BUDGET PROPOSALS
1
Dividends Tax
2
Capital Gains Tax
3
Medical Tax Credit System
4
Retirement Fund
5
Micro Businesses
6
Branches of Foreign Companies
7
Employment Companies
AdividendwithholdingtaxwillreplaceSTCfrom1April2012atarate
of 15%.
Asfrom1March2012,theinclusionrateforindividualsandspecial
trustswillincreaseto33,3%.Forcompaniesandothertruststhiswill
increaseto66,6%.
Anumberoftheexclusionlimitshavebeenincreased.
Asfrom1March2013,thenewMedicalTaxCreditSystemwillcome
intoeffect.Furtheramendmentstothesystemaretobeimplemented
in 2014.
AsfromMarch2014,anemployer’scontributiontoretirementfundson
behalfofanemployeewillbetreatedasataxablefringebenefitinthe
handsoftheemployee.Individualswillfromthatdatebeallowed
todeductupto22,5%ofthehigheroftaxableincomeoremploymentincomeforcontributionstopension,providentandretirement
annuityfundswithaminimumannualdeductionofR20000andan
annualmaximumofR250000.Forindividualsatleast45yearsofage,
thedeductionwillbeupto27,5%withaminimumannualdeduction
ofR20000andannualmaximumofR300000.
Asfrom1March2013,taxadministrationofmicrobusinessesistobe
simplifiedbyallowingthetaxpayertosubmitasinglecombinedreturn
forTurnoverTax,VATandEmployeesTaxbi-annually.
Proposalsareunderconsiderationtoreducethetaxrateonforeign
companiesearningincomethroughbranchesoperatinginSouthAfrica
from33%to28%.
Proposalsareunderconsiderationtoreducethetaxrateonemploymentcompaniesfrom33%to28%.
This booklet is published by FHPKF Publishers (Pty) Ltd for and on behalf of
chartered accountants
& business advisers
•
•
•
•
•
Allinformationcontainedhereinisbelievedtobecorrectatthetimeofpublication,
22February2012.Thecontentsshouldnotbeusedasabasisforactionwithout
furtherprofessionaladvice.
Whileeverycarehasbeentakeninthecompilationofthispublicationnoresponsibility
shallbeacceptedforanyinaccuracies,errorsoromissions.
Theinformationispreparedfromthebudgetspeechandthelegislationfinallyenacted
maydifferconsiderably.
Changesinratesoftaxannouncedinthebudgetspeechforthetaxyear2013become
effectiveonlyoncethelegislationisenactedbyParliament.
Copyrightsubsistsinthiswork.Nopartofthisworkmaybereproducedinanyformor
byanymeanswithoutthepublisher’swrittenpermission.
1
INDEX
Patent/IntellectualProperty
Pre-PaidExpenditure
Pre-ProductionInterest
Pre-TradingExpenditure
PrimeOverdraftRates
ProvisionalTax
PublicBenefitOrganisations
RecreationalClubs
RegionalHeadquarterCompany
ReinvestmentRelief
RelocationofanEmployee
ResearchandDevelopment
ResidenceBasedTaxation
ResidentialBuildingAllowances
RestraintofTrade
RetentionofDocuments
andRecords
RetirementLumpSumBenefits
RoyaltiestoNon-Residents
SecuritiesTransferTax
SkillsDevelopmentLevy
SmallBusinessCorporations
STC
StampDuty
StrategicAllowances
SubsistenceAllowances
TaxAdministrationBill
TaxRates-Companies
TaxRates-Individuals
TaxRates-Trusts
TaxRebates
TaxThresholds
TransferDuty
TravelAllowances
Trusts-Losses
TurnoverTax-MicroBusinesses
UnderstatementPenaltyTable
UnquantifiedProceeds
Value-AddedTax
VATReliefforDevelopers
VATReliefInter-group
VentureCapitalInvestments
VoluntaryDisclosureProgramme
WearandTearAllowances
WithdrawalLumpSumBenefits
WithholdingTaxonInterest
AdministrativePenalties
46
ArbitrationAwards
16
AssessedLossesRing-fenced
37
BodyCorporates
41
Bond/InstalmentRepayments
34
BranchProfitsTax
4
Broad-BasedEmployeeEquity
9
BudgetProposals
1
BursariesandScholarships
9
CapitalGainsTax
22
CapitalIncentiveAllowances
19
ConnectedPersons
27
CorporateTransactions
25
Deductions-Donations
41
Deductions-Employees
11
Deductions-Retirement
12
Deductions-TravelExpenses
17
DeemedCapital-DisposalofShares 27
DeemedEmployees
8
Directors-PAYE
27
DividendsTax
3
DonationsTax
47
DoubleTaxationAgreements
andWithholdingTaxes
30
EffectiveTaxRate
4
EnvironmentalExpenditure
39
EstateDuty
47
ExchangeControlRegulations
38
ExecutorsRemuneration
47
Exemptions-Individuals
11
FarmingIncome
40
FringeBenefits
14
HotelAllowances
18
IndustrialPolicyProjects
26
InterestRates-Changes
35
IRP5Codes
42
IT14SourceCodes
44
LearnershipAllowance
26
MarriedinCommunity
ofProperty
46
MedicalAidRebates/Credits
5
MedicalExpenseDeduction/Credit 13
NationalCreditAct
46
Non-Residents
32
OfficialInterestRates
andPenalties
34
PassiveHoldingCompanies
41
2
37
25
9
9
35
10
41
41
32
25
18
25
28
18
9
48
12
31
27
45
7
4
27
22
16
45
4
5
6
5
5
33
16
6
6
45
33
36
37
37
26
45
20
12
32
DIVIDENDS TAX
DividendsTax,applicabletoallSouthAfricanresidentcompanies,aswellas
non-residentcompanieslistedontheJSE,willcomeintooperationon
1April2012.DividendsTaxwillbebornebytheshareholderatarateof15%
(subjecttoanyreductionintermsofadoubletaxationagreement).Taxon
dividendsin speciewillremaintheliabilityofthecompanydeclaringthe
dividend.
Exemptions from Dividends Tax
ThefollowingshareholdersareexemptfromDividendsTax:SouthAfrican
residentcompanies,theGovernment,PBO’s,certainexemptbodies,closure
rehabilitationtrusts,pension,providentandsimilarfunds,shareholdersina
registeredmicrobusiness(providedthedividenddoesnotexceedR200000
inthatyearofassessment),anaturalpersonuponreceiptofaninterestina
qualifyingresidencebefore31December2012andanon-residentreceiving
adividendfromanon-residentcompanywhichislistedontheJSE,i.e.a
dual-listedcompany.Thesameexemptionsapplyinrespectofdividendsin
specie.
Withholding Tax Obligations
Inrespectofdividends,otherthandividendsin specie,thecompanydeclaring
thedividendisrequiredtowithholdtheDividendsTaxonpayment.Liability
forwithholdingtaxshiftsifthedividendispaidtoaregulatedintermediary
whichincludescentralsecuritiesdepositoryparticipants,brokers,collective
investmentschemes,approvedtransfersecretariesandlistedinvestment
serviceproviders.DividendsTaxcanbeeliminatedorreduceduponthe
timelyreceiptofawrittendeclarationthattheshareholderiseitherentitledto
anexemptionortodoubletaxationagreementreliefandawrittenundertakingfromtheshareholderthatthecompanywillbeinformedshouldtherebe
achangeinstatus.Inthecaseofdividendsin speciethereisnowithholding
obligationasthetaxremainsaliabilityofthecompanydeclaringthedividend.
However,theDividendsTaxmaysimilarlybeeliminatedorreducedupon
timelyreceiptoftherelevantdeclarationsandundertakings.
Use of Unutilised STC Credits
UnutilisedSTCcreditshavetobeutilisedwithinthreeyearsofthechangeover
totheDividendsTaxsystem.STCcreditswillbeexhaustedfirst.Allcompanies
willbedeemedtohavedeclaredadividendofnilon31March2012inorder
toascertaintheSTCcreditsavailableforset-offfrom1April2012.
Revised Dividend Definition
Asfrom1January2011,thedefinitionofadividendhasbeensimplifiedand
includesalldistributionstoashareholderotherthan,amongstothers,a
reductionofcontributedtaxcapital(whichconsistsofuntaintedshare
premiumandsharecapitalofacompany),capitalisationissuesandageneral
sharebuy-backbyaJSElistedcompany.
Inorderforadistributionofcontributedtaxcapitalnottoberegardedasa
dividendthedirectorshaveto,immediatelypriortothedistribution,recordin
writingthatcontributedtaxcapitalisbeingdistributed.
Interest-Free Loans
Thereisadeemeddividendimplicationwherealowinterestorinterest-free
loanoradvanceismadebyacompanytoaresidentnaturalpersonortrust
whichisconnectedtothecompanyortoaperson(otherthanacompany)
whoisconnectedtosuchnaturalpersonortrust.Theamountofthedeemed
dividendisthedifferencebetweentheofficialinterestrateandtherate
chargedbythecompanyontheloan.
3
TAX RATES COMPANIES
Foryearsofassessmentendingduringthefollowingperiods:
1April1993-31March1994
1April1994-31March1999
1April1999-31March2005
1April2005-31March2008
1April2008-31March2013
40%
35%
30%
29%
28%
Branch Profits Tax
Foryearsofassessmentendingduringthefollowingperiods:
1April1996-31March1999
1April1999-31March2005
1April2005-31March2008
1April2008-31March2012
1April2012-31March2013
40%
35%
34%
33%
28%
Note:Asfromyearsofassessmentendingonorafter31March2008,these
rates applytotheprofitsofanon-residentcompany.
STC
Dividenddeclaredbetween17March1993and21June1994
15%
Dividenddeclaredbetween22June1994and13March1996
25%
Dividenddeclaredbetween14March1996and30September2007 12,5%
Dividenddeclaredbetween1October2007and31March2012
10%
EFFECTIVE TAXRATE
2011
R
Taxableincome
Less:Normaltax
Availablefordistribution
Less:Dividend
Less:STC
Tax year
2012
2013
Priorto
1April2012
R
R
2013
From
1April2012
R
100,00
28,00
100,00
28,00
100,00
28,00
100,00
28,00
72,00
65,45
6,55
72,00
65,45
6,55
72,00
65,45
6,55
72,00
72,00
n/a
Retained
0
0
0
0
Totaltax
34,55
34,55
34,55
38,80
Normaltax
STC
DividendsTax
28,00
6,55
n/a
28,00
6,55
n/a
28,00
6,55
n/a
28,00
n/a
10,80
Effectiverate
34,55%
34,55%
Assumesallprofitsaredeclaredasadividend.
4
34,55%
38,80%
TAX RATES INDIVIDUALS-2012
Taxable income
R0-R150000
R150001-R235000
R235001-R325000
R325001-R455000
R455001-R580000
R580001+
Rates of tax
18%ofeachR1
R27000+25%oftheamountover
R48250+30%oftheamountover
R75250+35%oftheamountover
R120750+38%oftheamountover
R168250+40%oftheamountover
R150000
R235000
R325000
R455000
R580000
TAX RATES INDIVIDUALS-2013
Taxable income
R0-R160000
R160001-R250000
R250001-R346000
R346001-R484000
R484001-R617000
R617001+
Rates of tax
18%oftaxableincome
R28800+25%oftheamountover
R51300+30%oftheamountover
R80100+35%oftheamountover
R128400+38%oftheamountover
R178940+40%oftheamountover
R160000
R250000
R346000
R484000
R617000
TAX THRESHOLDS
Taxable income
Personsunder65
Persons65andunder75
Persons75andover
2012
R59750
R93150
R104261
2013
R63556
R99056
R110889
2012
R10755
R16767
R18767
2013
R11440
R17830
R19960
TAX REBATES
Amounts deductible from the tax payable
Personsunder65
Persons65andunder75
Persons75andover
Theserebatesarenotavailabletoeithernormalorspecialtrusts,and
companies.
