moet maatskappye wat die leerskaptoelae kragtens artikel 12H van die Inkomstebelastingwet[1] wil eis, voortaan besonderhede van hul geregistreerde leerskappe in ’n afsonderlike skedule verskaf. Kragtens hierdie skedule word afsonderlike besonderhede benodig vir leerders met ’n ongeskiktheid en leerders sonder ’n ongeskiktheid, vir beide NKR vlak 1 tot 6 en NKR vlak 7 tot 10. Verder moet die getal leerders en die toelaebedrag vir elk van hierdie groepe voltooi word.

Die tweede skedule het betrekking op beheerde buitelandse maatskappye (BBM’s). Kragtens artikel 72A van die Inkomstebelastingwet moet inwonende maatskappye wat ten minste 10 persent van die deelnameregte in enige BBM besit (anders as indirek deur ’n maatskappy wat inwonend is) ’n opgawe by die SAID indien. Die “ou” IT10B Adobe PDF-skedule is vervang deur ’n vereenvoudigde MS Excel IT10B-skedule wat maatskappye in staat stel om alle BBM-inligting te verklaar in een gekonsolideerde skedule wat as ’n ondersteunende dokument op eFiling opgelaai kan word, ongeag die aantal belange wat ’n maatskappy in BBM’s het. Die nuwe IT10B-skedule moet gebruik word en op eFiling gelaai word vir alle ITR14’s wat vanaf 1 Junie 2018 ingedien word.  Belastingbetalers wat reeds BBM-inligting gebaseer op die ou formaat voltooi het, word hierdeur tegemoetgekom.

Addisionele vereistes vir die verskaffing van inligting is ook ingestel vir groepe maatskappye wat gekonsolideerde finansiële state voorberei. In die toekoms moet maatskappye met filiale ’n volledige groepstruktuur saam met die ITR14 indien. Nuwe vrae met betrekking tot land-vir-land verslagdoeningregulasies is ook bygevoeg. Maatskappye wat aan hierdie regulasies onderhewig is sal die belastingjurisdiksie van die verslagdoenende entiteit vir die multinasionale entiteitsgroep asook die naam van die verslagdoenende entiteit, moet spesifiseer. ’n Aantal addisionele lynitems is ook bygevoeg op die belastingberekenings-gedeelte van die ITR14 ten einde ander wetsamendemente in aanmerking te neem.

’n Voorbeeld van die nuwe ITR14 is op die SAID se webtuiste beskikbaar vir verdere oorweging. Belastingvoldoeningsamptenare van maatskappye behoort hierdie nuwe vereistes sorgvuldig te oorweeg om te verseker dat die toepaslike ITR14 korrek voltooi word en dat die vereiste ondersteunende dokumentasie saam met die ITR14 ingedien word. Maatskappye wat reeds nuwe belastingopgawes op eFiling geskep het maar dit nog nie ingedien het nie, sal ook moet oorweeg in watter mate die wysigings hierdie opgawes sal beïnvloed.

[1] No. 58 van 1962

Hierdie artikel is ʼn algemene inligtingsblad en moet nie as professionele advies beskou word nie. Geen verantwoordelikheid word aanvaar vir enige foute, verlies of skade wat ondervind word as gevolg  van die gebruik van enige inligting vervat in hierdie artikel nie. Kontak altyd ʼn finansiële raadgewer vir spesifieke en gedetailleerde advies. (E&OE)

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ADDITIONAL MEDICAL EXPENSES TAX CREDIT

Section 6B of the Income Tax Act[1] provides for an additional medical expenses tax credit (“AMTC”) which is calculated against qualifying “out of pocket” medical expenses. This tax credit reduces the amount of income tax a natural person (hereinafter referred to as the “taxpayer”) is liable to pay. The AMTC is granted in addition to the medical scheme fees tax credit (“MTC”) in respect of fees paid to a registered medical scheme.[2]

The AMTC can be claimed by a taxpayer in respect of medical expenses incurred by that individual towards the medical expenses of that taxpayer as well as any of his or her dependants as defined. A “dependant” includes the spouse or partner of the taxpayer, any dependent children of the taxpayer or spouse, any other members of the taxpayer’s immediate family in respect of whom the taxpayer is liable for family care and support as well as any other person who is recognised as a dependant of the taxpayer under the rules of the relevant medical scheme.

