THE COMMON LAW DOCTRINE OF SIMULATION
In addition to specific anti-avoidance provisions and the general anti-avoidance provisions (GAAR) in the Income Tax Act,[1] the South African Revenue Service can apply another established principle to attack the validity of transactions and arrangements, namely the common law doctrine of simulation, or the plus valet doctrine. This is a fundamental principle of the South […]
DIFFERENT INTEREST RATES IN TAX
The Income Tax Act[1] contains definitions for various interest rates. These interest rates serve as the basis for interest calculations in income tax in different circumstances and can broadly be categorised into three main areas. Knowing the difference between these different types of interest rates could have a material impact on the amount of interest […]
DEDUCTION FOR PHOTOVOLTAIC SOLAR ENERGY PLANTS
Section 12B(1) and (2) of the Income Tax Act[1] provides for a 50/30/20 income tax deduction in respect of certain machinery or plant owned by the taxpayer and which was or is brought into use for the first time by that taxpayer, for the purpose of his or her trade to be used by that […]
SPECIAL TRUSTS
The Income Tax Act[1] includes specific provisions for “special trusts”. These trusts are taxed on the same sliding scale applicable to natural persons, which could be lower than the current 45% flat rate applicable to conventional trusts. Capital gains tax (“CGT”) is also lower within a special trust, at a maximum rate of 18% compared to […]
EMPLOYEES’ TAX (PART II): ARE YOU A LABOUR BROKER FOR TAX PURPOSES?
The deduction of employees’ tax is dependent upon three elements being present. These elements are all defined in the Fourth Schedule to the Income Tax Act[1] and include i) the presence of an employer, ii) an employee and iii) the payment of remuneration. No employees’ tax can be charged if one of these elements is […]
TAX DEDUCTIONS AGAINST SALARY EARNINGS
Our clients who earn only a salary will know that very few tax deductions are available against salary income for income tax purposes and whereby they may reduce the taxable income derived ultimately from such remunerations. Section 23(m) of the Income Tax Act[1] provides that none of the deductions ordinarily available to taxpayers in terms […]
ADDITIONAL MEDICAL EXPENSES TAX CREDIT
Section 6B of the Income Tax Act[1] provides for an additional medical expenses tax credit (“AMTC”) which is calculated against qualifying “out of pocket” medical expenses. This tax credit reduces the amount of income tax a natural person (hereinafter referred to as the “taxpayer”) is liable to pay. The AMTC is granted in addition to […]
MEDICAL SCHEME FEES TAX CREDIT
Section 6A of the Income Tax Act[1] provides for a medical scheme fees tax credit (“MTC”), or rebate, which reduces the amount of income tax payable by a natural person (hereinafter referred to as the “taxpayer”). The MTC applies to the fees paid by the taxpayer to a registered medical scheme for his or her […]
MISUSE OF ASSESSED LOSSES
An assessed loss for income tax purposes is a potentially valuable asset: it represents past losses made by a taxpayer which is able of being carried forward to subsequent tax years against which future taxable profits are able of being set off. The set-off of historic losses – in the form of an assessed loss […]
ARE YOU A SOUTH AFRICAN TAX RESIDENT INDIVIDUAL?
The question of TT for individuals has always been relevant in South Africa. It appears as though we find ourselves in a country which has always been a popular destination to which people from across the globe flock to set up businesses, but also a country from which people often travel for long-term stints overseas, or […]