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1
This booklet is published by FHPKF Publishers (Pty) Ltd for and on behalf of
• Allinformationcontainedhereinisbelievedtobecorrectatthetimeofpublication,17February2010. Thecontentsshouldnotbeusedasabasisforactionwithoutfurtherprofessionaladvice.• Whileeverycarehasbeentakeninthecompilationofthispublicationnoresponsibilityshallbe acceptedforanyinaccuracies,errorsoromissions.• Theinformationispreparedfromthebudgetspeechandthelegislationnallyenactedmaydiffer considerably.• ChangesinratesoftaxannouncedintheBudgetSpeechforthetaxyear2011becomeeffectiveonly oncethelegislationisenactedbyParliament.• Copyrightsubsistsinthiswork.Nopartofthisworkmaybereproducedinanyformorbyanymeans withoutthepublisher’swrittenpermission.
INDEX AdministrativePenalties 14
Bond/InstalmentRepayments 32
Broad-BasedEmployeeEquity 28
BudgetProposals 2
BursariesandScholarships 28CapitalGainsTax 22
CapitalIncentiveAllowances 19
ConnectedPersons 6
Deductions-Donations 18
Deductions-Employees 9
Deductions-Individuals 10
DeemedCapital-DisposalofShares 13
DeemedEmployees 7
Directors-PAYE 13
DividendsTax 3
DonationsTax 36
DoubleTaxationAgreements andWithholdingTaxes 30
EnvironmentalExpenditure 13
EstateDuty 36
ExchangeControlRegulations 38
ExecutorsRemuneration 36
Exemptions-Individuals 9
FarmingIncome 29FringeBenets 16
IndustrialPolicyProjects 35
InterestRates-Changes 33
LearnershipAllowance 31
LimitationofDeductions 25
MarriedinCommunity ofProperty 31
NationalCreditAct 34
Non-Residents 39OfcialInterestRates andPenalties 32
PassiveHoldingCompany 3
Patent/IntellectualProperty 25
Pre-ProductionInterest 28
Pre-TradingExpenditure 28
PrimeOverdraftRates 33
ProvisionalTax 12
PublicBenetOrganisations 18ReinvestmentRelief 25
RelocationofanEmployee 18
ResearchandDevelopment 25
ResidenceBasedTaxation 26
ResidentialBuildingAllowances 18
RestraintofTrade 28
RetentionofDocuments andRecords 40
RetirementLumpSumBenets 11
Ring-FencedAssessedLosses 11
RoyaltiestoNon-Residents 6
SecuritiesTransferTax 35
SkillsDevelopmentLevy 5
SmallBusinessCorporations 8
StampDuty 35
StrategicAllowances 22
TaxImpact-Companies 4
TaxRates-Companies 4
TaxRates-Individuals 5TaxRates-Trusts 6
TaxRebates 5
TaxThresholds 5
TransferDuty 34
TravelAllowances 14
Trusts-Losses 6
TurnoverTax 35
Value-AddedTax 37
ValueExtractionTax 3VentureCapitalInvestments 31
WearandTearAllowances 20
WithdrawalLumpSumBenets 11
chartered accountants
& business advisers
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1 Corporate Tax Rate Nochangetotherateofcorporatetax.
2 VAT
Areviewoftheclawbackfromdeveloperswhotemporarilylease residentialpropertypriortosaleistakingplace.
3 Voluntary Disclosure Program AVoluntaryDisclosureProgramwillexistfor12monthsfrom November2010.Non-complianttaxpayersmayusethiswindow periodtodiscloseandpayundeclaredtaxliabillitiesatareduced interestchargeandwithoutpenalties.Considerationwillalsobegiven toalignexchangecontrolviolationpenaltieswiththisvoluntary disclosureopportunity.
4 Discontinuation o the SITE System Thissystemwillberepealedfrom1March2011andreliefforlow incomeearnerswithmultiplesourcesofincomewillbeconsidered.
5 Retrenchment TheR30000exemptionforretrenchmentpackageswillbeadjusted andalignedwiththeretirementandretrenchmentlumpsums.
6 Interest Exemption
Inanattempttolimittaxplanningaimedatshiftingincome,theinterest exemptionwillnowbelimitedtobankdeposits,governmentretail bondsandcollectiveinvestmentmoneymarketfunds.
7 Post Retirement Lump Sum Lumpsumpayoutsthatoccurpostretirementwillinfuturereceivethe sametaxtreatmentaslumpsumsonretirement.
8 Limiting Salary Structuring Thecompanycarfringebenetvalueistobeincreased.Deferred
compensationandgrouplifeinsuranceschemesprovidedbyan employerwillbetaxedasafringebenet.
9 Further Anti-Avoidance Measures Sophisticatedtaxavoidanceschemes,particularlythoseinvolving crossbordertransactions,arelikelytocomeunderclosescrutiny.
10 Enhancements to Tax Administration SARSisoftheopinionthattaxcompliancehasdeterioratedduring therecessionandasaresultitintendstobolsteritsenforcement
policy.Thiswillincludeimprovementstothesystemofadministrative proceduresandgreaterfocusonsignicanttaxpayersandwealthy individuals.
11 Estate Duty EstatedutyandCGTarisingondeatharetobereviewedduetothelow revenueyieldandtheuseoftruststominimisetaxes.
BUDGET PROPOSALS
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DIVIDENDS TAX
Dividendstax,applicabletoSAresidentcompanies,willcomeinto operationatleastthreemonthsafteradateannouncedbytheMinister. DividendsTaxwillbebornebytheshareholderatarateof10%(subject toanyreductionintermsofdoubletaxationagreements).
Exemptions rom Dividends TaxThefollowingshareholdersareexemptfromdividendstax:SAresident companies,theGovernment,PBO’s,certainexemptbodies,rehabilitationtrusts,pension,providentandsimilarfunds,shareholdersinaregisteredmicrobusiness,providedthedividenddoesnotexceedR200000inayear ofassessment,anaturalpersonuponreceiptofaninterestinaprimary residenceandanon-residentreceivingadividendfromanon-resident companywhichislistedontheJSE,i.e.aduallistedcompany.
Withholding Tax Obligations in respect o Dividends TaxDividendstaxinitiallyrequiresthecompanydeclaringthedividendsto
withholddividendstaxonpayment.However,liabilityforwithholdingtaxshiftsifthedividendispaidtoaregulatedintermediarywhichincludescentralsecuritiesdepositoryparticipants,brokers,collectiveinvestmentschemesandlistedinvestmentserviceproviders.Dividendstaxcanbereducedoreliminateduponthetimelyreceiptofawrittendeclarationthat theshareholderisentitledtoanexemptionortotaxtreatyrelief.
Use o Unutilised STC CreditsUnutilisedSTCcreditsmustbeutilisedwithinveyearsofthechangeover tothedividendstaxsystem.STCcreditswillbeexhaustedrst.
Revised Dividend DefnitionThedenitionofadividendhasbeensimpliedandincludesalldistributionstoashareholderotherthan:areductionofcontributedtaxcapital(whichconsistsofuntaintedsharepremiumandsharecapitalofacompany), capitilisationissues,asharebuy-backofaJSElistedcompany,oraredemp-tionofaparticipatoryinterestinaforeigncollectiveinvestmentscheme.Inorderforadistributionofcontributedtaxcapitalnottoberegardedasadividendthedirectorsmust,immediatelypriortothedistribution,recordinwritingthatcontributedtaxcapitalisbeingdistributed.
Introduction o Value Extraction Tax (VET)
Thisisananti-avoidancemeasuresimilartothedeemeddividendprovisionswhichwillbeintroducedwhendividendstaxiseffective.Thisisaseparatetaxleviedonthecompanyandnottheshareholder.Thisarisesonlyin respectofSouthAfricanresidentcompaniesseekingtoextractvalue withoutdeclaringdividendsandiscalculatedat10%ofthevalueextracted.Thisisapplicablewhereacompany:provideslowinterestloansoradvancestoashareholder,releasesorrelievesloanspreviouslymadetoashareholder,settlesaloanowedbyashareholdertoathirdparty,orceasestobeaSouth Africanresident.Theseanti-avoidancerulesapplyalsotoallpersonswhoareconnectedpersonsinrelationtotheshareholder.
Passive Holding CompanyTopreventtheuseofprivateinvestmentcompaniesavoidingthepaymentofdividendstax,passiveholdingcompanies,whichearnmorethan80%oftheirgrossincomeintheformofinterestanddividendsandinwhichmorethan50%oftheparticipationrightsareheldbyveorlessresidentnaturalpersons,willbetaxedat10%ontheirdividendincomeandatarateof40%ontheirothertaxableincome,butwillnotberequiredtosubjectdividendstheydeclaretothedividendstax.
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NORMALTAX
Foryearsofassessmentendingduringthefollowingperiods:
1April1993-31March1994 40%
1April1994-31March1999 35%
1April1999-31March2005 30%
1April2005-31March2008 29%1April2008-31March2011 28%
Note:CompaniesqualifyingundertheTaxHolidaylegislation(Section37H)
weresubjecttotaxat0%.TheTaxHolidayendedon30September1999.
Branch Profts TaxForyearsofassessmentendingduringthefollowingperiods:
1April1996-31March1999 40%
1April1999-31March2005 35%1April2005-31March2008 34%
1April2008-31March2011 33%
Note:Asfromyearsofassessmentendingonorafter31March2008these
STCDividenddeclaredonorafter 17March1993 15%
Dividenddeclaredonorafter 22June1994 25%Dividenddeclaredonorafter 14March1996 12,5%
Dividenddeclaredonorafter 1October2007 10%
2008 20082009 2010 2011 PriortoAfter 1/10/20071/10/2007
R RR R R
Taxableincome 100,00 100,00100,00 100,00 100,00Less:Normaltax 29,00 29,0028,00 28,00 28,00
71,00 71,0072,00 72,00 72,00Less:STC 7,89 6,456,55 6,55 6,55
Availablefordistribution 63,11 64,5565,45 65,45 65,45
Totaltaxpaid 36,89 35,4534,55 34,55 34,55
Effectiverateoftax 36,89% 35,45%34,55% 34,55% 34,55%
Assumesallprotsaredeclaredasdividends
TAX RATES COMPANIES
TAX IMPACT COMPANIES
Tax year
ratesapplytotheprotsofanon-residentcompany.
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TAX RATES INDIVIDUALS-2010
Taxable income Rates o taxR0-R132000 18%ofeachR1R132001-R210000 R23760+25%oftheamountover R132000R210001-R290000 R43260+30%oftheamountover R210000
R290001-R410000 R67260+35%oftheamountover R290000R410001-R525000 R109260+38%oftheamountover R410000R525001+ R152960+40%oftheamountover R525000
Taxable income Rates o taxR0-R140000 18%ofeachR1R140001-R221000 R25200+25%oftheamountover R140000
R221001-R305000 R45450+30%oftheamountover R221000R305001-R431000 R70650+35%oftheamountover R305000R431001-R552000 R114750+38%oftheamountover R431000R552001+ R160730+40%oftheamountover R552000
TAX RATES INDIVIDUALS-2011
TAX THRESHOLDS
Taxable income2010 2011
Personsunder65 R54200 R57000
Personsover65 R84200 R88528
Amounts deductible rom the tax payable 2010 2011
Personsunder65 R9756 R10260
Personsover65 R15156 R15935
Theserebatesarenotavailabletoeithernormalorspecialtrusts,andcompanies.
TAX REBATES
TheSkillsDevelopmentActseekstorestructuretheexistingtrainingsystemandupgradethelevelofskillsandaccesstoskillsbyworkers.
Directorsremuneration,onthesamebasisasforPAYE,willbesubjecttotheSkillsDevelopmentLevy.
TheSkillsDevelopmentLevyispayablebyemployersatarateof1%ofremunerationasfrom1April2001(previously0,5%).
EmployerspayingannualremunerationoflessthanR500000areexemptfromthislevyasfrom1August2005.
SKILLS DEVELOPMENTLEVY
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ROYALTIES TO NON-RESIDENTS
Asfrom1January2009,nodeductionwillbeallowedinrespectofroyaltypaymentsif:
• theintellectualpropertywasatanytimewhollyorpartlyownedby aSouthAfricanresidentorthetaxpayer,or
• theintellectualpropertywasdevelopedbythetaxpayerora
connectedpersonwhoisaresident.
