Archive for category: 2014 – 2017

National Treasury released the following media statement on the special VDP for offshore assets.

For access to the entire media statement, please click here.

SARS have also updated the guide for special VDP, please click here to access the guide.

Interestingly, the last version of the bill that proposed to include to the special VDP required a 50% inclusion of the highest market value of the offshore assets prior to 2015. Both the SARS guide and the National Treasury Media release refers to a 40% inclusion rate. In addition, the current version of the bill that seeks to introduce the special VDP into law states that the window period for applications will be 1 October 2016 to 31 March 2017, while the SARS guide indicates that the window period will be 1 October 2016 to 31 June 2017.

While the functionality for the special VDP is available  on e-filing, the law is not yet in place to back it up. These are uncertain times and taxpayers would be well advised to proceed with caution.

The South Atlantic Jazz festival case (“Jazz festival case”) put into a motion a series of changes to the VAT legislation, more specifically, as to when an input tax claim can be made without a proper tax invoice. In short, the taxpayer in the South Atlantic Jazz festival case was successful in a dispute against SARS to claim an input tax credit without a valid tax invoice.

It came as no surprise when the legislation was subsequently changed in 2015 by section 25 of the 2015 Taxation Laws Amendment Act to effectively delete the provision successfully relied upon by the taxpayer in the Jazz Festival case. Not all was however lost – consolation was left for taxpayers seeking the same relief as was offered to the taxpayer in the Jazz Festival case. The consolation, however, came on SARS’ terms as taxpayers seeking an input tax deduction without a valid tax invoice can continue to seek an input tax deduction, provided:

• Certain circumstances prescribed by SARS exists; and
• The taxpayer is in possession of certain documents prescribed by SARS.

During 2016, SARS published two draft binding general rulings setting out (a) what the circumstances are that must be present and (b) what the prescribed documents are to claim an input tax credit without a proper tax invoice.

The circumstances under which taxpayers could seek this special relief would, based on the draft binding general ruling exist if:

• The taxpayer exhausted all remedies to obtain a valid invoice;
• All taxes and returns must be up to date; and
• The period in which the claim is sought falls on or after 1 April 2016

The documents prescribed per the other draft binding general ruling were essentially documents allowing all elements of a valid tax invoice to be identified.

The 2016 Draft Tax Administration Laws Amendment Bill however proposed to delete the above consolation and replace it with, what is arguably, a more restrictive one.

Per clause 24(1)(b) of the Draft Taxation Laws Amendment Bill, a taxpayer seeking an input tax deduction without a valid tax invoice must apply for a ruling from SARS before the taxpayer can claim an input tax credit and further states that SARS can only issue a ruling if:

• The taxpayer has taken reasonable steps to obtain a valid tax invoice; and
• No other provision in the VAT Act allows a deduction of the input VAT.

If the proposed change makes it into the final Act, which seems likely at this stage, it is evident that taxpayer’s will, with effect from 1 April 2016, need to apply for a ruling to get an input tax deduction if not in possession of a valid tax invoice.

Comments submitted on the proposed section to the effect that rulings are often administratively burdensome and the ruling process takes long were met with reassurance in the SARS and National Treasury Response Document that SARS has capacity to deal with applications in this regard. In addition, it would appear that rulings of this nature will be processed by SARS within 2 months, a somewhat shortened period.

Given our experience with ruling applications, we are skeptical that a ruling process will be practical in this space, however, we understand the policy rationale for the proposed change.

Taxpayers will be well advised to seek professional advice should they wish to rely on the new provision going forward.

Notable revisions include:

• Changes to section 7C (trusts and loan accounts) to remove the deemed interest imputation for loans to trust and replacing same with a deemed donation provision and removing the R100 000 annual donations tax exclusion prohibition.
• Extension of the Employment Tax Incentive to 28 February 2019;
• Dividends on restricted equity instrument will no longer all be deemed remuneration. The proviso to the income tax exemption for dividends will however still apply in limited circumstances.

For access to the entire revision, please click here.

Members of the public are randomly emailed with false emails made to look as if these emails were sent from SARS, but are in fact fraudulent emails aimed at enticing unsuspecting taxpayers to part with personal information such as bank account details. Examples include emails that appear to be from returns@sars.co.za or refunds@sars.co.za indicating that tax payers are eligible to receive TAX refunds.

These emails contain links to false forms and false websites made to look like the “real thing”, but with the aim of fooling people into entering personal information such as bank account details which the criminals then extract and use fraudulently.

Please note these are scams and SARS taxpayers should take note of the following:

• Do not open or respond to emails from unknown sources.
• Beware of emails that ask for personal, tax, banking and eFiling details (login credentials, passwords, pins, credit / debit card information, etc.) as SARS will never ask taxpayers for such information in an email.
• SARS will not request your banking details through the phone, email or websites.
• Beware of false sms’s.

More samples:

Institution Specific Scams: Absa | Capitec | FNB | Nedbank | Standard Bank

Topic Specific Scams: Audit | Personal and Banking Details | Refunds | Payments

Source Specific Scams: Email | Letter/Fax | Phone Call | SMS | Website

 Example of Latest Scams:

• SARS SCAM – eFiling refund due – 14 July 2016
• SARS SCAM – SARS eFiling refund – 12 July 2016
• SARS SCAM – Returns Confirmed – 23 June 2016
• SARS SCAM – Confirm Returns – 23 June 2016
• SARS SCAM – Urgent notice from the office of the Minister of Finance – 23 June 2016

• This ruling determines –
  • Whether or not the investee is a “controlled group company” and that the shares purchased by the Applicant and Co-Investor is “equity shares”; and
  • The meaning of “hotel keeper” and the allowances that a hotel keeper may claim.
• The Applicant and Co-Investor intends to invest in qualifying companies that will carry on the business of hotel keepers. They will each appoint a company (manager) to operate and manage their respective hotels. The manager will guarantee certain profit targets per annum.
• The Applicant intends to exit this investment on or before the 5^th year of the investment. The Co-Applicants will sell their respective hotels and distribute the proceeds to their shareholders.
• The ruling held that each share of the Co-Applicants will constitute an “equity share” and therefore a “qualifying share” and that neither of the Co-Applicants will constitute a “controlled group company” for so long as they do not hold more than 70% of the total equity shares, irrespective of the fact that the Applicant may invest more than 70% of the aggregate share capital in each of the Co-Applicants in monetary terms.
• The Applicant and Co-Investor can then get a deduction for the funds invested in the Co-Applicants in terms of the venture capital company regime.

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