In order for the expenses to qualify for the AMTC, the expenses must not have been recoverable by the taxpayer from any person (e.g. from the taxpayer’s medical scheme or an insurer under a medical gap cover insurance plan). Qualifying medical expenses can furthermore only be claimed in the year of assessment during which they are actually paid.

The types of expenses that would qualify for the AMTC include amounts paid for services rendered and medicines supplied by any duly registered medical practitioner, dentist, optometrist, homeopath, naturopath, osteopath, herbalist, physiotherapist, chiropractor or orthopaedist. Costs incurred for hospitalisation in a registered hospital or nursing home or home nursing by a registered nurse, midwife or nursing assistant will also qualify.

Any “over the counter” medicine will not qualify unless it is prescribed by any duly registered physician (as listed above) and acquired from a registered pharmacist. Medical expenses incurred and paid outside South Africa will qualify if it relates to services and medicines which are substantially similar to those listed above. Furthermore, the Commissioner may also prescribe qualifying expenses in respect of physical impairment or disability that could qualify for tax relief.

The AMTC amount is based on specific formulas and will depend on the taxpayer’s age (i.e. whether or not the taxpayer is 65 and older) and whether the taxpayer, his or her spouse or any of the taxpayer of his or her spouse’s children has a disability as defined.

[1] No. 58 of 1962

[2] Section 6A of the Income Tax Act

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)

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VERHALING VAN INKOMSTEBELASTING

In die gewone loop van sake word bates wat deur belastingbetalers gebruik word om hul besigheid te bedryf, oor ’n aantal jare in die vorm van rekeningkundige depresiasie afwaarts gewaardeer. Die Inkomstebelastingwet[1] maak dan ook voorsiening daarvoor dat bates oor ’n periode van tyd vir belastingdoeleindes afwaarts waardeer kan word, welke slytasieverwante vermindering in waarde jaarliks as ’n slytasiekorting teen belasbare inkomste geëis kan word. Hierdie kortings word toegestaan kragtens ’n aantal bepalings, afhangende van die relevante aard en die doel waarvoor die betrokke bates gebruik word[2].

Die Inkomstebelastingwet maak voorsiening dat hierdie kortings later omgekeer kan word sou hulle verhaal word. Met ander woorde, waar ’n korting wat vir belastingdoeleindes geëis is later verhaal kan word, byvoorbeeld deur die verkoop van die bate, die kortings wat voorheen toegestaan is ten opsigte van die bate wat nou van die hand gesit is, in ’n sekere mate omgekeer kan word.

Neem as voorbeeld die afleweringsvoertuig van Maatskappy A. Dit word vir belastingdoeleindes oor ’n tydperk van vyf jaar af gewaardeer, en kortings geëis ten opsigte van die voertuig (wat die maatskappy aanvanklik R150 000 gekos het) beloop R30 000 per jaar. Aan die einde van die derde verjaardag van die verkryging van die voertuig het Maatskappy A reeds kortings ter waarde van R90 000 teen die koste van die voertuig geëis en is die oorblywende belastingwaarde van die voertuig dus R60 000. Sou die voertuig op daardie stadium verkoop word vir ’n bedrag van R150 000 sal die maatskappy prakties die volle R90 000 wat oor die laaste drie jaar as kortings geëis is, verhaal het. Eweneens sou ’n verkoop teen R70 000 aanleiding gee tot die verhaling van slegs R10 000.

Enige verhaling is ingesluit in die belasbare inkomste van die belastingbetaler en word belas op inkomstebelastingrekening; prakties is dit ’n herroeping van kortings wat voorheen toegestaan is.