Iftheroyaltyissubjecttoawithholdingtaxatarateofatleast10%thenadeductionofonethirdoftheroyaltywillbeallowed.
CONNECTED PERSONS
Whereadepreciableassetisacquiredbyataxpayeranditwasheldby
aconnectedpersonwithinaperiodoftwoyearsbeforethatacquisition,thepurchasermayclaimcapitalallowancesonthelowerofthepurchasepriceorthefollowingdeemedcost:
• thenettaxvalueoftheassettotheseller,plus
• therecoupmentonthedisposalbytheseller,plus
• thetaxablecapitalgainonthedisposalbytheseller.
TAX RATES TRUSTS-2010AND2011
Alossincurredbyatrustcannotbedistributedtobeneciaries.Thelossisretainedinthetrustandcarriedforwardtothenextyearasanassessedloss.
Taxable income Rate o tax Alltaxableincome 40%ofeachR1
Specialtrustsaretaxedattheratesapplicabletoindividuals.
A special trustisonecreatedsolelyforthebenetofaperson affectedbyamentalillnessorseriousphysicaldisabilitywhichpreventsthatpersonfromearningsufcientincometomaintainhimself,oratestamentarytrustestablishedsolelyforthebenetofminorchildrenwhoarerelativesofthedeceased.Wherethepersonforwhosebenetthetrustwasestablisheddiespriortooronthelastdayoftheyearofassessmentortheyoungestbeneciaryinthecaseofatestamentarytrustturns21yearsofagepriortooronthelastdayoftheyearof
assessment,thetrustwillnolongerberegardedasaspecialtrust.
TRUSTS LOSSES
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Foryearsofassessmentcommencingonorafter1March2009:
• A labour broker isanaturalpersonwho,forreward,providesaclient withotherpersonstorenderaservicefortheclientorprocuressuch otherpersonsfortheclientandremuneratessuchpersons.
• A personal service provider isacompany(includingaclose corporation)ortrustwhereanyservicerenderedonbehalfofthe entitytoitsclientisrenderedpersonallybyanypersonwhoisa connectedpersoninrelationtosuchentity,andoneofthefollowing provisionsapply:
- thepersonwouldhavebeenregardedasanemployeeofthe
client,iftheservicewasnotrenderedthroughanentity;or
- thepersonorentityrenderingtheservicemustperformsuch servicemainlyatthepremisesoftheclientandsuchpersonor entityissubjecttothecontrolorsupervisionofsuchclientasto themannerinwhichthedutiesareperformed;or
- morethan80%oftheincomederivedfromservicesrenderedis receivedfromoneclientorassociatedpersoninrelationtothe client.
• Theentitywill,however,notberegardedasa personal service provider wheresuchentityemploysthreeormorefull-time
employeesthroughouttheyearofassessment,noneofwhomare connectedpersonsinrelationtosuchentity.
Implications
• Alabourbrokernotinpossessionofanexemptioncerticatewill besubjecttoPAYEattheratesapplicabletoindividualtaxpayers.
• ApersonalserviceproviderwillbesubjecttoPAYEattherateof 33%(2008:34%)inthecaseofacompanyand40%inthecase ofatrust.
• NoPAYEwillberequiredtobedeductedwheretheentityprovides anafdavitconrmingthatitdoesnotreceivemorethan80%ofits incomefromonesource.
• ThedeemedemployeemayapplytoSARSforataxdirectivefora lowerrateoftax.
• Deductionsavailabletodeemedemployeeswillbelimitedto remunerationforservicesrendered,contributionstopension, providentandbenetfunds,legalexpenses,baddebts,expenses inrespectofpremises,nancecharges,insurance,repairs,fueland maintenanceinrespectofassetsusedwhollyandexclusivelyfor tradeandanyamountpreviouslyincludedintaxableincomeand subsequentlyrefundedbytherecipient.
Labourbrokersandpersonalserviceprovidersareregardedasdeemedemployees.
TAXATION DEEMEDEMPLOYEES
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Yearsofassessmentendingbetween1April2010and31March2011
Yearsofassessmentendingbetween1April2009and31March2010
Applies i:
• Allshareholdersormembersthroughouttheyearofassessmentare naturalpersonswhoholdnosharesinanyother privatecompaniesor members’interestinanyotherclosecorporationsorco-operativesother thanthosewhichareinactiveandhaveassetsoflessthanR5000
• GrossincomefortheyearofassessmentdoesnotexceedR14million (2006:R6million)
• Notmorethan20%ofthegrossincomeandallthecapitalgainsconsist collectivelyof investment incomeandincomefromrenderinga personal
service
- Investment income includesanyannuity,interest,rentalincome, royaltyoranyincomeofasimilarnature,aswellasdividendsand anyproceedsderivedfrominvestmentortradinginnancial instruments(includingfutures,optionsandotherderivatives), marketablesecuritiesorimmovableproperty
- Personal serviceincludesanyserviceintheeldofaccounting,
actuarialscience,architecture,auctioneering,auditing,broadcasting, broking,commercialarts,consulting,draughtsmanship,education, engineering,entertainment,health,informationtechnology, journalism,law,management,performingarts,realestate,research, secretarialservices,sport,surveying,translation,valuationor veterinaryscience,whichisperformedpersonallybyanypersonwho holdsaninterestinthecompanyorclosecorporation,exceptwhere suchsmallbusinesscorporationemploysthreeormore unconnectedfull-timeemployeesforcoreoperations
• Thecompany,co-operativeorclosecorporationisnotanemployment
entity.
Taxable income Rates o tax R0-R54200 Nil
R54201-R300000 10%oftheamountoverR54200R300001+ R24580+28%oftheamountoverR300000
Taxable income Rates o taxR0-R57000 NilR57001-R300000 10%oftheamountoverR57000R300001+ R24300+28%oftheamountoverR300000
TAXATION SMALLBUSINESSCORPORATIONS
Investment incentive
Thefullcostofanyassetusedinaprocessofmanufactureandbroughtintouseforthersttimeonorafter1April2001,maybedeductedinthetaxyearinwhichtheassetisbroughtintouse.Asfrom1April2005,allotherdepreciableassetsarewrittenoffona50:30:20basis.
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Employeesorholdersofofcewhoderiveremunerationarerestrictedin
deductingexpenditureincurredwhichrelatestoemploymenttothe following:
• Deductionsinrespectofcontributionstoapensionfundorretirementannuity fund
• Legalexpenses• Wearandtearallowance• Baddebtsallowance• Doubtfuldebtsallowance• Premiumspaidintermsofanallowableinsurancepolicy
- totheextentthatthepolicycoversthepersonagainstlossof incomeasaresultofillness,injury,disabilityorunemployment,and - inrespectofwhichallamountspayableintermsofthepolicy constitutesincomeasdened• Homeofceexpenses,subjecttorequirements
• Refundedawardsforservicesrenderedandrefundedrestraintoftrade awardsasfrom1March2008.
• DividendsreceivedoraccruedfromSouthAfricancompaniesare generallynotsubjecttotax.• Allinterestreceivedbyoraccruedtonon-residentsisexemptfromtax providedtheindividualisphysicallyabsentfromSouthAfricaforatleast 183days,anddidnotcarryonbusinessinSouthAfricathrougha permanentestablishmentduringtheyearofassessment.• Interestreceivedbyresidentnaturalpersons: Personsunder65years R22300 (2010:R21000) Personsaged65yearsandover R32000 (2010:R30000) Interestincludesdistributionsfrompropertyunittrustsandforeign interestanddividends.Theforeigninterestanddividendexemptionis limitedtoR3700(2010:R3500).• Unemploymentinsurancebenets.
Termination lump sums received rom employer AonceoffexemptionofR30000applliesif:
• theemployeehasreachedtheageof55years,or• theterminationofservicesareduetoill-health,or• theemployeewasretrenchedbecausetheemployerhasceasedto operateorbecauseofpersonnelreductionThisexemptiondoesnotapplytodirectorsofcompaniesormembersofclosecorporationsiftheyatanytimeheldaninterestofmorethan5%inthatentity.
Thetaxableportionistaxedintermsoftheratingformula.
Compensation Asfrom1March2007,compensationawardspaidbyanemployeronthedeathofanemployeeinthecourseofemploymentwillbeexempttotheextentofR300000lessanypreviousretrenchmentexemptionenjoyedbythatemployee.
DEDUCTIONS EMPLOYEES
EXEMPTIONS INDIVIDUALS
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Current pension und contributions7,5%ofremunerationfromretirement-fundingemploymentorR1750,whicheveristhegreater.Retirement-fundingemploymentreferstoincomewhichistakenintoaccounttodeterminecontributionstoapensionor providentfund.
Excesscontributionsarenotcarriedforwardtothenextyearofassessmentbutareaccumulatedforthepurposeofdeterminingthetaxfreeportionofthelumpsumuponretirement.
Arrear pension und contributionsUptoamaximumofR1800perannum.Anyexcessmaybecarriedforward.
Current retirement annuity und contributions15%oftaxableincomefromnon-retirement-fundingemployment,orR3500lesscurrentcontributionstoapensionfund,orR1750,whicheveristhegreater.
Reinstated retirement annuity und contributionsUptoamaximumofR1800perannum.Anyexcessmaybecarriedforward.
Medical expenses and medical aid deductions• 65 years and older:Mayclaimallqualifyingexpenditureincurredand medicalaidcontributionspaidbythetaxpayeroremployer• Younger than 65 years:Mayclaimmedicalaidcontributions,paidby thetaxpayeroremployer,uptothecappedamountandqualifying expendituretotheextentthatitexceeds7,5%oftaxableincomebefore thisdeduction
• Younger than 65 years (but with an immediate amily member whohas a disability):Ifthetaxpayer,spouseorchild(includinganadopted
childorstepchild)hasadisability,thedeductionallowedisallqualifying expenditureandmedicalaidcontributionspaidbythetaxpayeror employer
• ThecappedamountiscalculatedatR670(2010:R625)foreachofthe rsttwobeneciariesandR410(2010:R380)foreachadditional beneciaryasdenedbythemedicalaidfund
• Qualifyingexpenditureincludes:
- owncontributionstomedicalaidfundsinexcessofcappedamount - medicalaidfringebenetdeterminedbytheemployerinexcessof cappedamount - paymentstomedicalpractitioners,nursinghomesandhospitals - paymentstopharmacistsforprescribedmedicines - paymentsforphysicaldisabilities,includingremedialteachingand costsincurredformentallyhandicappedpersons - paymentsforthebenetofanydependents
• Disability meansamoderatetoseverelimitationofaperson’sabilityto functionorperformdailyactivitiesasaresultofphysical,sensory,
communication,intellectualormentalimpairment,ifthelimitationlasts morethanayearandisdiagnosedbyaregisteredmedicalpractitioner
• Recoveriesofexpenses(includingamountsreceivedfrommedicalaid savingsaccount)reducetheclaim• Expenditurepaidbyataxpayeronbehalfofaspouseorchildrencan onlybeclaimedinthetaxpayer’sowntaxreturn.
DEDUCTIONS INDIVIDUALS
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Asfrom1March2004,lossesfromsecondarytradeswillbering-fenced,andwillnotbeavailableforset-offagainstincomefromanyothertrade.Itwillonlyapplytoanindividualwhosetaxableincome,beforesettingoffanyassessedlossorbalanceofassessedloss,isequaltoorexceedsthelevelatwhichthemaximumrateoftaxisapplicable.Fortherestrictionstoapplythepersonmusthaveincurredanassessedlossfromthesecondarytradeinatleastthreeyearsofassessmentduringanyveyearperiod,orhavecarriedonanyofthefollowing‘suspect’trades:• Anysportingactivities• Anydealingincollectables• Therentalofaccommodation,vehicles,aircraftorboats(unlessatleast 80%oftheassetisusedbypersonswhoarenotrelativesofsuch personforatleasthalfoftheyearofassessment)
• Animalshowing• Farmingoranimalbreeding(otherwisethanonafull-timebasis)• Performingorcreativearts• Gamblingorbetting.Thetaxpayerwillbeabletocircumventtheseprovisionswherehecanprovethatthereisareasonableprospectofderivingtaxableincomewithinareas- onableperiodandwherehecomplieswithothertests,unlesslosseshavebeenincurredincarryingonasuspecttradeinatleastsixoutoftenyears.
