nitascha | nitascha – T Roos & Kie
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June 7, 2016 / nitascha / 0 Comments
Ons kliënte het waarskynlik die verskeidenheid advertensies oor die radio en in die algemene media opgemerk waarin finansiële diensteverskaffers die publiek uitnooi om in hul onderskeie sogenaamde “belastingvrye” beleggingsprodukte te belê. Hierdie produkte word moontlik gemaak deur afdeling 12T van die Inkomstebelastingwet, 58 van 1962, wat in 2015 bekendgestel is as ‘n inisiatief deur die Nasionale Tesourie ten einde ‘n spaarkultuur onder die Suid-Afrikaanse publiek aan te moedig deur gebruik te maak van die voorafbepaalde en spesifieke toegewings met betrekking tot inkomstebelasting op hierdie rekenings.
In wese beteken dit dat alle bedrae wat uit belastingvrye spaarrekenings ontvang word, vrygestel is van inkomstebelasting, en meer spesifiek:
Dividende wat aan sodanige rekenings betaal word, sal nie onderhewig wees aan dividendebelasting nie;
Realisering van bates in belastingvrye rekenings sal nie kapitale winste of verliese veroorsaak nie (en is dus effektief vrygestel van die kapitaalwinsbelasting regime); en
Enige bedrae ontvang sal vrygestel wees van inkomstebelasting.
Die belastingvrye spaarregime is egter net van toepassing op natuurlike persone en bestorwe boedels van persone wat in lewe bydraes tot hierdie “belastingvrye spaarrekenings” gemaak het. Die regime is dus nie beskikbaar vir maatskappye of trusts nie. Bydraes tot sodanige rekenings word egter beperk tot R30 000 jaarliks sowel as ‘n totaal van R500 000 in ‘n persoon se leeftyd. Waar hierdie totale oorskry word, sal die oortollige bedrag as belasbare inkomste van die bydraende persoon beskou word en volgens voorskrif teen 40% belas word. (Dit blyk dat hierdie bedrag deur die Wetgewer misgekyk is toe die maksimum marginale inkomstebelastingkoers vir individue onlangs verhoog is vanaf 40% tot 41% …) Dit is ‘n redelik knellende voorwaarde, en sorg moet dus gedra word deur individue wat bydra tot hierdie belastingvrye spaarrekenings om nie die bedrae te oorskry nie. Oordragte tussen belastingvrye spaarrekenings asook enige inkomste wat deur ‘n individu vanuit belastingvrye beleggingskapitaal ontvang word, word egter nie in die R30 000 of R500 000-beperkings ingesluit nie. Die beperkings is dus net van toepassing op nuwe kapitaal wat by ‘n individu se belastingvrye spaarrekening gevoeg word en kumulatief bereken word.
Dit is twyfelagtig of die inisiatief ver genoeg strek en so winsgewend is as wat dit met eerste oogopslag voorkom. Belastingbetalers wat ‘n natuurlike persoon is, sal daaraan herinner word dat hulle alreeds ‘n jaarlikse R30 000 effektiewe korting op kapitaalwinsbelasting ontvang (die eerste R30 000 van kapitale wins/verlies gerealiseer in ‘n belastingjaar word geïgnoreer vir kapitaalwinsbelasting doeleindes), en dat hulle verder ook ‘n jaarlikse rentevrystelling van R23 800 ontvang (R34 500 in die geval van individue ouer as 65), nieteenstaande die 12T-toegewings.
Wanneer in aanmerking geneem word dat finansiële produkte wat as konserwatief beskou word tipies dié produkte is wat deur die Finansiële Diensteraad goedgekeur word as “belastingvrye spaarbeleggingsrekenings”, sal dit nie vanselfsprekend wees dat na-belasting wins uit belastingvrye spaarrekenings noodwendig spaargeld in die konvensionele vorm sal oorskry nie.
