1 budget & tax update 2009. 2 the morning ahead 2009 budget2009 budget 2008 tax update2008 tax...

11

Budget & Tax Budget & Tax UpdateUpdate

20092009

22

The The morningmorning ahead ahead

• 2009 Budget2009 Budget

• 2008 Tax update2008 Tax update

33

PART 1PART 1

BUDGET 2009BUDGET 2009

44

Main tax proposals

• Personal income tax relief of R13.6 billion

• Fuel taxes to increase by 23c (petrol) and 24c (diesel) per litre

• RAF levy to increase by 17,5c per litre

• Increased sin taxes

• Green taxes• New luxury motor vehicle excise taxes to tax carbon emissions

• Tax on energy-intensive light bulbs

• Increase in the plastic bag levy from 3c to 4c per bag

• Incentives for investments in energy efficient technologies

55

Tax collectionsTax collections2003 - 20102003 - 2010

Collections

0

100

200

300

400

500

600

700

R b

illio

n

2003

2004

2005

2006

2007

2008

2009

2009 revised

2010

66

Tax collectionsTax collections2003 - 20102003 - 2010

0%

20%

40%

60%

80%

100%

2003 2005 2007 2009 2010

Other taxes

Excise duties

Customs duty (RBn)SDL

Retirement funds

Transfer duties

Fuel levy

VAT

Individuals (R Bn)

Companies (R Bn)

77

Personal income tax relief

88

Tax tablesTax tables

99

RebatesRebates

2003 2004 2005 2006 2007 2008 2009 2010

Primary rebate

- under 65 4860 5400 5800 6300 7200 7740 8280 9756

Increase 11% 7% 8.6% 14% 7.5% 7.0% 17.8%

- over 65 3000 3100 3200 4500 4500 4680 5040 5400

Increase 3.3% 3.2% 41% 0.0% 4.0% 7.7% 7.1%

1010

Tax thresholdTax threshold

20102010 20092009

Under 65Under 65 R54 200R54 200 R46 000R46 000

Over 65Over 65 R84 200R84 200 R74 000R74 000

1111

Interest and taxable dividend Interest and taxable dividend exemptionexemption

20102010 20092009

Under 65Under 65 R21 000R21 000 R19 000R19 000

Over 65Over 65 R30 000R30 000 R27 500R27 500

Foreign dividends &Foreign dividends &

interestinterest R3 500R3 500 R3 200R3 200

1212

Basic interest exemption Basic interest exemption 2003 - 20102003 - 2010

6000

1000

1900021000

10000

27500 30000

3200 3500

0

5000

10000

15000

20000

25000

30000

35000

2003 2004 2005 2006 2007 2008 2009 2010

- under 65 - over 65 Foreign interest

1313

Capital exemptionsCapital exemptions

20102010 20092009

Donations taxDonations tax R100 000R100 000 R100 000R100 000

Estate dutyEstate duty R3,5mR3,5m R3,5mR3,5m

CGT annual exclusionCGT annual exclusion R17 500R17 500 R16 000R16 000

Primary residencePrimary residence

exclusionexclusion R1,5mR1,5m R1,5mR1,5m

1414

Company tax ratesCompany tax ratesYears of assessment ending between 1/4/09 and Years of assessment ending between 1/4/09 and

31/3/1031/3/10

20102010 20092009

Non-mining companiesNon-mining companies 28%28% 28%28%

Close corporationsClose corporations 28%28% 28%28%

Employment companiesEmployment companies 33%33% 33%33%

Taxable income of a non-residentTaxable income of a non-resident

companycompany

33%33% 33%33%

Other companiesOther companies 28%28% 28%28%

1515

Small business corporationsSmall business corporations

Years of assessment ending between 1 April 2009 - 31 March 2010Years of assessment ending between 1 April 2009 - 31 March 2010

Taxable incomeTaxable income Rate of taxRate of tax

RR

00 -- 54 20054 200 0%0%

54 201 54 201 -- 300 000300 000 10% of the amount over R54 20010% of the amount over R54 200

300 000300 000 -- R24 580 + 28% of the amount over R300 000R24 580 + 28% of the amount over R300 000

1616

Turnover tax for micro businessesTurnover tax for micro businesses

Years of assessment ending on 28 February 2010Years of assessment ending on 28 February 2010

TurnoverTurnover Rate of taxRate of tax

RR

00 -- 100 000100 000 0%0%


300 001300 001 -- 500 000500 000 R2 000 + 3% of the amount over R300 000R2 000 + 3% of the amount over R300 000



1717

STCSTC

Rate of STC on dividends declared Rate of STC on dividends declared

14 March 1996 – 30 September 200714 March 1996 – 30 September 2007 12.50%12.50%

On or after 01 October 2007On or after 01 October 2007 10%10%

1818

Other tax ratesOther tax rates

20102010 20092009

Trusts (other than special Trusts (other than special trusts)trusts)

40%40% 40%40%

Estate dutyEstate duty 20%20% 20%20%

Donations taxDonations tax 20%20% 20%20%

PBOs & recreational clubsPBOs & recreational clubs 28%28% 28%28%

1919

IndividualsIndividuals

• Medical scheme contributions

monthly monetary caps increased from R570 to R625 for each of the first two beneficiaries and from R345 to R380 for each additional beneficiary

• No tax-free fringe benefit on medical scheme contributions Tax deduction to be claimed (based on monthly

cap)

• Deduction to be replaced with a tax credit in 2 years’ time

2020

CGT on sale of primary residenceCGT on sale of primary residence

• Proceeds up to R2 million to be disregardedProceeds up to R2 million to be disregarded

• Primary residence exclusion remains at R1,5mPrimary residence exclusion remains at R1,5m

2121

Increase in “sin” taxesIncrease in “sin” taxes

• Malt beer - increased by 7c to 79c per 340ml can

• Unfortified wine - increased by 14c to R1.98 per litre

• Fortified wine - increased by 32c to R3.72 per litre

• Spirits - increased by R3.21 to R25.05 per 750ml

• Cigarettes - increased by 88c to R7.70 per packet of 20.