ASSESSEDLOSSESRING-FENCED
RETIREMENT LUMPSUMBENEFITS
Asfrom1October2007,thetaxable portionofalumpsumfromapension,providentorretirementannuityfundonretirementordeathisthelumpsumlessanycontributionsthathavenotbeenallowedasataxdeductionplusthe taxable portion o all lump sums previously received.Thisamountissubjecttotaxatthefollowingratesless any tax previously paid:
Taxable portion o lump sum
R0-R300000 0%R300001-R600000 18%oftheamountoverR300000R600001-R900000R54000+27%oftheamountoverR600000R900001+ R135000+36%oftheamountoverR900000
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Thetaxablelumpsumcannotbeset-offagainstanyassessedlossofthetaxpayer.
WITHDRAWAL LUMPSUMBENEFITS
Asfrom1March2009,thetaxable portionofapre-retirementlumpsumfromapensionorprovidentfundisthewithdrawallessanytransfertoanewfund plus all withdrawal lump sums previously received.Thisamountissubjecttotaxatthefollowingratesless any tax previously paid:
Taxable portion o withdrawal
R0-R22500 0%R22501-R600000 18%oftheamountoverR22500R600001-R900000R103950+27%oftheamountoverR600000R900001+ R184950+36%oftheamountoverR900000
Rates o tax
Rates o tax
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PROVISIONAL TAX
Allprovisionaltaxpayersarerequiredtoremittwoprovisionaltaxpaymentsayear.Athirdvoluntarypaymentmayberequiredtoavoidinterestbeingcharged.
First Year o AssessmentWhereataxpayerhasnotbeenassessedpreviously,areasonableestimateofthetaxableincomemustbemade.Thebasicamountcannotbeestimatedatnilaswaspreviouspractice,unlessfullymotivated.
First PaymentOnehalfofthetotaltaxinrespectoftheestimatedtaxableincomeforthe yearispayablesixmonthsbeforethenancialyearend.Theestimateof taxableincomemaynotbelessthanthebasicamountwithouttheconsent ofSARS.
Second Payment Atwo-tiermodelappliesdependingonthetaxpayer’staxableincome: • Actual taxable income equal to or less than R1 million Toavoidanyadditionaltaxontheunderestimationoftaxableincome thiscanbebasedonthebasicamountasdenedorifalowerestimate isusedtheestimatemustbewithin90%ofthetaxableincomenally assessed.• Actual taxable income exceeds R1 million Toavoidanyadditionaltaxontheunderestimationtheestimatemustbe within80%ofthetaxableincomenallyassessed.Iftheaboverequirementsarenotmet,apenaltyof20%oftheprovisionaltaxunderpaidmaybeimposed.
Third Payment
ThirdprovisionalpaymentsareonlyapplicabletoindividualsandtrustswithtaxableincomeinexcessofR50000andcompaniesandclosecorporationswithtaxableincomeinexcessofR20000.Suchpaymentsshouldbemadebefore30SeptemberinthecaseofataxpayerwithaFebruaryyearendandwithinsixmonthsofotheryearendstoavoidinterestbeingcharged.
Basic AmountThebasicamountisthetaxableincomeofthelatestprecedingyearof assessmentincreasedby8%p.a.ifthatassessmentismorethanayearold.
Permissable Reductions in the Basic AmountCapitalgainsandtaxableportionsoflumpsumsarenotincludedin
thebasicamountfortherstperiodorthesecondperiod,wherethetaxableincomeisnotexpectedtoexceedR1million.Ifhoweveranestimatelowerthanthebasicamountisused,suchamountsmustbeincludedinthe estimate.TheseamountshavetobeincludedinthesecondprovisionaltaxpaymentswherethetaxableincomeisexpectedtoexceedR1million.
EstimatesSARShastherighttoincreaseanyprovisionaltaxestimate,evenifbasedonthebasicamount,toanamountconsideredreasonable.
Persons over 65Personsover65years,excludingdirectorsofcompaniesandmembersof
closecorporations,whosetaxableincomedoesnotexceedR120000(2009:R80000)areexemptfromprovisionaltax,providedthatsuchincomeconsistsexclusivelyofremuneration,rental,interestordividends.
Persons under 65Personsunder65yearswhodonotcarryonbusiness,andwhosetaxable incomedoesnotexceedthetaxthresholdorwhoseinterest,foreign dividendsandrentalincomedoesnotexceedR20000(2008:R10000)areexemptfromprovisionaltax.
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DIRECTORS PAYE
Directorsofprivatecompaniesandmembersofclosecorporationsare deemedtohavereceivedamonthlyremuneration,subjecttoPAYE,calculatedinaccordancewiththefollowingformula:
Y=T
NWhere
Y=deemedmonthlyremuneration
T= thebalanceofremunerationpaidoraccruedinthelastyearof assessmentafterthedeductionofcontributionstopensionfunds, retirementannuityfunds,qualifyingmedicalaidcontributionsandincome protectionplansbytheemployee,qualifyingdonationsmadebythe employeronbehalfoftheemployee,lumpsumawardsfromtheemployer andwithdrawalsfromretirementfundsandshareincentivebenets.
N=numberofcompletedmonthswhichthedirector/memberwasemployed bythecompany/closecorporationduringthelastyearofassessment.
Actualremunerationpaidisstillsubjecttoemployeestax.Theemployeestaxpayablethereonmustbereducedbytheamountofemployeestaxpayableonthedeemedremuneration.
Theformulacalculatedremunerationdoesnotapplytodirectorsofprivatecompaniesandmembersofclosecorporationswheretheyearnatleast75% oftheirremunerationintheformofxedmonthlypayments.
ENVIRONMENTAL EXPENDITURE
Expenditureincurredbyataxpayertoconserveormaintainlandisdeduct- ibleifitiscarriedoutintermsofabiodiversitymanagementagreementwithadurationofatleastveyearsandthelandusedbythetaxpayerinhistradeconsistsof,includesorisincloseproximitytothelandwhichissubjecttothisagreement.Wheretheconservationormaintenanceoflandownedbythetaxpayeriscarriedoutintermsofadeclarationofatleast30years’duration,theexpenditureincurredisdeemedtobeadonationtotheGovernment
whichqualiesasadeductionundersection18A.Incertaincircumstanceswherethelandisdeclaredanationalparkornaturereserveanannualdonationbasedon10%ofthelesserofcostormarketvalueofthelandisdeemedtobemadetotheGovernmentandqualiesfor asection18Adeductionintheyearthedeclarationismadeandineachof thesubsequentnineyears.Recoupmentsarisewherethetaxpayerbreachestheagreementorviolatesthedeclaration.
DEEMED CAPITAL DISPOSALOFSHARES Asfrom1October2007,theproceedsonthesaleofanequityshareor collectiveinvestmentschemeunitwillautomaticallybeofacapitalnatureifheldcontinuouslyforatleastthreeyearsexcept:• ashareinashareblockcompany• ashareinanon-residentcompany• ahybridequityinstrument.Previouslythetaxpayercouldelectthattheproceedsonthesaleofalistedshareheldforatleastveyearsbetreatedascapital.
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TRAVEL ALLOWANCES
Reimbursive Travel ExpensesWhereanemployeereceivesareimbursementbasedontheactualbusinesskilometrestravelled,noothercompensationispaidtothe employeeandthecostsarecalculatedinaccordancewiththeprescribedrateof292cents(2008:246cents)perkilometre,noemployeestaxneedbededucted,providedthebusinesstraveldoesnotexceed8000kilometresperannum.Thereimbursementmustbedisclosedundercode3703ontheIRP5certicate.NoPAYEiswith-
heldandtheamountisnotsubjecttotaxationonassessment.Ifthebusinesskilometrestravelledexceed8000kilometresper annum,orifthereimbursiverateperkilometreexceedstheprescribedrate,orifothercompensationispaidtotheemployeetheallowancemustbedisclosedseparatelyundercode3702ontheIRP5certicate.NoPAYEiswithheldandtheamountissubjecttotaxationon assessment.
Fixed Travel Allowances
Asfrom1March2010,80%(2007:60%)ofthexedtravel allowanceissubjecttoPAYEandthefullallowanceisdisclosedon theemployee’sIRP5certicate,irrespectiveofthequantumof businesstravel.
Failuretosubmitcertainreturnsorinformationwillgiverisetothe followingxedratepenalties:
ADMINISTRATIVE PENALTIES
Thepenaltywillautomaticallybeimposedmonthlyuntilthetaxpayerremediesthenon-compliance.
• Late payment o PAYE and provisional tax attracts a penalty o10% o the amount due.
• ThelatesubmissionofthePAYEreconciliationattractsapenalty
o 10% o the PAYE deducted or the tax year.
Assessed loss or taxable income Penalty
or preceding yearAssessedloss R 250
R0–R250000 R 250
R250001–R500000 R 500
R500001–R1000000 R 1000
R1000001–R5000000 R 2000
R5000001–R10000000 R 4000
R10000001–R50000000 R 8000
AboveR50000000 R16000
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Accuraterecordsoftheopeningandclosingodometerreadingsmust bemaintainedinallcircumstances.Priorto1March2010,inthe absenceofaccuratetravelrecords,therst18000kilometrestravelled aredeemedprivatetravelandthemaximumbusinesskilometreswhich
maybeclaimedarelimitedto14000. Asfrom1March2010theclaimmustbebasedontheactualdistancetravelledassupportedbyalogbookandthedeemedkilometresmethodmaynolongerbeused.
DEDUCTIONS TRAVELEXPENSES
Cost o vehicle
DoesnotexceedR40000 15364 47,3 22,5
ExceedsR40000butnotR60000 20910 49,4 26,2
ExceedsR60000butnotR80000 25979 49,4 26,2
ExceedsR80000butnotR100000 31513 54,8 30,5
ExceedsR100000butnotR120000 36978 54,8 30,5
ExceedsR120000butnotR140000 41771 54,8 30,5
ExceedsR140000butnotR160000 47512 57,2 39,8
ExceedsR160000butnotR180000 52629 57,2 39,8
ExceedsR180000butnotR200000 58334 65,9 43,8
ExceedsR200000butnotR220000 64591 65,9 43,8ExceedsR220000butnotR240000 69072 65,9 43,8
ExceedsR240000butnotR260000 74777 65,9 43,8
ExceedsR260000butnotR280000 79918 69,3 52,5
ExceedsR280000butnotR300000 85440 69,3 52,5
ExceedsR300000butnotR320000 88793 69,3 52,5
ExceedsR320000butnotR340000 95218 69,3 52,5
ExceedsR340000 100011 77,1 68,0
DEEMEDEXPENDITURE-2008
15
DEEMEDEXPENDITURE-2009/2011
Cost o vehicle
DoesnotexceedR40000 14672 58,6 21,7
ExceedsR40000butnotR80000 29106 58,6 21,7
ExceedsR80000butnotR120000 39928 62,5 24,2
ExceedsR120000butnotR160000 50749 68,6 28,0
ExceedsR160000butnotR200000 63424 68,8 41,1
ExceedsR200000butnotR240000 76041 81,5 46,4
ExceedsR240000butnotR280000 86211 81,5 46,4
ExceedsR280000butnotR320000 96260 85,7 49,4
ExceedsR320000butnotR360000 106367 94,6 56,2
ExceedsR360000butnotR400000 116012 110,3 75,2
ExceedsR400000 116012 110,3 75,2
Fixed Fuel RepairsR cc
Fixed Fuel RepairsR cc
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Thecashequivalentoftaxablebenetsgrantedtoemployeesistaxable.