Hierdie artikel is algemene inligtingsblad en moet nie as professionele advies beskou word nie. Geen verantwoordelikheid word aanvaar vir enige foute, verlies of skade wat ondervind word as gevolg van die gebruik van enige inligting vervat in hierdie artikel nie. Kontak altyd finansiële raadgewer vir spesifieke en gedetailleerde advies. (E&OE)
Municipalities are required to issue rates clearance certificates without which a property cannot be transferred from a seller to a buyer. The rates clearance certificate certifies that outstanding debts owing to a municipality up to the date of transfer have been settled.
Property buyers relied on these certificates as proof that all previous debt on the property have been fully settled and that transfer of the property to the buyer could proceed.
However, in some cases rates clearance certificates are issued while all charges for the period before the transfer date of a property to a new owner are not yet allocated to the municipal accounts of the previous owners. The question then is: can the new owner of the property be held liable for these historic debts incurred before it became owner of the property?
In a court case between a municipality and a ratepayer in May 2013, the judgement made by the court was incorrectly interpreted by municipalities. Based on their interpretation, municipalities held new property owners liable for municipal debt incurred by previous owners and refused to issue rates clearance certificates until all such debt were paid.
In addition, municipal services to a property would be cut off and municipalities would refuse to reconnect such services until all debt were fully settled. Buyers who wanted to take transfer of the property had no choice but to settle debt for services not consumed by themselves.
A subsequent court case issued judgement on 8 September 2014, stating that the municipalities’ interpretation of the previous judgement was wrong. The following principles were laid down:
A municipality’s right to payment, although attached to a specific property, ended when a property was transferred to a new owner. Outstanding municipal debts up to date of transfer had to be recovered from the seller.
Payment of debt for services consumed by a previous owner remained the responsibility of that owner. The buyer of a property is not liable for debt incurred for services consumed prior to the transfer of the property.
The second judgement referred to above was the subject of an appeal to the Supreme Court of Appeal (City of Tshwane Metropolitan Municipality v PJ Mitchell (38/2015)  ZASCA 1). The appeal was successful, with obvious serious consequences for property owners.
As a result of the successful appeal, new home owners can in law be liable for municipal debts of their predecessors in title. Consequently, it would now be up to property owners themselves to recover these amounts from previous owners, and no longer the duty of the municipality seeking to recover its debts to do so. The obligation for ensuring that no outstanding municipal debts exist upon transfer has therefore now shifted definitively to property buyers, and away from municipalities in issuing rates clearance certificates (which is different from the position prior to the successful appeal a few months ago).
This is an arduous task, and one which property buyers should take very seriously when purchasing a property to ensure that no unpleasant surprises materialise in the months (or even years) following the transfer of the property in the deeds office to their name.
Accessed on 21 April 2016:
TRANSAKSIES WAT AAN DIE SAID GERAPPORTEER MOET WORD IN TERME VAN REGERINGSKENNISGEWING
Afdeling 37 van die Wet op Belastingadministrasie, 28 van 2011 (die Adminwet) vereis van belastingbetalers om ‘n transaksie wat kwalifiseer as ‘n “rapporteerbare transaksie” te rapporteer. Versuim van die belastingbetaler sal lei tot die hef van ‘n boete wat wissel tussen R50 000 en R300 000 per maand (afdeling 212) vir so lank as 12 maande. Die doel met die verpligting op belastingbetalers om sekere transaksies te rapporteer, is vanselfsprekend: om die Suid-Afrikaanse Inkomstediens (SAID) in staat te stel om transaksies waarin hy kenmerke van potensiële belastingvermyding bespeur, op ‘n deurlopende basis te monitor.
‘n “Transaksie” (gedefinieer as insluitend enige transaksie, ooreenkoms, reëling, plan of verstandhouding) word beskou as ‘n “rapporteerbare transaksie” indien dit óf aan een van die kriteria uiteengesit in afdeling 35(1)(a) tot (e) voldoen, óf spesifiek in ‘n openbare kennisgewing uitgereik deur die Kommissaris van SAID gelys word.