2222

Other proposalsOther proposals

• SITE system may be discontinued by 2010/2011

• Travel allowances to be deductible only if supported by a log book; “deemed” business expenses to be scrapped from 2011

2323

New subsistence allowance rates

• Travel in the RepublicTravel in the Republic

meals and incidental costs: R260 per day meals and incidental costs: R260 per day

incidental costs only: R80 per dayincidental costs only: R80 per day

• Travel outside the RepublicTravel outside the Republic

daily amount is available on the SARS websitedaily amount is available on the SARS website

2424

Estate dutyEstate duty

• R3,5m abatement R3,5m abatement

Benefit for both spousesBenefit for both spouses

• 1-year usufruct schemes to be closed down1-year usufruct schemes to be closed down

• 5-year additional assessment rule to be 5-year additional assessment rule to be reconsideredreconsidered

2525

Relief for winding up dormant Relief for winding up dormant property-holding companiesproperty-holding companies

• Various pressures exist to liquidate entities with Various pressures exist to liquidate entities with inactive real estate (e.g. vacant land and residential inactive real estate (e.g. vacant land and residential property). To alleviate these pressures, it is property). To alleviate these pressures, it is proposed that rollover relief be provided to facilitate proposed that rollover relief be provided to facilitate these liquidations for a transitional period these liquidations for a transitional period

2626

Small business corporationsSmall business corporations

• Permitted investments for shareholders to Permitted investments for shareholders to include shelf companiesinclude shelf companies

2727

‘‘Green taxes’Green taxes’

• Incentives for cleaner productionIncentives for cleaner production

• Plastic bag levy increases from 3c to 4c per bagPlastic bag levy increases from 3c to 4c per bag

• Taxation of incandescent light bulbs - R3Taxation of incandescent light bulbs - R3

• Emission reduction creditsEmission reduction credits

• Motor vehicle ad valorem duties and emission taxesMotor vehicle ad valorem duties and emission taxes

• International air passenger departure taxInternational air passenger departure tax

• Fuel leviesFuel levies

2828

VALUE-ADDED TAX VALUE-ADDED TAX

• Voluntary registration thresholdVoluntary registration threshold

• False statement on VAT formsFalse statement on VAT forms

• VAT registration verificationsVAT registration verifications

• VAT implications of VAT implications of reorganisationsreorganisations

2929

PART 2PART 2

TAX UPDATETAX UPDATE

3030

Medical expenses (section 18)Medical expenses (section 18)

• Taxpayers with a handicap or a handicapped spouse/ child receive Taxpayers with a handicap or a handicapped spouse/ child receive deductions for all medically-related expenses (without 7.5% hurdle)deductions for all medically-related expenses (without 7.5% hurdle)

The terms ‘handicapped person’, etc are outdated The terms ‘handicapped person’, etc are outdated

Uncertainty as to the type of expenses that will qualify for Uncertainty as to the type of expenses that will qualify for deductiondeduction

• Definition of ‘handicapped person’ replaced with ‘disabled person’Definition of ‘handicapped person’ replaced with ‘disabled person’

condition must last longer than 1 year and diagnosed by a condition must last longer than 1 year and diagnosed by a registered medical practitionerregistered medical practitioner

Types of deductible expenses Types of deductible expenses

List to be reviewed annuallyList to be reviewed annually

3131

RETIREMENT BENEFITSRETIREMENT BENEFITS

• Pre-retirement withdrawals from retirement fundsPre-retirement withdrawals from retirement funds

• Allocations to spouses upon divorceAllocations to spouses upon divorce

• Default preservation of withdrawal benefitsDefault preservation of withdrawal benefits

• Annuitisation of death benefitsAnnuitisation of death benefits

• Preservation fundsPreservation funds

• Unclaimed benefit fundsUnclaimed benefit funds

• Transfers from pension to provident fundsTransfers from pension to provident funds

3232

Withdrawal benefits Withdrawal benefits (s 1, s 6 & para 7 of Second Schedule)(s 1, s 6 & para 7 of Second Schedule)

• Tax-free amount increased from R1 800 to R22 Tax-free amount increased from R1 800 to R22 500 less amounts utilised on/after 1 March 2009500 less amounts utilised on/after 1 March 2009

• Applies to aggregate of withdrawal benefits Applies to aggregate of withdrawal benefits received over the tax-payer’s life-time received over the tax-payer’s life-time

• Tax calculated in terms of the special tax tableTax calculated in terms of the special tax table

• Effective 1 March 2009Effective 1 March 2009

3333

Tax table for withdrawal lump sum Tax table for withdrawal lump sum benefits for 2009/2010 benefits for 2009/2010

3434

Divorce settlements from Divorce settlements from retirement funds retirement funds

(paras 2, 2B, 4 & 6 of Second Schedule)(paras 2, 2B, 4 & 6 of Second Schedule)

• Divorce order payments to ex-spouse from retirement Divorce order payments to ex-spouse from retirement fund from were taxed in the hands of the memberfund from were taxed in the hands of the member

right of recovery of tax from non-member spouseright of recovery of tax from non-member spouse

• AmendmentAmendment

The non-member will pay the tax on amounts awarded to The non-member will pay the tax on amounts awarded to him/her from the member’s retirement fundhim/her from the member’s retirement fund

Effective 1 March 2009Effective 1 March 2009

3535

Default withdrawal benefits Default withdrawal benefits (para 4(1) of Second Schedule)(para 4(1) of Second Schedule)

• BackgroundBackground

All withdrawal benefits taxed; no incentive for All withdrawal benefits taxed; no incentive for reinvestment of default withdrawalsreinvestment of default withdrawals

• Amendment:Amendment:

Only taxed once the member withdraws the cashOnly taxed once the member withdraws the cash

3636

Transfers from pension to Transfers from pension to provident funds provident funds

(para 2 of Second Schedule)(para 2 of Second Schedule)

• A transfer from a pension to a provident fund is A transfer from a pension to a provident fund is a taxable event as employee contributions to a taxable event as employee contributions to pension funds are tax-deductible but there is no pension funds are tax-deductible but there is no deduction for provident fund contributionsdeduction for provident fund contributions

3737

EMPLOYERS AND EMPLOYEESEMPLOYERS AND EMPLOYEES

• Expatriate accommodationExpatriate accommodation

• Deduction for repayable remunerationDeduction for repayable remuneration

• Deemed employeesDeemed employees

• Additional learnership deduction for apprenticeshipsAdditional learnership deduction for apprenticeships

• Payroll givingPayroll giving

• Personal use of business cell-phones and computersPersonal use of business cell-phones and computers

• Broad-based employee share schemesBroad-based employee share schemes

• SITE re-determinationSITE re-determination

3838

Expatriate accommodation Expatriate accommodation (paragraph 9(7A) of the Seventh Schedule)(paragraph 9(7A) of the Seventh Schedule)

• No rental value (up to R25 000 pm) on accommodation No rental value (up to R25 000 pm) on accommodation provided to an employee away from his/her usual place of provided to an employee away from his/her usual place of residence outside the Republicresidence outside the Republic

For up to 2 years from date of arrival (extended from 1 For up to 2 years from date of arrival (extended from 1 year); oryear); or

If the employee spends less than 90 days in the Republic in If the employee spends less than 90 days in the Republic in that yearthat year

• No exemption if the employee spent more than 90 days in the No exemption if the employee spent more than 90 days in the Republic in the previous year of assessmentRepublic in the previous year of assessment

• General effective dateGeneral effective date

3939

Repayable remunerationRepayable remuneration(sections 11(nA), (nB), 23(k) & 23(m)(iiA))(sections 11(nA), (nB), 23(k) & 23(m)(iiA))

• BackgroundBackground Employee receives remuneration (e.g. maternity Employee receives remuneration (e.g. maternity

pay) but later fails to meet conditions and amount pay) but later fails to meet conditions and amount received is repaid to employerreceived is repaid to employer

no tax relief for employeeno tax relief for employee

• AmendmentAmendment Repaid benefit allowed as a tax deduction for Repaid benefit allowed as a tax deduction for

employeeemployee PAYE refunded by employer orPAYE refunded by employer or Deducted on tax returnDeducted on tax return

