The South African Institute of
Chartered Accountants
(SAICA) presentation to the Standing
Committee on Finance
Presented by:
Piet Nel: Project director: Tax
Wessel Smit
Member of SAICA’s tax committee
Presentation Footer 1

22 August 2012
Retrospective effective dates
Additional medical expenses tax credit
Fringe benefits
Employer provided motor vehicle
Debt reductions for less than full consideration
Fair value and market-to-market
International tax
Sundry and other issues
SAICA presentation to ScoF
– August 2012
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The effective date of the increase in the dividends tax rate and other related amendments
Amendments to the dividends tax legislation – 1 April 2012
Hybrid equity – 1 April 2012
Dividends declared by listed companies (dividends tax)
SAICA presentation to ScoF
– August 2012
Rates and Monetary Amounts and Amendment of Revenue
Laws Bill
Draft Taxation Laws
Amendment Bill, 2012
Draft Taxation Laws
Amendment Bill, 2012
Draft Tax Administration
Amendment Bill, 2012,
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Pages 2 – 4 of the SAICA submission
It does not recognise the expected increase in cost of medical care
For taxpayers under 65 (25% and 7,5%) limited instances where deduction will be available
Not clear how it will apply where the individual turns 65 during a year of assessment in cases of superannuation, ill-health or other infirmity
Impact on payroll systems (PAYE)
SAICA presentation to ScoF
– August 2012
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Pages 6 – 12 of the SAICA submission
‘operating lease’
The definition of an operating lease (as defined in section 23A of the Income Tax Act) is too narrow.
‘the actual cost to the employer incurred under that operating lease’
Not clear what this must include
The treatment of the cost of fuel
SAICA presentation to ScoF
– August 2012
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Page 27 of the SAICA submission
Reduction in base cost of assets
The link with the capital gain provisions must be made (paragraph 20(3)(b))
The interaction between section 19 and section 24J(4A) where the debt reduction relates to a financial instrument
The capital gain legislation provided relief for liquidating companies in certain instances
The debt reduction regime should provide similar relief
SAICA presentation to ScoF
– August 2012
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Page 30 - 42 of the SAICA submission
Complex legislation
Proposed effective date of 31 December 2012 to be reconsidered
Impact of fair value accounting on previous global financial crisis
IFRS might change – could effect tax legislation
A definition of ‘hedge’ or ‘hedging‘ needs to be included in the legislation
Expanded definition of ‘covered persons’
SAICA presentation to ScoF
– August 2012
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Page 45 – 52 of the SAICA submission
Definition of resident: Effective management – 75% rule
The post-transaction requirement for cross-border asset-for-share transactions – the law does not give effect to the intention as expressed in the Memorandum
SAICA presentation to ScoF
– August 2012
8

Clarification of date of registration for value-added tax purposes
Mentioned in budget – not addressed in the draft legislation
Provisional tax
Addressed in the Draft Tax Administration Amendment Bill
Introduction of compulsory (automatic) penalty questioned
Regulation of tax practitioners
Addressed in the Draft Tax Administration Amendment Bill
Introduction of controlling bodies and the regulatory body
SAICA presentation to ScoF
– August 2012
9

The final dividend cycle and the STC credits
Corporate rules
Interest incurred in acquisition transactions
Fringe benefits Residential – stand alone submission
SAICA presentation to ScoF
– August 2012
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pietn@saica.co.za
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