Vanuit ’n kapitaalwinsbelasting-perspektief word die basiskoste van ’n bate verminder wanneer kortings jaarliks geëis word op die slytasie van die bate.[3] Op die verkoopstadium, dus, deur Maatskappy A hierbo, sal die afleweringsvoertuig in die voorbeeld slegs ’n basiskoste van R60 000 hê. Sou verkoop teen ’n groter waarde as dit dan nie aanleiding gee tot dubbelbelasting, met ander woorde op beide kapitaalwinsbelasting en inkomstebelastingrekening nie? Skedule Agt van die Inkomstebelastingwet hou hiermee rekening: in die mate dat ’n bedrag ontvang word vir die verkoop van ’n bate en hierdie bedrag reeds ingesluit is in die belasbare inkomste van die belastingbetaler, word die opbrengs vir die doeleindes van kapitaalwinsbelasting dienooreenkomstig verminder.[4] As die afleweringsvoertuig dus vir R70 000 verkoop word sal ’n verhaling van R10 000 erken word (en teen inkomstebelastingrekening belas word) maar met die opbrengs (R70 000 minus R10 000) wat dan gelykstaande is aan die basiskoste van R60 000 gee dit aanleiding daartoe dat geen wins vir kapitaalwinsbelasting erken sal word nie.

Wat uit die voorgaande na vore kom is dat die verkoop van depresieerbare bates aanleiding mag gee tot belastinggevolge anders as kapitaalwinsbelastingresultate. Hoewel dubbelbelasting nie voorkom nie kan strenger belastinggevolge voorkom as wat die geval sou gewees het met kapitaalwinsbelasting-gevolge. Laasgenoemde is wat baie belastingbetalers verkeerdelik aanneem as die enigste gevolge van die verkoop van enige bates, depresieerbaar al dan nie.

[1] 58 van 1962

[2] Kortings word tipies geëis kragtens artikels  11(e), 11D, 12B tot 12F

[3] Paragraaf 20(3)(a) van die Agtste Skedule van die Inkomstebelastingwet

[4] Paragraaf 35(3)(a)

Hierdie artikel is ʼn algemene inligtingsblad en moet nie as professionele advies beskou word nie. Geen verantwoordelikheid word aanvaar vir enige foute, verlies of skade wat ondervind word as gevolg  van die gebruik van enige inligting vervat in hierdie artikel nie. Kontak altyd ʼn finansiële raadgewer vir spesifieke en gedetailleerde advies. (E&OE)

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DEDUCTIBILITY OF SED AND ED EXPENDITURE

The South African Revenue Service (“SARS”) recently issued a binding private ruling (“BPR”)[1] in which the income tax consequences of expenditure in respect of socio-economic development (“SED”) and enterprise development (“ED”) obligations were considered.

The applicant in this case is a company that owns and operates a wind farm that generates electricity. In terms of the applicant’s electricity generation agreement and licence entered into with the South African government and the relevant regulator, it must commit a specified percentage of its annual revenue to SED and ED expenditure. Failure to incur these expenses could result in the electricity generation agreement being terminated. In order to meet these obligations, the applicant established a trust to undertake specific SED and ED projects directly, or to provide funding to other organisations that are approved by SARS as public benefit organisations in terms of section 30(3) which will undertake such projects. The applicant made contributions to this trust to fund its SED and ED projects.

Expenditure and losses will qualify for the general income tax deduction in section 11(a) and read with section 23(g) of the Income Tax Act[2] to the extent that it is actually incurred in the production of the income, laid out or expensed for purposes of the taxpayer’s trade and such expenditure and losses are not of a capital nature. It is furthermore important to note that a donation for Donations Tax purposes include any gratuitous disposal of property including any gratuitous waiver or renunciation of a right (section 55(1) of the Income Tax Act). Any disposal of property for a consideration which, in the opinion of the Commissioner for SARS, is not an adequate consideration, is also deemed to be a donation (section 58 of the Income Tax Act).

Based on the facts set out above, SARS confirmed in the ruling that the contributions to the trust by the applicant in respect of the SED and ED commitments will be deductible under section 11(a) read with section 23(g). The income tax deduction in each year of assessment will be equal to the specified percentage of the applicant’s revenue (as defined in the agreement) earned in that year of assessment. The ruling also states that the contributions to the trust will not be a donation as defined in section 55(1) nor a deemed donation, as contemplated in section 58.