4040

Deemed employeesDeemed employees(ss 11((ss 11(ccA), 12E(4)(A), 12E(4)(aa) & 23() & 23(kk) and paragraphs 1, ) and paragraphs 1,

2(1A) & 11 of Fourth schedule)2(1A) & 11 of Fourth schedule)

• Personal service companies & personal service trusts combined under one category: personal service provider

• “Labour broker” retained for individuals only

4141

Learnership allowance Learnership allowance (apprenticeships)(apprenticeships)

(section 12H)(section 12H)

• 2 deductions per year for each year of the apprenticeship

• At least 1 deduction in the year the agreement is entered into

• Where no formal examination is completed before the completion of the apprenticeship, the additional deductions will only be claimed upon completion

• This amount will be equal to the number of years required to complete the learnership as per the initial agreement X 2

Less the allowance claimed when the agreement was entered into

4242

ExampleExample• Employee X entered into a 4-year apprenticeship agreement with

employer Y.

• Employer Y agrees to pay X R25 000 p.a. (fixed for 4 years)

• Result

• Year 1: employer Y can claim s 12H allowance of R25000

• No additional allowance may be claimed in years 2 and 3

• Year 4: assuming that X has successfully completed the apprenticeship, employer Y can claim an additional allowance of R25 000 x 2 x 4 = R200000 less R25 000 (the amount claimed in year 1) = R175 000

• In essence, the ending additional deduction equals the starting and ending additional deductions for all years of the learnership less the starting deduction for the first year (which has already been taken into account

4343

Payroll giving Payroll giving (s 18A & paragraph 2(4) of Fourth Schedule)(s 18A & paragraph 2(4) of Fourth Schedule)

• Background: Section 18A deduction for donations to PBOs on assessmentSection 18A deduction for donations to PBOs on assessment

No reduction of PAYE through the yearNo reduction of PAYE through the year

Scope to encourage PBO donationsScope to encourage PBO donations

• Amendment: Employers can deduct donations when calculating monthly PAYEEmployers can deduct donations when calculating monthly PAYE

Deduction limited to 5% of remunerationDeduction limited to 5% of remuneration

Section 18A deduction limited to 10% of taxable incomeSection 18A deduction limited to 10% of taxable income

Re-determination required on assessmentRe-determination required on assessment

4444

Personal use of employer-provided Personal use of employer-provided phones and computersphones and computers (paras 6 & 10 of Seventh Schedule)(paras 6 & 10 of Seventh Schedule)

• Background:

Employees often receive cell-phones and laptops Employees often receive cell-phones and laptops from employers for business use, but invariably some from employers for business use, but invariably some private use exists which is taxableprivate use exists which is taxable

• Amendment:

To simplify administration, all telephone, and To simplify administration, all telephone, and computer equipment (modems, disks, printers, computer equipment (modems, disks, printers, software, etc) is exempt from fringe benefit tax if software, etc) is exempt from fringe benefit tax if provided mainly for business useprovided mainly for business use

4545

Broad-based employee share schemes Broad-based employee share schemes (sections 8B & 11((sections 8B & 11(llA))A))

• Background: Employer grants qualifying shares to employeesEmployer grants qualifying shares to employees

Tax-deduction for employerTax-deduction for employer No taxable fringe benefit in hands of employeeNo taxable fringe benefit in hands of employee

Qualifying requirements too stringentQualifying requirements too stringent

• Amendment: Tax-free ceiling raised to R50 000 over 5 years (previously R9 000 over Tax-free ceiling raised to R50 000 over 5 years (previously R9 000 over

3 years)3 years) Employee participation lowered from 90% to 80%Employee participation lowered from 90% to 80% Permissible restrictions relaxed Permissible restrictions relaxed Deduction: R10 000 p.a. over 5 yearsDeduction: R10 000 p.a. over 5 years

4646

SITE redeterminationSITE redetermination

• Refunds following broken periods (para 11B(4) of the Refunds following broken periods (para 11B(4) of the Fourth Schedule)Fourth Schedule)

Effective 1 January 2008Effective 1 January 2008

ExampleExample

• Mr P worked for 4 months and earned a salary of R5000 p.m.Mr P worked for 4 months and earned a salary of R5000 p.m.

• SITE of R210 was deducted (calculated on an annual salary of SITE of R210 was deducted (calculated on an annual salary of R60 000). Mr P's salary for the year amounts to R20 000 and R60 000). Mr P's salary for the year amounts to R20 000 and he should therefore not pay any tax. Mr P will now be able to he should therefore not pay any tax. Mr P will now be able to claim the R840 of SITE that was withheld from his salary as a claim the R840 of SITE that was withheld from his salary as a refund when he files a tax return.refund when he files a tax return.

4747

CORPORATE TAXCORPORATE TAX

• STC ReformsSTC Reforms

Dividend withholding tax Dividend withholding tax

Transitional arrangementsTransitional arrangements

Revised dividend definitionRevised dividend definition

Refund of withholding taxRefund of withholding tax

• Passive Holding CompaniesPassive Holding Companies

4848

Dividend withholding tax Dividend withholding tax (ss 64E and 64F)(ss 64E and 64F)

• 10% tax on the shareholder (beneficial shareholder)10% tax on the shareholder (beneficial shareholder)

• Applies only to dividends declared by SA resident companiesApplies only to dividends declared by SA resident companies

• Beneficial owner is exempt from the dividend tax if:Beneficial owner is exempt from the dividend tax if: A South African resident company;A South African resident company; A sphere of the SA government (i.e. national, provincial and local)A sphere of the SA government (i.e. national, provincial and local) An exempt parastatal;An exempt parastatal; A pension, provident or similar benefit fund;A pension, provident or similar benefit fund; An approved PBO; or An approved PBO; or An environmental rehabilitation trustAn environmental rehabilitation trust A shareholder in a “micro business” (refer Sixth Schedule)A shareholder in a “micro business” (refer Sixth Schedule)

4949

ExamplesExamples

1.1. Individual owns all the shares of Co.1, which owns all the shares of Individual owns all the shares of Co.1, which owns all the shares of Co. 2; and Co. 2 owns all the shares of Co. 3. Co. 3 pays a R20 000 Co. 2; and Co. 2 owns all the shares of Co. 3. Co. 3 pays a R20 000 dividend to Co. 2, Co. 2 pays a R20 000 dividend to Co. 1; and Co. dividend to Co. 2, Co. 2 pays a R20 000 dividend to Co. 1; and Co. 1 pays a R20 000 dividend to the individual shareholder1 pays a R20 000 dividend to the individual shareholder

Result.Result. The dividends tax only applies once the R20 000 dividend is The dividends tax only applies once the R20 000 dividend is paid to the Individual. The previous dividends are exempt.paid to the Individual. The previous dividends are exempt.

