During February 2016, the beleaguered South African Minister of Finance, Pravin Gordhan made a serious attempt to balance government’s books. Being an election year, the increase in wealth taxes went down well with the grassroots support base of the ruling ANC.
Archive for Hugo Van Zyl
During February 2016 the beleaguered South African Minister of Finance, Minister Pravin Gordhan, made a serious attempt to balance government’s books.
Gordhan was called back after Minister Nene was removed from his position, by President Zuma early December 2015. The true reason for this politically motivated musical chairs, appointing three ministers in less than 4 days, remains a mystery. Point is Nene was removed and Gordhan had to step in and rescue the cash flow and ensure the country did not face junk status.
It is not unusual for South Africans to live and work overseas for some years, and then at some point, usually after receiving a second nationality, to return to South Africa. Many of these persons returning to South Africa wish to bring their household goods back with them. The SA Customs and Excise Act makes provision for a concession that allows such persons to import goods without having to pay import duties and VAT.
Unfortunately, many persons encounter hiccups with the process, and Breytenbachs Advisory are aware of persons who have been kept in custody at Customs for days due to non-compliance to the prescribed process. We have subsequently provided some answers to South Africans’ frequently asked question on the import of household goods to South Africa.
Who qualifies for the concession on the import of household goods to South Africa? Read more
The South African Revenue Service (SARS) has announced an amnesty of sort – a threat and upfront warnings: we do know about you, best you come forward before we make the tax audit into your affairs known.
On July 9th, 2015, SARS issued a press release, which can be read in more detail on:
The International Consortium of Investigative Journalists (ICIJ), based information obtained by French newspaper Le Monde, ranked South Africa number 31 among the countries with the largest amount of dollars ($2.3blion) in the so-called leaked Swiss Read more
So, in 2008, whilst on the rise, Minister Nene went crashing to the floor. (See Video Below.) Now, he is on top of it, in fact he was handed a poisonous chalice and survived. In fact, he survived so well he had some goodies to share with Expat South Africans.
Yes, one has to compliment the new Minister of Finance on his performance. Minister Nene, at times, had to force his fellow politicians to enjoy the tax lecture and austerity and budget cuts. Increasing the tax on sinners, smokers, gamblers and other naughty taxpayer did not help to make him too popular.
But the tablets were handed out, the jabs will follow later. The patient is indeed not yet able to leave the hospital. Increasing VAT to 15% would have ensured a cure but once Read more
In South Africa, the South African Revenue Service (SARS the local equivalent of the IRS) has just issued a draft public notice for comment and it refers to strange new terminology, not always correctly understood by the non-American resident.
Most US expats and failed SA expats returning from the USA with a green card in the back pocket, are all facing being caught red handed. Yes, for many years SARS was not the best of gossip queen in the OECD. The cam the Krok case and SARS received some interesting info from the ATO. Not only did SARS wake up to the word FOUNDATION they also saw the benefit of acting in “cohort” with another tax authority.
Suddenly the effort to make FATCA happen for FFI’s in South Africa, became an interesting Read more
Exchange Control is the bugbear of every South African residing outside SA or even for those in SA wishing to internationalize their business or investment portfolio.
South Africans have seen a gradual ease of exchange control rules and although most transactions remain under “surveillance” the ease of transfer and tracking have been made substantially easier of the last few years.
Pensioners living abroad can now extract their monthly pension and retirement annuity income from South Africa (SA) without the need of a tax clearance certificate, despite living Read more
In terms of the Right of Aliyah doctrine (the right of every Jew to immigrate to Israel) every Jew going to or intending to go to Israel will be granted an Oleh’s visa. Oleh, for my colleagues not dealing with Israeli law (plural: olim) means a Jew immigrating into Israel. The Oleh Visa is granted by mere expression of the interest to “relocate” to Israel as a qualifying Jew (albeit born outside Israel after 1950).
A person shall not be registered as a Jew by ethnic affiliation or religion and will be denied Oleh Visa, despite being a Jew as defend, inter alia because of political status / activity (i.e. is engaged in an activity directed against the Jewish people or which is likely to endanger public health or the security of the state of Israel) or secondly, where a notification (issued under the Law of Return 5710-1950 as amended by Law of Return Read more
The first and very important note to make, in dealing with South African tax issues: tax year 2014 ends on the last day of FEBRUARY 2014. The South African tax year for most individuals, are 1 March until the last day of February in the next calendar year. Corporates can change their tax year-end to align with the last day of their financial year-end, yet Trusts partners in a JV or partnership, are obliged to file assuming a tax year-end on the last day of February, despite their financial year-end being the last day of another month.
