The Taxation Laws Amendment Act introduced a new section into the Income Tax Act which deals with value mismatches involving the transfer of assets in exchange for the issue of shares. Essentially, the section applies where the value of the asset given in consideration for the shares issued is different from what it would have been had the transaction been between independent persons acting at arm's length.
Abusive schemes whereby taxpayers retain shares for at least 18 months before they are disposed of for a nominal consideration recently came to the attention of the National Treasury, which proposed that the share buy-backs and dividend stripping rules be amended with effect from 20 February 2019. The treasury provided no guidance on the nature of the amendments, but taxpayers should expect a complicated provision that might have several unintended consequences.
In a recent unreported case regarding a taxpayer that conducted business in the wholesale and retail industry, the Tax Court had to decide whether the taxpayer could claim the employment tax incentive under the Employment Tax Incentive Act for certain periods. In its decision, the court not only considered the provisions of the act, but also applied various principles of South African labour law.
Under the Tax Administration Act, persons that enter into certain types of transaction must report the details of those transactions to the South African Revenue Service. These types of transaction are called 'reportable arrangements'. In order to determine when the information must be disclosed by, the parties must first establish when the arrangement qualified as a reportable arrangement.
A recent Value Added Tax Act amendment has created certainty regarding suppliers' ability to correct tax invoices that have already been issued and provides a remedy to recipient vendors which previously had difficulty obtaining a corrected tax invoice from suppliers. However, it remains unclear whether suppliers will be allowed to issue manual tax invoices reflecting the correct details where their systems do not allow for the issued tax invoice's particulars to be amended.
In October 2018 the draft National Biodiversity Framework (NBF) was published for public comment. Considering that South Africa is the third most biodiverse country in the world, the government, as custodian of the country's biodiversity, has implemented approximately 30 national strategies, frameworks and systems in the biodiversity sector. The NBF's purpose is to coordinate and align the efforts of the many organisations and persons involved in the complex interplay between these strategies.
Cannabis has enjoyed heightened attention following a recent ruling decriminalising the private possession, consumption and cultivation of the plant for recreational purposes. While there have been several positive developments in the promotion of the medical cannabis market in South Africa, the overarching regulatory framework and authorities' current practice remain barriers to entry for prospective local players in the medical cannabis product manufacturing market.
The Biodiversity Act regulates bioprospecting on and biotrade with indigenous biological resources and indigenous genetic resources and the use of traditional knowledge. Although the early years of regulation under the act were stormy and there was much confusion over who needed to apply for permits and what was required from applicants, there is now more certainty as to what is required.
The legal and philosophical issues relating to the concept of ownership of various kinds of human biological material has been hotly debated. This is an emotive topic that requires balancing societal and commercial interests with individuals' rights, such as the constitutional right to bodily and psychological integrity, which includes the right not to be subjected to medical research or scientific experiments without giving informed consent.
The Genetically Modified Organisms (GMO) Act provides the requirements to ensure the responsible development, production, use and application of GMOs. Any entity or person planning to perform a regulated activity under the act must prepare an application to the registrar and pay the application fee. Regulated activities include activities involving genetic modification, the experimental or trial release of a GMO, the contained use of a GMO and the general release of or commodity clearance regarding a GMO.
The South African government has focused on biopharming as a means of developing the bioeconomy for more than a decade. In addition, different government departments have already implemented legislation concerning plant-based protein production. Given this infrastructure and the highly active local biopharming research community, South Africa is considered a promising jurisdiction for the production of plant-based therapeutic proteins, with many possible opportunities for investment and collaboration.
Under South African statute, the owner of copyright in a work is given the exclusive right to perform certain specified acts in respect of that work or to authorise others to do so, thus preventing unauthorised persons from performing those acts. However, only certain specified categories of work defined in the Copyright Act are eligible for copyright protection.
The Constitutional Court's recent judgment decriminalising the private use of cannabis has garnered significant attention in South Africa. As predicted, the judgment has encouraged a number of existing and potential companies to create a brand for their business in order to grow and distribute cannabis in South Africa. Unfortunately, most of these businesses must delay their plans for their brand's trademark application – although possibly not for long.
South Africa is an attractive launch pad for many international companies when it comes to the protection and enforcement of intellectual property for their services or products that they wish to share with Africa. Even more attractive is South Africa's simple, quick and affordable patent system. There is no patent opposition in South Africa and the validity of a patent can be challenged only post-grant by way of the court system.
Proprietors that are interested in registering a shape or container mark should be aware of the kind of protection that a specific IP act affords them and ensure that they layer their rights in order to have the best protection as well as protection in perpetuity. The most important question for proprietors in this regard is whether they intend to use the shape for a short or prolonged period.
When a student is studying or planning to study at a university in South Africa, it is important that they understand their rights as an IP creator during that time. Many students, especially undergraduates, will argue that they do not participate in research and development in any manner and that intellectual property is merely a module for law students. However, all students may be IP creators without being aware of it.
The South African Revenue Service recently published the fourth issue of Interpretation Note 64, which seeks to provide guidance on the application and interpretation of Section 10(1)(e) of the Income Tax Act. With the rising prevalence of complex developments, security estates, shopping centres, wellness compounds and high-rise flats in South Africa, body corporates, homeowners' associations and share block companies are commonplace and clear guidelines as to the taxation of these entities is imperative.
Many residential property developers will begin 2018 with a major cash-flow challenge, as they may be faced with a substantial value added tax (VAT) liability in respect of the temporary letting of residential units which have been developed for resale. It is hoped that the South African Revenue Service and the National Treasury will urgently address the problems with regard to the VAT rules concerning the change-in-use adjustments for property developers.