Use o Company Owned VehicleThedeterminedvalueforthefringebenetisthecashcostexcludingVAT, nancechargesandinterest.Theemployeewillbetaxedon2,5%(2006:1,8%)permonthofthedeterminedvalueofthemotorvehiclehavingthehighest
value,and4%permonthofthedeterminedvalueofanysecondorsubsequentvehicleusedprimarilyforprivatepurposes.Iftheemployeebearsthefullcostof:• allfuelusedforprivateuse(includingtravelbetweenplaceofresidence andemployment),themonthlyvalueisreducedby0,22%(2006:R120);• maintainingthevehicle(includingrepairs,servicing,lubricationandtyres), themonthlyvalueisreducedby0,18%(2006:R85).Iftheemployeehastheuseofacompanycarandreceivesatravelallowanceforanothervehicle,thecompanycaristaxedat4%ofthedeterminedvalue andnot2,5%.Ifthecostsfortheothervehiclearereimbursedbasedonactual
distancetravelledonbusinessandtheratedoesnotexceed292cents(2008:246cents)perkilometrethe2,5%(2006:1,8%)willstillapply.Theprivateusebyanemployeeofamotorvehicleshallhavenovalueif:• thevehicleisavailabletoandusedbyallemployeesandtheprivateuseis infrequentandincidentaltoitsbusinessuse,or• wherethenatureoftheemployee’sdutiesrequiresregularuseofthe vehicleforperformanceofdutiesoutsidenormalhoursofworkanditis notusedforprivatepurposesotherthantraveltoandfromwork.Whereitcanbeshownthatthedistancetravelledforprivatepurposes (includingtravellingbetweentheemployee’splaceofresidenceandhisplaceofemployment)islessthan10000km,thefringebenetmaybereduceduponassessmentbytheratioofthisdistanceto10000km.TheprovisionofacompanycarresultsinadeemedconsiderationandthusliableforoutputVATforthevendoremployer.Thedeemedconsideration,inclusiveofVAT,isasfollows:Motorvehicle/Doublecab 0,3%ofcostofvehicle(excl.VAT)permonthBakkies 0,6%ofcostofvehicle(excl.VAT)permonth
Medical Aid Contributions Asfrom1March2010,thefullcontributionbyanemployerisafringebenet.
Theamountbywhichanemployer’scontributiontoamedicalaidfundexceedsR670(2010:R625)foreachofthersttwobeneciariesasdenedbythemedicalaidfundandR410(2010:R380)foreachadditionalbeneciaryissubjecttoPAYE.Iftheemployermakesalumpsumpaymentforallemployees,theeffectivebenetisdeterminedinaccordancewithaformula,whichwillhavetheeffectofapportionmentamongstallemployeesconcerned.
Holiday AccommodationTheemployeeistaxedontheprevailingmarketrateifthepropertyisownedbytheemployerorrentedfromanassociatedentity;ortheactualrentaliftheemployerrentedtheaccommodation.
Long Service and Bravery AwardsTherstR5000ofthevalueofanyassetawarded,excludingcash,isnotsubjecttotax.
Use o Business Cellphones and Computers Asfrom1March2008notaxablevaluewillbeplacedontheprivateuseby employeesofemployerownedcellphonesandcomputerswhichareusedmainlyforbusinesspurposes.
FRINGE BENEFITS
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Low Interest/Interest-Free Loans• Theamounttaxedisthedifferencebetweeninterestpayableontheloan bytheemployeeandtheofcialinterestrate• Short-termloans,notgrantedregularly,whicharenotinexcessofR3000, arenottaxablebenets• Aloantotheemployeetoenablehimtofurtherhisownstudiesisnota taxablebenet.
Subsistence AllowancesIfanemployeeisobligedtospendatleastonenightawayfromhisusual residenceinSouthAfricaonbusiness,theemployermaypayanallowanceforpersonalsubsistenceandincidentalcostswithoutsuchamountsbeing includedintheemployee’staxableincome,subjecttotheemployeetravellingforbusinesswithinthefollowingmonth.Ifsuchallowanceispaidtoanemployeeandthatemployeedoesnottravelforbusinesspurposesbytheendofthefollowingmonth,theallowancebecomessubjecttoPAYEinthatmonth.Iftheallowancesdonotexceedtheamountsorperiodsdetailedbelow,thetotalallowancemustbereectedundercode3705ontheIRP5certicate.
Wheretheallowancesexceedtheamountsorperiodsdetailedbelow,thetotalallowancemustbereectedundercode3704ontheIRP5certicate.Thefollowingamountsaredeemedtohavebeenexpendedbyanemployeeinrespectofasubsistenceallowance:Local travel• R85(2010:R80)perdayorpartofadayforincidentalcosts;or• R276(2010:R260)perdayorpartofadayformealsandincidentalcosts.Whereanallowanceispaidtoanemployeetocoverthecostofaccommo- dation,mealsorotherincidentalcosts,theemployeehastoprovehowmuchhespentwhileawayonbusiness.Thisclaimislimitedtotheallowance received.Overseas travel Actualaccommodationcostsplusanallowancepercountryassetouton www.sars.gov.za(2009:$215)perdayformealsandincidentalcostsincurredoutsideSouthAfrica.Thedeemedexpenditurewillnotapplywherethe absenceisforacontinuousperiodinexcessofsixweeks.
Residential Accommodation Supplied by Employer Asfrom1March1999,whereaccommodationisprovidedtoanemployeeandisnotownedbytheemployerorassociatedentity,thevalueofthefringe benettobetaxedshallbethegreateroftheformulavalueortherentalandotherexpensespaidbytheemployer.Theformulawillneverthelessapplyifitis:• customaryfortheindustrytoprovidefreeorsubsidisedaccommodation toemployees;• necessaryfortheparticularemployertoprovidefreeaccommodationfor properperformanceoftheemployee’sdutiesorasaresultoffrequent movementofemployeesorlackofexistingaccommodation;and• providedforbonadebusinesspurposes,otherthanobtainingatax benet. Asfrom1March2008,norentalvaluewillbeplacedonthe:• supplyofaccommodationtoanemployeeawayfromhisusualplaceof
residenceinSouthAfricafortheperformingofduties• supplyofaccommodationinSouthAfricatoanemployeeawayfromhis usualplaceofresidenceoutsideSouthAfricaforatwoyearperiod.This concessiondoesnotapplyiftheemployeewaspresentinSouthAfricafor morethan90daysinthetaxyearpriortothedateofarrivalforthepurpose ofhisduties.ThereisamonthlymonetarycapofR25000.
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Asset type Conditions or annual allowance Annual allowance
Residential Buildingprojectserectedonorafter1April1982 2%ofcostandan buildings andbefore21October2008consistingofatleastinitialallowanceof veunitsofmorethanoneroomintendedfor 10%ofcost
letting,oroccupationbybonadefull-time employees
Newandunusedbuildingsacquired,erectedor 5%ofcostor10% improvedonorafter21October2008ifsituated ofcostforlowcost anywhereinSouthAfricaandownedbythetax- residentialunitsnot payerforuseinhistradeeitherforlettingoras exceedingR200000 employeeaccommodation.Enhancedallowances forastandaloneunit areavailablewherethelowcostresidentialunit orR250000inthe issituatedinanurbandevelopmentzone caseofanapartment
Employee 50%ofthecostsincurredorfundsadvancedor R6000priorto housing donatedtonancetheerectionofhousingfor 1March2008
employeesonorbefore21October2008 R15000between subjecttoamaximumperdwelling 1March2008and 20October2008
Employee Allowanceonamountsowingoninterestfree 10%ofamount housing loanaccountinrespectoflowcostresidential owingattheend loans unitssoldatcostbythetaxpayertoemployees ofeachyearof andsubjecttorepurchaseatcostonlyincaseof assessment repaymentdefaultorterminationofemployment
Thefollowingitemsofexpenditurebornebytheemployerforrelocation, appointmentorterminationareexemptfromtax:• transportationoftheemployee,membersofhishouseholdandpersonal
possessions• hiringtemporaryresidentialaccommodationfortheemployeeand
membersofhishouseholdforupto183daysaftertransfer• suchcostsasSARSmayallow,e.g.newschooluniforms,replacementof curtains,bondregistrationandlegalfees,transferduty,motorvehicle registrationfees,cancellationofbondandagent’sfeeonsaleofprevious residenceExpenseswhichdonotqualifyarelossonsaleofthepreviousresidenceandarchitect’sfeesfordesignoforalterationstoanewresidence.
RELOCATION OF ANEMPLOYEE
AnorganisationwillqualifyasaPublicBenetOrganisation(PBO)ifitcarriesoutoneormorepublicbenetactivitiesinanon-protmannersubstantiallyinSouthAfrica.ApublicbenetactivityincludestheactivitiesassetoutintheNinthScheduletotheAct,aswellasactivitiesapprovedbytheMinisterofFinanceintheGazette.
DonationstocertaindesignatedPBO’swillqualifyforataxdeductionIndividuals-limitedto10%(2007:5%)oftaxableincomebeforethe
deductionofdonationsandmedicalexpensesCompanies-limitedto10%(2007:5%)oftaxableincomebeforethe deductionofdonations.
