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 […]
Transfer duty
Transfer duty is a tax levied upon the purchaser of immovable property situated in South Africa.[1] The duty is levied in accordance with the following sliding scale and is based on the value of the property which is the subject of the transfer: Value of the property (R) Rate 0 – 900 000 […]
Tax consultancy services: A fringe benefit?
A recent judgment of the Tax Court sitting in Pretoria[1] highlighted yet again the very broad nature of the employment fringe benefit regime governed by the Seventh Schedule of the Income Tax Act[2] and applies to goods and services provided to employees through an employer. As a general principle, employees’ benefits received from their employers […]
VAT Increase and Accounting Systems
As you are aware, the National Treasury announced an increase in Value Added Tax (VAT) from 14% to 15% effective 1 April 2018. We urge you to ensure that your accounting systems are set up to process transactions at the new VAT rate of 15% from 1 April 2018. This is to avoid any penalties […]
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 […]
Borrowing to purchase listed shares – 100% tax ineffective?
Where a person borrows money to purchase shares, the general rule would be that the interest paid on the funds borrowed to fund that acquisition would not be deductible for tax purposes, the reason being that the interest expense is not incurred in the production of “income”.[1]+[2] Similarly, interest paid cannot be said to be […]
The taxation of employee incentive schemes
It has become popular commercial practice for many employers to design employment incentive schemes whereby employees are remunerated for services rendered over a period of time by allowing them to participate in share incentive schemes. Typically, these schemes take the form of either cash-based settled schemes or share-based settled schemes. The former involves participating employees […]
Withdrawal of VAT relief for residential property developers
Section 18B of the Value-Added Tax Act[1] was introduced effective 10 January 2012 in a bid to grant relief for residential property developers caused by the slump in the property market at that time. Many property developers, registered for VAT, would develop residential properties with a view to dispose of these properties in the short-term […]
Tax clearance certificates
Taxpayers may require SARS to issue them with a tax clearance certificate for various reasons. This includes a general confirmation that the relevant taxpayer’s affairs are all in order and up to date (a so-called “Good Standing” tax clearance certificate), or a certificate being required to participate in certain government tenders. Perhaps most notably in […]
Company tax in South Africa
If you are self-employed or a business owner, you have to pay company tax in South Africa. How much business tax you pay and what deductions you can claim will depend on the size and type of your business. What is company tax? Company tax (also called, “corporate income tax”) is what keeps our economy functional. There exists […]