Hierdie artikel handel slegs oor laasgenoemde, en sodanige openbare kennisgewing is op 16 Maart 2015 in die Regeringsgazette nr. 38569 as Kennisgewing 212 uitgereik. Hierdie Kennisgewing lys die volgende transaksies, hieronder opgesom, wat as “rapporteerbare transaksies” beskou word:
Sekere hibriede ekwiteitsinstrumente (tipies omrekenbare of aflosbare voorkeuraandele) wat aflosbaar/omrekenbaar is binne 10 jaar van uitreiking;
Sekere hibriede skuldinstrumente (byvoorbeeld omrekenbare skuldbriewe of ondergeskikte lenings), buiten gelyste instrumente. In die geval van omrekenbare skuldbriewe is dit slegs potensieel rapporteerbaar indien omrekening in die eerste 10 jaar na uitreiking van die notas mag geskied);
Aandeelterugkope deur maatskappye wat meer as R10 miljoen beloop, indien dit gepaardgaan met uitreik van nuwe aandele deur daardie maatskappy binne ‘n jaar na die aandeelterugkope plaasgevind het;
Enige bydrae of betalings gemaak deur Suid-Afrikaanse inwoners aan ‘n buitelandse trust waarin die Suid-Afrikaanse belastingbetaler ‘n voordelige aandeel het of sal verkry, wat in alle redelike verwagting R10 miljoen sal oorskry;
Waar een of meer persone ‘n beherende aandeel in ‘n maatskappy verkry wat ‘n beraamde belastingverlies van meer as R50 miljoen het of dit in alle redelike verwagting sal hê;
‘n Ooreenkoms waarvolgens ‘n Suid-Afrikaanse belastingbetaler ‘n bedrag van meer as R5 miljoen betaal aan ‘n buitelandse persoon wat in daardie land as ‘n versekeraar gekwalifiseer is.
Die ooglopende doelwit daarmee dat die Kommissaris toegelaat word om ‘n lys reëlings soos bogenoemde te publiseer, is om aan die SAID die vermoë te gee om transaksies en/of strukture te identifiseer wat dikwels deur belastingbetalers gebruik word om belasting te ontduik. Die publisering van ‘n lys soos bogenoemde stel die SAID in staat om ‘n buigsame benadering te volg in die identifisering en monitering van belastingkomplotte, asook om die bevoegdheid te behou om selfs verdere transaksies te publiseer wat gerapporteer moet word sonder om deur die tydrowende wetgewingsproses te moet gaan om hierdie transaksies in die Adminwet gelys te kry.
Benewens ‘n lys transaksies wat per se sal kwalifiseer as rapporteerbare reëlings bepaal die Kennisgewing ook dat, vir die doeleindes van sodanige reëlings genoem in afdeling 35(1)(a) tot (e) waarna vroeër verwys is (in teenstelling met dié wat in die Kennisgewing self gelys is), ‘n transaksie nie rapporteerbaar sal wees indien die belastingvoordeel voortspruitend daaruit vir alle betrokke partye nie R5 miljoen sal oorskry nie. Hierdie drempel van R5 miljoen is egter nie van toepassing op die lys transaksies waarna hierbo verwys word en wat in die Kennisgewing self gelys word nie.
A SAVINGS RESOLUTION TO STICK TO
At the beginning of every year we always have the best intentions when it comes to financial new years resolutions. We have every intention to keep them and get more serious about our finances. However, we often get lost in that we struggle to find practical solutions on how to do this and take control. We have a couple of ideas for you.
Looking at how you can cut on what you’re already spending and by committing to planning ahead, you can boost your savings in any given year.
Quick fixes: Where can you save straight away?
Similar to that garage full of clutter, a careful look at your monthly budget and spending habits may reveal a lot you are able to “throw out”. Look at where you can cut excessive spending on luxury items, or where you can save on unavoidable expenses.
For a start, check whether you may be able to lower your bank fees: Can you set up an account elsewhere for cheaper or can you switch to a simpler offering if you’re paying for features you don’t really use? You may even be able to negotiate better interest rates on your credit card(s) and home loan. Similarly, check with your insurer whether you may qualify for lower insurance premiums. As your car ages, for example, its market value falls and you may be able to negotiate a lower car insurance premium. (Be sure to maintain the cover you need, however!)
