Don’t lose that assessed loss!
Assessed losses can be carried forward—provided that the company doesn’t cease trading If the amount of allowable deductions exceeds the taxable income in your business, you will end up with what is known as an ‘assessed loss’ for tax purposes. In terms of Section 20 of the Income Tax Act, you are entitled to carry […]
Section 42: Asset-for-share transactions
It is often the case that South African tax resident shareholders wish to reorganise their South African group of companies, for a multitude of commercial reasons, without the ultimate shareholders changing. One of these could potentially be to create a single holding company structure. Various group relief provisions are contained in the Income Tax Act […]
Home office expenditure
Taxpayers who are salaried employees have limited deductions available to them. However, home office expenditure can be claimed as an income tax deduction, but the onus is on the taxpayer to prove that the expenses are in fact deductible. For employment to constitute a “trade” and to qualify to deduct home office expenditure, the taxpayer […]
Wear-and-tear Allowance
Capital expenditure incurred in the production of income and in carrying on of a trade does not qualify for a deduction under the so-called general deduction formula in section 11(a) of the Income Tax Act No 58 of 1962 (the Act). The Act does, however, grant deductions or allowances for specific types of capital expenditure […]
Analysing tax exemption for dividends
Dividends are a valuable part of many shareholders’ income, but even though they are exempt from regular income tax, it does not mean that they are completely exempt from tax. A dividend can be defined as any local or foreign dividend paid by a resident company of South Africa or a foreign country, provided that the […]
Employee share incentive schemes
Employer companies generally implement employee share incentive schemes to retain and incentivise their employees by enabling the latter to receive indirect benefits from the appreciation in the growth of the company. This is an effective way to offer benefits to employees and encourage their participation and loyalty of employees. Even though these schemes are generally […]
VAT: Special dispensation for motor dealers expired
Motor dealers may in certain instances pay an amount to a customer for a second-hand vehicle over the generally accepted trade-in market value reflected in the Auto Dealers’ Guide (motor dealers usually determine the market value of second-hand vehicles according to a publication known as the “Auto Dealers’ Guide”). The difference between this value and […]
Budget 2022: Details start to emerge
The annual National Budget Speech was delivered on 23 February 2022 by Finance Minister Enoch Godongwana. Practitioners are getting to grips with some of the more pertinent changes that will become a reality for taxpayers, particularly in the individuals, employment and savings areas. Reviewing the timing of accrual and incurral of variable remuneration Section 7B […]
What are the requirements for self-invoicing?
As a result of the specific nature of goods, it is common practice that certain recipients of goods and services “self-invoice” when they receive goods or services from their suppliers. In other words, they do not receive an invoice from the suppliers – instead, they invoice themselves. This scenario is typically found where the volume or […]
What constitutes a dividend?
Although there are several exclusions to the general rule, South Africa applies a withholding tax on dividends declared by companies at a rate of 20%. It is essential to appreciate that such a withholding obligation for companies do not arise only on “ordinary” dividends but that the concept of what constitutes a dividend, goes much wider. The Income Tax […]