The unusual business conditions of the COVID-19 outbreak will require a more flexible approach from tax authorities when analysing transfer pricing in the 2020 year of assessment.
The 2020 National Budget Speech delivered by the Minister of Finance contained various tax policy proposals, including those aimed at refining the Real Estate Investment Trust (REITs) tax regime. The proposals included clarifying the definition of REITs and the meaning of a share in the definition of REITs. The Budget also proposed amending the provisions regarding the taxation of foreign dividends received by REITs.
Section 95 of the Tax Administration Act (28 of 2011) (the TAA) deals with the estimation of assessments. It provides as follows:
The 2020 Draft Taxation Laws Amendment Bill was released on 31 July 2020, and public comment was invited to be submitted by 31 August. One of the more contentious amendments seeks to significantly curtail the tax benefits that have been available to salaried taxpayers through the so-called "bursary exemption". In this article, I will explain the nature of the exemption and the proposed amendment that is currently under discussion.
With the publication of the draft legislative changes to the various tax acts at the end of July this year, a number of changes have been proposed in the Taxation Laws Amendment Bill 2020 (TLAB) with particular reference to employees. This means that employers have to be aware of these changes as they will potentially affect operations, policies and payroll.
Voluntary Disclosure Programme (VDP) applications have been a permanent feature of our law since 1 October 2012. The essence of a VDP application is that it allows a taxpayer to come clean with the South African Revenue Service (SARS) about a tax default. It not only promotes ethical conduct and an opportunity for taxpayers to regularise their tax affairs, but incentivises them to make disclosures by being granted certain relief from the consequences. SARS will not, for example, pursue criminal prosecution for a tax offence arising from the default. They will also grant the taxpayer relief from understatement and administrative non-compliance penalties.
Due to rapid global technological advances, there has been a shift towards e-commerce and electronic transactions. In an attempt to achieve a connected enterprise model, the majority of global enterprise businesses have developed applications to enhance the consumer experience.
Misconception 1: FATCA and CRS only impact large financial institutions, such as banks
Not true. The impacts of FATCA (Foreign Account Tax Compliance Act) and CRS (Common Reporting Standard) are pervasive and far reaching. Individuals in South Africa looking to open an account with a bank, investment platform or another financial institution have to disclose all the jurisdictions in which they are tax residents to these financial institutions. In a similar manner, entities that want to open a bank or investment account need to complete FATCA and CRS self-certification forms in which they confirm their classifications under FATCA and CRS and provide additional information depending on their particular classifications. The board of directors (or equivalent) of entities are responsible for the accuracy and completeness of the FATCA and CRS information provided, and for compliance with these regulations in general. Fiduciaries should therefore familiarise themselves with these regulations and/or appoint third party service providers to assist them with FATCA and CRS compliance.
It is an inevitable consequence when operating in a distressed economy, such as in South Africa these days, that shareholders will dispose of companies for less than they paid for them – whether the companies were formed by those shareholders or purchased by them. Moreover, it has always been, and remains, very common to fund private companies in South Africa with nominal share capital and large shareholders' loans, often interest-free. While there are some advantages in having loans rather than share capital, those advantages are far, far fewer than they used to be (mainly that it is now far simpler to repay share capital than it was in the past) and, in any event, business realities demand that these loans are de facto fixed capital.
What a very different world we now live in. The world of law, steeped in tradition, with many firms hanging onto the way things have always been done, has largely found itself to be remarkably and unexpectedly flexible.
To Candidate Legal Practitioners (CLPs), whatever happened to the suit you purchased to be worn to client consultations? Is that pair of comfortable shoes, set aside for court runs, still tucked under the passenger seat of your car? To the student, what will you do with the few hundred rand you didn't use to purchase your final year law dinner ticket? What will you wear during your final exams now that your law student council couldn't arrange a "Class of 2020" hoodie?
So, you want to be a lawyer, but we are living through an unprecedented time in human history and the legal profession has not been exempt from the upheaval. Law firm office life will eventually return, but it will be a different kind of environment, with industry experts suggesting that the COVID world of lockdowns and social distancing will necessitate the existence of office space as a resource, available as needed, rather than a requirement. For an aspiring legal professional, the transition from law school to working life can feel tumultuous at the best of times and now, more than ever, it will be important that law students are as equipped as possible with the knowledge and tools to persevere and flourish in the COVID and post-COVID legal world.
"It is the trade of lawyers to question everything, yield nothing, and to talk by the hour," according to Thomas Jefferson, a lawyer who drafted the American Declaration of Independence, and became the third was a president of the US.