Also consider whether you may be able to save on your investment fees, as even a small percentage saving in annual investment fees could have a significant impact on your ultimate investment outcome.
Finally, look at how behavioural changes may lead to further savings. Consider using public transport once in a while to save on fuel and car maintenance costs, or make a conscious effort to save electricity. You could even clear out that garage and have a jumble sale!
Once you’ve re-evaluated your monthly budget and spending habits, it’s time to put a savings plan in place.
The best idea would be to create your own savings roadmap. Think about your savings goals, both shorter-term and long-term, and write these down. Then consider how long you have to reach these goals, and how much you realistically need to save to do so.
Remember that by starting to invest as early as you can, you can maximise the power of compounding. Compounding happens because investment returns are earned on your total investment balance – your initial investment amount and the returns you’ve already earned on this amount so far. This effectively means that your investment returns start generating their own returns, and your investment can grow faster.
A regular debit order into a unit trust investment will ensure that you save in a disciplined and structured manner. However, these investments still offer the flexibility for you to change or cease your monthly contributions without penalty should your personal circumstances unexpectedly change.
In addition to assessing and amending your investment portfolio, it’s a good idea to plan ahead for the large purchases you intend to make throughout the year. By identifying such items in advance and saving towards these over a reasonable timeframe, you won’t have to finance your purchases with debt.
Ask if you need advice
If you do not have the time or inclination to conduct a thorough financial analysis, or if you would feel more comfortable obtaining professional advice, consult your financial advisor for assistance.
A financial advisor can help you calculate how much you should be saving, given your future financial requirements, inflation expectations and the returns you may be able to generate. They can also advise on the suitability of different investment products and their associated tax and contractual implications. When constructing these investments, your financial advisor will be able to assist you in making appropriate asset allocation decisions and comparing unit trusts from different asset managers. And once your portfolio is in place, your advisor can provide ongoing monitoring and support to ensure that your investments remain suitably positioned and your savings plan stays on track.
By prioritise your investments and implementing sound spending habits, this may well be a resolution that sees you reaping the benefits in years to come. You can carry these strategies through to any year, the point is to start and then maintain the discipline.
‘N SPAARVOORNEME OM BY TE HOU
Aan die begin van elke jaar neem ons finansiële nuwejaarsvoornemens met die beste bedoelings. Ons is vas van plan om daarby te hou en meer erns met ons finansiële sake te maak. Ons raak egter dikwels verlore omdat ons sukkel om praktiese maniere te vind om die voornemens uit te voer en beheer te neem. Ons het egter ‘n paar idees hieroor.
Deur te kyk na hoe jy kan bespaar op wat jy reeds spandeer en deur getrou vooruit te beplan, kan jy elke jaar meer bespaar.
Kitsoplossings: Waarop kan jy onmiddellik spaar?
Net soos met daardie motorhuis vol gemors kan ‘n deeglike kykie na jou maandelikse begroting en spandeergewoontes vir jou duidelik wys wat jy kan “uitgooi”. Kyk waar jy oordadige spandering op luukse-items kan verminder of waar jy kan bespaar op onvermydelike uitgawes.
‘n Goeie beginpunt is om seker te maak dat jy die laagste moontlike bankkoste betaal. Kan jy by ‘n ander bank ‘n rekening open met goedkoper fooie of kan jy na ‘n eenvoudiger opsie oorskakel indien jy betaal vir dienste wat jy nie gebruik nie? Dit mag selfs moontlik wees om vir beter rentekoerse op jou kredietkaart(e) en huislening te onderhandel. Jy kan ook seker maak of jy nie moontlik kwalifiseer vir laer versekeringspremies nie. Soos jou motor verouder, byvoorbeeld, daal sy markwaarde en kan jy ‘n laer versekeringspremie beding. (Maak egter seker jy behou die nodige dekking!)
Maak seker of jy nie dalk kan bespaar op jou beleggingsfooie nie, want selfs ‘n klein persentasievermindering in jaarlikse beleggingsfooie kan ‘n aansienlike impak op jou uiteindelike beleggingsopbrengste hê.