2.2. Co. X is listed on the JSE and has 1 million ordinary shares, of Co. X is listed on the JSE and has 1 million ordinary shares, of which 600000 shares are held by resident natural persons, 300000 which 600000 shares are held by resident natural persons, 300000 shares are held by pension funds and 100000 shares are held by shares are held by pension funds and 100000 shares are held by resident companies. Co. X pays a dividend of R5 per share.resident companies. Co. X pays a dividend of R5 per share.

Result.Result. D Dividends paid to resident natural persons are subject to the ividends paid to resident natural persons are subject to the dividends tax. Dividends paid to pension funds and resident dividends tax. Dividends paid to pension funds and resident companies are exempt.companies are exempt.

5050

STC transitional arrangements STC transitional arrangements (ss 64I and 64J)(ss 64I and 64J)

STC creditsSTC credits

• Exemption for dividends previously subject to STCExemption for dividends previously subject to STC

• STC credit dividends will be exhausted firstSTC credit dividends will be exhausted first

• Dividends eligible for STC credits will be allocated pro rata amongst Dividends eligible for STC credits will be allocated pro rata amongst all shareholders within the same class, irrespective of whether they all shareholders within the same class, irrespective of whether they are exempt from the dividend taxare exempt from the dividend tax

• STC credits will be dependent on reporting by initial company payer to STC credits will be dependent on reporting by initial company payer to payee, failing which there will be no STC creditpayee, failing which there will be no STC credit

• STC credits will disappear 5 years after the effective date of the new STC credits will disappear 5 years after the effective date of the new Dividend TaxDividend Tax

5151

Other transitional arrangementsOther transitional arrangements

• Dividends declared before and paid after Dividends declared before and paid after change-over date will be subject to STC (not change-over date will be subject to STC (not dividends tax)dividends tax)

5252

““Dividend” definition (section 1)Dividend” definition (section 1)

• New dividend definition in s 1: any amount transferred by a New dividend definition in s 1: any amount transferred by a company to a shareholder in respect of a share excluding company to a shareholder in respect of a share excluding

amounts resulting in a reduction of “contributed tax capital” (CTC); andamounts resulting in a reduction of “contributed tax capital” (CTC); and

distribution of a company’s own sharesdistribution of a company’s own shares

• Contributed tax capital: notional amount derived from the value Contributed tax capital: notional amount derived from the value of any contribution made to a company as consideration for the of any contribution made to a company as consideration for the issue of shares by the company issue of shares by the company

• Starting point: share capital and share premium on cross-over Starting point: share capital and share premium on cross-over datedate

Excluding SC and SP that would have been a dividend if distributed Excluding SC and SP that would have been a dividend if distributed immediately before cross-over dateimmediately before cross-over date

5353

Dividend withholding tax Dividend withholding tax (ss 64G and 64H)(ss 64G and 64H)

• SA companies that pay dividends will be required to SA companies that pay dividends will be required to withhold 10% dividend tax from the paymentwithhold 10% dividend tax from the payment

Listed share pass-through system to regulated intermediariesListed share pass-through system to regulated intermediaries

Unlisted share pass-through system by “declared” nominee Unlisted share pass-through system by “declared” nominee arrangementsarrangements

• Tax withheld must be paid to SARS by the end of the Tax withheld must be paid to SARS by the end of the month following the month of the dividend (same as month following the month of the dividend (same as STC)STC)

5454

Refund of tax Refund of tax (ss 64L & 64K(2))(ss 64L & 64K(2))

• Beneficial owners can obtain a refund if amounts are Beneficial owners can obtain a refund if amounts are over-withheldover-withheld

1. Company refund process: If a declaration by the beneficial owner is submitted within 1 year after payment of the dividend otherwise eligible for exemption or relief

2. SARS refund process: If a refund is not made within 1 year

3. Three-year time limit: No amount may be refunded after three years from the date on when the Dividends Tax is withheld

5555

ExampleExampleCompany X, listed, has 1 million uncertificated shares, of which Company Y holds 100 Company X, listed, has 1 million uncertificated shares, of which Company Y holds 100

shares through a regulated intermediaryshares through a regulated intermediary

Company X pays a dividend of R5 per share; (R500 accrues to Company Y)Company X pays a dividend of R5 per share; (R500 accrues to Company Y)

Assume all parties are residents: Company Y is exempt from Dividends TaxAssume all parties are residents: Company Y is exempt from Dividends Tax

Result:Result:

• Company X is exempt from withholding as the shares involved are uncertificated sharesCompany X is exempt from withholding as the shares involved are uncertificated shares

• Regulated Intermediary is not obliged to withhold if Company Y submits its declaration to Regulated Intermediary is not obliged to withhold if Company Y submits its declaration to Regulated IntermediaryRegulated Intermediary

• If not, Regulated Intermediary must withhold and pay over to SARS R50 (10% of R500). If not, Regulated Intermediary must withhold and pay over to SARS R50 (10% of R500).

• If the declaration is late but within 1 year from payment, Regulated Intermediary must If the declaration is late but within 1 year from payment, Regulated Intermediary must pay the R50 back out of tax withholding funds otherwise to be held for SARS in relation pay the R50 back out of tax withholding funds otherwise to be held for SARS in relation to the next dividend payment to be made by Regulated Intermediary (as long as the to the next dividend payment to be made by Regulated Intermediary (as long as the Regulated Intermediary makes a dividend payment within the required 1 year period). Regulated Intermediary makes a dividend payment within the required 1 year period).

• If no refund occurs beyond the 1 year date, Company Y can make a claim for refund If no refund occurs beyond the 1 year date, Company Y can make a claim for refund directly from SARSdirectly from SARS

5656

Passive Holding Companies (s Passive Holding Companies (s 9E)9E)

• Introduced to eliminate arbitrage

• 40% tax on passive ordinary revenue from financial instruments

• 10% tax on dividends

• Dividends paid are not subject to dividends tax if previously taxed in a PHC

5757

‘‘Passive holding company’Passive holding company’

Any company, other than an excluded company, where -Any company, other than an excluded company, where -

• passive income > 80% of gross income of that company passive income > 80% of gross income of that company and the gross income (other than passive income) of all and the gross income (other than passive income) of all other companies that form part of the same group of other companies that form part of the same group of companies, as defined in s 41companies, as defined in s 41

• 5 or less resident individuals (with any connected 5 or less resident individuals (with any connected persons) at any time during the year in/directly hold more persons) at any time during the year in/directly hold more than 50% of participation rights in the companythan 50% of participation rights in the company

5858

Definitions within “passive holding Definitions within “passive holding company”company”

• ‘‘passive income’= gross income derived from financial passive income’= gross income derived from financial instrumentsinstruments

• ‘‘gross income’ = as defined in s 1, excludinggross income’ = as defined in s 1, excluding

royalties androyalties and

dividends if the company holds at least 20% of the dividends if the company holds at least 20% of the total equity share capital and voting rights in the total equity share capital and voting rights in the company declaring the dividendcompany declaring the dividend

5959

‘‘Excluded company’Excluded company’

• A listed companyA listed company

• A member of the same group of companies as per s 41 as a listed A member of the same group of companies as per s 41 as a listed co.co.

