Below, please find issue 122 of ENS' tax in brief, a snapshot of the latest tax developments in South Africa.
case law
- IT 45979 | 20 March 2024
- The taxpayer filed a statutory appeal under section 107 of the Tax Administration Act 28 of 2011 (TAA), read with Rule 10 of the Tax Court Rules.
- The taxpayer, engaged in farming, contested additional assessments by SARS for the 2018 and 2019 tax years related to insurance agreements with Company XYZ Insurance Company Limited.
- The dispute centred on premiums paid for "Multi-Peril Contingency Policy Contracts" in 2018 and 2019, which the taxpayer claimed as a deductible expense under section 11(a) of the Income Tax Act. 58 of 1962.
- The Tax Court evaluated the contracts and determined that the premiums constituted an investment in a capital asset due to their refundable nature and interest generated from the relevant account. The contributions therefore did not qualify as a deductible expense under section 11(a).
- The appeal was dismissed, and SARS' assessments upheld, including in respect of penalties for understatement and interest on underpaid tax for the 2018 and 2019 tax years.
- Find a copy of the case here.
binding general rulings
- Binding General Ruling (“BGR”) 70
| Issue of a Single Section 18A Receipt to a Donor Taxpayer For
Multiple Bona Fide Donations
- This BGR provides clarity on whether a section 18A-approved organisation is entitled to issue a single section 18A receipt for multiple bona fide donations actually paid or transferred by the same donor taxpayer during a year of assessment.
- See a copy of the BGR here.
- BGR 71 | Section 18A Receipt for a Donation of Property in Kind
- This BGR provides clarity on the detail that must appear on a section 18A receipt issued by a section 18A-approved organisation to a donor taxpayer for a donation of any property in kind to comply with section 18A(2) of the ITA and third-party reporting requirements under TAA.
- See a copy of the BGR here.
- BGR (VAT) 72 | Particulars to be Contained a Credit Note for a
Valid Deduction Under Section 16(3)(a)(v) for Prepaid Vouchers
- This BGR sets out the particulars acceptable in a credit note that the telecommunications company must issue to the prepaid subscriber as per section 21(1)(f), read with sections 16(2)(a) and 16(3)(a)(v) of the ValueAdded Tax Act, 1991.
- Find BGR (VAT) 72 here.
- BGR (VAT) 14 | Specific Supplies in the Short-Term (Non-Life)
Insurance Industry
- BGR 14 clarifies the VAT treatment applicable to various supplies in the short-term non-life insurance industry, addressing common transactions and their VAT implications.
- Find BGR (VAT) 14 here.
- BGR (VAT) 64 (Issue 2) | Temporary Application of New Dwellings
for Exempt Supplies Simultaneously held by Developers for Taxable
Purposes
- The ruling addresses the VAT implications for developers who temporarily let newly constructed dwellings for exempt residential use while still holding them for eventual taxable supplies (sales).
- Find BGR (VAT) 64 here.
customs and excise
- Customs and Excise Act, 1964 (“Customs
Act”) | Tariff Amendments 2024
- Publication details for tariff amendment notice R4818, as published in Government Gazette 50646 on 10 May 2024, are now available.
- See notice R4818 here.
- Customs Act | Tariff Classification
- The legislative changes of section 4(3D) of the Customs Act provide for the publication of tariff determinations to assist
- traders who are required to make tariff self-determination when
clearing goods of the same class or kind.
The Tariff Classification documents have been revised to align the process with this legislative change.
Customs Tariff Classification External Policy (SC-CR-A-09) and Excise Tariff Determination Policy (SE-TDN-02) have merged. - The Excise document, TDN-02 – Tariff Determination Policy is withdrawn.
- See the updated policy here.
SARS publications
- Tax Practitioner Connect Issue 52 (May 2024)
- This issue includes information on the Employer annual reconciliation period, a change to the Business Rescue email address, enhancement to the Dispute Resolution Process for Trusts, reporting of digital fraud, enhancements to eFiling, updates of Customs Clearance Declaration and Mandatory Disclosure Rules.
- See the latest issue here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.