Tax

A taxpayer who is subject to a tax audit has certain rights to engage with SARS, which includes the right to be advised of the audit findings, and, where there are any potential adjustments of material nature, the taxpayer has 21 business days to respond in writing to the outcome of the audit.

The obligation of SARS to collect tax and taxpayers' rights are often at odds with each other. To address this issue, the Budget 2018 proposes to reconcile taxpayers' constitutional rights with SARS' constitutional obligations by including a provision in the Tax Administration Act stipulating that SARS must inform the taxpayer at commencement of the audit when the information will be audited.

The two programmes, the Employment Tax Incentive (ETI) created by and falling under SARS, and the Youth Empowerment Service (YES) by the Department of Trade and Industry, are designed to work together and to compliment one-another.

Every earner is taxed. Through one kind of tax or another, government takes a bit out of everyone’s earnings. This means everyone is forced to spend some months working for government. Tax Freedom Day is the day on which average South African income-earners at last start working for themselves, the day on which they have finally paid their tax bill in full.

On 6 April 2018, the South African Revenue Service (SARS) announced that it will continue to apply normal income tax rules to cryptocurrencies and will expect affected taxpayers to declare cryptocurrency gains or losses as part of their taxable income.

Globally, tax is making headlines with an increasing focus on tax avoidance or aggressive tax planning, to increase the revenue collection by governments. While specific anti-avoidance rules are already available, general anti-avoidance rules (GAARs) were adopted in South Africa and elsewhere, coupled with a greater focus on addressing base erosion and profit shifting.

South Africa's tax legislation contains controlled foreign company (CFC) rules which aim to prevent South African taxpayers from locating companies in low tax jurisdictions in an effort to avoid paying South African tax.

An increase in the Value Added Tax (VAT) rate to 15% will came into effect on 1 April 2018. Generally, the sale of residential property is subject to transfer duty, however, if a seller is a VAT vendor, such as a property developer, VAT may be payable. How will the VAT increase effect the sale of residential property, where a property is purchased before 1 April but transfer only occurs after the date of the increase?

In South Africa, as with most other countries around the world, there is no guidance and regulation regarding cryptocurrencies such as Bitcoin. The Budget Review 2018 (Budget) proposes that the income tax and value-added tax (VAT) legislation be amended to deal with cryptocurrencies, which pose a risk to the South African tax system. Given the current Budget deficit, the imposition of taxes on cryptocurrencies would assist the South African Revenue Service (SARS) with increasing its revenue collection going forward.

An investigation by Tax Ombud, Judge Bernard Ngoepe, found that complaints of the alleged delayed payment and even payment avoidance by the South African Revenue Service (SARS), of income tax and VAT refunds, were justified.