• A bank or a money-lenderA bank or a money-lender

• An authorised user as per the Securities Services ActAn authorised user as per the Securities Services Act

• Insurance companyInsurance company

• Collective investment schemeCollective investment scheme

• PBOPBO

• Approved recreational clubApproved recreational club

• A foreign company as defined in section 9DA foreign company as defined in section 9D

• A venture capital company as defined in section 12JA venture capital company as defined in section 12J

6060

ExampleExample

• Company X is owned equally by 3 unconnected individuals.Company X is owned equally by 3 unconnected individuals.

• Company X earns R500 of dividends from a 10% subsidiary, R200 of Company X earns R500 of dividends from a 10% subsidiary, R200 of interest and R300 from payment for goods sold and delivered.interest and R300 from payment for goods sold and delivered.

• Company X also earns R1 000 of capital gains from the sale of landCompany X also earns R1 000 of capital gains from the sale of land..

• Dividends and interest constitute passive income. Dividends and interest constitute passive income.

• Due to Company X’s less than 20% holding in Company X, the dividend Due to Company X’s less than 20% holding in Company X, the dividend received by Company is included in the calculation. received by Company is included in the calculation.

• The capital gains are excludedThe capital gains are excluded

• The sum of all passive income, (dividends and interest) is 70% of The sum of all passive income, (dividends and interest) is 70% of Company X’s ordinary revenue. Company X’s ordinary revenue.

• Company X does not satisfy the gross income requirement Company X does not satisfy the gross income requirement

• Therefore, not a passive holding companyTherefore, not a passive holding company

6161

ExampleExample

• Co. X is wholly owned by an individual.Co. X is wholly owned by an individual.

• Co. X has income of R200 of which R190 is passive income.Co. X has income of R200 of which R190 is passive income.

• Company owns all the shares of a subsidiary which has R1 000 of Company owns all the shares of a subsidiary which has R1 000 of income, of which R300 is passive income.income, of which R300 is passive income.

• The total gross income of the group (i.e. Company X and The total gross income of the group (i.e. Company X and Subsidiary) amounts to R1 200. Subsidiary) amounts to R1 200.

• The passive income of Company X amounts to only R190 of the The passive income of Company X amounts to only R190 of the R900 group total (R1 200 less the R300 passive subsidiary income). R900 group total (R1 200 less the R300 passive subsidiary income).

• Therefore Company X is not a passive holding company.Therefore Company X is not a passive holding company.

6262

SMALL BUSINESSSMALL BUSINESS

• S 12E: asset write-off election S 12E: asset write-off election

• Micro business turnover taxMicro business turnover tax

• Venture capital company allowanceVenture capital company allowance

6363

Small business corporations Small business corporations (section 12E)(section 12E)

Taxpayer has the option ofTaxpayer has the option of

• 50:30:20 write-off OR50:30:20 write-off OR

• Section 11(e) wear tearSection 11(e) wear tear

From commencement of years of assessment ending on From commencement of years of assessment ending on or after 1 January 2009or after 1 January 2009

6464

Turnover Tax for micro businesses Turnover Tax for micro businesses (Section 48 & Sixth Schedule)(Section 48 & Sixth Schedule)

• Turnover-based tax system Turnover-based tax system

• To alleviate tax compliance costs for very small businesses To alleviate tax compliance costs for very small businesses (not necessarily to reduce the tax liability)(not necessarily to reduce the tax liability)

• Elective Elective

• Incorporated and unincorporated enterprises (sole proprietors) Incorporated and unincorporated enterprises (sole proprietors)

Certain limitationsCertain limitations

• Annual turnover up to R1million p.a.Annual turnover up to R1million p.a.

• Implementation: Years of assessment commencing on or after Implementation: Years of assessment commencing on or after 1 March 20091 March 2009

6565

““Turnover”Turnover”

• ‘Qualifying turnover’ = total receipts from carrying on business activities, excluding any

Amount of a capital nature; and

Government subsidies

• ‘Taxable turnover’ means total receipts from carrying on business 50% of proceeds on sale of a capital asset (see next slide)

Investment income of a company / cc

Add-back of previous year’s tax allowances in 1st year

Doubtful debts, s 24C, etc (first applied against assessed loss)

Excludes

government subsidies

Amounts accrued before registration as a micro business

6666

Capital receiptsCapital receipts

• CGT exemption CGT exemption if proceeds do not exceed if proceeds do not exceed R1.5m over 3-year periodR1.5m over 3-year period

• Otherwise: Otherwise: 50% of proceeds included in 50% of proceeds included in “taxable turnover”“taxable turnover”

Immovable property to the extent used for Immovable property to the extent used for businessbusiness

Other assets used mainly for businessOther assets used mainly for business

6767


Years of assessment ending on 28 February 2010Years of assessment ending on 28 February 2010

TurnoverTurnover Rate of taxRate of tax

RR

00 -- 100 000100 000 0%0%





6868

Turnover tax illustrationTurnover tax illustration

Turnover

R

Tax

R Average

100 000 Nil 0%

200 000 1 000 0.50%

300 000 2 000 0.67%

500 000 8 000 1.60%

750 000 20 500 2.73%

1 000 000 38 000 3.80%

6969


• Increase in compulsory VAT registration threshold from R300 000 to R1million

• Businesses electing the TT will not be allowed to register for VAT

• STC/withholding tax exemption on dividends up to R200000

• Businesses that elect the TT system must remain in the system for at least 3 years

• Businesses that opt out of the regime can’t migrate back in for 3 years

7070

Persons that do not qualify as a Persons that do not qualify as a micro businessmicro business

• Anyone holds any shares or has any interest in the equity of another Anyone holds any shares or has any interest in the equity of another company other than permitted investmentscompany other than permitted investments

• Investment income exceeds 10% of total receipts Investment income exceeds 10% of total receipts

• ‘‘Personal service provider’ or ‘labour broker’ without IRP30Personal service provider’ or ‘labour broker’ without IRP30

• ‘‘Professional service providers’Professional service providers’

• Total amounts received from the disposal ofTotal amounts received from the disposal of

(i)(i) immovable property, to the extent that it was used for business purposes; and immovable property, to the extent that it was used for business purposes; and

(ii)(ii) any other asset of a capital nature used mainly for business purposes any other asset of a capital nature used mainly for business purposes

exceed R1,5m over a period of 3 years or such shorter period exceed R1,5m over a period of 3 years or such shorter period during which that person was a registered micro businessduring which that person was a registered micro business

7171

• a companya company With a year end other than the last day of FebruaryWith a year end other than the last day of February at any time during its year of assessment, any of its shareholders is at any time during its year of assessment, any of its shareholders is

a person other than a natural person (or the deceased or insolvent a person other than a natural person (or the deceased or insolvent estate of a natural person)estate of a natural person)

at any time during its year of assessment, any of its shareholders at any time during its year of assessment, any of its shareholders holds any shares or has any interest in the equity of any other holds any shares or has any interest in the equity of any other company other permitted investmentscompany other permitted investments

PBOPBO approved recreational clubapproved recreational club

• a partner in a partnership if –a partner in a partnership if – any of the partners is not a natural personany of the partners is not a natural person a partner in more than one partnership a partner in more than one partnership partnership turnover exceeds R1mpartnership turnover exceeds R1m

7272

VAT deregistration reliefVAT deregistration relief

• The normal rule is that when any vendor deregisters from the VAT system, it is required to pay VAT (exit VAT) on the value of the assets held before deregistering.