PUBLIC BENEFITORGANISATIONS
DEDUCTIONS DONATIONS
RESIDENTIAL BUILDING ALLOWANCES
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Asset type Conditions or annual allowance Annual allowance
Industrialbuildings Constructionofbuildingsorimprovementson 5%ofcost orimprovements orafter1January1989,providedbuilding (previously2%) isusedwhollyormainlyforcarryingon (note3) processofmanufactureorsimilarprocess
Constructionofbuildingsorimprovementsonor 10%ofcost after1July1996to30September1999andthe (note3) buildingsortheimprovementsarebroughtinto usebefore31March2000andusedinaprocess ofmanufactureorsimilarprocess
Newcommercial Anycostincurredinerectinganynewand 5%ofcost buildings(otherthan unusedbuilding,orimprovinganexistiing residential buildingonorafter1April2007whollyormainly accommodation) usedforthepurposesofproducingincomeinthe (note1) courseoftrade
Buildinginanurban Costsincurredinerectingorextendingabuilding 20%inrstyear
developmentzone inrespectofdemolishing,excavatingtheland,or 8%ineachofthe (note1) toprovidewater,powerorparking,drainageor 10subsequentyears security,wastedisposaloraccesstothebuilding Improvementstoexistingbuildings 20%ofcost
Hotelbuildings Constructionofbuildingsorimprovements, 5%ofcost providedusedintradeashotelkeeperorused
by lessee in trade as hotelkeeper Refurbishments(note2)whichcommenced 20%ofcost onorafter17March1993
Hotelequipment Machinery,implements,utensilsorarticles 20%ofcost broughtintouseonorafter16December1989
Aircraft Acquiredonorafter1April1995 20%ofcost(note3)
Farmingequipment Machinery,implements,utensilsorarticles 50%inrstyear (otherthanlivestock)broughtintouseonor 30%insecondyear after1July1988.Biodieselplantandmachinery 20%inthirdyear broughtintouseafter1April2003
Ships SouthAfricanregisteredshipsusedfor 20%ofcost prospecting,miningorasaforeign-going (note3) ship,acquiredonorafter1April1995
Plantandmachinery Neworunusedmanufacturingassetsacquired 40%in1styear onorafter1March2002willbesubjecttowear 20%ineachofthe
andtearallowancesoverfouryears 3subsequentyears(note 4)
Plantandmachinery Newandunusedplantormachinerybroughtinto 100%ofcost (smallbusiness useonorafter1April2001andusedbythetax- corporationsonly) payerdirectlyinaprocessofmanufacture
Non-manufacturing Acquiredonorafter1April2005 50%inrstyear assets(smallbusiness 30%insecondyear corporationsonly) 20%inthirdyear
Licences Expenditure,otherthanforinfrastructure, Evenlyoverthe toacquirealicencefromagoverment periodofthelicence, bodytocarryontelecommunicationservices, subjecttoa
exploration,productionordistributionof maximumof petroleumortheprovisionofgamblingfacilities 30years
Notes:1 Allowancesavailabletoownersasusersofthebuildingoraslessors/nanciers2 Refurbishmentisdenedasanyworkundertakenwithintheexistingbuildingframework3 Recoupmentsofallowancescanbedeductedfromthecostofthereplacementasset4 Whereplantandmachineryisusedinaprocessofmanufactureorasimilarprocess, thetaxpayerisobligedtomakeuseoftheallowancesandnotthewearandtearrates
CAPITAL INCENTIVE ALLOWANCES
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ThefollowingratesofwearandtearareallowedbySARSintermsofInterpretationNote47:
Type o No. o yearsasset or write-o
Type o No. o yearsasset or write-o
Addingmachines 6 Air-conditioners window 6 mobile 5 roomunit 10 Air-conditioningassets absorptiontypechillers 25 airhandlingunits 20 centrifugalchillers 20 coolingtowers 15
condensingsets 15 Aircraft(lightpassengerorcommercialhelicopters) 4 Arcweldingequipment 6 Artefacts 25Balers 6Batterychargers 5Bicycles 4Boilers 4Bulldozers 3Bumpingaking 4
Carports 5Cashregisters 5Cellphoneantennae 6Cellphonemasts 10Cellulartelephones 2Cheque-writingmachines 6Cinemaequipment 5Colddrinkdispensers 6Communicationsystems 5Compressors 4Computers
mainframe 5 personal 3Computersoftware(mainframes) purchased 3 self-developed 1Computersoftware(personalcomputers) 2Concretemixersportable 4Concretetransitmixers 3Containers 10Cropsprayers 6Curtains 5Debarkingequipment 4Deliveryvehicles 4Demountablepartitions 6Dentalanddoctors’equipment 5Dictaphones 3Drillingequipment(water) 5
Drills 6Electricsaws 6Electrostaticcopiers 6Engravingequipment 5Escalators 20Excavators 4Faxmachines 3Fertiliserspreaders 6Firearms 6Fireextinguishers(looseunits) 5
Firedetectionssystems 3Fishingvessels 12Fittedcarpets 6Food bins 4Food-conveyingsystems 4Fork-lifttrucks 4Front-endloaders 4Furnitureandttings 6Gantrycranes 6Gardenirrigationequipment(movable) 5
Gascuttingequipment 6Gasheatersandcookers 6Gearboxes 4Gearshapers 6Generators(portable) 5Generators(standby) 15Graders 4Grindingmachines 6Guillotines 6Gymnasiumequipment Cardiovascular 2
Healthtesting 5 Weightsandstrength 4 Spinning 1 Other 10Hairdressers’equipment 5Harvesters 6Heatdryers 6Heatingequipment 6Hotwatersystems 5Incubators 6Ironingandpressing
equipment 6Kitchenequipment 6Knittingmachines 6Laboratoryresearchequipment 5Lathes 6Laundromatequipment 5Lawreports 5
ALLOWANCESWEAR AND TEAR
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Liftinstallations 12Medicaltheatreequipment 6Millingmachines 6Mobilecaravans 5
Mobilecranes 4Mobilerefrigerationunits 4Motors 4Motorcycles 4Motorisedchainsaws 4Motorisedconcretemixers 3Motormowers 5Musicalinstruments 5Navigationsystems 10Neonsignsandadvertisingboards 10
Ofceequipment-electronic 3Ofceequipment-mechanical 5Oxygenconcentrators 3Ovensandheatingdevices 6Ovensforheatingfood 6Packagingequipment 4Paintings(valuable) 25Pallets 4Passengercars 5Patterns,toolinganddies 3Pelletmills 4
Perforatingequipment 6Photocopyingequipment 5Photographicequipment 6Planers 6Pleasurecraft,etc 12Ploughs 6Portablesafes 25Powertools(hand-operated) 5Powersupply 5Publicaddresssystems 5Pumps 4
Racehorses 4Radarsystems 5Radiocommunication 5Refrigeratedmilktankers 4Refrigerationequipment 6Refrigerators 6
Type o No. o yearsasset or write-o
Type o No. o yearsasset or write-o
Runwaylights5Sanders 6Scales 5Securitysystemsremovable 5Seedseparators 6
Sewingmachines 6Shakers 4Shopttings 6Solarenergyunits 5Specialpatternsandtooling 2Spindryers 6Spotweldingequipment 6Stafftrainingequipment 5Surgebins 4Surveyors: Fieldequipment 10
Instruments 5Tape-recorders 5Telephoneequipment 5Televisionandadvertisinglms 4Televisionsets,videomachinesanddecoders 6Textbooks 3Tractors 4Trailers 5Traxcavators 4Trollies 3
Trucks(heavy-duty) 3Trucks(other) 4Truck-mountedcranes 4Typewriters 6Vendingmachines(includingvideogamemachines) 6Videocassettes 2Warehouseracking 10Washingmachines 5Waterdistillationandpuricationplant 12
Watertankers 4Watertanks 6Weighbridges(movableparts) 10Wirelinerods 1Workshopequipment 5X-rayequipment 5
Notes1 Wearandtearmaybeclaimedoneitheradiminishingvaluemethodoronastraight- linebasis,inwhichcasecertainrequirementsapply2 Removalcostsincurredinmovingbusinessassetsfromonelocationtoanotherare
notdeductibleastheseareregardedasbeingcapitalinnature.Wearandtearmay beclaimedovertheremainingusefulllifeoftheassets3 Whenanassetisacquiredfornoconsideration,awearandteardeductionmaybe claimedonitsmarketvalueatdateofacquisition4 Whereanassetisacquiredfromaconnectedperson,wearandtearmayonlybe claimedontheoriginalcosttothesellerlessallowancesclaimedbytheconnected personplusrecoupmentsandCGTincludedintheseller’sincome5 Theacquisitionof“small”itemsatacostoflessthanR7000(2009:R5000)peritem maybewrittenoffinfullduringtheyearofacquisition
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Asset type Conditions or annual allowance Annual allowance
Strategicprojects Anadditionalindustrialinvestmentallowanceis 100%ofcost (note) allowedonnewandunusedassetsusedforpre- ferredqualifyingstrategicprojectswhichwere approvedbetween31July2001and31July2005
Anyotherqualifyingstrategicprojects 50%ofcost Pipelines Newandunusedstructurescontractedfor 10%ofcost andconstructioncommencedonorafter 23February2000
Electricityand Newandunusedstructurescontractedfor 5%ofcost telephonetrans- andconstructioncommencedonorafter missionlinesand 23February2000 railwaytracks
Airporthangars Constructioncommencedonorafter 5%ofcost andrunways 1April2001
Rollingstock Broughtintouseonorafter1January2008 20%ofcost
Portassets Broughtintouseforthersttimebythetaxpayer 5%ofcost onorafter1January2008
Environmental Asfrom8January2008fornewandunusedassets 40%in1styear assets Environmentaltreatmentandrecyclingassets 20%ineachofthe 3subsequentyears Environmentalwastedisposalassetsofa 5%ofcost permanentnature
Energyefciency Allformsofenergyefciencysavingsasreected Determinedin savings onanenergysavingscerticateinanyyearof accordancewitha assessmentendingbefore1January2020 formula
Note:• Theallowanceislimitedtotheincomederivedfromtheindustrialprojectandtheexcessis deductibleintheimmediatelysucceedingyearofassessment,subjecttocertainotherlimits
CapitalGainsTax(CGT),applicablesince1October2001,appliestoaresident’sworldwideassetsandtoanon-resident’simmovablepropertyorassetsofapermanentestablishmentintheRepublic.
DisposalsCGTistriggeredondisposalofanasset.• Importantdisposalsinclude: - abandonment,scrapping,loss,etc - vestingofaninterestinanassetofatrustinthebeneciary - distributionofanassetbyacompanytoashareholder - granting,renewal,extensionorexcerciseofanoption• Deemeddisposalsinclude: - terminationofSouthAfricanresidency - achangeintheuseofassets - thetransferofanassetbyapermanentestablishment
- thereductionorwaiverofadebtbyacreditorwithoutfull consideration,subjecttocertainexclusions• Disposalsexclude: - thetransferofanassetassecurityforadebtorthereleaseof suchsecurity - issueof,orgrantofanoptiontoacquire,ashare,debentureor
unit trust - loansandthetransferorreleaseofassetsecuringdebt
STRATEGIC ALLOWANCES
CAPITAL GAINSTAX
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Calculation o a Capital Gain/Loss• Acapitalgainorlossisthedifferencebetweentheproceedsandthe basecost
Base Cost• Expenditureincludedinthebasecost: - costofacquisition,transfer,stampdutyandsimilarcosts - remunerationofadvisors,consultantsandagents
- costsofmovinganassetandimprovementcosts• Expenditureexcludedfromthebasecost: - expensesdeductibleforincometaxpurposes - interestpaid,raisingfees(exceptinthecaseoflistedsharesand
business assets) - expensesinitiallyrecordedandsubsequentlyrecovered• Methodsfordeterminingbasecost: - Timeapportionmentbasecost
Example: IfanassetcostR250000on1October1998andwassoldon
30September2002forR450000,asCGTwasimplementedon 1October2001,thebasecostis:
Originalcostexpenditure R250000
Add: R150000*
*Proceedsfromdisposal R450000
Less:Basecostexpenditure (R250000)
Timeapportionmentbasecost R400000
Note 1:Whendeterminingthenumberofyearstobeincludedinthetime
apportionmentcalculation,apartoftheyearistreatedasafullyear. Note 2:Whereexpenditureinrespectofapre-valuationdateassetwasincurred onorafter1October2001andanallowancehasbeenallowedinrespectofthat asset,asecondtimeapportionmentformulaisapplied.
- Valuationasat1October2001 - 20%oftheproceeds
Proceeds• Thetotalamountreceivedoraccruedfromthedisposal
• Excluded: - amountsincludedingrossincomeforincometaxpurposes - amountsrepaidorrepayableorareductioninthesaleprice• Specictransactions: - connectedpersons-deemedtobeatmarketvalue - deceasedpersons-marketvalueasatdateofdeath - deceasedestates-thedisposalisdeemedtobeatthebasecost i.e.marketvalueatdateofdeath
Inclusion Rates And Eective Rates
Inclusion rate Max eective rateIndividualsandspecialtrusts 25% 10%Companies 50% 14%Trusts 50% 20%
UnitTrusts(CIS):theunitholderistaxable
RetirementFunds:nottaxable
} x 34 /
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Exclusions and Rebates• Annual exclusion
NaturalpersonsandspecialtrustsR17500(2009:R16000). NaturalpersonsintheyearofdeathR120000(2007:R60000)
• Exclusions
• Aprimaryresidence,ownedbyanaturalpersonoraspecialtrust, usedfordomesticresidentialpurposes,wheretheproceedsdonot exceedR2milllion.WheretheproceedsexceedR2million,the
exclusionisR1,5million(2006:R1million)ofthecalculatedcapital gain. • Personaluseassets,notusedforthecarryingonofatrade • Lumpsumsfrominsuranceandretirementbenets.Thisexclusion doesnotapplytosecond-handpolicies • Smallbusinessassets,limitedtoR750000(2007:R500000)
Requirements: - grossassetvalue-lessthanR5million - shouldbesoleproprietorforatleastveyears,55yearsold, sufferfromill-health,beinrmordeceased
• Compensation,prizesanddonationstocertainPBO’s
• Assetsusedbyregisteredmicrobusinessesforbusinesspurposes
Rollover RelieGainisdisregardeduntilthedisposalofthereplacementassetoris recognisedoveraveyearperiodcommencingwhenthereplacementassetisbroughtintouse• Certaininvoluntarydisposalsandthereplacementofqualifying
business assets• Transferofassetsbetweenspouses
• Shareblockconversionstosectionaltitle• Transferofprimaryresidencefromaqualifyingcorporateentityortrust between11February2009and31December2011
Corporate TransactionsIncometaxandCGTreliefexistsforcertaintransactions.Theseare:• Assetforsharetransactions• Amalgamationtransactions• Intra-grouptransactions• Unbundlingtransactions• Liquidation,windinguporderegistrationtransactionswithinagroup.