MEDICAL AID REBATES/CREDITS
Monthly amounts deductible from tax payable 2012
Personsunder65
n/a
Personsunder65withonedependant
n/a
Personsunder65withtwodependants
n/a
2013
R230
R460
R614
Thethirdandeachsubsequentdependanthasanadditionalrebateor
creditofR154permonthperdependantforthe2013year.
5
TAX RATES TRUSTS-2012AND2013
Taxable income
Alltaxableincome
Rate of tax
40%
Specialtrustsaretaxedattheratesapplicabletoindividuals.
Aspecial trustisonecreatedsolelyforthebenefitofapersonaffectedby
amentalillnessorseriousphysicaldisabilitywhichpreventsthatperson
fromearningsufficientincometomaintainhimself,oratestamentarytrust
establishedsolelyforthebenefitofminorchildrenwhoarerelatedtothe
deceased.Wherethepersonforwhosebenefitthetrustwasestablished
diespriortooronthelastdayoftheyearofassessmentortheyoungest
beneficiary,inthecaseofatestamentarytrust,turns21yearsofageprior
tooronthelastdayoftheyearofassessment,thetrustwillnolongerbe
regardedasaspecialtrust.
TRUSTS LOSSES
Alossincurredbyatrustcannotbedistributedtobeneficiaries.Thelossis
retainedinthetrustandcarriedforwardtothenextyearasanassessedloss.
TURNOVER TAX MICROBUSINESSES
Asfrom1March2009,asimplifiedturnover-basedtaxsystemwas
implementedforsmallsoleproprietors,partnershipsandincorporated
businesseswithaturnoveroflessthanR1millionperyear.
Thisturnover-basedpresumptivetaxsystemiselective.Witheffectfromyears
ofassesstmentcommencing1March2012,amicrobusinesscanvoluntarily
exittheturnovertaxsystemattheendofanyyearofassessment.However,
onceoutoftheturnovertaxsystemthetaxpayerwillnotbepermittedto
re-enter.Priortothis,athreeyearlock-inperiodexistedforexitandre-entry
intothesystem.Personalservicesrenderedunderemployment-likeconditions
andcertainprofessionalservicesareexcludedfromthistaxsystem.
Yearsofassessmentendingbetween1April2011and31March2012
Turnover
Rates of tax
R0-R150000 Nil
R150001-R3000001% oftheamountoverR150000
R300001-R500000
R1500+2%oftheamountoverR300000
R500001-R750000
R5500+4% oftheamountoverR500000
R750001-R1000000
R15500+6%oftheamountoverR750000
Yearsofassessmentendingbetween1April2012and31March2013
Turnover
Rates of tax
R0-R150000 Nil
R150001-R3000001% oftheamountoverR150000
R300001-R500000
R1500+2%oftheamountoverR300000
R500001-R750000
R5500+4% oftheamountoverR500000
R750001-R1000000
R15500+6%oftheamountoverR750000
6
SMALL BUSINESS CORPORATIONS
Yearsofassessmentendingbetween1April2011and31March2012
Taxable income
Rates of tax
R0-R59750
Nil
R59751-R300000
10%oftheamountoverR59750
R300001+
R24025+28%oftheamountoverR300000
Yearsofassessmentendingbetween1April2012and31March2013
Taxable income
Rates of tax
R0-R63556
Nil
R63557-R350000
7%oftheamountoverR63556
R350001+
R20051+28%oftheamountoverR350000
Applies if:
•
•
•
Allshareholdersormembersthroughouttheyearofassessmentare
naturalpersonswhoholdnosharesinanyotherprivatecompaniesor
members’interestinanyotherclosecorporationsorco-operativesother
thanthosewhich:
- areinactiveandhaveassetsoflessthanR5000;or
- havetakenstepstoliquidate,wind-uporderegister(effectivefor
yearsofassessmentcommencingonorafter1January2011).
GrossincomefortheyearofassessmentdoesnotexceedR14million
(2006:R6million)
Notmorethan20%ofthegrossincomeandallthecapitalgains
consistcollectivelyof investment incomeandincomefromrendering
a personal service.
Investment income includesanyannuity,interest,rentalincome,royalty
oranyincomeofasimilarnature,localdividends,foreigndividends(from
1April2012)andanyproceedsderivedfrominvestmentortradingin
financialinstruments(includingfutures,optionsandotherderivatives),
marketablesecuritiesorimmovableproperty.
Personal serviceincludesanyserviceinthefieldofaccounting,
actuarialscience,architecture,auctioneering,auditing,broadcasting,
consulting,draughtsmanship,education,engineering,financialservice
broking,health,informationtechnology,journalism,law,management,
realestatebroking,research,sport,surveying,translation,valuationor
veterinaryscience,whichisperformedpersonallybyanypersonwho
holdsaninterestinthecompany,co-operativeorclosecorporation,
exceptwheresuchsmallbusinesscorporationemploysthreeormore
unconnectedfull-timeemployeesforcoreoperationsthroughouttheyear
ofassessment
• Thecompany,closecorporationorco-operativeisnotanemployment
entity.
Investment incentive
Thefullcostofanyassetusedinaprocessofmanufactureandbroughtinto
useforthefirsttimeonorafter1April2001,maybedeductedinthetax
yearinwhichtheassetisbroughtintouse.Asfrom1April2005,allother
depreciableassetsarewrittenoffona50:30:20basis.
7
DEEMED EMPLOYEES
Labour brokers andpersonalserviceprovidersareregardedasdeemed
employees.
Foryearsofassessmentcommencingonorafter1March2009:
• A labour brokerisanaturalpersonwho,forreward,providesaclient
withotherpersonstorenderaservicefortheclientorprocures
otherpersonsfortheclientandremuneratessuchpersons
• A personal service providerisacompany,closecorporationortrust
whereanyservicerenderedonbehalfoftheentitytoitsclientis
renderedpersonallybyanypersonwhoisaconnectedpersonin
relationtosuchentity,andoneofthefollowingprovisionsapply:
- thepersonwouldhavebeenregardedasanemployeeofthe
client,iftheservicewasnotrenderedthroughanentity;or
- thepersonorentityrenderingtheservicemustperformsuch
servicemainlyatthepremisesoftheclientandsuchpersonor
entityissubjecttothecontrolorsupervisionofsuchclientasto
themannerinwhichthedutiesareperformed;or
- morethan80%oftheincomederivedfromservicesrenderedis
receivedfromoneclientorassociatedpersoninrelationtothe
client
• Theentitywill,however,notberegardedasapersonal service
provider wheresuchentityemploysthreeormoreunconnected
full-timeemployeesforcoreoperationsthroughouttheyearof
assessment.
Implications
•
•
Alabourbrokernotinpossessionofanexemptioncertificatewill
besubjecttoPAYEonincomereceivedattheratesapplicableto
individualtaxpayers.Deductionsofexpenditurewillbelimitedto
remunerationpaidtoemployees
ApersonalserviceproviderwillbesubjecttoPAYEattherateof
28%(2012:33%)inthecaseofacompanyand40%inthecase
of a trust
• NoPAYEwillberequiredtobedeductedwheretheentityprovides
anaffidavitconfirmingthatitdoesnotreceivemorethan80%ofits
incomefromonesource
• ThedeemedemployeemayapplytoSARSforataxdirectivefora
lowerrateoftaxtobeapplied
• Deductionsavailabletopersonalserviceproviderswillbelimitedto
remunerationtoemployees,contributionstopension,providentand
benefitfunds,legalexpenses,baddebts,expensesinrespectof
premises,financecharges,insurance,repairs,fuelandmaintenance
inrespectofassetsusedwhollyandexclusivelyfortradeandany
amountpreviouslyincludedintaxableincomeandsubsequently
refundedbytherecipient.
8
PRE–TRADING EXPENDITURE
Thedeductionofexpenditureandlossesincurredinconnectionwith,but
priortothecommencementof,tradeisallowed,providedtheexpenditure
andlosses,includingsection24Jinterest,couldhavebeendeductiblehad
thetradecommenced.Suchexpenditureandlossesarering-fencedinthat
theycanonlybeset-offagainstincomefromthattrade.Thebalanceis
carriedforwardandcanbeclaimedinasubsequentyearofassessment.
PRE–PRODUCTION INTEREST
Priorto1January2012,interestandrelatedfinancechargesincurredonany
borrowingfortheacquisition,installation,erectionorconstructionofany
machinery,plant,buildingorimprovementstoabuildingorotherassets,
includingland,weredeductiblewhentheassetwasbroughtintouseinthe
productionofincome.Suchexpensesarenowdeductibleaspre-trading
expenditure.
BURSARIES ANDSCHOLARSHIPS
Bona fidescholarshipsorbursariesgrantedtoenableanypersontostudy
atarecognisededucationalinstitutionareexemptfromtax.Wherethe
benefitisgrantedtoanemployee,theexemptionwillnotapplyunlessthe
employeeagreestoreimbursetheemployerintheeventthatthestudies
arenotcompleted.Wherethebeneficiaryisarelativeoftheemployee,the
exemptionwillonlyapplyiftheannualremunerationoftheemployeeisless
thanR100000(2007:R60000)andtotheextentthatthebursarydoesnot
exceedR10000(2007:R3000).
BROAD-BASED
EMPLOYEEEQUITY
Employercompaniesmayissuequalifyingsharesuptoacumulativelimit
ofR50000(2008:R9000)peremployeeinrespectofthecurrenttaxyear
andtheimmediatelyprecedingfour(2008:two)taxyears.Ataxdeduction
limitedtoamaximumofR10000(2008:R3000)peryearperemployeewill
beallowedintheemployer’shands.Providedtheemployeedoesnotsell
thesharesforatleastfiveyearstherewillbenotaxconsequencesforthe
employee,otherthanCGT.
RESTRAINT OFTRADE
Gross Income
Anyamountreceivedbyoraccruedtoanynaturalperson,labourbrokeror
personalserviceproviderforarestraintoftradeimposedonsuchperson,
shouldbeincludedintherecipient’sgrossincomeintheyearofreceiptor
accrual.
Deduction
Whereanexpensewasincurredinrespectofarestraintoftradeimposedon
anyperson,thededuction,inayearofassessment,islimitedtothelesserof:
• theexpenseapportionedovertheperiodforwhichtherestraintapplies;or
• one-thirdoftheamountincurredperyear
Nodeductionisallowedwheretheexpensedidnotconstituteincomeinthe
handsoftherecipient.
9
PROVISIONAL TAX
Allprovisionaltaxpayersarerequiredtosubmittwoprovisionaltaxreturnsa
year.Athirdvoluntarypaymentmaybemadetoavoidinterestbeingcharged.
First Year of Assessment
Whereataxpayerhasnotbeenassessedpreviously,areasonableestimateof
thetaxableincomemustbemade.Thebasicamountcannotbeestimatedat
nil,unlessfullymotivated.
First Payment
Onehalfofthetotaltaxinrespectoftheestimatedtaxableincomeforthe
yearispayablesixmonthsbeforetheendoftheyearofassessment.The
estimateoftaxableincomemaynotbelessthanthebasicamountwithout
theconsentofSARS.
Second Payment
Atwo-tiersystemappliesdependingonthetaxpayer’staxableincome:
• Actual taxable income of R1 million or less
Toavoidanyadditionaltaxthebasicamount,asdefined,canbeused.
Ifalowerestimateisused,theestimatemustbewithin90%ofthetaxable
incomefinallyassessed.
• Actual taxable income exceeds R1 million
Toavoidanyadditionaltaxtheestimatemustbewithin80%ofthetaxable
incomefinallyassessed.
Iftheaboverequirementsarenotmet,additionaltaxof20%oftheprovisional
taxunderpaidmaybeimposed.
Third Payment
Thirdprovisionalpaymentsareonlyapplicabletoindividualsandtrustswith
taxableincomeinexcessofR50000andcompaniesandclosecorporations
withtaxableincomeinexcessofR20000.Suchpaymentsshouldbemade
before30SeptemberinthecaseofataxpayerwithaFebruaryyearendand
withinsixmonthsofotheryearendstoavoidinterestbeingcharged.
Basic Amount
Thebasicamountisthetaxableincomeofthelatestprecedingyearof
assessmentincreasedby8%p.a.ifthatassessmentismorethanayearold.
