General
By Russell Smith
Over the course of the past month we have seen comments by the profession in relation to the draft Taxation Laws Amendment Bill 2012 and the Treasury response to those. We hope to be able to discuss the final Act in our next edition. We must commend the Treasury for being open to constructive feedback, the most noteworthy acknowledgement of which is the proposed deferral of the withholding tax on interest and proposed increase in the royalties withholding tax rate – both of which are moved to 1 July. In addition, many of the hybrid instrument anti avoidance rules are to be withdrawn for further consideration. However, the dividend tax loopholes reported on in our last edition will be firmly closed. Significant concessions have been announced for life insurance companies who would have been required to mark to market all of their policyholder assets at the end of each year (and consequently pay CGT on unrealised gains). This is now to be confined to a once off deemed disposal at the end of February 2012.
The Tax Administration Act (no 28 of 2011) was finally gazetted and is effective from 1 October 2012. This Act is intended to harmonise the administrative provisions of all of our taxing statutes with the exception of the Customs & Excise Act. In this edition we highlight ten key differences to be aware of, and in later editions we will consider each of the primary chapters in some depth (assessments, dispute resolution, penalties, search and seizure ....etc).
Finally, we are pleased to see some progress from SARS in publishing guidance on VAT apportionment for input tax in organisations making exempt supplies. A class ruling for certain educational institutions (universities and technikons) has been issued which sets out an approved VAT input claim methodology. The fact that SARS has committed itself in writing, quite apart from the merits of the ruling itself, is to be welcomed since we have seen nothing along these lines in years, while many vendors have had individual apportionment ruling requests denied. Hopefully this is just the start and we will see more guidance in the form of class rulings, general rulings or interpretation notes covering other industries (banking, insurance and retail in particular) which have long sought clarification in this difficult area of VAT practice.
