Bursaries and scholarships: The tax rules are changing
Over the past several years, many employers and employees have made use of the beneficial tax treatment of bursary and scholarship schemes, as provided for in the Income Tax Act. The Act contains provisions that provide an exemption in respect of bona fide bursaries or scholarships granted by employers to employees or relatives of qualifying […]
Section 7C of the income tax act explained
What is section 7C? This section of the Income Tax Act is an anti-avoidance measure aimed at transactions between connected persons and trusts, where a trust is funded by low interest or interest-free loans. This is usually done to ensure that assets form part of the trust’s capital, and the funder (who is usually a […]
When is Capital Gains Tax not incurred?
Section 9HA of the Income Tax Act deals with deemed disposals by a deceased person. This section of the Act often causes some confusion, especially where there are heirs or legatees other than the surviving spouse. In terms of the provision, a deceased person is treated as having disposed of his or her assets at the date of death, for an amount received or accrued equal to […]
Pitfalls of VCC structures
Recently, much emphasis has been placed on the ever-growing Venture Capital Company (“VCC”) regime, particularly on the tax benefits for investors, in terms of which they can deduct the expenditure incurred in acquiring VCC shares, from their taxable income. This is not likely to change any time soon, as the 2020 tax year draws to […]
Employee share ownership plan – Part II
Binding Class Ruling 069 was issued on 23 October 2019 and relates to the tax implications that arise in respect of proposed employee share schemes (“the Schemes”) in terms of the Income Tax Act and the Eighth Schedule.[1] The applicant is a listed resident company that intends to implement new share incentive schemes, which will […]
Employee share ownership plan – Part I
Binding Class Ruling 069 was issued on 23 October 2019 and relates to the tax implications that arise in respect of proposed employee share schemes (“the Schemes”) in terms of the Income Tax Act and the Eighth Schedule.[1] The applicant is a listed resident company that intends to implement new share incentive schemes, which will […]
Employees can make themselves at home
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 determined by section 11 (in particular paragraphs (a), (d) and (e), […]
Employee Share Incentive Schemes – Practical Considerations
Companies, particularly listed companies, offer employees so-called share options (also referred to as share incentive schemes or employee share ownership plans (ESOPs)) as a form of further remuneration and even as an employee retention mechanism. In unpacking and understanding the tax consequences linked to ESOPs, the provisions of section 8C of the Income Tax Act need to be considered. Section […]
The New Generation’s Cash
1.1 Background to Bitcoin Bitcoin, Ether and Litecoin. These are some of the most prominent cryptocurrencies on the market today. Bitcoin is by far the best–known cryptocurrency due to the substantial increase in the price that was experienced in the past couple of years. Bitcoin is a cryptocurrency – a digital asset designed to work as a medium of exchange that uses cryptography to control its creation and management, rather […]
Tax implications of the variation of employment contracts
On 6 November 2018, the South African Revenue Service (“SARS”) issued a binding private ruling (“BPR 312”) in accordance with sections 78(1) and 87(2) of the Tax Administration Act.[1] This ruling set out the tax implications of varying employment contracts. Here the applicant (a resident company) previously entered a profit share arrangement with Mr X, […]