Permissable Reductions in the Basic Amount
Capitalgainsandtaxableportionsoflumpsumsarenotincludedinthebasic
amount.However,ifanestimatelowerthanthebasicamountisused,such
amountsmustbeincludedintheestimate.
Theseamountshavetobeincludedinthesecondprovisionaltaxestimateif
thetaxableincomeisexpectedtoexceedR1million.
Estimates
SARShastherighttoincreaseanyprovisionaltaxestimate,evenifbasedon
thebasicamount,toanamountconsideredreasonable.
Persons over 65
Personsover65years,excludingdirectorsofcompaniesandmembersof
closecorporations,whosetaxableincomedoesnotexceedR120000(2009:
R80000)areexemptfromprovisionaltax,providedthatsuchincomeconsists
exclusivelyofremuneration,rental,interestorforeigndividends.
Persons under 65
Personsunder65yearswhodonotcarryonbusiness,andwhosetaxable
incomedoesnotexceedthetaxthresholdorwhoseinterest,foreign
dividendsandrentalincomedoesnotexceedR20000(2008:R10000)are
exemptfromprovisionaltax.
10
EXEMPTIONS INDIVIDUALS
•
•
•
•
•
DividendsreceivedoraccruedfromSouthAfricancompaniesorJSEdual
listednon-residentcompaniesaregenerallynotsubjecttonormaltax.
Allinterestreceivedbyoraccruedtonon-residentsisexemptfromtax providedtheindividualisphysicallyabsentfromSouthAfricaforatleast
183daysordidnotcarryonbusinessinSouthAfricathrougha
permanentestablishmentduringtheyearofassessment.
Interestreceivedbyresidentnaturalpersons:
Personsunder65years
R22800 (2011:R22300)
Persons65yearsandover
R33000 (2011:R32000)
Interestincludesdistributionsfrompropertyunittrustsandforeign
interestanddividends.Theforeigninterestanddividendexemptionis
limitedtoR3700(2010:R3500).Asfrom1March2012,theforeign
interestanddividendexemptionfallsaway.
Unemploymentinsurancebenefits.
RoadAccidentFundpayoutsasfrom1March2012.
Termination Lump Sum from Employer
Asfrom1March2011,employerprovidedseverancepaymentsforreasons
ofage,illhealthandretrenchmentarealignedwiththetaxationoflump
sumbenefits,includingtheR315000(2011:R300000)exemption.This
exemptiondoesnotapplytodirectorsofcompaniesormembersofclose
corporationsiftheyatanytimeheldaninterestofmorethan5%inthat
entity.
Priorto1March2011,aonceoffexemptionofR30000appliedwherean
employeehadreachedtheageof55yearsortheterminationofservices
wasduetoillhealthortheemployeewasretrenchedbecausetheemployer
hadceasedtooperateorbecauseofareductioninpersonnel.
Compensation
Asfrom1March2007,compensationawardspaidbyanemployeronthe
deathofanemployeeinthecourseofemploymentwillbeexempttothe
extentofR300000.Asfrom1March2011,previousretrenchment
exemptionsarenolongerset-offagainstthisamount.
DEDUCTIONS EMPLOYEES
Salariedemployeesorholdersofofficearerestrictedtodeductingthe
followingexpenditurefromtheirremuneration:
• Baddebtsallowance
• Deductionsinrespectofcontributionstoapensionfundorretirement
annuity fund
• DonationstocertainPBO’s
• Doubtfuldebtsallowance
• Homeofficeexpenses,subjecttocertainrequirements
• Legalexpenses
• Medicalexpensesandmedicalaidcontributions
• Premiumspaidintermsofanallowableinsurancepolicy
- totheextentthatthepolicycoversthepersonagainstlossof
incomeasaresultofillness,injury,disabilityorunemployment,and
- inrespectofwhichallamountspayableintermsofthepolicy
constituteincomeasdefined
• Refundedawardsforservicesrenderedandrefundedrestraintoftrade
awardsasfrom1March2008
• Wearandtearallowance.
11
DEDUCTIONS RETIREMENT
Current Pension Fund Contributions
7,5%ofremunerationfromretirement-fundingemploymentorR1750,whicheveristhegreater.Retirement-fundingemploymentreferstoincomewhichis
takenintoaccounttodeterminecontributionstoapensionorprovidentfund.
Excesscontributionsarenotcarriedforwardtothenextyearofassessmentbut
areaccumulatedforthepurposeofdeterminingthetax-freeportionofthelump
sumuponretirement.
Arrear Pension Fund Contributions
UptoamaximumofR1800peryear.Anyexcessmaybecarriedforward.
Current Retirement Annuity Fund Contributions
15%oftaxableincomefromnon-retirement-fundingemploymentexcludingany
severancebenefits,orR3500lesscurrentcontributionstoapensionfund,or
R1750,whicheveristhegreater.Anyexcessmaybecarriedforward.
Reinstated Retirement Annuity Fund Contributions
UptoamaximumofR1800peryear.Anyexcessmaybecarriedforward.
Income Protection Contributions
Insurancepremiumspaidonincomeprotectionpoliciestotheextentthatsuch
amountsreceivedunderthepolicyconstituteincomeasdefined.
RETIREMENT LUMPSUMBENEFITS
Asfrom1October2007,thetaxable portionofalumpsumfromapension,
providentorretirementannuityfundonretirementordeathisthelumpsum
lessanycontributionsthathavenotbeenallowedasataxdeductionplus the
taxable portion of all lump sums previously received.Asfrom1March2011,
certainseverancebenefitsarealsotaxedintermsofthistable.Thisamountis
subjecttotaxatthefollowingratesless any tax previously paid:
Taxable portion
of lump sum
Rates of tax
R0-R315000
0%
R315001-R630000
18%oftheamountoverR315000
R630001-R945000R56700+27%oftheamountoverR630000
R945001+
R141750+36%oftheamountoverR945000
Thetaxablelumpsumcannotbeset-offagainstanyassessedlossofthe
taxpayer.
WITHDRAWAL LUMPSUMBENEFITS
Asfrom1March2009,thetaxable portionofapre-retirementlumpsumfrom
apensionorprovidentfundisthewithdrawnamountlessanytransfertoanew
fund plus all withdrawal lump sums previously received.Thisamountis
subjecttotaxatthefollowingratesless any tax previously paid:
Taxable portion
of withdrawal
Rates of tax
R0-R22500
0%
R22501-R600000
18%oftheamountoverR22500
R600001-R900000R103950+27%oftheamountoverR600000
R900001+
R184950+36%oftheamountoverR900000
12
MEDICAL EXPENSE DEDUCTION/CREDIT
As from 1 March 2012
65 years and older
Mayclaimallqualifyingexpenditureincurredandmedicalaidcontributionspaid
bythetaxpayeroremployerasadeductionagainsttaxableincome
•
Younger than 65 years
- Medicalaidcontributionsmaybeclaimedasacreditagainsttaxpayableas
follows:
- R230permontheachforthetaxpayerandthefirstdependant
- R154permonthforeachadditionaldependant
- Othermedicalexpenseswhichmaybeclaimedasadeductionagainst
taxableincomeinclude:
- somuchofthemedicalaidcontributionsmadebythetaxpayeror
employerasexceedsfourtimesthemedicalcreditlimit
- otherqualifyingmedicalexpenses
- Thetaxpayermaydeducttheothermedicalexpensestotheextentthatit
exceeds7,5%oftaxableincomebeforethisdeductionandanyretirement
lumpsumbenefit
•
Younger than 65 years (if an immediate family member has a disability)
- Medicalaidcontributionswillbeclaimedasacreditagainsttaxpayable
asabove
- Otherqualifyingmedicalexpensesmaybedeductedagainsttaxable
income,asabove,butwithoutthe7,5%limit.
•
Prior to 1 March 2012
•
•
•
•
65 years and older
Mayclaimallqualifyingexpenditureincurredandmedicalaidcontributionspaid
bythetaxpayeroremployer
Younger than 65 years
Mayclaimmedicalaidcontributionspaidbythetaxpayeroremployeruptothe
cappedamountandqualifyingexpendituretotheextentthatitexceeds7,5%of
taxableincomebeforethisdeduction
Younger than 65 years (if an immediate family member has a disability)
Ifthetaxpayer,spouseorchild(includinganadoptedchildorstepchild)
hasadisability,thedeductionincludesallqualifyingexpenditureandmedicalaid
contributionspaidbythetaxpayeroremployer
ThecappedamountiscalculatedatR720(2011:R670)forthetaxpayerandthe
firstdependantandR440(2011:R410)foreachadditionaldependantasdefined
bythemedicalaidfund.
Qualifying expenditure includes:
•
•
•
•
•
ownandemployercontributionstomedicalaidfundsinexcessofthecapped
amountorasexceedsfourtimesthemedicalcreditlimit
paymentstomedicalpractitioners,nursinghomesandhospitals
paymentstopharmacistsforprescribedmedicines
paymentsforphysicaldisabilities,includingremedialteachingandexpenditure
incurredformentallyhandicappedpersons
paymentsforthebenefitofanydependants.
Disabilitymeansamoderatetoseverelimitationofaperson’sabilitytofunctionor
performdailyactivitiesasaresultofphysical,sensory,communication,intellectual
ormentalimpairment,ifthelimitationlastsmorethanayearandisdiagnosedbya
registeredmedicalpractitioner.
Recoveriesofexpenses(includingamountsreceivedfrommedicalaidsavings
account)reducetheclaim.
Expenditurepaidbyataxpayeronbehalfofaspouseorchildmustbeclaimedby
the spousewhopaidtheexpense.
13
FRINGE BENEFITS
Use of Company Owned Motor Vehicle
ThedeterminedvalueforthefringebenefitisthecashcostincludingVATbut
excludingfinancechargesandinterest.Theemployeewillbetaxedon3.5%
(2011:2.5%)permonthofthedeterminedvalueofthemotorvehiclelessany
considerationpaidbytheemployeetowardsthecostofthevehicle.
Thefringebenefitisreducedto3.25%if,atthetimeacquired,thevehicle
issubjecttoamaintenanceplanfornolessthanthreeyearsand/or60000
kilometres.
Whereanemployeeisgiventheuseofmorethanonevehicleandcanshow
thateachvehicleisusedprimarilyforbusinesspurposes,thevalueplacedon
theprivateuseofallthevehiclesisdeterminedaccordingtothevalue
attributedtothevehiclecarryingthehighestvalueforprivateuse.
ForPAYEpurposestheemployerisrequiredtoincludeintheemployee’s
monthlyremuneration80%ofthetaxablebenefit.Theinclusionratemaybe
limitedto20%iftheemployerissatisfiedthatatleast80%oftheuseofthe
vehicleforayearofassessmentwillbeforbusinesspurposes.
OnassessmentSARSmust,provideditissatisfiedthataccuraterecordshave
beenkeptinrespectofdistancestravelledfor:
• businesspurposes,reducethevalueofthefringebenefitbythesame
proportionthatthebusinessmileagebearstothetotaldistancetravelled
duringtheyearofassessment
• privatepurposesandtheemployeehasbornethecostofthefollowing
vehiclerunningexpenses,reducethevalueofthefringebenefit:
- bythesameproportionthatthebusinessmileagebearstothetotal
distancetravelledduringtheyearofassessment,inthecaseof
licence,insuranceandmaintenancecosts
- byapplyingtheprescribedrateperkilometretothekilometrestravelled
forprivatepurposesinthecaseofthefuelcostpertainingtoprivateuse.
Novalueisplacedontheprivateuseofacompanyownedvehicleif:
• itisavailabletoandusedbyallemployees,privateuseisinfrequentand
incidentaltothebusinessuseandthevehicleisnotnormallykeptator
nearthatemployee’sresidencewhennotinuseoutsidebusinesshours
• thenatureoftheemployee’sdutiesrequiresregularuseofthevehiclefor
theperformanceofdutiesoutsidenormalhoursofworkandprivateuse
isinfrequentorincidentaltobusinessuseorlimitedtotravelbetween
placeofresidenceandplaceofwork.
