Andersen Tax Review — 12 April 2021

Author: Ernest Marais

Service: Andersen Tax


Notable Tax Law updates covering South African case law, legislation, SARS and global tax developments.

Case Law

Massmart Holdings Limited v CSARS (84/2020) [2021] ZASCA 27

Massmart wished to set off its capital losses for CGT purposes for dealings in relation to a Trust. The Trust was used for implementation of a share incentive scheme for key management personnel. Massmart wished to claim the Trust’s assessed losses as part of their company’s taxable income calculation [not the Trust] as they are a beneficiary of the Trust. This was dismissed in the Tax Court and the matter was taken on appeal to the SCA. It was determined by the SCA that Massmart loaned money to the Trust and recorded such loans as unpaid loans in Massmart’s statements and as a loss in the Trust’s statements. These loans were for the purpose of purchasing shares. The SCA therefore concluded that the loans were technically assets in the hands of Massmart in the form of an unpaid loan (accounts receivable) and could not be used as an assessed loss in the books of Massmart to set off their taxable income. The appeal was therefore dismissed. The full judgment can be accessed here.

Legislation

Income Tax Act, 1962

Interpretation Note 14 – SARS has published a comprehensive note to provide clarity on the definitions of allowances, advances and reimbursements in an employment relationship. The note further shows instances wherein deductions are allowed.

Value Added Tax Act, 1991

Section 72 Decisions – When there are difficulties and anomalies arise for vendors in terms of VAT, a directive can be issued by the Commissioner for clarity and guidance as to how a vendor should proceed. The process to be followed is in terms of section 72. SARS have released a comprehensive guide on the procedure to be followed when such a directive is required by the vendor.

South African Revenue Services Developments

SARS Calls on Employers to Stick to Deadline

SARS requests all employees to file their Employer Reconciliation Declaration (EMP501) from 1 April 2021 to 31 May 2021. The full media statement can be accessed here.

Transfer Duty guide

SARS has released a detailed guide on Transfer Duty. The guide consists of definitions, types of transactions that are subject to VAT or transfer duty, how to calculate transfer duty, exemptions from transfer duty, issues arising from payment, returns submissions, general administration and occurrence of transfer duty on acquisition of property.

Binding Private Rulings Cost

The cost for a small, medium and micro enterprises (SMME) application is R2500 and R14 000 for any other taxpayer. The cost recovery fees are calculated thereafter at a rate of R650 and R1000 for non-urgent and urgent matters respectfully. The government gazette notice can be accessed here.

SARS Announces the Preliminary Revenue Outcome For 2020/21

SARS has stated that R1 250 billion was collected for the year 2020/2021 as at 31 March 2021. This was more than the budget expected R1 212 Billion. The full media release statement can be accessed here.

Country by Country Information

SARS has released a comprehensive guide on how to submit Country by Country Information and which entities are required to submit such information.

Contact Ernest for assistance with corporate and commercial tax matters