Ring-fencing trading losses
Top-rate taxpayers need to watch out for Section 20A Section 20 of the Income Tax Act 58 of 1962 deals with the set-off of losses from a trade against other income. In general, such set-off is allowed (see sub-paragraph (1)(b)), provided that the loss is incurred in the taxpayer’s own name (i.e. not in a […]
Bribes, penalties, and fines: Don’t expect help from SARS
Deductions are disallowed under Section 23(o)—but it’s not quite cut and dried… The meeting went on longer than you expected, and now you’re rushing to get to your next appointment. It’s a new client, and a successful deal will be lucrative both for your company and this month’s commission cheque. But not five minutes after […]
Don’t lose that assessed loss!
Assessed losses can be carried forward—provided that the company doesn’t cease trading If the amount of allowable deductions exceeds the taxable income in your business, you will end up with what is known as an ‘assessed loss’ for tax purposes. In terms of Section 20 of the Income Tax Act, you are entitled to carry […]
Deducting bond interest when using an access bond facility
You can use a loan re-advance against your house to purchase a rental property, and get the interest allowed as a tax deduction – it just needs to be structured properly One of the questions most frequently asked is whether interest on a bond raised to purchase a rental property is deductible against the rent […]
PAYE and non-residents
Employment income is generally taxed where the services are physically exercised. The place of contract conclusion, where the employer is based and where the remuneration is paid is irrelevant in determining the taxation of employment income. This principle is supported by South African legislation and case law. Income earned from South African employers for services […]
Who qualifies for a special trust and how is it taxed?
Unlike “conventional trusts” that are taxed at a flat tax rate, a special trust is taxed on the same sliding scale applicable to natural persons. The Income Tax Act provides for two types of special trusts: a so-called type-A and type-B trust. In essence, a type-A trust is created for a person (or persons) having […]
Who qualifies for a special trust and how is it taxed?
Unlike “conventional trusts” that are taxed at a flat tax rate, a special trust is taxed on the same sliding scale applicable to natural persons. The Income Tax Act provides for two types of special trusts: a so-called type-A and type-B trust. In essence, a type-A trust is created for a person (or persons) having […]
What Happens When Debt is Waived?
Many natural persons or trust shareholders in companies are confronted with the unintended tax consequences of owing an amount on a loan account to the company in which they hold those shares. These tax consequences specifically relate to the “deemed dividend” which arises on interest-free loans (related to so-called “debit loans” in companies). In many cases, there is no intention to ever repay the […]
What happens when debt is waived?
Many natural persons or trust shareholders in companies are confronted with the unintended tax consequences of owing an amount on a loan account to the company in which they hold those shares. These tax consequences specifically relate to the “deemed dividend” which arises on interest-free loans (related to so-called “debit loans” in companies). In many cases, there is no intention to ever repay the […]
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 […]