• All vendors that deregister from the VAT system in light of the increase in the VAT registration threshold to R1 million will be allowed to pay the exit VAT over a period of six months.

• Where a vendor deregisters from the VAT system in order to register for the turnover tax, further relief will be granted to that vendor by way of a deduction up to R100 000 of the value of the assets held by that vendor prior to such deregistration.

Equates to an approximate reduction of up to R12 281 in the exit VAT that will be payable.

7373

VCC allowance (section 12J)VCC allowance (section 12J)

• 100% deduction for investments in VCC ordinary shares100% deduction for investments in VCC ordinary shares

Capped at R750 000 p.a. for individuals (R2.25 m life-Capped at R750 000 p.a. for individuals (R2.25 m life-time limit)time limit)

No limit for listed companiesNo limit for listed companies

Unlisted corporations are excludedUnlisted corporations are excluded

• Sunset clause: after 12 yearsSunset clause: after 12 years

7474

VCC requirementsVCC requirements• Minimum gross assets to qualify as a VCCMinimum gross assets to qualify as a VCC

R30m for investments in non-mining qualifying enterprisesR30m for investments in non-mining qualifying enterprises

R150m for investments into qualifying junior mining exploration enterprisesR150m for investments into qualifying junior mining exploration enterprises

• VCC qualifying investments:VCC qualifying investments: At least 10% in enterprises with up to R5m gross assets, after the At least 10% in enterprises with up to R5m gross assets, after the

investmentinvestment

At least 80% in enterprises with up to R10m gross assets, after the At least 80% in enterprises with up to R10m gross assets, after the investment investment

In the case of junior mining exploration companies R100m gross In the case of junior mining exploration companies R100m gross assets after the investmentassets after the investment

• SARS to approve applications for VCC statusSARS to approve applications for VCC status New VCCs have 36 months to qualify for full VCC approval.New VCCs have 36 months to qualify for full VCC approval.

Over the medium term, special financial regulations for VCCs consideredOver the medium term, special financial regulations for VCCs considered

7575

VCC(FAIS

Compliant)

Investor:Indiv / Listed

QualifyingSME

100% deduction

10% - R5m gross assets

80% - R10m gross assets

10% - any asset class

Individual – R750 000 pa deduction limitListed – No limit; subject to 10% shareholding limit in the VCC

7676

VCCs: excluded activities (section VCCs: excluded activities (section 12J)12J)

• Dealing in or renting land (excluding hotel keepersDealing in or renting land (excluding hotel keepers

• Financial services e.g. banking, insurance, money lending, HP financingFinancial services e.g. banking, insurance, money lending, HP financing

• Provision of professional services e.g. legal, tax advisory, broking, Provision of professional services e.g. legal, tax advisory, broking, management consulting, auditing, accounting and other related activitiesmanagement consulting, auditing, accounting and other related activities

• Casinos, other gambling-related activities and other games of chanceCasinos, other gambling-related activities and other games of chance

• Manufacturing, buying or selling liquor, tobacco products or armsManufacturing, buying or selling liquor, tobacco products or arms

• FranchiseesFranchisees

• Businesses conducted mainly outside SABusinesses conducted mainly outside SA

• Investment income exceeds 20% of gross incomeInvestment income exceeds 20% of gross income

7777

INCENTIVES AND ALLOWANCESINCENTIVES AND ALLOWANCES

• Residential buildingsResidential buildings

• Urban Development ZonesUrban Development Zones

• Loans for low-cost housing salesLoans for low-cost housing sales

• Government business licensesGovernment business licenses

• Strategic Industrial Policy ProjectsStrategic Industrial Policy Projects

7878

AllowanceAllowance for residential for residential buildings (s 13buildings (s 13sexsex))

• New residential housing 5% p.a.New residential housing 5% p.a.

• Low cost housing 10% p.a. Low cost housing 10% p.a.

• Replaces former 10% initial/2% p.a. (from 21 October 2008)Replaces former 10% initial/2% p.a. (from 21 October 2008)

• ““Low cost residential unit”Low cost residential unit”

• cost up to cost up to

R200 000 for free standing houses and R200 000 for free standing houses and

R250 000 for apartmentsR250 000 for apartments

• Monthly rental does not exceed 1% of cost (with 10% p.a. escalation)Monthly rental does not exceed 1% of cost (with 10% p.a. escalation)

• Applies to all rental housing and employer-provided housingApplies to all rental housing and employer-provided housing

• At least 5 units must be ownedAt least 5 units must be owned

7979

Urban Development Zone Urban Development Zone allowance (s 13allowance (s 13quatquat))

• The incentive is extended by 5 yearsThe incentive is extended by 5 years

• Enhanced allowances:Enhanced allowances:

New buildings: 20%(first year) & 8% p.a. (next 10 yrs) New buildings: 20%(first year) & 8% p.a. (next 10 yrs)

Low cost housing in UDZ Low cost housing in UDZ

New buildings: 25% in first year; 13% over next 5 yrs; 10% New buildings: 25% in first year; 13% over next 5 yrs; 10% in year 7in year 7

Improvements to existing buildings: 25% p.a.Improvements to existing buildings: 25% p.a.

8080

Loans for low-cost housing salesLoans for low-cost housing sales(s 13(s 13septsept))

• Special write-off when selling low cost housing to Special write-off when selling low cost housing to employees at no more than employer costemployees at no more than employer cost

• 10% year write-off for employer-loan portion of the sale10% year write-off for employer-loan portion of the sale

• Recoupment when principal is repaidRecoupment when principal is repaid

8181

ExampleExample

• In Year 1, Employer sells a low cost residential unit to Employee X for In Year 1, Employer sells a low cost residential unit to Employee X for R200000, all of which is paid via an interest-free loan account from R200000, all of which is paid via an interest-free loan account from Employer. Employee X repays R30 000 in Year 2, R25 000 in Year 3 Employer. Employee X repays R30 000 in Year 2, R25 000 in Year 3 and no repayment in Year 4.and no repayment in Year 4.

• Year 1: R20 000 (10% of R200 000).Year 1: R20 000 (10% of R200 000).