Yes, sadly this date, Friday 28th 2014, is not even listed on the SARS webpage on important dates, yet is an extremely important tax deadline.
SARS has two webpages namely: www.sars.gov.za and www.sarsefiling.co.za. Read more
Typical Double Tax Agreement (DTA) or treaty issues we face on a daily basis can be summarised as follow:
United Kingdom / South Africa DTA
1. Tax residency change not timeously reported to either SARS or HMRC
Most client suggest that they need file or report their SA income to the UK tax authority as they were non-domiciled in the UK and as the lump sum was not remitted to the UK, they need to pay UK tax on the lump sum income. No, says HMRC although you are non-domiciled you are subject to UK tax on lump sums received in SA, albeit not remitted to the UK, as lump sums are taxed on the arising basis and not on the remittance basis. In short, you cannot defer UK tax on the lump sum arising in SA, by sending said lump sum to Channel Islands, USA or EU nor can you escape the UK tax exposure by keeping the lump sum in your blocked account in South Africa.
2. The treaty dictates that lump sum received from South African fund managers on retirement annuity fund (RA) lump sums or pension/preservation funds, are tax exempt in SA and UK taxed only
This argument is most often presented to us by clients having called the HMRC call centre. We do not know how the client explained the situation to the HMRC call centre but suffice to say the answer is incorrect. The fact that HMRC refers you to Article 17 of the treaty is not adequate as the said article does not deal with lump sums. Article 17 specifically states that for purposes of the agreement an annuity taxable in the new home country only, is a fixed amount paid on a regular basis. You need not be tax lawyer to understand why the lump sum will never fall into this category of treaty exempt (in SA) annuity payments. Read more
On October 3rd, 2013 the South African Revenue Services (www.sars.gov.za) issued BPR 156 (binding private ruling) which ensure some clarity on the taxation of many expats’ pension funds stuck in South Africa.
An interesting ruling, which may be technically correct but in many ways inadequate, writer felt on first read. Perhaps incorrectly? Let’s consider the outcome and value of the ruling.
Like most SARS rulings, it brings clarity but adds several “however” warnings. Before we address them, allow me to summarize the ruling, with an extract:
SECTION: SECTION 1(1), DEFINITION OF “GROSS INCOME” PARAGRAPHS (a) AND (e)
SUBJECT: PENSION BENEFITS ACCRUING TO A NON-RESIDENT FROM A RESIDENT PENSION FUND
This ruling deals with the question as to whether and to what extent a pension annuity and a retirement fund lump sum benefit, received by or accrued to a person who is not a resident of South Africa from a pension fund registered in South Africa, will be taxable in South Africa. Read more
Real Estate Investment Trusts or REITs is a well known internationally known appropriate business structure yet South Africa only adopted its tax law as of April 1st, 2013 and its stock exchange listed or publicly listed trading rules to accommodate REIT’s as of May 1st, 2013.
Since then many property groups not only converted to a listed REIT but also restructured their balance sheets to remove the debt linked to a unit or a share. Now, on September 6th, the first American Depositry Receipt (ADR) status was granted to a South African listed REIT. One ADR unit equals 10 REIT units on the Johannesburg Stock Exchange. Despite the ZA Rand being at a 3 week high, the more recent currency exchange is circa R10=1U$D.
Real Estate Investment Trusts (REIT)
REIT’s are tax transparent or tax through flow investment vehicles that invest in and derive their income from real estate properties and mortgage, without necessarily paying tax on their trade result. To qualify for the South African REIT dispensation, a the REIT (either a company or a trust) must be tax resident in South Africa and be listed as an REIT in terms of the JSE (Johannesburg Stock Exchange) listing requirements.
REIT profits are distributed as tax deductible expenses (effectively pre-tax income) which is then received and taxed in the investors’ hands as taxable dividend income. As of 1 January 2014 the SA dividend withholding tax at 15% or the treaty governed rate where the investor is resident in a treaty country, will apply to nonresident investors. Read more