ValuationsValuationsshouldhavebeenobtainedonorbefore30September2004.Forcertaincategoriesofassetsthesevaluationsshouldhavebeenlodgedwiththersttaxreturnsubmittedafter30September2004,orsuchothertimeastheCommissionermayallow,providedthevaluationwasinfactdonepriortotherequisitedate• WherethemarketvalueofanyintangibleassetexceedsR1million• WherethemarketvalueofanyunlistedinvestmentexceedsR10million• WherethemarketvalueofanyotherassetexceedsR10million
Non-resident Sellers o Immovable Property Asfrom1September2007,whereanon-residentdisposesofimmovablepropertyinSouthAfrica,forR2millionormore,thepurchaserwillbeobligedtowithholdthefollowingtaxesfromtheproceeds: Seller’sstatus WithholdingtaxNaturalperson 5,0%Company 7,5%Trust 10,0%
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Expenditurepaidshouldbeapportioned,totheextentthatonlyexpenditureactuallyincurredinayearofassessmentisdeductible.Theremainderofthepre-paidexpenditurewillbedeductibleinsubsequentyearsofassessment.
Thisdoesnotapply:
• wherethegoods,servicesorbenets,inrespectofwhichthe expenditurewasincurred,aresuppliedorrenderedwithinsixmonths aftertheendoftheyearofassessment• wherethetotalpre-paidexpendituredoesnotexceedR80000 (2008:R50000)• toexpenditure,thetimingandaccrualofwhichisspecically determined• topre-paidexpenditurepayableintermsofalegislativeobligation.
LIMITATION OFDEDUCTIONS
PATENT / INTELLECTUALPROPERTY
Ataxpayermayclaimanallowanceforthecostofacquiringanyinvention, patent,design,copyright,otherpropertywhichisofasimilarnatureorknowledgeconnectedwiththeuseofsuchpatent,design,copyrightorotherpropertyortherighttohavesuchknowledgeimparted.
WherethecostexceedsR5000,theallowanceislimitedto:
• 5%ofthecostinrespectofanyinvention,patent,copyrightorother propertyofasimilarnature;or
• 10%ofthecostofanydesignorotherpropertyofasimilarnature.
WheretheintangiblewasacquiredfromaconnectedpersontheallowanceislimitedtothecosttotheconnectedpersonlessallowancesclaimedbytheconnectedpersonplusrecoupmentsandCGTincludedintheseller’sincome.No allowance isallowedinrespectofanyexpenditureincurredbythetaxpayeronorafter29October1999,inrespectoftheacquisitionofanytrademarkorpropertyofasimilarnature.
Whereanamountwasincurredinrespectofqualifyingscienticandtechnologicalresearchanddevelopmentcostsonorafter2November2006,thefollowingdeductionswillbeallowed:
• 150%ofoperatingresearchanddevelopmentcostsinrespectofactivities undertakeninSouthAfricaforthepurposesofthediscoveryofnovel, practicalandnon-obviousinformation;ordevising,developingorcreating anyinvention,designorcomputerprogramasdenedintheirapplicable acts,orknowledgeessentialtotheuseofsuchresearchproperty.• Researchanddevelopmentcapitalcosts(includingthecostofany
buildingorpartthereof,machinery,plant,implements,utensilorarticleor improvementstheretoofacapitalnature)ona50:30:20basis.
RESEARCH ANDDEVELOPMENT
Taxpayerscandefertaxablerecoupmentsandcapitalgainsonthesaleofbusinessassets(excludingbuildings)iftheyfullyreinvestthesaleproceedsinotherqualifyingassetswithinaperiodofthreeyears.Taxontherecoupmentandcapitalgainuponthedisposaloftheoldassetisspreadoverthesameperiodaswearandtearmaybeclaimedforthereplacementasset.
REINVESTMENT RELIEF
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• Aresidentmustincludeinhisincome:
NetincomeofCFCxResident’sparticipationrightsinCFC
TotalparticipationrightsintheCFC
• ThenetincomeofaCFCshouldbecalculatedaccordingtoSouth Africantaxprinciples.Ifthecalculationresultsinaloss,thedeductions arelimitedtoincomeandtheexcessiscarriedforward.
Exemptions
• Thenetincome(includingcapitalgains)oftheCFCthatisderivedfrom anactivebonadeforeignbusinessestablishmentsituatedoutside SouthAfrica
• IncomeotherwisetaxedinSouthAfricaatnormalrates
• ForeigndividendsreceivedbytheCFCfromanotherCFCtotheextent thattheincomefromwhichthedividendisdeclaredhasalreadybeen includedintheresident’staxableincome
• Netincomeattributabletointerest,royaltiesorsimilarincomepayable totheCFCbyotherforeigncompaniesformingpartofthesamegroup ofcompanies.
Tax Rebates
• Wherearesidenthastoincludeinhistaxableincomeanyforeign sourcedincomeorcapitalgain,proportionateamountofthenetincome ofaCFC,foreigndividends,orotheramountsattributedintermsofthe IncomeTaxAct,arebateinrespectofanyforeigntaxespaidorpayable
inrespectofsuchamounttoaforeigngovernmentisallowed• Therebateislimitedtotheforeigntaxpayableandmaynotexceed: TotalSAnormaltaxxForeignincome
Totaltaxableincome
• Ifthenormaltaxpayableontheforeignincomeexceedstherebate,the excessmaybecarriedforwardforamaximumofsevenyears
General
• AlossincurredincarryingonabusinessoutsideSouthAfricamaynotbe setoffagainstincomeinSouthAfrica
• TheamountofforeigntaxpayablemustbetranslatedtoSouthAfrican currencyatthelastdayofthetaxyearbyapplyingtheaverageexchange rateforthattaxyear
• ForeignincomeisconvertedtoRandsbyapplyingthespotexchange rateatthedatetheincomeaccrues.Naturalpersonsandnon-trading trustsmayelecttoapplytheaverageexchangerateforthattaxyear
• Whereforeignincomemaynotberemittedbecauseofrestrictions
imposedbythesourcecountry,suchincomeisincludedintheresident’s grossincomeinthetaxyearduringwhichthatamountmayberemitted toSouthAfrica
• TaxwithheldinaforeigncountryinrespectofSouthAfricansourced incomeisrecognisedasadeductionagainstsuchincomeratherthanas arebateagainstSouthAfricantaxpayableonthatincome.
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Thedeductionofexpenditureandlossesincurredinconnectionwith,butpriortothecommencementoftradeisallowed,providedtheexpenditureandlossesincludingsection24Jinterestcouldhavebeendeductiblehadthetradecommenced.However,suchexpenditureandlossesarering-fenced,inthattheycanonlybesetoffagainstincomefromthattrade.Thebalanceis
carriedforwardandcanbeclaimedinthenextyearofassessment.
EmployercompaniesmayissuequalifyingsharesuptoalimitofR50000(2008:R9000)peremployeeinthecurrenttaxyearandintheimmediatelyprecedingfour(2008:two)taxyears.AtaxdeductionlimitedtoamaximumofR10000(2008:R3000)perannumperemployeewillbeallowedintheemployer’shands.Providedtheemployeeholdsontothesharesforatleast
veyearstherewillbenotaxconsequencesfortheemployee,otherthanCGT.
PRE–TRADING EXPENDITURE
BROAD BASED EMPLOYEEEQUITY
RESTRAINT OFTRADE
Gross Income Anyamountreceivedbyoraccruedtoanynaturalperson,labourbrokerorpersonalserviceproviderforarestraintoftradeimposedonsuchperson, shouldbeincludedintherecipient’sgrossincomeintheyearofreceiptor accrual.
DeductionWhereanamountwasincurredinrespectofarestraintoftradeimposedonanyperson,thededuction,inayearofassessment,islimitedtothelesserof:• theamountapportionedovertheperiodforwhichtherestraintapplies;or• one-thirdoftheamountincurredperannumNodeductionisallowedwheretheamountdidnotconstituteincomeinthehandsoftherecipient.
Interestandrelatednancechargesincurredonanyborrowingforthe acquisition,installation,erectionorconstructionofanymachinery,plant,buildingorimprovementstoabuildingorotherassets,includingland,aredeductiblewhentheassetisbroughtintouseintheproductionofincome.
PRE–PRODUCTION INTEREST
BURSARIES ANDSCHOLARSHIPS
Bona fdescholarshipsorbursariesgrantedtoenableanypersontostudyatarecognisededucationalinstitutionareexemptfromfringebenettax.Wherethebenetisgrantedtoanemployee,theexemptionwillnotapplyunlesstheemployeeagreestoreimbursetheemployerintheeventthatthestudiesarenotcompleted.Wherethebeneciaryisarelativeoftheemployee,theexemptionwillonlyapplyiftheannualremunerationoftheemployeeislessthanR100000(2007:R60000)andtotheextentthatthe
bursarydoesnotexceedR10000(2007:R3000).
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FarmingincomeissubjecttotheprovisionsoftheFirstScheduletothe IncomeTaxAct.Farmerswhoarenaturalpersonsarealsoallowedto averagetheirfarmingincomeindeterminingtheirtaxliability.
Summary O The First Schedule’s Main Paragraphs
Rating Formula Applicable To FarmersBecauseafarmer’sincomeuctuatesfromyeartoyear,hemayelecttobetaxedinaccordancewitharatingformula.Theformulaisbasedonthe averagetaxablefarmingincomeinthecurrentandprecedingfouryears.Shouldheelecttomakeuseofthisformula,itisbindinguponhiminfutureyearsandheisnotpermittedtomakeuseoftheprovisionsrelatingto governmentlivestockreductionschemes,ratingformulaforplantation farmersandprovisionsrelatingtosugarcanefarmers.Forafarmercommencingfarmingoperationstheaveragetaxableincomefromfarmingintherstyearofassessmentendingonorafter1January2008willbetwothirdsofthetaxableincomeforthatperiod.
Capital Development Expenditure (Paragraph 12)
Thefollowingitemsofcapitalexpenditure,incurredduringayearof assessment,aredeductibleagainstfarmingincome:• expenditurewhichisnotrestrictedtotaxableincomefromfarming: - eradicationofnoxiousweedsandinvasivealienvegetationand preventionofsoilerosion• expenditurewhichisrestrictedtotaxableincomefromfarming: - dippingtanks,buildingofroadsandbridgesforfarmingoperations - dams,irrigationschemes,boreholes,pumpingplantsandfences - additions,erectionof,extensionsandimprovementstofarmbuildings notusedfordomesticpurposes - costsofestablishingtheareaforandtheplantingoftrees,shrubs
and perennial plants - carryingofelectricpowerfrommainpowerlinestofarmmachinery andequipment.Theexcessexpenditureovertaxableincomefromfarmingiscarriedforwardtothenextyearofassessment.Machinery,implements,utensilsandarticlesforfarmingpurposesarewrittenoffoverthreeyearsona50:30:20basis.Thisdoesnotapplytomotor vehiclesusedtoconveypassengers,caravans,aircraft(excludingcrop- sprayingaircraft)orofcefurnitureandequipment.Normalwearandtearmaybeclaimedontheseitems.
Non-arming IncomeIncomefromnon-farmingsourcesshouldbeshownseparately.Themostcommonexamplesofnon-farmingincomeare:• interestreceived• incomederivedbyafarmerfromcarryingonatradeotherthanfarming• annuities• rentalincomefromfarmland.
14–16 Plantationfarming17 Sugarcanedestroyedby re19 Ratingformulaforfarmers (whoarenaturalpersons)20 Expropriationoffarming
land
2–5&9 Valuationoflivestockandproduce6–7 Electionofstandardvalues8 Ring-fencingoflivestockacquisitions11 Donationsandinspeciedividends12 Capitaldevelopmentexpenditure13 Forcedsalesanddroughtrelief provisions
TAXATION OF FARMINGINCOME
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DoubleTaxationAgreementsprovideforreliefinrespectofroyaltiesandknow-howwithholdingtaxes.