• Year 2: Deduction = R17 000 (10% of (R200000 less the R30 000 Year 2: Deduction = R17 000 (10% of (R200000 less the R30 000 repaid)). Recoupment = R 30 000 repaid)). Recoupment = R 30 000

• Year 3: Deduction = R14 500 (10% of (R200 000 less R55 000 Year 3: Deduction = R14 500 (10% of (R200 000 less R55 000 repaid)). Recoupment = R 21 500 repaid)). Recoupment = R 21 500

The excess R3500 (i.e. R25 000 less R21 500) is rolled over to the next yearThe excess R3500 (i.e. R25 000 less R21 500) is rolled over to the next year

• Year 4: Deduction = R14 500 (10% of (R200000 less R55 000 repaid)). Year 4: Deduction = R14 500 (10% of (R200000 less R55 000 repaid)). Recoupment = R3 500 (the remaining recoupment from last year).Recoupment = R3 500 (the remaining recoupment from last year).

8282

Allowance for government Allowance for government business licenses (s 37D)business licenses (s 37D)

• Initial outlay to acquire a Government license will be Initial outlay to acquire a Government license will be

deducted over the life of the licensededucted over the life of the license

• Full deduction of annual fees to maintain a license, even Full deduction of annual fees to maintain a license, even

if funds not paid directly to Government (i.e. used for if funds not paid directly to Government (i.e. used for

required social expenditure)required social expenditure)

8383

Strategic Industrial Policy Projects Strategic Industrial Policy Projects (s 12I)(s 12I)

• Incentive to support government’s Industrial Policy Action Incentive to support government’s Industrial Policy Action plan (promoted by DTI)plan (promoted by DTI)

• Focus is the manufacturing sector Focus is the manufacturing sector

• Targets greenfield investments and brownfield expansions Targets greenfield investments and brownfield expansions and upgradesand upgrades

• R20billion allowable deductions over 5 years R20billion allowable deductions over 5 years

• Applications must be in by 21 December 2014Applications must be in by 21 December 2014

• Replaces the Strategic Industrial Project allowance Replaces the Strategic Industrial Project allowance

• Focuses on capital investment and trainingFocuses on capital investment and training

• S8(4)(n) recoupment if disposed of before end of the write-S8(4)(n) recoupment if disposed of before end of the write-off periodoff period

8484

Industrial policy projects: minimum Industrial policy projects: minimum requirements (section 12I)requirements (section 12I)

• Greenfield projects: Investment of R200 million in new Greenfield projects: Investment of R200 million in new industrial assetsindustrial assets

• Upgrades and expansions / brownfields: Investments of Upgrades and expansions / brownfields: Investments of least 25% of value of existing industrial assets subject to least 25% of value of existing industrial assets subject to a minimum of R30ma minimum of R30m

• Energy efficiency: 10% reduction in usageEnergy efficiency: 10% reduction in usage

• Spend more than 2% of wage bill on trainingSpend more than 2% of wage bill on training

• Training: Detailed skills development programmeTraining: Detailed skills development programme

8585

Industrial policy projects: scoring Industrial policy projects: scoring criteria (section 12I)criteria (section 12I)

Minimum of 5 points for Minimum of 5 points for qualifyingqualifying status status

Minimum of 8 points for Minimum of 8 points for preferredpreferred status status

A sub-minimum of 2 points must be attained in the labour component (employment A sub-minimum of 2 points must be attained in the labour component (employment creation + training)creation + training)

Greenfield investmentsGreenfield investments Brownfield expansionsBrownfield expansions

Energy efficiencyEnergy efficiency Energy efficiencyEnergy efficiency

Use of cleaner production technologyUse of cleaner production technology Use of cleaner production technologyUse of cleaner production technology

Innovation, linkages to small businessInnovation, linkages to small business InnovationInnovation

Location in an industrial development zoneLocation in an industrial development zone Small business linkagesSmall business linkages

Employment creation (x per R1m)Employment creation (x per R1m) Employment creation (x per R1m)Employment creation (x per R1m)

Training of employeesTraining of employees Training of employeesTraining of employees

8686

Industrial policy projects: additional Industrial policy projects: additional allowances (section 12I)allowances (section 12I)

Projects with Projects with qualifyingqualifying status (5 - 7 points) status (5 - 7 points)

• 35% investment tax allowance35% investment tax allowance

• Deduction of actual training expenses up to a maximum Deduction of actual training expenses up to a maximum

R36 000 per employee and R36 000 per employee and

an overall maximum of R20million per entity over 4 years.an overall maximum of R20million per entity over 4 years.

Projects with Projects with preferred preferred status (8 - 10 points)status (8 - 10 points)

• 55% investment tax allowance55% investment tax allowance

• Deduction of actual training expenses up to a maximumDeduction of actual training expenses up to a maximum

R36 000 per employee and R36 000 per employee and

an overall maximum of R30million per entity over 4 years.an overall maximum of R30million per entity over 4 years.

8787

ExampleExample

• A Greenfield project qualifies for preferred statusA Greenfield project qualifies for preferred status

• Taxpayer purchases machinery for R300m: qualifies for Taxpayer purchases machinery for R300m: qualifies for s12Cs12C

Result: Result:

• In the year that the machinery is brought into use, a In the year that the machinery is brought into use, a s12C deduction of R120 million (R300 million x 40%) will s12C deduction of R120 million (R300 million x 40%) will be allowedbe allowed

• In addition, a s12I deduction of R165m (R300m x 55%) In addition, a s12I deduction of R165m (R300m x 55%) will be allowedwill be allowed

• In each of the following 3 years, further s12C deductions In each of the following 3 years, further s12C deductions of R60m (R300m x 20%) per year will be allowedof R60m (R300m x 20%) per year will be allowed

8888

Body corporates Body corporates (s 10(1)(e))(s 10(1)(e))

• Levies are tax-free but other income is taxableLevies are tax-free but other income is taxable

• Non-levy income exempt up to R50 000Non-levy income exempt up to R50 000

Effective for years of assessment commencing Effective for years of assessment commencing on/after 1 March 2008on/after 1 March 2008

8989

Recreational clubs (sections 10(1)Recreational clubs (sections 10(1)(cO) & 30A)(cO) & 30A)

• Increase in basic exemption from R50 000 to R100 000

For years of assessment commencing on/after 1 For years of assessment commencing on/after 1 March 2009March 2009

• Fiduciary responsibility for the club must vest in at least 3 unconnected persons

General effective dateGeneral effective date

9090

VALUE-ADDED TAXVALUE-ADDED TAX

Industrial Development ZonesIndustrial Development Zones

Supply of right to receive money under a rental Supply of right to receive money under a rental agreementagreement

Land reform transactionsLand reform transactions

9191

Industrial Development Zones Industrial Development Zones (s(s 8(24)) 8(24))

• Goods temporarily removed from a Customs Controlled Goods temporarily removed from a Customs Controlled Area are subject to VAT if not returned within 30 daysArea are subject to VAT if not returned within 30 days

• Goods returned after 30 days do not receive any VAT Goods returned after 30 days do not receive any VAT reliefrelief


Goods returned after 30 days are eligible for VAT Goods returned after 30 days are eligible for VAT input credits (as an offset against the late charge)input credits (as an offset against the late charge)

limited to the lesser of the initial charge or an limited to the lesser of the initial charge or an amount based on the returned value (i.e. this test amount based on the returned value (i.e. this test taxes the devaluation as consumption) taxes the devaluation as consumption)