Theprovisionofacompanyownedvehicleconstitutesadeemedsupplywhich
attractsoutputVATforthevendoremployer.
Thedeemedconsiderationisasfollows:
Motorvehicle/Doublecab 0,3%ofcostofvehicle(excl.VAT)permonth
Bakkies
0,6%ofcostofvehicle(excl.VAT)permonth
Medical Aid Contributions
Asfrom1March2010,thefullcontributionbyanemployerisafringebenefit.
Iftheemployermakesalumpsumpaymentforallemployees,thefringebenefit
isdeterminedinaccordancewithaformula,whichwillhavetheeffectof
apportionmentamongstallemployeesconcerned.Thefringebenefithasno
valuewherethecontributionisinrespectof:
• anemployeeretiredduetosuperannuationorillhealth
• dependentsofadeceasedemployee.
Long Service and Bravery Awards
R5000ofthevalueofanyassetawarded,excludingcash,isnotsubjecttotax.
14
Low Interest/Interest-Free Loans
•
•
•
Theamounttaxedisthedifferencebetweeninterestpayableontheloanby
theemployeeandtheofficialinterestrate
NofringebenefitariseswheretheloanislessthanR3000
Nofringebenefitariseswherealoanismadetoanemployeetofurtherhis
ownstudies.
Holiday Accommodation
Theemployeeistaxedontheprevailingmarketrateifthepropertyisowned
bytheemployerorrentedfromanassociatedentity,ortheactualrentalifthe
employerrentedtheaccommodationfromathirdparty.
Use of Business Cellphones and Computers
Asfrom1March2008,notaxablevalueisplacedontheprivateuseby
employeesofemployer-ownedcellphonesandcomputerswhichareused
mainlyforbusinesspurposes.
Residential Accommodation Supplied by Employer
Thevalueofthefringebenefittobetaxedistherentalvaluelessany
considerationpaidbytheemployee.Wheretheaccommodationisnotowned
bytheemployer,therentalvalueisthegreateroftheformulavalueortherental
andotherexpensespaidbytheemployer.Theformulavaluewillbeused:
• wheretheaccommodationisownedbytheemployer
• wheretheaccommodationisnotownedbytheemployerbutisprovided
for a bona fidebusinesspurposewhereitiscustomarytoprovidefreeor
subsidisedaccommodationtoemployeesanditisnecessaryforthe
particularemployertoprovidefreeaccommodationforproperperformance
oftheemployee’sdutiesorasaresultoffrequentmovementofemployees
orlackofexistingaccommodation.
Asfrom1March2008,norentalvaluewillbeplacedonthe:
• supplyofaccommodationtoanemployeeawayfromhisusualplaceof
residenceinSouthAfricafortheperformingofhisduties
• supplyofaccommodationinSouthAfricatoanemployeeawayfromhis
usualplaceofresidenceoutsideSouthAfricaforatwoyearperiod.This
concessiondoesnotapplyiftheemployeewaspresentinSouthAfricafor
morethan90daysinthetaxyearpriortothedateofarrivalforthepurpose
ofhisduties.ThereisamonthlymonetarycapofR25000.
Employer-Owned Insurance Policies
Asfrom1March2012,anypremiumpaidbyanemployertoanyinsurerunder
anemployer-ownedinsurancepolicy(grouplifeordisabilityplan),directlyor
indirectly,forthebenefitoftheemployee,spouse,child,dependantornominee
willbetaxedinthehandsoftheemployeeasafringebenefit.Thepremium
may,however,qualifyasanincomeprotectioninsurancecontribution
deductionbytheemployee.Iftheemployermakesalumpsumpaymentfor
allemployees,thefringebenefitisdeterminedinaccordancewithaformula,
whichwillhavetheeffectofapportionmentamongstallemployeesconcerned.
Uniform Allowance
Anemployermayprovideanemployeewithauniformoranallowanceinorder
topurchasesuchuniform.Novalueisplacedonthefringebenefitprovided
thattheemployeeisrequired,whileonduty,towearthespecialuniformandit
isclearlydistinguishablefromordinaryclothing.
Free or Subsidised Meals and Refreshments
Freeorsubsidisedmealsprovidedbytheemployergiverisetoafringebenefit.
Thevalueofthisfringebenefitisthecosttotheemployerlessany
considerationpaidbytheemployee.Novalueisplacedonthebenefitif:
• itisprovidedinaplacemainlyorwhollypatronisedbytheemployeesora
placeontheemployer’spremises
• itisprovidedduringbusinesshours(normalorextended)oronaspecial
occasion.
15
SUBSISTENCE ALLOWANCES
Ifanemployeeisobligedtospendatleastonenightawayfromhisusual
residenceinSouthAfricaonbusiness,theemployermaypayanallowancefor
personalsubsistenceandincidentalcostswithoutsuchamountsbeing
includedintheemployee’staxableincome,subjecttotheemployeetravelling
forbusinessbynolaterthantheendofthefollowingmonth.
Ifsuchallowanceispaidtoanemployeeandthatemployeedoesnottravelfor
businesspurposesbytheendofthefollowingmonth,theallowancebecomes
subjecttoPAYEinthatmonth.
Iftheallowancesdonotexceedtheamountsorperiodsdetailedbelow,the
totalallowancemustbereflectedundercode3714ontheIRP5certificate.
Wheretheallowancesexceedtheamountsorperiodsdetailedbelow,thetotal
allowancemustbereflectedundercode3704(local)or3715(foreign)onthe
IRP5certificate.Thefollowingamountsaredeemedtohavebeenexpended
byanemployeeinrespectofasubsistenceallowance:
Local travel
• R93(2012:R88)perdayorpartofadayforincidentalcosts;or
• R303(2012:R286)perdayorpartofadayformealsandincidentalcosts.
Whereanallowanceispaidtoanemployeetocoverthecostofaccommodation,mealsorotherincidentalcosts,theemployeehastoprovehowmuch
wasspentwhileawayonbusiness,whichislimitedtotheallowancereceived.
Overseas travel
Actualaccommodationcostsplusanallowancepercountryassetouton
www.sars.gov.za(2009:$215)perdayformealsandincidentalcostsincurred
outsideSouthAfrica.Thedeemedexpenditurewillnotapplywherethe
absenceisforacontinuousperiodinexcessofsixweeks.
ARBITRATION AWARDS
Arbitrationawardsaregenerallyawardedduetounfairdismissal,termination
oftheemploymentcontractpriortotheexpirydateorduetounfairlabour
practices.Amountspaidduetounfairdismissalandearlyterminationofthe
contractconstituteremunerationandaretaxable. Amountspaidduetounfair
labourpracticemaybeincludedinremuneration.
TRAVEL ALLOWANCES
Fixed Travel Allowances
Asfrom1March2010,80%ofthefixedtravelallowanceissubjecttoPAYE.
Asfrom1March2011,wheretheemployerissatisfiedthatatleast80%ofthe
useofthevehiclefortheyearofassessmentwillbeforbusinesspurposes,
theinclusionratemaybelimitedto20%.Thefullallowanceisdisclosedonthe
employee’sIRP5certificate,irrespectiveofthequantumofbusinesstravel.
Reimbursive Travel Expenses
Whereanemployeereceivesareimbursementbasedontheactualbusiness
kilometrestravelled,noothercompensationispaidtotheemployeeandthe
costiscalculatedinaccordancewiththeprescribedrateof316cents
(2012:305cents)perkilometre,noemployeestaxneedbededucted,
providedthebusinesstraveldoesnotexceed8000kilometresperyear.
Thereimbursementmustbedisclosedundercode3703ontheIRP5certificate.
NoPAYEiswithheldandtheamountisnotsubjecttotaxationonassessment.
Ifthebusinesskilometrestravelledexceed8000kilometresperyear,orifthe
reimbursiverateperkilometreexceedstheprescribedrate,orifother
compensationispaidtotheemployeetheallowancemustbedisclosed
separatelyundercode3702ontheIRP5certificate.NoPAYEiswithheldbut
theamountissubjecttotaxationonassessment.
16
DEDUCTIONS TRAVELEXPENSES
Accuraterecordsoftheopeningandclosingodometerreadingsmustbe
maintainedinallcircumstances.
Priorto1March2010,intheabsenceofaccuratetravelrecords,thefirst
18000kilometrestravelledweredeemedprivatetravelandthemaximum
businesskilometreswhichwasclaimablewaslimitedto14000kilometres.
Asfrom1March2010,theclaimmustbebasedontheactualdistance
travelledassupportedbyalogbookandthedeemedkilometresmethodmay
nolongerbeused.
Thedeductioninrespectofbusinesstravelislimitedtotheallowancegranted
andmaybedeterminedaccordingtoactualexpenditureincurredorona
deemedcostperkilometrebasisintermsofthetablebelow.Thecostofthe
vehicleincludesVATbutexcludesfinancecosts.Whereactualexpenditureis
usedthevalueofthevehicleislimitedtoR480000(2011:R400000)for
purposesofcalculatingwearandtear,whichmustbespreadoverseven
years.
ThefinancecostsarealsolimitedtoadebtofR480000(2011:R400000).
Inthecaseofaleasedvehicle,theinstalmentsinanyyearofassessmentmay
notexceedthefixedcostcomponentinthetable.
DEEMEDEXPENDITURE-2013
Cost of vehicle
DoesnotexceedR60000
ExceedsR60001butnotR120000
ExceedsR120001butnotR180000
ExceedsR180001butnotR240000
ExceedsR240001butnotR300000
ExceedsR300001butnotR360000
ExceedsR360001butnotR420000
ExceedsR420001butnotR480000
ExceedsR480000
Fixed
R
Fuel
c
19492
38726
52594
66440
79185
91873
105809
119683
119683
73,7
77,6
81,5
89,6
102,7
117,1
119,3
133,6
133,6
Fixed
R
Fuel
c
Repairs
c
25,7
29,0
32,3
36,9
45,2
53,7
65,2
68,3
68,3
DEEMEDEXPENDITURE-2012
Cost of vehicle
DoesnotexceedR60000
ExceedsR60001butnotR120000
ExceedsR120001butnotR180000
ExceedsR180001butnotR240000
ExceedsR240001butnotR300000
ExceedsR300001butnotR360000
ExceedsR360001butnotR420000
ExceedsR420001butnotR480000
ExceedsR480000
17
19492
38726
52594
66440
79185
91873
105809
119683
119683
64,6
68,0
71,3
77,7
87,0
93,9
100,9
113,1
113,1
Repairs
c
26,4
29,2
31,9
35,0
44,7
54,2
65,8
67,6
67,6
RELOCATION OF ANEMPLOYEE
Thefollowingitemsofexpenditurebornebytheemployerforrelocation,
appointmentorterminationareexemptfromtax:
• transportationoftheemployee,membersofhishouseholdandpersonal possessions
• hiringtemporaryresidentialaccommodationfortheemployeeand
membersofhishouseholdforupto183daysaftertransfer
• suchcostsasSARSmayallow,e.g.newschooluniforms,replacementof
curtains,bondregistrationandlegalfees,transferduty,motorvehicle
registrationfees,cancellationofbondandagent’sfeeonsaleofprevious
residence.
Expenseswhichdonotqualifyarelossonsaleofthepreviousresidenceand
architect’sfeesfordesignoforalterationstoanewresidence.
