Legal Articles and Guides

The South African National Treasury is moving forwards with their promises to tighten up the income tax laws which are applicable to trusts, which relate specifically to instances where trusts have been granted interest-free or low-interest loans by individuals.

You sell your property for a good price and, with the deal in the bag, you start daydreaming about how to spend the proceeds. Then – disaster of disasters – you realise that in the excitement of the sale you forgot all about VAT.

The knives are out for Finance Minister Pravin Gordhan, who is not only facing possible arrest by the Hawks tomorrow " he has been asked to present himself at their offices in connection with the alleged "rogue unit' at SARS " but is also the centre of what a News24 report describes as "a massive new forensic probe into deals concluded during his tenure at the organisation".

SARS paid financial services firm KPMG R23m to investigate allegations of irregularity and misconduct involving the so-called "rogue unit" established to investigate tax evasion, says a BDlive report. This was in addition to the R332 177 spent to finance the work of the Kanyane committee and the R3m paid to the Sikhakhane Panel, both of which were mandated to investigate allegations against former SARS employee Johann van Loggerenberg, who was involved with the unit.

The battle between former Justice Minister Penuell Maduna and his ex-wife escalated this week, with Nompumelelo Maduna claiming he had "concocted" a story to get out of sharing the millions from his empowerment deal with his family, says a Sunday Times report. Nompumelelo filed court papers in response to an urgent application by Penuell in the Gauteng High Court (Pretoria) last month, in which he claimed she was trying to dupe him out of his R10.8m portion of Sasol dividends.

Despite an extensive two-year tender process, three private security companies still managed to secure multimillion-rand City of Cape Town contracts on the basis of fraudulent Tax Clearance Certificates, the Western Cape High Court has found, according to a Weekend Argus report. So serious were the findings made against Okuli Security Services, Comwezi Security Services and Command Security Services SA, that Acting Judge Michael Donen saw fit to grant a punitive costs order against them.

The Panama leaks, last year’s HSBC leaks, and OECD’s “Automatic Exchange of Information initiative” all suggest that South African residents with accounts and investments in foreign tax jurisdictions should ensure that they are fully compliant with all their local and international tax and exchange control obligations.

VAT is a tax that is levied in terms of the VAT Act on the value that is added by each vendor in the production chain of goods and is imposed each time a taxable supply of goods or services takes place. Each vendor is required to account to SARS for the VAT on the value which the vendor added to the good. While a VAT vendor is required to account to SARS for "output tax" on any taxable supplies made by the vendor, the VAT vendor is entitled to deduct from this accounting any "input tax" incurred by the vendor. The effect is that the VAT vendor only pays to SARS the VAT on the value which the vendor added to the good.