Non-Treaty Countries 12
Treaty Countries
Algeria 10 Australia 5 Austria 0 Belarus 5/10 Belgium 0Botswana 10 Brazil 10/15
Bulgaria 5 Canada 10 Croatia 5 Cyprus 0CzechRepublic 10 Denmark 0 Egypt 12Ethiopia 20Finland 0 France 12 Germany 12 Ghana 10Greece 5/7 Grenada* 12 Hungary 0 India 10 Indonesia 10Iran 10Ireland 0 Israel 12 Italy 6Japan 10 Korea 10
Kuwait 10Lesotho 10Luxembourg 0Malawi 12Malaysia 5Malta 10
Mauritius 0Mozambique 5Namibia 10Netherlands 0NewZealand 10Nigeria 7.5Norway 0
Oman 8 Pakistan 10PeoplesRepublicofChina 7/10Poland 10Portugal 10Romania 12RussianFederation 0Rwanda 10SaudiArabia 10Seychelles 0SierraLeone* 12Singapore 5SlovakRepublic 10Spain 5Swaziland 10Sweden 12Switzerland 0Taiwan 10Tanzania 10Thailand 12Tunisia 10Turkey 10Uganda 10
Ukraine 10UnitedKingdom 0USA 0Zambia 12Zimbabwe 12
*PartoftheDTAwiththeUnitedKingdom
Notes
1 Iftheroyaltyissubjecttotaxintherecipient’scountryofresidencethereisno withholdingtax.
2 Theaboveratesareprovidedasaguideonly.AnumberoftheaboveDTA’s provideforalternativerates,includingzero,tobeappliedinspecic circumstances.ToviewthecompleteDoubleTaxAgreementsreferto www.sars.gov.za.
3 CurrentlySouthAfricahasnowithholdingtaxondividendsorinterest.Anew dividendwithholdingtaxistoreplaceSTC.Theeffectivedateofthischange hasnotyetbeenannounced.
DOUBLE TAXATION AGREEMENTS
ANDWITHHOLDINGTAXES
Royalties % Royalties %
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Taxpayerswhoaremarriedincommunityofpropertyaretaxedonhalfoftheirowninterest,dividend,rentalincomeandcapitalgainandhalfoftheirspouses’interest,dividend,rentalincomeandcapitalgain,nomatterinwhosenametheassetisregistered(exceptforassetsexcludedfromthejointestate).Allothertaxableincomeistaxedonlyinthehandsofthespousewho
receivesthatincome.
MARRIED INCOMMUNITYOFPROPERTY
LEARNERSHIP ALLOWANCE
Asfrom1July2009ataxpayerwillbeentitledtoadeductionof100%ofthecostofsharesissuedbyaventurecapitalcompanysubjecttothefollowing limitations:• anaturalpersonmaydeductR750000inayearofassessmentanda totalofR2250000• alistedcompanyandanycompanyheld70%directlyorindirectlyby thatlistedcompanycandeductamaximumofthecostofupto40%of
thetotalequityinterestintheventurecapitalcompany• theventurecapitalcompanymustbeapprovedbySARSasaqualifying companyandfullanumberofpre-conditions.
VENTURE CAPITALINVESTMENTS
Employersareallowedtoclaimlearnershipallowancesinrespectofregisteredlearnershipsoverandabovethenormalremunerationdeduction.Foryearsofassessmentendingonorafter1January2010:• Whereanemployerispartytoalearnership,thelearnershipallowance
consistsoftwobasicthresholds,namelyarecurringannualcommence- mentallowanceofR30000andacompletionallowanceofR30000for eachyearofthelearnership,claimablecumulativelyattheendofthe learnership.• Forlearnerswithdisabilitiestherelevantallowancesareincreasedto R50000• Learnershipsoflessthan12fullmonthswillbeeligibleforapro-rata amountofthecommencementallowance(regardlessofthereasonthat thelearnershipfallsshortofthe12monthperiod).Ifalearnershipfalls overtwoyearsofassessment,thecommencementallowanceisallocated
pro-ratabetweenbothyearsbasedonthecalendarmonthsapplicableto eachyearbymultiplyingthecommencementamountbythetotalcalendar monthsofthelearnershipover12.Foryearsofassessmentendingbefore1January2010thelearnership allowanceregimewasasfollows:• Commencementallowance: - Thelesserof70%oftheprescribedremunerationofthelearneror R20000(forexistingemployees) - ThelesseroftheprescribedremunerationofthelearnerorR30000 (fornewemployees)
• Completionallowance:Thelesseroftheprescribedremunerationofthe learnerorR30000• Fordisabledpersonsemployedaslearnerstheinitialallowanceisequal to150%oftheannualsalaryofanexistinglearner(uptoamaximumof R40000)and175%foranewlyemployedlearner(uptoamaximumof R50000).Thecompletionallowanceforadisabledlearneris175%of annualsalary(uptoamaximumofR50000)• Specialprovisionsappliedtomultipleyearapprenticeshipcontracts
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ThefollowingtablereectsrepaymentsoneveryR1000borrowed.
Example:AbondofR80000at10,5%over20yearsR80000÷R1000x09,98=R798.40amonthovera20yearperiod.
Mortgage Bonds Short Term Financing
Rate 10 Yrs 20 Yrs 25 Yrs 30 Yrs 36 Months 48 Months 60 Months08,0% 12,13 08,36 07,72 07,34 31,34 24,41 20,2808,5% 12,40 08,68 08,05 07,69 31,57 24,65 20,5209,0% 12,67 09,00 08,39 08,05 31,80 24,89 20,7609,5% 12,94 09,32 08,74 08,41 32,03 25,12 21,0010,0% 13,22 09,65 09,09 08,78 32,27 25,36 21,2510,5% 13,49 09,98 09,44 09,15 32,50 25,60 21,4911,0% 13,78 10,32 09,80 09,52 32,74 25,85 21,7411,5% 14,06 10,66 10,16 09,90 32,98 26,09 21,9912,0% 14,35 11,01 10,53 10.29 33,21 26,33 22,2412,5% 14,64 11,36 10,90 10,67 33,45 26,58 22,5013,0% 14,93 11,72 11,28 11,06 33,69 26,83 22,75
13,5% 15,23 12,07 11,66 11,45 33,94 27,08 23,0114,0% 15,53 12,44 12,04 11,85 34,18 27,33 23,2714,5% 15,83 12,80 12,42 12,25 34,42 27,58 23,5315,0% 16,13 13,17 12,81 12,64 34,67 27,83 23,7915,5% 16,44 13,54 13,20 13,05 34,91 28,08 24,0516,0% 16,75 13,91 13,59 13,45 35,16 28,34 24,3216,5% 17,60 14,29 13,98 13,85 35,40 28,60 24,58
BOND / INSTALMENT SALE REPAYMENTS
Type Reason Basis o charge
Provisional 1stand2nd 10%penaltyplusinterestchargeddailyfromtax paymentlate duedatetodateofpayment
Provisional 3rdpayment Interestchargeddailyfromeffectivedatetotax late earlierofpaymentdateorassessmentdate. Effectivedateissixmonthsafteryear-end, exceptinthecaseofFebruaryyear-ends, whentheeffectivedateis30September
Provisional Overpayment Crediteddailyfromeffectivedatetodateoftax refund
Assessment Latepayment Interestchargedoneachcompletedmonth fromrstduedatetodateofpayment
Loanto Deemedfringe Ofcialrateforfringebenetlessactualemployee benet ratexloanxactualmonthsdividedby12
VAT Latepayment 10%penaltyplusinterestattheprescribedrate
VAT Refund Calculatedmonthly,starting21businessdays afterreceiptofreturntodateofpayment. Periodissuspendedwhenvendordenies SARSaccesstobooksifrequested
Employees Latepayment 10%penaltyplusinterestchargeddailyfromtax duedatetodateofpayment
SkillsDevelopment Latepayment 10%penaltyplusinterestchargeddailyfromLevy duedatetodateofpayment
OFFICIAL INTERESTRATESANDPENALTIES
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AllpaymentstenderedtoSARS,arerstsetoffagainstpenalties,theninterestandnallytax.
Prescribed rate - Assessed and Provisional tax
Date o change Rate %1May2009 13,51July2009 12,51August2009 11,51September2009 10,5
Ofcial rate - Fringe benefts
Date o change Rate %1March2009 11,51June2009 9,51July2009 8,51September2009 8,0
Prescribed rate - Overpayments o tax
InterestonoverpaymentofprovisionaltaxisonlypaidiftaxableincomeexceedsR50000(individualsandtrusts)R20000(companiesandclosecorporations)ortherefundexceedsR10000,regardlessoftaxableincome.Date o change Rate %1May2009 9,5
1July2009 8,51August2009 7,51September2009 6,5
Prescribed rate - Late payment and late reund o VAT
Date o change Rate %1September2009 10,5
INTEREST RATES CHANGES
Rate Rate
Date o change % Date o change %
20October2003 12,0015December2003 11,50
16August2004 11,0014April2005 10,5008June2006 11,0003August2006 11,5012October2006 12,0007December2006 12,50 08June2007 13,00 17August2007 13,50 12October2007 14,00 07December2007 14,5011April2008 15,0013June2008 15,50
12December2008 15,00 06February2009 14,0025March2009 13,0004May2009 12,0029May2009 11,0014August2009 10,50
07December1998 23,0011January1999 22,00
12February1999 21,0015March1999 20,0026April1999 19,0025June1999 18,0014July1999 17,5002August1999 16,5004October1999 15,5025January2000 14,5018June2001 13,7516July2001 13,5025September2001 13,0016January2002 14,00
18March2002 15,0015June2002 16,0014September2002 17,0013June2003 15,5018August2003 14,5015September2003 13,50
TheabovedatesareapplicabletoStandardBank.Banksdonotalwaysadjusttheirratesonthesameday.
RATESPRIME OVERDRAFT
RATES
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On Immovable Property (on or ater 1 March 2006 )Transferduty,ifpropertyispurchasedbynaturalpersons:
Transferduty,ifpropertyispurchasedbycompanies,closecorporationsortrusts,isataatrateof8%onfullpurchaseconsideration
Notes• NotransferdutyispayableifthetransactionissubjecttoVAT•Wherearegisteredvendorpurchasespropertyfromanon-vendor,theVAT notionalinputtaxcreditislimitedtothequantumoftransferdutypayable.
Anotionalinputtaxcreditisonlyclaimabletotheextenttowhichthe purchasepricehasbeenpaid• Certainexemptionsapplytocorporaterestructuring• Theacquisitionofacontingentrightinatrustthatholdsaresidential propertyorthesharesinacompanyorthemember’sinterestinaclose corporation,whichownsresidentialproperty,comprisingmorethan50% ofitsCGTassets,issubjecttotransferdutyattheapplicablerate• Liabilitiesoftheentityaretobedisregardedwhencalculatingthefair valueofthecontingentrightinthetrust,thesharesinthecompanyorthe member’sinterestintheclosecorporation
• Residentialpropertyincludesdwellings,holidayhomes,apartmentsand similarabodes,improvedandunimproved,zonedforresidentialpurposes. Itexcludesastructureofveormoreunits,rentedbyveormore unconnectedpersons.Italsoexcludesxedpropertyformingpartofthe enterpriseofaVATvendor• Anypersonwhodoesoromitstodoanythingwiththeintenttoevade transferdutymaybechargedwithadditionaldutyuptotwicetheamount ofdutypayable.Suchapersonisguiltyofanoffenceandliableon convictiontoaneorimprisonmentforaperiodnotexceeding60months.• Notransferdutyispayableinrespectoftheacquisitionbyaqualifying naturalpersonofaprimaryresidencefromaqualifyingcorporateentity
ortrustbetween11February2009and31December2011.
Property value Rates o tax
R0-R500000 0% R500001-R1000000 5%onthevalueaboveR500000
R1000001andabove R25000plus8%onthevalueaboveR1000000
Themaximumlendingratesofinterestarecalculatedasfollows:
TRANSFER DUTY
NATIONAL CREDIT ACT
TheNationalCreditActdoesnotapplytolargeagreementsasdened,ortocreditagreementswheretheconsumerisajuristicpersonwithaturnoveraboveadenedthreshold,thestateoranorganofstate,orwherethelenderistheSouth AfricanReserveBankoraforeigner.