HOTEL ALLOWANCES
Asset type
Conditions for annual allowance
Annual allowance
5%ofcost
Constructionofbuildingsorimprovements,
providedusedintradeashotelkeeperorused
by lessee in trade as hotelkeeper
Refurbishments(note)whichcommenced
onorafter17March1993
Hotelequipment
Machinery,implements,utensilsorarticles
broughtintouseonorafter16December1989
Hotelbuildings
20%ofcost
20%ofcost
Note:
• Refurbishmentisdefinedasanyworkundertakenwithintheexistingbuildingframework
RESIDENTIAL BUILDING ALLOWANCES
Asset type
Conditions for annual allowance
Annual allowance
Residential
buildings
Buildingserectedonorafter1April1982and
before21October2008consistingofatleast
fiveunitsofmorethanoneroomintendedfor
letting,oroccupationbybona fidefull-time
employees
2%ofcostandan
initialallowanceof
10%ofcost
Newandunusedbuildingsacquired,erectedor
improvedonorafter21October2008ifsituated
anywhereinSouthAfricaandownedbythetax-
payerforuseinhistrade,eitherforlettingoras
employeeaccommodation.Enhancedallowances
areavailablewherethelowcostresidentialunit
issituatedinanurbandevelopmentzone
5%ofcostor10%
ofcostforlowcost
residentialunitsnot
exceedingR200000
forastandaloneunit
orR250000inthe
caseofanapartment
Employee
housing
50%ofthecostsincurredorfundsadvancedor
donatedtofinancetheerectionofhousingfor
employeesonorbefore21October2008
subjecttoamaximumperdwelling
R6000priorto
1March2008
R15000between
1March2008and
20October2008
Employee
housing
loans
Allowanceonamountsowingoninterestfree
loanaccountinrespectoflowcostresidential
unitssoldatcostbythetaxpayertoemployees
andsubjecttorepurchaseatcostonlyincaseof
repaymentdefaultorterminationofemployment
10%ofamount
owingattheend
ofeachyearof
assessment
18
CAPITAL INCENTIVE ALLOWANCES
Asset type
Conditions for annual allowance
Annual allowance
Industrialbuildings
orimprovements
(note4)
Constructionofbuildingsorimprovementson
orafter1January1989,whereabuildingisused
whollyormainlyforaprocessofmanufacture
orsimilarprocessorresearchanddevelopment.
Constructionofbuildingsorimprovementsonor
after1July1996to30September1999andthe
buildingsortheimprovementsarebroughtinto
usebefore31March2000andusedinaprocess
ofmanufactureorsimilarprocess
5%ofcost
(previously2%)
(note2)
Newcommercial
buildings(otherthan
residential
accommodation)
(note1)
Anycostincurredinerectinganynewand
5%ofcost
unusedbuilding,orimprovinganexistiing
buildingonorafter1April2007whollyormainly usedforthepurposesofproducingincomeinthe
courseoftrade
Buildinginanurban
developmentzone
(note1)
Costsincurredinerectingorextendingabuilding
inrespectofdemolishing,excavatingtheland,or
toprovidewater,powerorparking,drainageor
security,wastedisposaloraccesstothebuilding
Improvementstoexistingbuildings
Aircraft
Acquiredonorafter1April1995
20%ofcost(note2)
Farmingequipment
andassetsused
inproductionof
renewableenergy
Machinery,implements,utensilsorarticles
(otherthanlivestock)broughtintouseonor
after1July1988.Biodieselplantandmachinery
broughtintouseafter1April2003
50%infirstyear
30%insecondyear
20%inthirdyear
Ships
SouthAfricanregisteredshipsusedfor
prospecting,miningorasaforeign-going
ship,acquiredonorafter1April1995
20%ofcost
(note2)
Plantandmachinery
(note4)
Neworunusedmanufacturingassetsacquired
onorafter1March2002willbesubjectto
allowancesoverfouryears Usedmanufacturingassets 40%in1styear
20%ineachofthe
3subsequentyears
(note3)
20%ofcost
Plantandmachinery
(smallbusiness
corporationsonly)
Newandunusedplantormachinerybroughtinto 100%ofcost
useonorafter1April2001andusedbythetax-
payerdirectlyinaprocessofmanufacture
Non-manufacturing
assets(smallbusiness
corporationsonly)
Acquiredonorafter1April2005
50%infirstyear
30%insecondyear
20%inthirdyear
Licences
Expenditure,otherthanforinfrastructure,
toacquirealicencefromagoverment
bodytocarryontelecommunicationservices,
exploration,productionordistributionof
petroleumortheprovisionofgamblingfacilities
Evenlyoverthe
periodofthelicence,
subjecttoa
maximumof
30years
10%ofcost
(note2)
20%infirstyear
8%ineachofthe
10subsequentyears
20%ofcost
Notes:
1 Allowancesavailabletoownersasusersofthebuildingoraslessors/financiers
2 Recoupmentsofallowancescanbedeductedfromthecostofthereplacementasset
3 Whereplantandmachineryisusedinaprocessofmanufactureorasimilarprocess,
thetaxpayerisobligedtomakeuseoftheallowancesandnotthewearandtearrates
4 Asfrom1January2012,neworunusedassetsorbuildingsusedforthepurposeof
researchanddevelopmentwillalsoqualifyfortheallowances.
19
WEAR AND TEAR ALLOWANCES
ThefollowingratesofwearandtearareallowedbySARSintermsof
InterpretationNote47:
Type of
asset
No. of years
for write-off
Addingmachines
Air-conditioners
window
mobile
roomunit
Air-conditioningassets
absorptiontypechillers
airhandlingunits
centrifugalchillers
coolingtowers
condensingsets
Aircraft(lightpassengeror
commercialhelicopters)
Arcweldingequipment
Artefacts
Balers
Batterychargers
Bicycles
Boilers
Bulldozers
Bumpingflaking
Carports
Cashregisters
Cellphoneantennae
Cellphonemasts
Cellulartelephones
Cheque-writingmachines
Cinemaequipment
Colddrinkdispensers
Communicationsystems
Compressors
Computers
mainframe
personal
Computersoftware
(mainframes)
purchased
self-developed
Computersoftware
(personalcomputers)
Concretemixersportable
Concretetransitmixers
Containers
Cropsprayers
Curtains
Debarkingequipment
Deliveryvehicles
Demountablepartitions
Dentalanddoctors’equipment
Dictaphones
Drillingequipment(water)
6
6
5
10
25
20
20
15
15
4
6
25
6
5
4
4
3
4
5
5
6
10
2
6
5
6
5
4
5
3
3
1
2
4
3
10
6
5
4
4
6
5
3
5
Type of
asset
No. of years
for write-off
Drills
Electricsaws
Electrostaticcopiers
Engravingequipment
Escalators
Excavators
Faxmachines
Fertiliserspreaders
Firearms
Fireextinguishers(looseunits)
Firedetectionssystems
Fishingvessels
Fittedcarpets
Food bins
Food-conveyingsystems
Fork-lifttrucks
Front-endloaders
Furnitureandfittings
Gantrycranes
Gardenirrigationequipment
(movable)
Gascuttingequipment
Gasheatersandcookers
Gearboxes
Gearshapers
Generators(portable)
Generators(standby)
Graders
Grindingmachines
Guillotines
Gymnasiumequipment
Cardiovascular
Healthtesting
Weightsandstrength
Spinning
Other
Hairdressers’equipment
Harvesters
Heatdryers
Heatingequipment
Hotwatersystems
Incubators
Ironingandpressing
equipment
Kitchenequipment
Knittingmachines
Laboratoryresearch
equipment
Lathes
Laundromatequipment
Lawreports
20
6
6
6
5
20
4
3
6
6
5
3
12
6
4
4
4
4
6
6
5
6
6
4
6
5
15
4
6
6
2
5
4
1
10
5
6
6
6
5
6
6
6
6
5
6
5
5
Type of
asset
No. of years
for write-off
Lift installations
12
Medicaltheatreequipment
6
Millingmachines
6
Mobilecaravans
5
Mobilecranes
4
Mobilerefrigerationunits
4
Motors
4
Motorcycles
4
Motorisedchainsaws
4
Motorisedconcretemixers
3
Motormowers
5
Musicalinstruments
5
Navigationsystems
10
Neonsignsandadvertising
boards
10
Officeequipment-electronic
3
Officeequipment-mechanical
5
Oxygenconcentrators
3
Ovensandheatingdevices
6
Ovensforheatingfood
6
Packagingequipment
4
Paintings(valuable)
25
Pallets
4
Passengercars
5
Patterns,toolinganddies
3
Pelletmills
4
Perforatingequipment
6
Photocopyingequipment
5
Photographicequipment
6
Planers
6
Pleasurecraft,etc
12
Ploughs
6
Portable safes
25
Powertools(hand-operated)
5
Powersupply
5
Publicaddresssystems
5
Pumps
4
Racehorses
4
Radarsystems
5
Radiocommunication
5
Refrigeratedmilktankers
4
Refrigerationequipment
6
Refrigerators
6
Type of
asset
No. of years
for write-off
Runwaylights5
Sanders
6
Scales
5
Securitysystemsremovable
5
Seedseparators
6
Sewingmachines
6
Shakers
4
Shopfittings
6
Solarenergyunits
5
Specialpatternsandtooling
2
Spindryers
6
Spotweldingequipment
6
Stafftrainingequipment
5
Surgebins
4
Surveyors:
Fieldequipment
10
Instruments
5
Tape-recorders
5
Telephoneequipment
5
Televisionandadvertisingfilms
4
Televisionsets,video
machinesanddecoders
6
Textbooks
3
Tractors
4
Trailers
5
Traxcavators
4
Trollies
3
Trucks(heavy-duty)
3
Trucks(other)
4
Truck-mountedcranes
4
Typewriters
6
Vendingmachines(including
videogamemachines)
6
Videocassettes
2
Warehouseracking
10
Washingmachines
5
Waterdistillationand
purificationplant
12
Watertankers
4
Watertanks
6
Weighbridges(movableparts)
10
Wirelinerods
1
Workshopequipment
5
X-rayequipment
5
Notes
1
2
3
4
5
earandtearmaybeclaimedoneitheradiminishingvaluemethodoronastraight-
W
linebasis,inwhichcasecertainrequirementsapply
Costsincurredinmovingbusinessassetsfromonelocationtoanotherarenot
deductibleastheseareregardedasbeingcapitalinnature.Wearandtearmay
beclaimedovertheremainingusefullifeoftheassets
Whenanassetisacquiredfornoconsideration,awearandtearallowancemaybe
claimedonitsmarketvalueatdateofacquisition
Whereanassetisacquiredfromaconnectedperson,wearandtearmayonlybe
claimedontheoriginalcosttothesellerlessallowancesclaimedbytheconnected
personplusrecoupmentsandCGTincludedintheseller’sincome
Theacquisitionof“small”itemsatacostoflessthanR7000(2009:R5000)peritem
maybewrittenoffinfullduringtheyearofacquisition.
21
STRATEGIC ALLOWANCES
Asset type
Conditions for annual allowance
Strategicprojects
(note)
Anadditionalindustrialinvestmentallowanceis 100%ofcost
allowedonnewandunusedassetsusedforpreferredqualifyingstrategicprojectswhichwere
approvedbetween31July2001and31July2005
Anyotherqualifyingstrategicprojects
50%ofcost
Annual allowance
Pipelines
Newandunusedstructurescontractedfor
andconstructioncommencedonorafter
23February2000
10%ofcost
Electricityand
telephonetrans-
missionlinesand
railwaytracks
Newandunusedstructurescontractedfor
andconstructioncommencedonorafter
23February2000
5%ofcost
Airportand
Portassets
Newandunusedassetsandimprovementsbrought 5%ofcost
intouseonorafter1January2008anduseddirectly
andsolelyforpurposeofbusinessasairport,
terminalortransportoperationorportauthority
Rollingstock
Broughtintouseonorafter1January2008
20%ofcost
Asfrom8January2008fornewandunusedassets
Environmentaltreatmentandrecyclingassets
Environmentalwastedisposalassetsofa
permanentnature
40%in1styear
20%ineachofthe
3subsequentyears
Allformsofenergyefficiencysavingsasreflected
onanenergysavingscertificateinanyyearof
assessmentendingbefore1January2020
Determinedin
accordancewitha
formula
Environmental
assets
Energyefficiency
savings
5%ofcost
Note:
• Theallowanceislimitedtotheincomederivedfromtheindustrialprojectandtheexcessis deductibleintheimmediatelysucceedingyearofassessment,subjecttocertainotherlimits
CAPITAL GAINSTAX
CapitalGainsTax(CGT),applicablesince1October2001,appliestoaresident’s
worldwideassetsandtoanon-resident’simmovablepropertyorassetsofa
permanentestablishmentinSouthAfrica.