Laastens moet jy nadink oor hoe gedragsveranderinge tot verdere besparing kan lei. Oorweeg dit om soms van openbare vervoer gebruik te maak ten einde op brandstof- en instandhoudingskoste van jou motor te bespaar, of wend ‘n doelbewuste poging aan om elektrisiteit te bespaar. Jy kan selfs die motorhuis skoonmaak en ‘n rommelverkoping hou!
Sodra jy jou maandelikse begroting en spandeergewoontes herevalueer het, kan jy ‘n spaarplan in werking stel. Die beste idee sal wees om jou eie besparingspadkaart te maak. Dink na oor jou spaardoelwitte, korttermyn en langtermyn, en skryf dit neer. Besluit dan hoe lank dit jou behoort te neem om hierdie doelwitte te bereik, en wat ‘n realistiese bedrag is om te spaar om dit reg te kry.
Onthou dat jy die krag van saamgestelde rente tot die maksimum kan ontgin deur vroegtydig te begin belê. Jy kry saamgestelde rente wanneer beleggingsopbrengste verdien word op jou beleggingsbalans – jou aanvanklike beleggingsbedrag en die opbrengste wat jy reeds tot dusver verdien het. Dit beteken dat jou beleggingsopbrengste hul eie winste begin genereer sodat jou belegging vinniger kan groei.
‘n Gereelde debietorder na ‘n effektetrustrekening sal verseker dat jy op ‘n gedissiplineerde en gestruktureerde manier spaar. Hierdie beleggings bied egter die buigsaamheid dat jy jou maandelikse bydraes kan verander of staak sonder penalisasie indien jou persoonlike omstandighede onverwags sou verander.
Benewens die assessering en aanpassing van jou beleggingsportefeulje is dit ook ‘n goeie idee om vooruit te beplan vir die groot aankope wat jy beplan om deur die loop van die jaar te maak. Deur sulke items vooruit te identifiseer en vir ‘n redelike tyd vooraf daarvoor te spaar, sal dit nie vir jou nodig wees om jou aankope met skuld te finansier nie.
Vra as jy hulp benodig
Indien jy nie die tyd of aanleg het om ‘n deeglike finansiële ontleding te doen nie, of indien jy eerder professionele advies wil verkry, raadpleeg jou finansiële adviseur vir bystand hiermee.
‘n Finansiële adviseur kan jou help om te bereken hoeveel jy behoort te spaar met inagneming van jou toekomstige finansiële vereistes, verwagte inflasiekoerse en die rente wat jy moontlik mag genereer. Hulle kan ook raad gee oor die geskiktheid van verskillende produkte en die verwante belasting- en kontraktuele implikasies. Wanneer jou beleggingsportefeulje gevorm word, kan hulle jou van raad bedien rakende toepaslike besluite oor batetoekennings en vergelyking van effektetrusts van verskillende batebestuurders. Sodra jou portefeulje gereed is, kan jou adviseur deurlopende monitering en ondersteuning verskaf om te verseker dat jou beleggings gunstig geposisioneer bly en jou spaarplan op koers bly.
Deur jou beleggings te prioretiseer en gesonde spandeergewoontes te implementeer, kan dit beslis ‘n voorneme wees waarvan jy die voordele in die toekoms sal kan oes. Jy kan hierdie strategieë van jaar tot jaar oordra – die belangrikste is om ‘n begin te maak en die dissipline vol te hou.
We have recently become aware of an increased level of audits being conducted by the South African Revenue Service in relation to taxpayers’ obligations in terms of the Skills Development Levies Act, 9 of 1999 (SDL Act). The focus appears to be specifically on non-compliant taxpayers who fail to register as required in terms of section 5 of the SDL Act, and thus for these employers to pay the requisite levy over to SARS. The problem is perhaps amplified thereby that the skills development levy is often considered an ‘unimportant’ tax by taxpayers (primarily due to it being less costly compared to, for example, VAT or income tax). Compliance with the SDL Act is therefore not a top priority to taxpayers, with the effect that taxpayers are also not apprised of their rights and obligations in terms of this Act when confronted by SARS to register and settle an ostensible skills development levy obligation.