9292

Supply of the right to receive money under Supply of the right to receive money under a rental agreement (s 2(4)(b))a rental agreement (s 2(4)(b))

4. Lessee pays rental amount (R11 400 for month 1)

2. Cession of right to rental income

1. R

en

tal

Ag

ree

me

nt

Lessor Financier

Lessee

3. Financier pays present value of the rental stream

939393

AmendmentAmendment

• Section 2(4)(b) (that makes the supply to the financier Section 2(4)(b) (that makes the supply to the financier taxable) deletedtaxable) deleted

• The supply of the right to receive the rentals is therefore The supply of the right to receive the rentals is therefore a financial service and hence exempta financial service and hence exempt

9494

Land reform transactions (sections Land reform transactions (sections 11(1)(s) & (t))11(1)(s) & (t))

• VAT zero-rating of land purchases in terms of VAT zero-rating of land purchases in terms of Land Reform and Land Restitution programmesLand Reform and Land Restitution programmes

previously zero-rated under a specific rulingpreviously zero-rated under a specific ruling

In line with pre-existing zero ratings for In line with pre-existing zero ratings for Government subsidised housingGovernment subsidised housing

9595

ESTATE DUTYESTATE DUTY

• Pension benefitsPension benefits

• Time limits for assessment (subject to Time limits for assessment (subject to review)review)

9696

Pension Benefits (section 3(2)(Pension Benefits (section 3(2)(ii))))

• Background:Background:

Deemed part of deceased’s estateDeemed part of deceased’s estate

At death of income provider, surviving spouse and dependant At death of income provider, surviving spouse and dependant children rely on these savings to alleviate financial difficultieschildren rely on these savings to alleviate financial difficulties

Tax not in line with Government’s social objectives to reduce Tax not in line with Government’s social objectives to reduce the value of benefit in these circumstancesthe value of benefit in these circumstances


Lump sum benefits from retirement fund exempt from Estate Lump sum benefits from retirement fund exempt from Estate DutyDuty

9797

Estate Duty – Time Limits for Estate Duty – Time Limits for Assessment Assessment

• The liquidation and distribution account will set a 5-The liquidation and distribution account will set a 5-year (automatic) assessment periodyear (automatic) assessment period

• Assets found within the 5 years trigger a re-opening Assets found within the 5 years trigger a re-opening of that tax estateof that tax estate

• Assets found afterwards are deemed to be their own Assets found afterwards are deemed to be their own Estate without going back to the date of deathEstate without going back to the date of death Estate Duty Act section 9Estate Duty Act section 9

Budget 2009: subject to reviewBudget 2009: subject to review

9898

OtherOther

• Stamp DutyStamp Duty

• Securities Transfer TaxSecurities Transfer Tax

9999

Repeal of Stamp Duties ActRepeal of Stamp Duties Act

• Stamp duty currently only applies to leases of immovable Stamp duty currently only applies to leases of immovable propertyproperty

• To be repealed from 1 April 2009To be repealed from 1 April 2009

The Stamp Duties Act will continue to apply to any instrument The Stamp Duties Act will continue to apply to any instrument described in Schedule 1 of the Act executed before the date of the described in Schedule 1 of the Act executed before the date of the repeal as if the Act had not been so repealed.repeal as if the Act had not been so repealed.

100100

Securities Transfer TaxSecurities Transfer Tax

• De minimus exemption for amounts less than R100 De minimus exemption for amounts less than R100 (transfers within a month)(transfers within a month)

101101

AdministrationAdministration

• Provisional taxProvisional tax

• Estimated employees’ tax liabilityEstimated employees’ tax liability

• Employers’ obligationsEmployers’ obligations

• Administrative penaltiesAdministrative penalties

• Advance tax rulings Advance tax rulings

• Interest payableInterest payable

• Date of payment of tax to SARS Date of payment of tax to SARS

102102

Provisional tax (Paragraph 20 of Provisional tax (Paragraph 20 of Fourth Schedule)Fourth Schedule)

• Second provisional tax payment must be based on the Second provisional tax payment must be based on the taxpayer’s estimate (no basic amount)taxpayer’s estimate (no basic amount)

Estimate must be at least 80% of the actual tax liability for the Estimate must be at least 80% of the actual tax liability for the year year

20% penalty on underpayment20% penalty on underpayment

• Originally effective from 1 January 2009Originally effective from 1 January 2009

SARS extended implementation to 1 March 2009SARS extended implementation to 1 March 2009

103103

Estimated employees’ tax liability Estimated employees’ tax liability (paragraph 12 of Fourth Schedule(paragraph 12 of Fourth Schedule))

• SARS may estimate employees’ tax SARS may estimate employees’ tax if an if an employer fails to furnish an annual PAYE return, employer fails to furnish an annual PAYE return, fails to deduct employees’ tax or fails to pay over fails to deduct employees’ tax or fails to pay over employees’ tax deducted from employeesemployees’ tax deducted from employees

104104

Employers’ obligations (Fourth Employers’ obligations (Fourth Schedule)Schedule)

• No IRP5 certificates may be issued until EMP501 No IRP5 certificates may be issued until EMP501 reconciliations submitted (para 14(5))reconciliations submitted (para 14(5))

• Penalty for non-submission of EMP501 = 10% of total Penalty for non-submission of EMP501 = 10% of total employees’ tax for the year (para 14(6))employees’ tax for the year (para 14(6))

Effective 29 August 2008 (GG 31381)Effective 29 August 2008 (GG 31381)

105105

Administrative penalties Administrative penalties (section 75B) (section 75B)

• Penalties prescribed by regulationPenalties prescribed by regulation

• Effective from 1 January 2009Effective from 1 January 2009

106106

Advance tax rulings (sAdvance tax rulings (s 76O) 76O)

• Previously:Previously:

Currently SARS has to publish all binding private Currently SARS has to publish all binding private rulings and binding class rulingsrulings and binding class rulings


A ruling that is similar to a ruling that has already A ruling that is similar to a ruling that has already been published need not be publishedbeen published need not be published

107107

Interest on late payment of tax (s Interest on late payment of tax (s 8989quatquat))

• Interest payable at the prescribed rate on Interest payable at the prescribed rate on

Normal tax payable in excess of the credit amount; orNormal tax payable in excess of the credit amount; or

Credit amount in excess of normal tax payable Credit amount in excess of normal tax payable

• Effective from a date to be advised in the GazetteEffective from a date to be advised in the Gazette

108108

Date of payment of tax to SARS Date of payment of tax to SARS

• The Minister of Finance may move the date for The Minister of Finance may move the date for payments (and returns) falling on 31 March forward by payments (and returns) falling on 31 March forward by a maximum of two business daysa maximum of two business days

109109

Thank you!Thank you!

1 budget & tax update 2009. 2 the morning ahead 2009 budget2009 budget 2008 tax update2008 tax...

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