Disposals
CGTistriggeredondisposalofanasset.
• Important disposals include
-
-
-
-
abandonment,scrapping,loss,donation
vestingofaninterestinanassetofatrustinthebeneficiary
distributionofanassetbyacompanytoashareholder
granting,renewal,extensionorexcerciseofanoption
-
-
-
-
terminationofSouthAfricanresidency
achangeintheuseofanasset
thetransferofanassetbyapermanentestablishment
thereductionorwaiverofadebtbyacreditorwithoutfull
consideration,subjecttocertainexclusions
-
-
-
thetransferofanassetassecurityforadebtorthereleaseof
suchsecurity
issueof,orgrantofanoptiontoacquire,ashare,debentureor
unit trust
loansandthetransferorreleaseofanassetsecuringdebt
• Deemed disposals include
• Disposals exclude
22
Calculation of a Capital Gain/Loss
• Acapitalgainorlossisthedifferencebetweentheproceedsandthebase
cost.Anaggregatecapitallossiscarriedforwardandisavailableforset-off
inthefollowingtaxyear
Base Cost
• Expenditure included in the base cost
-
-
-
acquisition,disposal,transfer,stampduty,STTandsimilarcosts
remunerationofadvisors,consultantsandagents
costsofmovinganassetandimprovementcosts
-
-
-
expensesdeductibleforincometaxpurposes
interestpaid,raisingfees(exceptinthecaseoflistedsharesandbusiness
assets)
expensesinitiallyrecordedandsubsequentlyrecovered
-
-
-
Valuationasat1October2001
20%oftheproceeds
Timeapportionmentbasecost
Example:
IfanassetcostR250000on1October1998andwassoldon
30September2010forR450000,asCGTwasimplementedon
1October2001,thebasecostis:
Originalcostexpenditure
Add:
R250000
R50000*
*Proceedsfromdisposal
Less:Basecostexpenditure
R450000
(R250000)
Timeapportionmentbasecost
R300000
• Expenditure excluded from the base cost
• Methods for asset acquired before 1 October 2001
} x 3/12
Note 1:Whendeterminingthenumberofyearstobeincludedinthetime
apportionmentcalculation,apartoftheyearistreatedasafullyear.
Note 2:Whereexpenditureinrespectofapre-valuationdateassetwasincurred
onorafter1October2001andanallowancehasbeenallowedinrespectofthat
asset,anextendedformulaisapplied.
• Part disposals
-
Basecosttobeapportioned
Proceeds
• Thetotalamountreceivedoraccruedfromthedisposal
• Excluded
-
-
amountsincludedingrossincomeforincometaxpurposes
amountsrepaidorrepayableorareductioninthesaleprice
• Specific transactions
-
-
-
connectedpersons-deemedtobeatmarketvalue
deceasedpersons-marketvalueasatdateofdeath
deceasedestates-thebequestisdeemedtobeatthebasecost
i.e.marketvalueatdateofdeath
Inclusion Rates And Effective Rates
Inclusion rate
Individuals/SpecialTrusts
Companies
Trusts
2012
25%
50%
50%
2013
33,3%
66,6%
66,6%
Max effective rate
2012
10%
14%
20%
InthecaseofUnitTrusts(CIS),theunitholderisliablefortheCGT.
RetirementFundsareexemptfromCGT.
23
2013
13,3%
18,6%
26,7%
Exclusions and Rebates
• Annual exclusion
NaturalpersonsandspecialtrustsR30000(2012:R20000).
NaturalpersonsintheyearofdeathR300000(2012:R200000)
• Other exclusions
- Aprimaryresidence,ownedbyanaturalpersonoraspecialtrust,
usedfordomesticresidentialpurposes,wheretheproceedsdonot exceedR2million.WheretheproceedsexceedR2million,the
exclusionisR2million(2012:R1,5million)ofthecalculatedcapitalgain
- Personaluseassetsownedbyanaturalpersonoraspecialtrust,not
usedforthecarryingonofatrade
- Lumpsumsfrominsuranceandretirementbenefits.Thisexclusion
doesnotapplytosecond-handpoliciesunlesstheyarepurerisk
policieswithnoinvestmentorsurrendervalue
- Smallbusinessassetsoraninterestinasmallbusiness,limitedto
R1,8million(2012:R900000)ifcertainrequirementsaremet,including:
- thegrossassetvalueofthebusinessislessthanR10million
(2012:R5million)
-thenaturalpersonwasasoleproprietor,partneroratleast10%
shareholderforatleastfiveyears,isatleast55yearsold,or
suffersfromill-health,isinfirmordeceased
- Compensation,prizesanddonationstocertainPBO’s
- Assetsusedbyregisteredmicrobusinessesforbusinesspurposes.
Rollover Relief
Thecapitalgainisdisregardeduntilultimatedisposaloftheassetorinthe
caseofareplacementassetitisrecognisedoverafiveyearperiod
commencingwhenthereplacementassetisbroughtintouseunlessdisposed
of earlier.
• Certaininvoluntarydisposalsandthereplacementofqualifyingbusiness
assets
• Transferofassetsbetweenspouses
• Shareblockconversionstosectionaltitle
• Transferofresidencefromaqualifyingcorporateentityortrustbetween
11February2009and31December2012.Iftransferoccurredafter
1October2010,thetransferringentitymustbeterminated.
Valuations
Valuationsshouldhavebeenobtainedonorbefore30September2004.For
certaincategoriesofassetsthesevaluationsshouldhavebeenlodgedwith
thefirsttaxreturnsubmittedafter30September2004,orsuchothertimeas
theCommissionermayallow,providedthevaluationwasinfactdonepriorto
therequisitedate
• WherethemarketvalueofanyintangibleassetexceedsR1million
• WherethemarketvalueofanyunlistedinvestmentexceedsR10million
• WherethemarketvalueofanyotherassetexceedsR10million.
Non-resident Sellers of Immovable Property
Asfrom1September2007,whereanon-residentdisposesofimmovable
propertyinSouthAfricainexcessofR2million,thepurchaserwillbeobliged
towithholdthefollowingtaxesfromtheproceeds(unlessadirectivetothe
contraryhasbeenissued):
Seller’s status
Withholding tax
Naturalperson
5,0%
Company
7,5%
Trust
10,0%
24
CORPORATE TRANSACTIONS
Taxreliefexistsforcertaintransactions.Theseare:
• Assetforsharetransactions
• Amalgamationtransactions
• Intra-grouptransactions
• Unbundlingtransactions
• Liquidation,windinguporderegistrationtransactionswithinagroup.
REINVESTMENT RELIEF
Taxpayerscandefertaxablerecoupmentsandcapitalgainsonthesaleof
businessassets(excludingbuildings)iftheyfullyreinvestthesaleproceedsin
otherqualifyingassetswithinaperiodofthreeyears.Taxontherecoupment
andcapitalgainuponthedisposaloftheoldassetisspreadoverthesame
periodaswearandtearmaybeclaimedforthereplacementasset.
PRE-PAID EXPENDITURE
Expenditurepaidshouldbeapportionedtotheextentthatonlyexpenditure
actuallyincurredinayearofassessmentisdeductible.Theremainderofthe
pre-paidexpenditurewillbedeductibleinsubsequentyearsofassessment.
Thisdoesnotapply:
• wherethegoods,servicesorbenefits,inrespectofwhichthe
expenditurewasincurred,aresuppliedorrenderedwithinsixmonths
aftertheendoftheyearofassessment
• wherethetotalpre-paidexpendituredoesnotexceedR100000
(2012:R80000)
• toexpenditure,thetimingandaccrualofwhichisspecifically
determined
• topre-paidexpenditurepayableintermsofalegislativeobligation.
RESEARCH ANDDEVELOPMENT
Asfrom2November2006,thefollowingdeductionswillbeallowedfor
expenditureincurredinrespectofqualifyingresearchanddevelopment:
Prior to 1 April 2012
• 150%ofoperatingresearchanddevelopmentcostsinrespectofactivities
undertakeninSouthAfricaforthepurposesofthediscoveryofnovel,
practicalandnon-obviousinformation;ordevising,developingorcreating
anyinvention,designorcomputerprogramasdefinedintherelevantacts,
orknowledgeessentialtotheuseofsuchresearchproperty
• Researchanddevelopmentcapitalcosts(includinganybuildingorpart
thereof,machinery,plant,implements,utensilorarticleorimprovements
theretoofacapitalnature)arewrittenoffona50:30:20basis.
As from 1 April 2012
• 100%automaticdeductionofexpenditureincurredsolelyanddirectlyin
respectofseparatelyidentifiableresearchanddevelopmentactivities
• 50%additionaldeductionofexpenditureincurredsolelyanddirectlyin
respectofseparatelyidentifiableresearchanddevelopmentactivities.
Thisdeductionissubjecttopre-approvalbytheDepartmentofScience
andTechnology
• Researchanddevelopmentcapitalassetsarewrittenoffasfollows:
- Machinery,plantutensilsorarticlesona40:20:20:20basis
- Buildingsorimprovements5%peryear.
25
LEARNERSHIP ALLOWANCE
Employersareallowedtoclaimlearnershipallowancesinrespectof
registeredlearnerships(enteredintobefore10October2016)overand
abovethenormalremunerationdeduction.Foryearsofassessmentending
onorafter1January2010:
• Whereanemployerispartytoalearnership,thelearnershipallowance
consistsoftwobasicthresholds,namelyarecurringannualcommence mentallowanceofR30000andacompletionallowanceclaimableatthe
endofthelearnershipofR30000.Thecompletionallowanceisclaimable
cumulativelyforeverycompletedyearwherethelearnershipexceeds
24months
• Forlearnerswithdisabilitiestherelevantallowancesareincreasedto
R50000
• Learnershipsoflessthan12fullmonthswillbeeligibleforapro-rata
amountofthecommencementallowance(regardlessofthereasonthat
thelearnershipfallsshortofthe12monthperiod).Ifalearnershipfalls
overtwoyearsofassessment,thecommencementallowanceis
allocatedpro-ratabetweenbothyearsbasedonthecalendarmonths
applicabletoeachyearbymultiplyingthecommencementamountby
thetotalcalendarmonthsofthelearnershipover12.
VENTURE CAPITALINVESTMENTS
Asfrom1July2009,ataxpayerwillbeentitledtoadeductionof100%of
thecostofsharesissuedbyaventurecapitalcompanysubjecttothe
followinglimitations:
• anaturalpersonmaydeductR750000inayearofassessmentanda
totalofR2250000
• alistedcompanyandanycompanyheld70%directlyorindirectlyby
thatlistedcompanycandeductamaximumofthecostofupto40%of thetotalequityinterestintheventurecapitalcompany
• theventurecapitalcompanymustbeapprovedbySARSasaqualifying
companyandfulfilanumberofpre-conditions.
Asfrom1January2012,therearenoceilingsregardingtheamountwhich
maybeclaimedasadeductionwhichwillnowbeavailabletoalltaxpayers
providedtheexpenditurecomprisesaninvestmentinequityshares,the
investorisnotaconnectedpersonaftermakingtheinvestmentandis
genuinelyexposedtotheriskofeconomiclossintheeventoffailureofthe
venture.Variousthresholdsregardingthelevelandnatureofexpenditureby
theventurecapitalcompanyhavealsobeenrelaxedtoattractmoreinterest
inthisactivity.
INDUSTRIAL POLICY PROJECTS
Anadditionalinvestmentallowanceforanapprovedprojectisavailableto
brownfieldprojectexpansionorupgrade,oragreenfieldprojectinrespectof
newandunusedmanufacturingitems.Subjecttocertainlimitstheadditional
allowanceis55%ofthecostofassetsforgreenfieldprojectsand35%for
brownfieldprojects.Wheretheprojectisundertakeninanindustrialdevelopmentzonetheallowancesareincreasedto100%and75%respectively.
ThereisalsoanadditionalprojectrelatedtrainingallowanceofR36000per
employeelimitedtoR30millionorR20millionifnopreferredstatusapplies.
