Interest free loans and trusts
The recent introduction of section 7C to the Income Tax Act[1] brought the taxation of trusts, and the funding thereof specifically, under the spotlight again. Briefly, section 7C seeks to levy donations tax on loans owing by trusts to connected parties (typically beneficiaries or the companies they control). To the extent that interest is not […]
VAT consequences where agents are involved
A practical problem often encountered in the VAT context is when services or goods are supplied to and from VAT vendors via agents. (In this context, the term “agent” is used in the legal sense where a “principal/agent” relationship exists, and not where the term is often loosely used in the non-legal sense, where reference […]
Interest free loans to directors
It is very often the case that a company extends an interest free or low interest loan to a director. This manifests either as a true incentive or benefit to that director (mostly the case in larger corporate environments) or in a small business environment in lieu of salaries paid. The latter is especially the […]
Interest free loans cross border
A consideration of the tax consequences of interest free loans will be incomplete if not also considered in the context of interest free debt funding being provided cross-border. Typically, when “cheap debt” is encountered it is in the form of low interest or interest free loans being provided to related parties (or “connected persons” as […]
Beware of Capital Gains Tax when you emigrate
While many people immigrate to South Africa, we also see many of our clients emigrating from South Africa. And while formal migration-status is not necessarily linked to tax residency, the time of tax migration often coincides with formal emigration linked to passport or visum status. Many are surprised to learn (often after the fact) that […]
Interest free loans with companies
The latest annual nation budget presented in Parliament proposed the dividends tax rate to be increased with almost immediate effect from 15% to 20%. The increased rate brings into renewed focus what anti-avoidance measures exist in the Income Tax Act[1] that seeks to ensure that the dividends tax is not avoided. Most commonly, the dividends […]
A timing anomoly when disposing of property
Property related transactions are typically significant transactions, and therefore tax considerations linked thereto should be carefully considered. One such consideration involves the timing of the disposal of immovable property that was held by persons as capital assets. Sales of such property will comprise a transaction subject to capital gains tax (“CGT”). This article considers when […]
Retirement funds and divorce: The tax implications
This article will explore the tax consequences where a member of a retirement fund and his/her spouse gets divorced and the member spouse’s retirement benefits are to be divided between him-/herself and the non-member spouse. Where the non-member spouse will receive a portion of the member spouse’s retirement fund in terms of the divorce court […]
Proposed amendment to the taxation of trusts
National Treasury published its much anticipated proposed annual amendments to tax legislation earlier in July. This year the proposed amendments were widely anticipated to shed led on Treasury’s proposals on how to address the perceived abuse of the trust form specifically going forward, especially as relates to the now well known ‘conduit pipe’ principle (in […]
Tax implications of international branches
Irrespective of whether a South African company is expanding its business offshore, or whether international businesses set up shop in South Africa, companies trading internationally are often confronted with the complex tax implications for doing so. This article explores the tax implications linked to international branches of a company specifically; it does not consider the […]