The skills development levy (or SDL) is a levy upon employers required to register for SDL (see registration requirement below). It is levied at 1% of remuneration paid to employees during any month (which include directors of a company). The levy is thus also applicable to directors’ remuneration.
Even though directors’ remuneration is also subject to the SDL, what should not be forgotten, though, (especially in the context of what appears to be the focus of SARS’ audits) is that directors’ remuneration is excluded in terms of section 3(5)(e) from determining whether the threshold amount of R500,000 has been reached and which requires registration for SDL purposes (see section 4(b)).
As above, even though the threshold limit for registering for SDL is R500,000 of remuneration paid (or reasonably expected to be paid to employees in the coming 12 months), the R500,000 threshold amount is determined for private companies without having regard to any directors’ remuneration paid. Therefore, although the directors’ remuneration will be subject to SDL once the company is registered, it is ignored for purposes of determining whether a taxpayer is liable, and thus required to register, for SDL.
This is particularly relevant for SME’s conducting business through a private company, especially where remuneration is comprised largely of directors’ salaries. To give an example in illustration: assume a private company pays salaries to non-directors of R400,000, and R1,000,000 to the two directors of the company collectively. On these facts, the company need not register and pay SDL as non-director salaries amount to less than R500,000. Were the company, however, to pay salaries to non-directors of R600,000, then irrespective of the directors’ remuneration, the company would need to register for SDL and pay 1% per month on the total remuneration paid to all employees (including directors).
Some controversy surrounds one of the most significant amendments that would have been effected by the Taxation Laws Amendment Act, 25 of 2015, and the Tax Administration Laws Amendment Act, 23 of 2015, being how retirement type funds would have been taxed in future. This includes both the taxation of proceeds from funds, as well as the extent to which the amounts contributed to funds throughout will be deductible for income tax purposes.
Although the reform process has been the subject of consultation since 2012, certain key proposals have recently, due to lobbying from the trade union movement specifically, been postponed to 1 March 2018 to allow for further consultation.
What was proposed initially and has been enacted since:
It is important to distinguish upfront between 3 types of funds, being pension funds, provident funds and retirement annuity funds. Historically, in terms of the Income Tax Act, 58 of 1962 (the Income Tax Act), contributions made to pension funds were deductible, limited to 7.5% of the individual’s particular annual pensionable salary. Whereas pension funds are designed to allow for the accumulation of wealth of salaried individuals towards retirement, retirement annuity funds aim to provide for non-salary income to be saved towards retirement. To this end, 15% of non-pensionable income (e.g. income from an own business) contributed to a retirement annuity fund were previously allowed as income tax deductions.
Both retirement annuity and pension funds, however, had certain limitations imposed on them which restricted access to the capital accumulated in these funds only until after retirement, and even then not all capital would have been accessible as a lump sum withdrawal: realisation would generally take place through monthly annuities received from such funds. In this sense, provident funds differed and capital accumulated in such funds were accessible even before retirement. To discourage use of such funds, though (and to encourage a long term savings culture), no income tax deductions were historically allowed for provident fund contributions.
The new amendments now seek to harmonize the tax treatment of these 3 types of funds, and specifically as relates the differentiation on the tax treatment of contributions, as well as access to the fund capital together with the tax consequences of lump sum withdrawals. The single, encompassing provision now dealing with fund contributions is section 11(k) of the Income Tax Act. Section 11(k) now allows for a deduction of any fund contributions up to 27.5% of the higher of an individual’s i) remuneration received from an employer or ii) his or her taxable income for the year in question. The deduction is limited, though, to R350,000, meaning that individuals earning more than R1,272,727 will effectively have a lesser rate applied to them. (Note that the 27.5% will include contributions made by an employer on an employee’s behalf, which amount is also included as part of the individual’s remuneration for income tax purposes in the form of a fringe benefit.)
All of the above proposals have been left unchanged and were signed into law and have become effective.