26
DIRECTORS PAYE
Directorsofprivatecompaniesandmembersofclosecorporationsare
deemedtohavereceivedamonthlyremuneration,subjecttoPAYE,
calculatedinaccordancewithaformula.
Theformulacalculatedremunerationdoesnotapplytodirectorsofprivate
companiesandmembersofclosecorporationswhoearnatleast75%of
theirremunerationintheformoffixedmonthlypayments.
STAMP DUTY
Nostampdutyispayableonleasesofimmovablepropertyenteredintoafter
1April2009.
SECURITIES TRANSFERTAX
Asfrom1July2008,securitiestransfertax(STT)ispayableatarateof
0,25%oftheconsideration,closingpriceormarketvalue(whicheveris
greater)onthetransfer,cancellationorredemptionofanylistedorunlisted
share,member’sinterestinaclosecorporationorcessionofarightto
receivedistributionsfromacompanyorclosecorporation.
• Onlistedsecurities,thismustbepaidbythe14thofthemonthfollowing
themonthduringwhichthetransferoccurred
• Onunlistedsecurities,thismustbepaidbytheendofthesecondmonth
followingtheendofthemonthduringwhichthetransferoccurred
• Ifnotpaidinfullwithintheprescribedperiodinterestwillbeimposedat
theprescribedrateanda10%penaltywillbepayable
• NoSTTispayableiftheconsideration,closingpriceormarketvalueis
lessthanR40000.
DEEMED CAPITAL DISPOSALOFSHARES
Asfrom1October2007,theproceedsonthesaleofanequityshareor
collectiveinvestmentschemeunitwillautomaticallybeofacapitalnatureif
heldcontinuouslyforatleastthreeyearsexcept:
• ashareinashareblockcompany
• ashareinanon-residentcompany
• ahybridequityinstrument.
Previouslythetaxpayercouldelectthattheproceedsonthesaleofalisted
shareheldforatleastfiveyearsbetreatedascapital.
CONNECTED PERSONS
Whereadepreciableassetisacquiredbyataxpayeranditwasheldbya
connectedpersonatanytimeduringaperiodoftwoyearsbeforethat
acquisition,thepurchasermayclaimcapitalallowancesonthelowerofthe
purchasepriceorthefollowingdeemedcost:
• thenettaxvalueoftheassettotheseller,plus
• therecoupmentonthedisposalbytheseller,plus
• thetaxablecapitalgainonthedisposalbytheseller.
27
RESIDENCE BASED TAXATION
As from 1 January 2001, residents of South Africa are taxable on their
worldwide income.
Resident means
• AnaturalpersonwhoisordinarilyresidentinSouthAfrica
• Asfrom1March2005,anaturalpersonwhoisphysicallypresentin
South Africa for at least 91 days in the current and each of the
precedingfivetaxyearsandatleast915daysduringthefivepreceding
tax years
• Acompanyortrustthatisincorporated,established,formedorwhich hasitsplaceofeffectivemanagementinSouthAfrica.
Resident excludes
•
•
Anaturalperson,whowaspreviouslyregardedasadeemedresident,if physicallyabsentfromSouthAfricaforacontinuousperiodofatleast
330daysfromthedateofdeparture
Apersonwhoisdeemedtobeexclusivelyaresidentofanothercountry
forthepurposesoftheapplicationofanydoubletaxationagreement.
Exemptions
• RemunerationforservicesrenderedoutsideSouthAfricaduringthetax yearifsuchpersonwasoutsideSouthAfricaforperiodsinaggregateof at least 183 days, of which 60 days were continuous
• Non-SouthAfricanpensionandsocialsecuritypayments.
Foreign Dividends
Foreigndividendsreceivedfromanon-residentcompany,includingdeemed
dividends,aretaxable,exceptif:
• theshareholderholdsatleast10%oftheequityandvotingrightsofthe
distributingcompany
• thedistributingcompanyislistedonboththeJSEandarecognised
foreignexchangeandthedividendisnotadividendin specie
• thedistributingcompanyisacontrolledforeigncompany(CFC)and
thedividendsdonotexceedamountsdeemedtobetheresident
shareholder’sincomeundertheCFCrules
• thedividendisdeclaredfromamountsalreadytaxableinSouthAfrica
• foreigndividendsdeclaredbyoneCFCtoanotherCFCresidentinthe
same country.
Anyremainingtaxableforeigndividendissubjecttoaformulawherebythe
maximumrateoftaxationis15%.
Aresidentisentitledtoacreditforanywithholdingtaxpaidinrespectofa
foreigndividendthatisincludedingrossincome.
Asfrom1April2012,nodeductionisallowedforinterestincurredinthe
productionofforeigndividends.
Controlled Foreign Companies
ACFCisanon-residentcompanyinwhichresidents,otherthanaheadquartercompany,directlyorindirectlyownorcontrolmorethan50%of
theparticipationorvotingrights.Asfrom1April2012,aresidentholding
between10%and20%ofaforeigncompany,maynolongerelecttotreat
28
thecompanyasaCFC.
• Aresidentmustincludeinhisincome:
Resident’sparticipationrightsinCFC
NetincomeofCFCx
TotalparticipationrightsintheCFC
• ThenetincomeofaCFCshouldbecalculatedaccordingtoSouth
Africantaxprinciples.Ifthecalculationresultsinaloss,thedeductions arelimitedtoincomeandtheexcessiscarriedforward.
Exemptions
•
•
•
•
Thenetincome(includingcapitalgains)oftheCFCthatisderivedfrom
anactivebona fideforeignbusinessestablishmentsituatedoutside
SouthAfrica(subjecttocertainexclusions)
IncomeoftheCFCotherwisetaxedinSouthAfricaatnormalrates
ForeigndividendsreceivedbytheCFCfromanotherCFCtotheextent
thattheincomefromwhichthedividendisdeclaredhasalreadybeen
includedintheresident’staxableincomeundertheCFCrules
Netincomeattributabletointerest,royaltiesorsimilarincomepayable
totheCFCbyotherforeigncompaniesformingpartofthesamegroup
ofcompanies.
Tax Rebates
•
•
Wherearesidenthastoincludeinhistaxableincomeanyforeign
sourcedincomeorcapitalgain,theproportionateamountofthenet
incomeofaCFC,foreigndividends,orotherattributableamounts,a
rebateinrespectofanyforeigntaxespaidorpayableinrespectofsuch
amounttoaforeigngovernmentisallowed
Therebateislimitedtotheforeigntaxpayableandmaynotexceed:
Taxableforeignincome
TotalSouthAfricannormaltaxx
Totaltaxableincome
• Iftheforeigntaxpaidexceedsthelimitsetoutabove,theexcessforeign
taxmaybecarriedforwardforamaximumofsevenyears
• Asfrom1January2012,foreigntaxeswithheldonincomearisingfrom
servicesrenderedinSouthAfricamaybeclaimedasarebate.
General
•
•
•
•
•
AlossincurredincarryingonabusinessoutsideSouthAfricamaynotbe
set-offagainstincomeinSouthAfrica
TheamountofforeigntaxpayablemustbeconvertedtoRandsatthe
lastdayofthetaxyearbyapplyingtheaverageexchangerateforthat
taxyear
ForeignincomeisconvertedtoRandsbyapplyingthespotexchange
rateatthedatetheincomeaccrues.Naturalpersonsandnon-trading
trustsmayelecttoapplytheaverageexchangerateforthattaxyear
Whereforeignincomemaynotberemittedbecauseofrestrictions
imposedbythesourcecountry,suchincomeisincludedintheresident’s
grossincomeinthetaxyearduringwhichthatamountmayberemitted toSouthAfrica
TaxwithheldinaforeigncountryinrespectofSouthAfricansourced
incomeisrecognisedasadeductionagainstsuchincomeratherthanas
arebateagainstSouthAfricantaxpayableonthatincome.
29
DOUBLE TAXATION AGREEMENTS
ANDWITHHOLDINGTAXES
DoubleTaxationAgreementsprovideforreliefinrespectofroyalties,know-how,
dividendsandinterestwithholdingtaxes.
Non-Treaty Countries
Royalties %
Dividends %
Interest %
12
15
10
10
5
0
5/10
0
10
10/12
5/10
6/10
5
0
10
0
12
12
0
12
12
10
5/7
0
10
10
10
0
12
6
10
10
10
10
0
12
5
10
0
10
5
10
10
10
7.5
0
10
5/10
5/10
5/10
5/10
10
10
5/10
5/10
5/10
0
5/10
5/10
10
10
5/10
5/10
7.5/10
5/10
5/10
5/10
10
10
10
0
10
5/10
5/10
5/10
0
10
5/10
10
5/10
5
5/10
5/10
8/10
5/10
5/10
5/10
7.5/10
5/10
10
10
0
5/10
0/10
10
10
5
10
0
0
0
0
10
8
0
0
10
5/10
5/10
0
10
10
5
0
10
10
10
10
0
10
0
10
10
10
0
0/10
0/8
10
10
10
7.5
0
Treaty Countries
Algeria
Australia
Austria
Belarus
Belgium
Botswana
Brazil
Bulgaria
Canada
Croatia
Cyprus
CzechRepublic
Denmark
Egypt
Ethiopia
Finland
France
Germany
Ghana
Greece
Hungary
India
Indonesia
Iran
Ireland
Israel
Italy
Japan
Korea
Kuwait
Lesotho
Luxembourg
Malawi
Malaysia
Malta
Mauritius
Mexico
Mozambique
Namibia
Netherlands
NewZealand
Nigeria
Norway
30
Oman
Pakistan
PeoplesRepublicofChina
Poland
Portugal
Romania
RussianFederation
Rwanda
SaudiArabia
Seychelles
Singapore
SlovakRepublic
Spain
Swaziland
Sweden
Switzerland
Taiwan
Tanzania
Thailand
Tunisia
Turkey
Uganda
Ukraine
UnitedKingdom
USA
Zambia
Zimbabwe
Royalties %
Dividends %
Interest %
8
10
7/10
10
10
12
0
10
10
0
5
10
5
10
0
0
10
10
12
10
10
10
10
0
0
12
12
0
10
5
5/10
10
10
10
10
5/10
0
5/10
5/10
5/10
10
0/7.5
5/10
10
10
10
10
10
5/10
10
5/10
10
10
10
0
10
10
10
10
10
10
10
10
0
0
0
5
10
0
5
10
10
5/10
10
0/10
10
0
0
10
10
10
Notes
1
Theaboveratesareprovidedasaguideonly.AnumberoftheaboveDTA’s
provideforalternativerates,includingzero,tobeappliedinspecific
circumstances.Onlyinvestorswithameaningfulshareholdingwillbeentitled
toareducedrateofDividendsTax.ToviewthecompleteDoubleTax
Agreementsrefertowww.sars.gov.za.
2
CurrentlySouthAfricahasnowithholdingtaxondividendsorinterest.
ThenewDividendsTaxistoreplaceSTCwitheffectfrom1April2012.
Awithholdingtaxoninterestpaidtonon-residentswillbeintroducedfrom
1January2013,ataproposedrateof15%.
ROYALTIES TO NON-RESIDENTS
Asfrom1January2009,nodeductionwillbeallowedinrespectofroyalty
paymentsif:
• theintellectualpropertywasatanytimewhollyorpartlyownedbythe
taxpayeroranotherSouthAfricanresident,or
• theintellectualpropertywasdevelopedbythetaxpayeroraconnected
personwhoisaresident.
Iftheroyaltyissubjecttoawithholdingtaxatarateofatleast10%thena
deductionofonethirdoftheroyaltywillbeallowed.
31
REGIONAL HEADQUARTERCOMPANY
Asfromyearsofassessmentcommencingonorafter1January2011,anew
headquartercompanyregimeprovidesthefollowingbenefits:
• itssubsidiariesarenottreatedascontrolledforeigncompanies
• dividendsarenotsubjecttoSTCorDividendsTax
• noapplicationofthincapitalisationrulesmerelybecauseoftheexistence
ofback-to-backcross-borderloans;and
• exemptionfromthependingwithholdingtaxoninterestinrespectof
back-to-backloans
Aregionalinvestmentfundregimealsoappliesfromyearsofassessment
commencingonorafter1January2011.Qualifyingforeigninvestorswillbe
regardedaspassiveinvestorswithnoexposuretoSouthAfricantaxbecause
oftheuseofaSouthAfricanportfoliomanager.
