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SARS Basic Guide to Income Tax Exemption for Public Benefit Organisations

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SARS has issued their second Basic Guide to Income Tax Exemption for Public Benefit Organisations to assist organisations in obtaining and retaining approval as a public benefit organisation.

For access to the entire guide, please click here

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Launch of Special Voluntary Disclosure Programme (SVDP)

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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.

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Draft Taxation Laws Amendment Bill, 2016: (second batch) Revisions and Additions for Public Comment

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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.

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Guide on the Determination of Medical Tax Credits (Issue 7)

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The guide provides general guidelines to determine the medical fees tax credit and additional medical aid tax credit for income tax purposes. The guide includes the relevant definitions and formulas as well as detailed examples for purposes of the medical fees tax credit and additional medical aid tax credit calculation.

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BPR 242: Venture Capital Company Investment in Qualifying Companies

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  • 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 5th 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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D v Commissioner, SARS (VAT 1390):

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“Whether the delivery of food orders to the taxpayer’s customers constitute a service supplied by it for consideration in the course, or furtherance, of its enterprise (and therefore whether same is within ambit of Value Added Tax Act, No. 89 of 1991). If so,  whether VAT falls to be paid on taxpayer’s delivery charges or whether same should be borne by taxpayer’s deliverers/ drivers (independent contractors).”

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