Legislative reform that has been delayed:
The main concern raised by trade unions was access to the capital of specifically provident funds. It was proposed initially that all funds going forward would fall under the umbrella of what had up to now been the regime for pension funds, i.e. that a capital amount is available for withdrawal at retirement, but the major portion of accumulated wealth is annuitised and only receivable in the form of monthly annuities being paid out going forward. This specific ‘annuitisation requirement’ has drawn the ire of COSATU, especially of provident funds been built up by members which could have been drawn in one lump sum on resignation from an employer. What the effect of annuitisation would be effectively, therefore, is to ensure that not all savings may be withdrawn as one lump sum, but only a percentage thereof. From Treasury’s side, this is obviously to encourage saving for retirement. One also has sympathy for the counter-argument though, being that a savings product intentionally sought out by employees to allow them to access all capital on retirement (e.g. to start an own business at some stage) has now with one foul swoop of the legislative pen been prevented.
It remains to be seen in the coming months and years how this political hot potato will play itself out, especially in the context of looming elections with COSATU publicly reconsidering its support for the ruling party.
April 13, 2016 / nitascha / 0 Comments
T he Income Tax Act, 58 of 1962 (‘Income Tax Act’) contains various specific anti-avoidance rules aimed at preventing the abuse of certain specific sections in the Income Tax Act. However, over and above these specific anti-abuse provisions, the general anti-avoidance rules (‘the GAAR’) would also find application to cover further potential and unforeseen loopholes, or abuse of beneficial tax regimes, which exist nonetheless and are exploited by taxpayers.
disregarding, combining, or recharacterising any steps in or parts of the impermissible avoidance arrangement;
deeming persons who are connected persons in relation to each other to be one and the same person for purposes of determining the tax treatment of any amount;
reallocating any gross income, receipt or accrual of a capital nature, expenditure or rebate amongst the parties;
recharacterising any gross income, receipt or accrual of a capital nature or expenditure; or
treating the impermissible avoidance arrangement as if it had not been entered into or carried out, or in such other manner as in the circumstances of the case SARS deems appropriate for the prevention or diminution of the relevant tax benefit.
April 7, 2016 / nitascha / 0 Comments
One of the more significant changes that the “new” Companies Act, 71 of 2008, brought about was that a company may now provide financial assistance to prospective shareholders to subscribe for shares in that company. In other words, it may lend persons money to enable them to subscribe for shares in the lender (although other forms of financial assistance is also contemplated – see below). Previously, in terms of section 38 of the now repealed Companies Act, 61 of 1973, this was not allowed.
In terms of section 44 of the “new” Companies Act, financial assistance by a company would include extending a loan, guarantee or the providing of security to enable a person to obtain funding for purposes of acquiring shares in that company. Section 44 seeks to regularise such instances of financial assistance however, and this would extend beyond the mere granting of a loan to a would-be shareholder. The wide definition of “financial assistance” makes it clear that the section covers various scenarios and also specifically where financial assistance by a company is provided to anyone not only for the purpose of enabling him or her to subscribe for shares in that company, but also if the assistance is to enable shares to be acquired in a related company.
The purpose of the provision is quite clearly to protect existing shareholders. For example: if a company were to lend money to a prospective shareholder who is subsequently unable to repay the assisting company, that company would have effectively diluted the shareholding interests of the existing shareholders (who would have paid cash for their shares), whilst the new shareholder who is unable to repay the company still has an interest left in the company (and indirectly therefore to the cash subscription proceeds of the other shareholders).
Notwithstanding the potential negative effect of allowing shares to be subscribed for in a company on loan account, it is foreseeable that such financial assistance may be required from time to time for genuine commercial purposes and transactions that would otherwise not have been feasible. B-BBEE transactions are an excellent example of this.
For a company to give financial assistance to a would-be shareholder, the directors of the company must be satisfied that the financial assistance is fair and reasonable to the company, and further that the company will be solvent and liquid thereafter. They must also ensure that this is not in contravention of the company’s Memorandum of Incorporation. If in breach of any of these conditions, the directors may potentially be held personally liable. Typically, the shareholders of the company must also approve thereof by way of a special resolution.