ARE MY DONATIONS BEING TAXED?
BPR 338 deals with the tax treatment of payments made to a Public Benefit Organisation (PBO) at a fundraising event, under section 30 of the Income Tax Act. The ruling is essentially an interpretation of section 18A of the Act and seeks to clarify the situation for PBOs and funders. In terms of the transaction, […]
DO YOU FALL WITHIN THE “CONNECTED PERSONS” DEFINITION?
On 28 January 2020, SARS released interpretation note 67 providing guidance on the term “connected persons” in section 1(1) of the Income Tax Act. The interpretation note itself is voluminous but worthy of a short discussion as one may fall within this definition without knowing. The definition allows for the following scenarios to be regarded […]
INTRA-GROUP TRANSACTIONS: HOW IT WORKS
The South African Revenue Service (“SARS”) issued a private binding ruling (BPR329) on 27 September 2019 on the tax implications of intra-group transactions and the subsequent sale of the relevant assets to a third party outside the group of companies. The taxpayer in this regard wants to implement a Broad-Based Black Economic Empowerment transaction in terms of which immovable […]
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 […]
DEDUCTION FOR HOME OFFICE EXPENDITURE
More and more employers are allowing salaried employees to work from home to avoid wasting productive hours while commuting. Such employees may claim a home office deduction (allowed for under the “Other Deductions” section of the personal income tax return or ITR12 form) if certain strict requirements are met. The deductibility of these expenses is […]
FOREIGN CURRENCY: CAPITAL GAIN
With the fast approaching 2019 tax season, taxpayers who have realised a capital gain in a foreign currency should take note of the special rules that apply to the translation of those gains to Rand. Generally, there are two ways of translating a capital gain or loss into Rand – a “simple method” and a […]
SALE OF SHARES: INCOME VS REVENUE – BACK TO FIRST PRINCIPLES
The distinction between amounts of a capital nature as opposed to a revenue (or income) nature is essential, and over the years, few other topics have enjoyed so much attention in our tax courts. Although most taxpayers appreciate this distinction, it is essential to revisit the core principles from time to time, to ensure that […]
RING-FENCING OF ASSESSED LOSSES OF CERTAIN TRADES – PART II
Section 20A of the Income Tax Act[1]ring-fences losses incurred by natural persons from certain trades under specific circumstances. If applicable, the natural person will not be able to set off the loss incurred from that trade against the income from any other trade (such as salary or other professional income) and may only set off […]
RING-FENCING OF ASSESSED LOSSES OF CERTAIN TRADES – PART I
Persons are generally allowed to set off any losses incurred in respect of one trade against the income derived from another trade, thereby reducing their overall tax liability. However, section 20A of the Income Tax Act[1]ring-fences losses incurred by natural persons from certain trades under specific circumstances. If applicable, the natural person will not be […]
NON-RESIDENT SELLERS OF IMMOVABLE PROPERTY
Section 35A of the Income Tax Act[1] came into effect on 1 September 2007 and sets out the capital gains tax consequences of the sale of immovable property situated in South Africa in instances where the seller is not a South African tax resident. In terms of these provisions, the purchaser of the immovable property […]