SARS Quarterly Stakeholder Meeting Feed Back SARS Quarterly - - PowerPoint PPT Presentation

SARS Quarterly Stakeholder Meeting Feed Back

SARS Quarterly Stakeholder Meeting

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SARS Quarterly Stakeholder Meeting

• 30 minute appointments
• TCC
• Additional assessment examples
• Where not required …. to submit returns
• Other banks – formal request to Gerda
• How to remove old tax payers on E-filing
• Foreign TCC >R10m in branch

SARS Quarterly Stakeholder Meeting

Tax Amnesty Unit

• Ph : 0860 121 220
• F : 011 602 5504
• E-mail : sbau@sars.gov.za

DAVIS TAX COMMISSION FIRST INTERIM REPORT

• PWC comment

DAVIS TAX COMMISSION FIRST INTERIM REPORT

• Reaction to the DTC report was really fuelled by the media hype as is always the

case when punitive changes to a very popular mechanism are proposed.

• However, close scrutiny of what has been proposed does not significantly change

the use of a trust in a planner’s estate plan. It is primarily to protect wealth and to have decisions taken by a select few (trustees). Should assets be owned by an individual limited protection will be to his avail and if this individual has limited experience or business acumen (example a young daughter / son) these hard – earned assets might be squandered or be neglected if the individual has the last (only) say.

• Yes, a higher CGT rate for trusts is suggested, but only assets that need preservation

and protection need to be placed in a trust, a perpetual entity. That generation skipping mechanism will continue to be highly beneficial.

• A trust will continue to play a big role in an individual’s estate planning.
• Radical and sweeping changes have indeed been proposed by a select few and it

must be remembered that this report merely consists of proposals and recommendations and does not have legislative force.

• It is however important to take cognisance of the proposals but the final legislation

may look much different than these proposals. It is important to keep calm and not make hasty and impulsive decisions based upon these mere recommendations. One must also be wary of advisors which may want to misuse the recommendations and suggest implementation of preliminary, impulsive estate planning mechanisms.

DAVIS TAX COMMISSION FIRST INTERIM REPORT

• What is of concern is that the DTC has identified the trust instrument

as a prime estate duty saving mechanism. Assets held in companies

• f which the shares are held in trust will achieve similar results. Why

merely focus on the trust itself?

• It is also surprising that Estate Duty savings are proposed to be

combatted by the implementation of punitive income tax and capital gains tax provisions.

• Estate Duty savings are not the only reason why trusts are created.

These recommendations will certainly be met with fierce resistance and debate and hopefully a less punitive approach will eventually be followed.

• The DTC has also emphatically stated that they do not perceive CGT

as a wealth tax but as a tax on income. We cannot agree with this. It is also well documented that South Africa is the only country that levies CGT and Estate Duty on the same assets on death, which constitute a double taxation in our book. Whether we categorise this levying of CGT at death as a wealth tax or not, it remains a levying of two taxes on the same occurrence (at death).

SARS Quarterly Stakeholder Meeting

• Practitioner appointments

– Cancel if not attend – Possible black listing – Make a booking

• randfontein@sars.gov.za
• roodepoort@sars.gov.za
• krugersdorp@sars.gov.za

What’s new on SARS website?

SARS latest Documents issued Do you have to submit a tax return?

Liability to pay tax is one thing; liability to put in a tax return is another. It will save you time and stress if you don’t need to complete a tax return. If you are a natural person and -

• You earn R350,000 p.a. or less from a single source and

– PAYE has been deducted, and – This amount was paid as a salary with no allowances, or

• You earn less than R23,800 in interest (if less than 65 years old) or

R34,500 in interest if aged 65 or over, or

• You are a non-resident with dividend income.
• Then you do not need to complete a tax return. Remember if you are

due a refund, you will lose it if you don’t put a return in.

SARS latest Documents issued Draft interpretation Note 6 (IN 6)

South African Revenue Service (SARS) proposes to change its interpretation of the ‘place of effective management’ (POEM) concept in the recently issued draft interpretation Note 6 (IN 6), putting an end to much confusion.

• The POEM concept is not defined in the Income Tax Act and its

interpretation depends on the facts and circumstances of each particular case.

• SARS's interpretation of the POEM, expressed in the current IN 6, has,

since it was first issued, been the subject of scrutiny and criticism, primarily because it diverges from international precedent and interpretation.

• When the POEM of a company is determined to be in South Africa it is,

subject to treaty relief, taxable here on its worldwide income, capital gains and dividends tax

• SARS' interpretation of the POEM concept in the draft IN6 is radically

changed, for the better

SARS latest Documents issued

Current SARS rules

• Formerly, SARS adhered to the idea that POEM was

the place where a company was managed on a day- to-day basis.

• This was contrary to the international view on this

issue, and the approach adopted by the Organisation for Economic Co-operation and Development (OECD), in terms of which POEM means the place ‘where the shots are called’, according to comments made by Special Commissioner David Shirley in the case of Wensleydale’s Settlement Trustees v Inland Revenue Commissioner.

SARS latest Documents issued

Implementation vs. decision-making

• The fact that POEM is no longer to be determined by SARS where the company

business is managed on a day-to-day basis, but where key management and commercial decisions are made for the company as a whole, is consistent with international jurisprudence

• In other words, operational management must be distinguished from key

management and commercial decisions

• SARS will now attach more weight to the location where the management and

commercial decisions, that are necessary for its business as a whole, are in substance made as opposed to the location where those decisions are implemented.

• Global telecommunications, information technology and global travel can

complicate matters when trying to establish the POEM of a company.

• The POEM test will now be one of substance over form, and various factors would

be taken into account when trying to identify the single dominant place where the effective management is actually located.

SARS latest Documents issued

SARS trade mark or logo

SARS has reiterated that the SARS trade mark or logo should not be used by any person without written authority for any purpose whatsoever, including documents, training material or email signatures

SARS Guides

A Step by Step guide to the Entity Merge Functionality on eFiling

SARS latest Documents issued

Where to find it:

• http://www.sars.gov.za/Pages/Whats-

New.aspx

General discussion

Questions?

Thank you to ….

Your attendance See you at our next event….

16 September 2015