South Africa, Cliffe Dekker Hofmeyr updates

Corporate Tax

Contributed by Cliffe Dekker Hofmeyr
Is the Office of the Tax Ombud doing its job?
  • South Africa
  • 07 December 2018

Since its establishment in October 2013, the Office of the Tax Ombud (OTO) has been expected to enhance South Africa's tax administration system. Although the OTO has proven its value to the industry and taxpayers alike by resolving complaints, securing large refunds and launching much-anticipated investigations, its greatest challenge continues to be proving that it is equipped and has the capacity to go toe-to-toe with the South African Revenue Service.

Disallowance of use of assessed loss
  • South Africa
  • 30 November 2018

The Supreme Court of Appeal recently considered whether the South African Revenue Service commissioner had been correct in disallowing the use of certain assessed losses under Section 103(2) of the Income Tax Act. Section 103(2) of the act is an anti-avoidance provision which essentially allows the commissioner to disallow the offsetting of an assessed loss or balance of an assessed loss against a taxpayer's income where certain requirements are met.

No capital gains tax? Ruling on disposal of property by public benefit organisations
  • South Africa
  • 23 November 2018

The South African Revenue Service recently published Binding Private Ruling 309, which deals with the disposal of assets by public benefit organisations. Specifically, the ruling deals with the application of the definition of 'gross income' in the Income Tax Act and the capital gains tax exemption in the Eighth Schedule to the act.

SARS rules on tax treatment of customer loyalty programmes
  • South Africa
  • 16 November 2018

The South African Revenue Service recently published Binding Private Ruling 310, which deals with the tax treatment of customer loyalty programmes. The applicant was a local company supplying goods and services in the course of trade, which had – in order to enhance its business – proposed to implement a customer loyalty programme through which participating customers could benefit.

No tax deduction for damages paid for deliberate breach of supply contracts
  • South Africa
  • 09 November 2018

The South African courts have held, on a number of occasions, that taxpayers are entitled to deduct damages or compensation paid to third parties. However, this principle does not apply in all cases. A recent High Court decision has made clear that before a taxpayer calculatedly breaches an agreement, it should carefully consider the incidence of tax.

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