UNDERSTANDING LIQUIDATIONS AND TAX DEDUCTIONS
Decisions of South Africa’s courts are an essential source of law. The courts uphold and enforce the Constitution and develop common law that is consistent with the values of the Constitution, and the spirit and purpose of the Bill of Rights. In a taxation context, court decisions assist in how legislation must be interpreted or […]
TELKOM’S INSENSIBLE GAINS AND LOSSES
The Supreme Court of Appeal (“SCA”) delivered judgement on 25 March 2020 in a matter that primarily deals with gains or losses caused by foreign exchange fluctuations. Key to the debate was the interpretation of statutes and specifically whether section 24I of the Income Tax Act (which regulates foreign exchange gains and losses) is a self-standing […]
TAX LAW FOR EMPLOYER-PROVIDED TRANSPORT SERVICES
Many business transactions are concluded in terms of section 42 of the Income Tax Act. This section essentially allows a transfer of an asset by a person to a company, in exchange for equity shares in that company, allowing for a tax neutral transaction. The South African Revenue Service has recently issued Binding Private Ruling […]
CAPITAL GAINS TAX ON DEATH
Section 9HA of the Income Tax Act deals with deemed disposals by a deceased person. This section of the Act often causes some confusion, especially where there are heirs or legatees other than the surviving spouse. In terms of the provision, a deceased person is treated as having disposed of his or her assets at […]
RE-ALLOCATION OF SURPLUS RETIREMENT FUND ASSETS
Binding Class Rulings (BCR) are issued in response to applications by a specific class of taxpayers (usually persons that will have the same tax consequences apply to them from a transaction) and clarifies how the Commissioner for SARS would interpret and apply the provisions of the tax laws relating to a specific proposed transaction. BCR […]
THE GIVE AND TAKE OF SHARE TRANSFERS
Many business transactions are concluded in terms of section 42 of the Income Tax Act. The section essentially allows a transfer of an asset by a person to a company, in exchange for equity shares in that company, allowing for tax neutral transaction. The South African Revenue Service has recently issued Binding Private Ruling 339, […]
AMALGAMATIONS: WHAT IS ALLOWED?
Corporate transactions are a way of everyday life. Asset acquisitions, company acquisitions, mergers, and asset for share transactions are far the more common than one may think. There are, however, always two sides to these types of transactions. The Companies Act deals with the legal and governance requirements for a company to enter into and […]
FUTURE EXPENDITURE ON CONTRACTS
Section 24C of the Income Tax Act[1] (hereinafter referred to as “the Act”) allows a deduction, from income, received by or accrued to a taxpayer in terms of any contract, to finance future expenditure which will be incurred by the taxpayer in fulfilling its obligations in the performance of such contract. On 3 December 2019, the […]
PITFALLS OF VCC STRUCTURES
Recently, much emphasis has been placed on the ever-growing Venture Capital Company (“VCC”) regime, particularly on the tax benefits for investors, in terms of which they can deduct the expenditure incurred in acquiring VCC shares, from their taxable income. This is not likely to change any time soon, as the 2020 tax year draws to […]
HOW TO QUALIFY AS A PUBLIC BENEFIT ORGANISATION
Non-profit organisations can apply for approval as a “public benefit organisation” (“PBO”) in terms of section 30(3) of the Income Tax Act[1] in order to qualify for tax exemption under section 10(1)(cN) of the Income Tax Act. In terms of these provisions, the organisation’s sole or principal object must be the carrying on of one […]