Mortgageagreements {(Reporatex2.2)+5%}peryearCreditfacilities {(Reporatex2.2)+10%}peryear
Unsecuredcredittransactions {(Reporatex2.2)+20%}peryearShorttermcredittransactions 5%permonthOthercreditagreements {(Reporatex2.2)+10%}peryearIncidentalcreditagreements 2%permonth
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Nostampdutyispayableonleasesofimmovablepropertyenteredintoafter1April2009
STAMP DUTY
SECURITIES TRANSFERTAX
Asfrom1July2008thestampdutyonthetransferofunlistedsharesandtheuncerticatedsecuritiestaxonlistedshareswasabolishedandreplacedwiththesecuritiestransfertaxatarateof0,25%oftheconsideration, closingpriceormarketvalue(whicheverisgreater)onthetransfer, cancellationorredemptionofanylistedorunlistedshare,members’interestinaclosecorporationorcessionofarighttoreceivedistributionsfromacompanyorclosecorporation.• Onlistedsecurities,thismustbepaidbythe14thofthemonthfollowing themonthduringwhichthetransferoccurred• Onunlistedsecurities,thismustbepaidbytheendofthesecondmonth
followingtheendofthemonthduringwhichthetransferoccurred.• Ifnotpaidinfullwithintheprescribedperiodinterestwillbeimposedat theprescribedrateanda10%penaltywillbepayable• Dutyof0,5%ispayableonthecreationorincreaseinauthorisedshare capitalintermsoftheCompaniesAct.
Turnover
R0-R100000 Nil
R100001-R3000001%oftheamountoverR100000
R300001-R500000 R2000+3%oftheamountoverR300000
R500001-R750000 R8000+5%oftheamountoverR500000
R750001-R1000000 R20500+7%oftheamountoverR750000
TURNOVER TAX MICROBUSINESSES Asfrom1March2009asimpliedturnover-basedtaxsystemwas
implementedforsmallsoleproprietors,partnershipsandincorporated businesseswithaturnoverlessthanR1millionperyear.Thisturnover-basedpresumptivetaxsystemiselective.Afterjoiningthesystem,qualifyingbusinessesaretoremaininthesystemforaminimumofthreeyears(providedtheyremainwithinthemonetarythreshold).Onceabusinesshaselectedtomigrateoutofthesystem,itwillnotbeabletomigratebackforaperiodofthreeyears.Personalservicesrenderedunderemployment-likeconditionsandprofessionalservicesareexcludedfromthistaxsystem.
Rates o tax
INDUSTRIAL POLICY PROJECTS
Anadditionalinvestmentallowanceinrespectofapprovedprojectsisavail-abletobrowneldprojectexpansionorupgradeorgreeneldprojectsinrespectofwhollynewandunusedmanufacturingitems.Theadditional investmentallowance,subjecttolimitations,is55%ofthecostoftheassetsor35%ifnopreferredstatus.Thereisalsoanadditionalprojectrelated trainingallowanceofR36000peremployeelimitedtoR30millionor R20millionifnopreferredstatus.
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Payableatarateof20%onthevalueofanypropertydisposedofgratu-itouslybyaSouthAfricanresident(naturalperson,corporateentityortrust)excludingdonationsexemptfromthetax.Thetaxispayablewithinthreemonthsofthedonationtakingeffect.
Exempt donations include:• DonationsbynaturalpersonsuptoR100000perannumafter 1March2007(2006:R50000)• Donationsbycorporateentitiesnotconsideredtobepubliccompanies uptoR10000perannum• Donationsbetweenspousesnotseparated• Bonademaintenancepayments• DonationstoPublicBenetOrganisationsandqualifyingtraditional councilsandcommunities
• Donationswherethedoneewillnotbenetuntilthedeathofthedonor• Donationsmadebycompanieswhicharerecognisedaspublic companiesfortaxpurposes• Donationscancelledwithinsixmonthsoftheeffectivedate• Propertydisposedofunderandinpursuanceofanytrust• DonationofpropertyorarightinpropertysituatedoutsideSouthAfrica ifacquiredbythedonor - beforebecomingresidentinSouthAfricaforthersttime,or - byinheritanceordonationfromanon-resident• Donationsbetweencompaniesformingpartofthesamegroupof companies
Rates o Estate Duty• Personsdeceasedpriorto1October2001-25%
• Personsdeceasedonorafter1October2001-20%
Exemptions rom Estate Duty include:
• Personsdeceasedpriorto1March2006,therstR1500000• Personsdeceasedonorafter1March2006,therstR2500000
• Personsdeceasedonorafter1March2007,therstR3500000• Anybequesttoasurvivingspouseorapublicbenetorganisation• Whereasurvivingspousediesonorafter1January2010,theunutilised portionoftheexemptionoftherstdeceasedspousemaybecarried forwardtotheestateofthesurvivingspouse
Anexecutorisentitledtothefollowingremuneration:
•theremunerationxedbydeceasedinthewill,or
• 3,5%ongrossassetsand6%onincomeaccruedandcollectedfrom date of death
ExecutorsremunerationissubjecttoVATwheretheexecutorisregisteredasavendor.
ESTATE DUTY
DONATIONS TAX
EXECUTORS REMUNERATION
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VATwasintroducedon30September1991at10%andincreasedto14%on7April1993.TheVATsystemcomprisesthreetypesofsupplies:
• Standard-rated supplies–suppliesofgoodsandservicessubjecttothe VATrateinforceatthetimeofsupply
• Exempt supplies–suppliesofcertainservicesnotsubjecttoVAT. Vendorsmakingexemptsuppliesarenotentitledtoinputcredits
• Zero-rated supplies–suppliesofcertaingoodsorservicessubjectto VATatzeropercent.Thefollowingare,amongstothers,specicallyzero- rated:brownbread,maizemeal,samp,mealierice,driedmaize,dried beans,lentils,pilchards(excludingpetfoodorsardinessuppliedintins), milkpowder(unavoured),dairypowderblend,rice,freshvegetables (excludingcanned,bottledanddehydrated),freshfruit,vegetableoilused forcooking(excludingoliveoil),milkincludinglong-lifemilk(excluding
condensed,avoured,sweetenedandevaporatedmilk),culturedmilk, brownwheatenour,raweggs,podvegetables,diesel,petroland illuminatingparafn.Exportsalesandservicesarezero-rated,subjectto specicrequirements.SuppliesfromSouthAfricatoanIndustrial DevelopmentZonewillbetreatedasexports.
VATinputtaxcreditsmayingeneralnotbeclaimedinrespectof entertainmentandsedananddouble-cabtypemotorvehicles
Allfee-basednancialservicesaresubjecttoVATwiththeexceptionof:
• premiumspayableinrespectoflifepoliciesissuedintermsofthe
InsuranceActandcontributionstopension,provident,retirement annuityandmedicalaidfunds;and
• buyingorsellingofderivativesorgrantingofanoption.
Registration Requirements Asfrom1March2009avendorisrequiredtoregisterforVATwhenhisturn-overina12monthperiodislikelytoexceedR1million(previouslyR300000).WhereturnoverislessthanR1million,butexceedsR50000(2009:R20000)andR60000inthecaseofcommercialrentalestablishmentsina12monthperiod,avendorcanregistervoluntarily.Allvendorsthatderegisterfromthe
VATsysteminlightoftheincreaseintheVATregistrationthresholdto R1millionwillbeallowedtopaytheexitVAToveraperiodofsixmonths.
AregisteredmicrobusinessmaynotberegisteredforVAT.
WhereturnoverislessthanR1,5million(previouslyR1,2million)ina12monthperiod,VATreturnsmayberenderedeveryfourmonths.WhereturnoverislessthanR30millionina12monthperiod,VATreturnsmayberenderedeverytwomonths.TurnoverinexcessofR30millionresultsinVATreturnshavingtoberenderedeverymonth.Farmers,withaturnoveroflessthanR1,5million(previouslyR1,2million),mayrenderVATreturnseverysixmonths.
NormallyavendoraccountsforVATonaninvoicebasis.However,whereturnoverina12-monthperiodislikelytobelessthanR2,5million,onecanapplytobeplacedonapaymentsbasisifthevendorisanaturalpersonoranunincorporatedbodyofpersonswhosemembersarenaturalpersons.
Ataxinvoicemustreectthepurchaser’stradenameandVATregistrationnumber,ifthevalueisinexcessofR3000.
VALUE-ADDED TAX (VAT)
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Foreign Capital AllowanceIndividuals,olderthan18years,ingoodstandingwithSARS,caninvestR4million(2008:R2million)abroad.Incomeaccruingthereonmayalsoberetainedabroad.
Single Discretionary AllowanceIndividuals,olderthan18years,haveasinglediscretionaryallowanceof R750000(2008:R500000)percalendaryearforthepurposeof maintenance,gifts,travelandstudy.Individuals,under18years,haveatravelallowanceofR160000percalendaryear.
Miscellaneous Transers Againsttheproductionofthenecessarydocumentsapplicationcanbe madefortheremittanceof:alimonyandchildsupport,legalfees,feesforexaminationsheldinSouthAfrica,weddingexpensesandBarorBatMitzvah ceremonies,seminarfees,subscriptions,sportingevents.
Medical/Dental Expenses AbroadNolimit,againstoriginaldocumentaryevidenceofcost.
Full-time StudentsTravelandmaintenancecostsareincludedinthesinglediscretionary allowance.Tuitionandacademicfeesmaybepaiddirectlytotheinstitutionconcernedagainstoriginaldocumentaryevidence,withoutanylimit.
Philatelic and Numismatic ImportsNolimitapplicable,excludingSouthAfricangoldcoinsmintedfrom1962.
Directors FeesNolimitisapplicabletodirectorsfeespaidtonon-residentsincluding emigrants.Applicationstobesupportedbyacopyofthedirectorsresolutionconrmingtheamountpaidtogetherwithproofofnon-residentstatus.
GuaranteesNolimitisapplicabletoguaranteesgivenbynon-residentsinrespectof nancialassistancetoSouthAfricanresidentswhoarenotaffectedpersons.
EmigrantsWheretheforeigncapitalallowancehasnotbeenfullyutilised,atop-upispermittedupto:
• R8million(2008:R4million)perfamilyunit• R4million(2008:R2million)persingleemigrant• R1millionoverallinsuredvalueperfamilyunitorsingleemigrantof householdandpersonalandothereffects.Inaddition,theunutilisedportionofthesinglediscretionaryallowancemayberemitted.
InheritancesNon-residentbeneciariesareentitledtotransfertheirinheritance,irrespectiveofwhetherthedeceasedwasresidentornon-residentinSouthAfrica.FormerSouthAfricanresidentshavetocompleteemigrationformalitiesinordertoqualify.
Remittable IncomeTheincomeearnedbyanemigrantonhisblockedassetsisfreelyremittableabroad,afterprovidingforincometax,whereapplicable.
Blocked Assets Assetsinexcessofthesettling-inallowanceremainblockedandfallunderthe
EXCHANGE CONTROL REGULATIONS
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Retention periods commence rom the date o the last entry in the particular record
Companies (IntermsofGovernmentGazettedated25November1983)
CerticateofIncorporation Indenite CerticateofChangeofName Indenite MemorandumandArticlesofAssociation Indenite CerticatetoCommenceBusiness Indenite Minutebook,CM25andCM26,aswellasresolutions passedatgeneralmeetings Indenite
AnnualFinancialStatements 15years
Booksofaccount 15years Supportingschedulestobooksofaccountand ancillarybooksofaccount 15years Fixedassetregisters 15years Proxyforms 3years
Close Corporations
FoundingStatement(CK1) Indenite AmendedFoundingStatement(CK2) Indenite
Minutebooks Indenite AnnualFinancialStatements 15years Booksofaccount 15years Accountingrecordsincludingsupportingschedules 15years Fixedassetregisters 15years
When a company or close corporation reproduces its records onmicroflm, the original may be destroyed ater a period o three yearsThe microflm copies must be retained indefnitely
Other Suggested Periods o Retention(Whererelevantstatutoryorlegalrequirementshavebeentakenintoaccount)
Recordsoftrustmonies
Taxreturnsandassessments(afterdateofassessment) 5years
Staffpersonnelrecords(afteremploymentceased) 3years Salaryandwageregisters 3years
Paidchequesandbillsofexchange 6years
Invoices–salesandpurchases 5years
Bankstatementsandvouchers 5years Stocksheets–listedcompany 6years Stocksheets–unlistedcompany 5years Year-endworkingpapers 5years VATrecords 5years Othervouchersandgeneralcorrespondence 5years
The above list is not comprehensive
RECOMMENDED GUIDELINE FOR THE
RETENTIONOFDOCUMENTSANDRECORDS
Retentionperiod
Indenite
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