While binding private rulings are not binding on other taxpayers, it does however clarify how SARS would interpret and apply the provisions of the tax laws relating to a specific proposed transaction.

The take away is that taxpayers should consider the potential income tax deductibility of SED and ED expenses carefully, especially in instances where they are obliged in terms of an agreement to incur these costs.

[1] BPR 282

[2] No 58 of 1962

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)

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FURTHER REFINEMENTS TO THE ATTACK ON INTEREST FREE LOANS TO TRUSTS

We previously reported on the introduction of section 7C of the Income Tax Act, 58 of 1962. In terms of this targeted anti-avoidance provision, National Treasury sought to attack interest free loans granted to trusts by connected persons of that trust.

Typically, these loans would have arisen by virtue of an individual that would sell his or her asset to a trust of which he/she is a beneficiary for estate duty purposes on interest free loan account. By doing so, the asset’s value will grow in the trust, while the interest free loan will remain a non-appreciable, static asset in the hands of the beneficiary, thereby excluding future capital growth on the asset from estate duty when that individual should one day pass away.

Section 7C deems an interest component to arise on interest free or low interest loan accounts to the extent that interest is not charged at the prescribed rate. The amount of the deemed interest is then treated as an annual donation by the trust, thereby attracting donations tax on the value of the deemed donation made to the trust. Were the trust creditors to actually charge interest on the loans to the trusts on the other hand, this will lead to taxable income accruing in their hands, and which will be subject to income tax being charged thereon at prevailing income tax rates.

The new proposals contained in the draft Taxation Laws Amendment Bill, published on 19 July 2017, contain two significant reforms which further focus the extent of the anti-avoidance provisions of section 7C and counter two specific planning solutions being conceived in practice to counter the application of section 7C in its current form.

The first such proposal to take note of is that loans to trusts are no longer the sole target, but also interest free loans extended to companies (owned by trusts) by the beneficiaries of that trust. This is in an attempt to counter structuring solutions whereby loans owing by a trust were shifted by way of complex restructurings to companies owned by trusts.

The second proposal is aimed at loans due by trusts being transferred from the creditor individual to another, thereby effectively “breaking the link” between the person that extended the loan to the trust and the person now entitled to the amounts due by the trust. In other words, section 7C would only previously apply to the person who extended the loan to the trust. Since the person now holding the loan claim did not originally grant the loan to the trust, the provisions of section 7C, in its original form, would not have applied. The second new revision to section 7C counters this approach making it clear that a connected person acquiring a loan claim is also caught by the provisions of section 7C (and thus required to charge interest) irrespective thereof that that person did not itself extend any loan finance itself to the trust.

The above are still mere proposals, but are proposed to become effective 19 July 2017 if enacted (which appears likely). Taxpayers with loan accounts to trusts are therefore well-advised to seek guidance on how to treat such loan accounts going forward.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)

 

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DIE 2017 BELASTINGSEISOEN IS OOP

Die Kommissaris van die SAID het onlangs die jaarlikse kennisgewing gepubliseer om die 2017 belastingseisoen amptelik “oop” te verklaar. Individue mag hul jaarlikse inkomstebelastingopgawes vir die 2017-aanslagjaar (wat op 28 Februarie 2017 geëindig het) vanaf 1 Julie 2017 indien, en ons versoek dat ons kliënte ons kontak sodat ons die nodige reëlings kan tref. Die volgende tydsraamwerk is van toepassing:

  • Vir ‘n maatskappy, binne 1 jaar van sy jaareinde (byvoorbeeld, ‘n maatskappy met sy finansiële jaareinde op 31 Maart 2017 moet sy 2017-belastingopgawe teen 31 Maart 2018 indien);
  • Vir alle ander belastingbetalers (insluitend natuurlike persone en trusts) moet opgawes op die laatste ingedien word teen:
  • 22 September 2017 vir persone wat steeds van hardekopie opgawes gebruik maak;
  • 24 November 2017 vir persone (uitgesluit belastingbetalers wat vir voorlopige belasting geregistreer is) wat van die SAID se eFiling stelsel gebruik maak; en
  • 31 Januarie 2018 vir alle voorlopige belastingbetalers wat van die SAID se eFiling stelsel gebruik maak.

