On 23 April 2020, National Treasury released a media statement with respect to further tax measures introduced to combat the COVID-19 pandemic. On 1 May 2020, National Treasury also released the Draft COVID-19 Tax Bills that have been updated to reflect the relief measures requiring legislative amendments.

    One of the measures announced by National Treasury, was to allow larger businesses to apply to SARS on a case-by-case basis to defer tax payments without incurring penalties, where such businesses can show that they are incapable of making tax payments due to the COVID-19 pandemic. Larger businesses are those businesses with a gross income of more than R100 million (previously R50 million).

    Following this announcement, SARS has now provided guidance on the process to be followed and the requirements that should be met to apply for the waiving of penalties for tax debt.

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    On 1 April 2020, National Treasury released the COVID-19 Draft Tax Bills, including the Draft Explanatory Memorandum.

    The objective of these Bills is to attempt to manage the severe impact of the COVID-19 measures that have been implemented, by granting certain tax concessions. No tax concessions were proposed with respect to the deferral of payment of value-added tax. While tax concessions regarding the deferral of payment of PAYE and provisional tax were proposed, these concessions focus on small or medium sized businesses (i.e. businesses with an annual turnover equal to or less than R50 million). For more information on these concessions, please refer to the  Draft Explanatory Memorandum.

    What are the practical implications of the COVID-19 tax measures for large businesses (i.e. businesses with turnover exceeding R50 million)?

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    Last week, SARS announced the implementation of measures to ensure the safety of all of its employees and clients. It is expected that these measures will be tightened as a result of President Cyril Ramaphosa’s announcement of a nationwide lockdown in light of the COVID-19 pandemic.

    Want to know more about the SARS measures and the measures announced by President Ramaphosa?

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    There is a direct interface between the CIPC and SARS. While convenient, this can result in non-compliance from a tax perspective.

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    Of late, it is our experience that there is an increase in the severity of understatement penalties imposed by SARS. How can taxpayers safeguard against the imposition of severe penalties?

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    Care should be taken whenever a tax position is taken by a taxpayer, for example, a decision on whether or not an amount is tax deductible. Some tax positions taken by taxpayers, could not only result in understatement penalties, but could also create uncertain tax positions that should be separately presented in the annual financial statements. In this newsletter, we briefly discuss the IFRS presentation requirements for uncertain tax positions, and the impact thereof on tax risk management.

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    With the ever-increasing cost of living, annual remuneration increases may not always be sufficient to increase employees’ buying power. One other mechanism that employers can use to assist their employees, is by granting employees bursaries or scholarships for educational expenditure. If an employer grants a bursary or scholarship to a qualifying employee or a relative of such employee, the bursary or scholarship may possibly be exempt from normal income tax in terms of sections 10(1)(q) and 10(1)(qA) of the Income Tax Act.

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  • Value-added tax impact of certain corporate restructuring transactions clarified

    The draft Taxation Laws Amendment Bill 2019 (draft TLAB) was published on 21 July 2019 for public comment. The draft TLAB proposes to increase the scope of the relief provided by the value-added tax restructuring provisions in section 8(25) of the Value-Added Tax Act No. 89 (1991).

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    The Tax Administration Act (2011) entitles an aggrieved taxpayer to object or appeal against an assessment and certain decisions made by SARS. But what should you do if you are aggrieved by a decision made by SARS and such decision is not subject to objection or appeal?

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    During April 2019, SARS migrated to a new hosting platform. This also had an impact on the SARS eFiling user interface. From 1 July 2019, you will be required to create a default Primary User.

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  • VAT Provisions with respect to irrecoverable debts

    The sale of debts on a non-recourse basis can be a useful cash management tool. Have you considered how recent amendments to section 22 of the Value-Added Tax Act No. 89 of 1991 will impact your corporate tax compliance?

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  • Power of the Court in tax disputes

    A recent Supreme Court of Appeal case highlighted that understatement penalties not only place significant pressure on a taxpayer’s financial resources, but could also be indicative of a lack of commitment to proper corporate tax compliance and risk management. Where a taxpayer disagrees with the understatement penalty imposed, the onus is on the taxpayer to submit proof of why the relevant understatement penalty or the penalty percentage is inappropriate in the circumstances.

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  • Directors of Private Companies no longer automatically regarded as Employees

    Effective for years of assessment commencing on/after 1 March 2019, directors of private companies are no longer specifically included as employees for purposes of the Fourth Schedule to the Income Tax Act 58 (1962).

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  • Changes to the provision for doubtful debt allowance

    Effective for years of assessment commencing on/after 1 January 2019, taxpayers will need to amend the manner in which they determine the doubtful debt allowance as per section 11(j) of the Income Tax Act 58 (1962).

  • Investing Offshore via a Foreign Trust

    If you are considering investing offshore via a foreign trust or have already done so, it is important to consider the amendments as introduced by the 2018 Taxation Laws Amendment Bill published on 25 October 2018.

  • Requests for Relevant Material

    After carefully determining your company tax liability and submitting the completed company tax return, SARS will acknowledge the receipt of your return. SARS might then proceed and request relevant supporting material in instances where it is deemed necessary.

    In our experience, SARS sometimes does not specify the number of days afforded to the taxpayer to comply with the request, and if the number of days is specified, it is unclear whether SARS is referring to calendar days or business days.

    Sound familiar?


  • Draft Tax Bills Published

    The Draft Taxation Laws Amendment Bill 2018 (TLAB) and the Draft Tax Administration Laws Amendment Bill 2018 (TALAB) were published on 16 July 2018 for public comment.

    While still in draft form, do you know how some of these proposed amendments will impact your corporate income tax liability, mergers and acquisitions (m&a tax) or corporate restructuring?

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  • Reportable arrangements

    If you entered into certain transactions, disclosure in the prescribed tax return may not be enough. You could also be required to report these transactions if they are regarded as reportable arrangements. Failure to report a reportable arrangement could result in penalties of between R50 000 and R3,6 million.

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  • Rights and Remedies available to TaxPayers

    We have found that taxpayers are often not aware of all their available rights and remedies. This is one instance in which ignorance may prove not to be bliss!

    Did you know?......

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  • Nubis.Tax Introduction

    We thought it time for a proper introduction and a little background...

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  • VAT rate increase guide

    On 21 February 2018 it was announced that the value-added tax rate will increase from 14% to 15%. The rate increase is to take effect on 1 April 2018. We have compiled a guide to assist the reader to treat this increase in the VAT rate correctly.

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