Soos die geval was in vorige jare mag maatskappye slegs opgawes via eFiling indien – in terme van bogenoemde SAID-kennisgewing is handgeskrewe opgawes nie toelaatbaar nie.

Nie alle individue hoef belastingopgawes in te dien nie. Verskeie kriteria word gelys, wat beteken dat, slegs indien aan hierdie kriteria voldoen word, sodanige persoon ‘n belastingopgawe by die SAID moet indien. Byvoorbeeld, alle maatskappye, of dit in Suid-Afrika ingelyf is al dan nie, is verplig om opgawes in te dien indien Suid-Afrika die plek is vanwaar die maatskappy effektief bestuur word. Niebelastingpligtige maatskappye wat wel in Suid-Afrika ingelyf is, sowel as niebelastingpligtige maatskappye wat buite die Republiek ingelyf is en inkomste uit ‘n Suid-Afrikaanse bron genereer, moet ook opgawes indien.

Belastingbetalers (uitgesluit maatskappye) moet opgawes indien as hulle enige handel in Suid-Afrika gedryf het tydens die 2016-belastingjaar. Dit is nie van toepassing op persone wat slegs ‘n salaris verdien nie. Verskeie ander faktore word gelys in terme waarvan belastingbetalers onverbonde aan ‘n maatskappy opgawes moet indien. Die belangrikste vrystelling van die indiening van ‘n opgawe vir belastingpligtige natuurlike persone is egter indien die persoon deur die jaar slegs ‘n salaris van een werkgewer verdien het wat nie   R350 000 oorskry het nie, en indien inkomste uit rente vir daardie persoon ook minder was as R23 800 (of R34 500 indien die persoon ouer as 65 jaar is).

Heelwat belastingbetalers is dus potensieel vrygestel van die vereiste om ‘n inkomstebelastingopgawe in te dien, alhoewel hulle wel vir belastingdoeleindes geregistreer mag wees. Selfs al word die indiening van ‘n belastingopgawe nie vereis volgens die kennisgewing nie, sal dit egter voordelig wees om dit wel in te dien. Natuurlike belastingbetalers verkeer dikwels onder die wanpersepsie dat die voltooiing van ‘n opgawe noodwendig tot die betaling van belasting sal lei. Dit is onwaar, en baie mag alreeds onder belastinggevolge gely het deur bedrae in die vorm van lopende belastingbydraes wat deur die jaar van hul salarisse afgetrek is. Dit kom natuurlik neer op ‘n eenvoudige kontantvloeimeganisme wat ingestel is om ‘n gedurige toevoer van kontant aan die fiscus te voorsien en welke bydraes afgetrek word van die jaarlikse belastingaanspreeklikheid wanneer die jaarlikse belastingaanslag geassesseer word. Die geleentheid om dit te weerlê, word egter aangebied met die voltooiing van ‘n belastingopgawe en die eis van aftrekbare uitgawes in die vorm van o.a. mediesefonds- of pensioenfondsbydraes. Die beginsel in hierdie geval is dat alle inkomste belasbaar is ongeag of ‘n opgawe voltooi word of nie. Aftrekkings kan egter net geëis word deur ‘n belastingopgawe in te dien, dus behoort natuurlike persone die geleentheid aan te gryp om dit te doen.

Hierdie artikel is ʼn algemene inligtingsblad en moet nie as professionele advies beskou word nie. Geen verantwoordelikheid word aanvaar vir enige foute, verlies of skade wat ondervind word as gevolg  van die gebruik van enige inligting vervat in hierdie artikel nie. Kontak altyd ʼn finansiële raadgewer vir spesifieke en gedetailleerde advies. (E&OE)

 

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