TAXATION OF NON-RESIDENTS
Interest
Allinterestreceivedbyoraccruedtonon-residentsisexemptfromtaxunless
thatperson:
• atanytimeduringthatyearcarriedonbusinessthroughapermanent
establishmentinSouthAfrica
• isanaturalpersonwhowasphysicallypresentinSouthAfricaformore
than183daysinaggregateduringthatyear.
Dividends
Asfrom1April2012,anewDividendsTaxwillbebornebytheshareholder
atarateof10%(subjecttoanyreductionintermsofadoubletaxation
agreement).
Royalties
Subjecttoadoubletaxationagreement,royaltiespaidtonon-residentsare
subjecttoafinalwithholdingtaxof12%(proposedratefor2013:15%).
ResidentsrequireGovernmentandExchangeControlapprovalforroyalty
paymentstoanon-resident.
Other Income
Non-residentswillcontinuetobetaxedonSouthAfricansourcedincomeonly.
Payment to Non-Resident Entertainers
Awithholdingtaxof15%ispayablebynon-residentsportspersonsand
entertainersonincomeearnedinSouthAfrica.
WITHHOLDING TAX ONINTEREST
Asfrom1January2013,interestaccruingfromaSouthAfricansourcetoa
non-resident,excludingacontrolledforeigncompany,willbesubjecttoa
proposedrateof15%withholdingtaxonpayment,exceptinterest:
• arisingonanyGovernmentdebtinstrument
• arisingonanylisteddebtinstrument
• arisingonanydebtowedbyabankorSARB
• arisingfromabillofexchangeorletterofcreditwheregoodsareimported
intoSouthAfricaandwhereanauthoriseddealerhascertifiedsuchonthe
instrument
• payablebyaheadquartercompany
• accruingtoanon-residentnaturalpersonwhowasphysicallypresentin
SouthAfricaforaperiodexceeding183daysinaggregate,duringthat
year,orcarriedonabusinessthroughapermanentestablishmentin
SouthAfrica.
32
TRANSFER DUTY
On Immovable Property (on or after 23 February 2011)
Payablebynaturalpersonsandlegalentities:
Property value
Rates of tax
R0-R600000 0%
R600001-R1000000 3%onthevalueaboveR600000
R1000001-R1500000 R12000plus5%onthevalueaboveR1000000
R1500001andabove
R37000plus8%onthevalueaboveR1500000
• NotransferdutyispayableifthetransactionissubjecttoVAT
• Ifaregisteredvendorpurchasespropertyfromanon-vendor,theVAT
notionalinputtaxcreditislimitedtotheVATfraction(14/114)ofthelower
ofthesellingpriceortheopenmarketvalue.Anotionalinputtaxcreditis
onlyclaimabletotheextenttowhichthepurchasepricehasbeenpaid
andthepropertyisregisteredintheDeedsOffice
• Asfrom10January2012,therestrictionthatthenotionalinputislimited
tothetransferdutypaidisnolongerapplicable
• Certainexemptionsapplytocorporaterestructuring
• Theacquisitionofacontingentrightinatrustthatholdsaresidential
propertyorthesharesinacompanyorthemember’sinterestinaclose
corporation,whichownsresidentialproperty,comprisingmorethan50%
ofitsCGTassets,issubjecttotransferdutyattheapplicablerate
• Liabilitiesoftheentityaretobedisregardedwhencalculatingthefair
valueofthecontingentrightinthetrust,thesharesinthecompanyor
themember’sinterestintheclosecorporation
• Residentialpropertyincludesdwellings,holidayhomes,apartmentsand
similarabodes,improvedandunimproved,zonedforresidentialpurposes.
Itexcludesastructureoffiveormoreunits,rentedbyfiveormore
unconnectedpersons.Italsoexcludesfixedpropertyformingpartofthe
enterpriseofaVATvendor
• Anypersonwhodoesoromitstodoanythingwiththeintenttoevade
transferdutymaybechargedwithadditionaldutyuptotwicetheamount
ofdutypayable.Suchapersonisguiltyofanoffenceandliableon
convictiontoafineorimprisonmentforaperiodnotexceeding60months
• Notransferdutyispayableinrespectoftheacquisitionbyaqualifying
naturalpersonofaresidence,mainlyusedfordomesticpurposes
(includingholidayhomes),fromaqualifyingcorporateentityortrust
between11February2009and31December2012.
From1October2010to31December2012thisexemptionisextendedto
includemulti-tieredstructures.Afterthetransferoftheresidence,allthe
entitiesmustbewounduporterminatedwithinsixmonthsofthedisposal.
UNQUANTIFIED PROCEEDS
Whereanassetisdisposedofforanunquantifiedamount,theportionofthe
purchasepricewhichcannotbequantifiedisdeemedtoaccrueintheyear
thatitbecomesquantifiable.Anyrecoupment,capitalgain/lossarisingfrom
suchtransactionisdeferreduntilsuchtimeastheconsiderationbecomes
quantifiable.
Iftheassetisbroughtintouseinyear1,buttheconsiderationonlybecomes
quantifiableinyear2,thewearandtearforyear1andyear2willbeclaimed
in year 2.
33
BOND / INSTALMENT SALE REPAYMENTS
ThefollowingtablereflectsrepaymentsoneveryR1000borrowed.
Example:AbondofR80000at10,5%over20years
R80000÷R1000x09,98=R798.40amonthovera20yearperiod.
Rate
07,0%
07,5%
08,0%
08,5%
09,0%
09,5%
10,0%
10,5%
11,0%
11,5%
12,0%
12,5%
13,0%
13,5%
14,0%
14,5%
15,0%
15,5%
16,0%
16,5%
Mortgage Bonds
10 Yrs 20 Yrs
11,61
11,87
12,13
12,40
12,67
12,94
13,22
13,49
13,78
14,06
14,35
14,64
14,93
15,23
15,53
15,83
16,13
16,44
16,75
17,60
07,75
08,06
08,36
08,68
09,00
09,32
09,65
09,98
10,32
10,66
11,01
11,36
11,72
12,07
12,44
12,80
13,17
13,54
13,91
14,29
25 Yrs 30 Yrs
07,07
07,39
07,72
08,05
08,39
08,74
09,09
09,44
09,80
10,16
10,53
10,90
11,28
11,66
12,04
12,42
12,81
13,20
13,59
13,98
06,65
06,99
07,34
07,69
08,05
08,41
08,78
09,15
09,52
09,90
10.29
10,67
11,06
11,45
11,85
12,25
12,64
13,05
13,45
13,85
Short Term Financing
36 Months
48 Months
60 Months
30,88
31,11
31,34
31,57
31,80
32,03
32,27
32,50
32,74
32,98
33,21
33,45
33,69
33,94
34,18
34,42
34,67
34,91
35,16
35,40
23,95
24,18
24,41
24,65
24,89
25,12
25,36
25,60
25,85
26,09
26,33
26,58
26,83
27,08
27,33
27,58
27,83
28,08
28,34
28,60
19,08
20,04
20,28
20,52
20,76
21,00
21,25
21,49
21,74
21,99
22,24
22,50
22,75
23,01
23,27
23,53
23,79
24,05
24,32
24,58
OFFICIAL INTEREST RATES &PENALTIES
Type
Reason
Basis of charge
Provisional
tax
1stand2nd
paymentlate
10%penaltyplusinterestchargeddailyfrom
duedatetodateofpayment
Provisional
tax
3rdpayment
late
Interestchargeddailyfromeffectivedateto
earlierofpaymentdateorassessmentdate.
Effectivedateissixmonthsafteryear-end,
exceptinthecaseofFebruaryyear-ends,
wheretheeffectivedateis30September
Provisional
tax
Overpayment
Crediteddailyfromeffectivedatetodateof
refund
Assessment
Latepayment
Interestchargedoneachcompletedmonth
fromfirstduedatetodateofpayment
Loanto
employee
Deemedfringe
benefit
Officialrateforfringebenefitlessactual
ratexloanxactualmonthsdividedby12
VAT
Latepayment
10%penaltyplusinterestattheprescribed
rate
VAT
Refund
Calculatedmonthly,starting21businessdays
afterreceiptofreturntodateofpayment.
Periodissuspendedwhenvendordenies
SARSaccesstobooksifrequested
Employees
tax
Latepayment
10%penaltyplusinterestchargeddailyfrom
duedatetodateofpayment
SkillsDevelopment
Levy
Latepayment
10%penaltyplusinterestchargeddailyfrom
duedatetodateofpayment
34
PRIME OVERDRAFT RATES
Date of change
Rate
%
Date of change
Rate
%
07December2007
11April2008
13June2008
12December2008
06February2009
25March2009
14,50
15,00
15,50
15,00
14,00
13,00
04May2009
29May2009
14August2009
26March2010
10September2010
19November2010
12,00
11,00
10,50
10,00
09,50
09,00
TheabovedatesareapplicabletoStandardBank.Banksdonotalwaysadjust
theirratesonthesameday.
INTEREST RATES CHANGES
Prescribed rate - Late payment of assessed and provisional tax and
underpayment of provisional tax
Date of change
Rate %
1August2009
11,5
1September2009
10,5
1July2010
9,5
1March2011
8,5
Allpaymentsarefirstsetoffagainstpenalties,theninterestandfinallytax.
Prescribed rate - Late payment of VAT
Date of change
Rate %
1September2009
10,5
1July2010
9,5
1March2011
8,5
Allpaymentsarefirstsetoffagainstpenalties,theninterestandfinallytax.
Prescribed rate - Refund of overpayment of provisional tax
Date of change
Rate %
1July2009
8,5
1August2009
7,5
1September2009
6,5
1July2010
5,5
1March2011
4,5
Interestonoverpaymentofprovisionaltaxisonlypayableiftaxableincome
exceedsR50000(individualsandtrusts)R20000(companiesandclose
corporations)ortherefundexceedsR10000,regardlessoftaxableincome.
Prescribed rate - Refund of VAT after prescribed period
Date of change
Rate %
1September2009
10,5
1July2010
9,5
1March2011
8,5
Prescribed rate - Refund on successful objection, appeal or conceded appeal
Date of change
Rate %
1March2011
8,5
Official rate - Fringe benefits
Date of change
Rate %
1July2009
8,5
1September2009
8,0
1October2010
7,0
Asfrom1March2011theofficialrateisequaltotheSouthAfricanrepurchaserate
plus 100 basis points.
35
VALUE-ADDED TAX (VAT)
VATwasintroducedon30September1991at10%andincreasedto14%on
7April1993.TheVATsystemcomprisesthreetypesofsupplies:
• Standard-rated supplies–suppliesofgoodsandservicessubjecttothe
VATrateinforceatthetimeofsupply
• Exempt supplies–suppliesofcertainservicesnotsubjecttoVAT.
Vendorsmakingexemptsuppliesarenotentitledtoinputcredits
• Zero-rated supplies–suppliesofcertaingoodsorservicessubjectto
VATatzeropercent.Thefollowingare,amongstothers,specificallyzero-
rated:brownbread,maizemeal,samp,mealierice,driedmaize,dried
beans,lentils,pilchards(excludingpetfoodorsardinessuppliedintins),
milkpowder(unflavoured),dairypowderblend,rice,freshvegetables
(excludingcanned,bottledanddehydrated),freshfruit,vegetableoil
usedforcooking(excludingoliveoil),milkincludinglong-lifemilk
(excludingcondensed,flavoured,sweetenedandevaporatedmilk),
culturedmilk,brownwheatenflour,raweggs,podvegetables,diesel,
petrolandilluminatingparaffin.Exportsalesandservicesarezero-rated,
subjecttospecificrequirements.SuppliesfromSouthAfricatoan
IndustrialDevelopmentZonewillbetreatedasexports.
VATinputtaxcreditsmayingeneralnotbeclaimedinrespectofmotor
vehicles(includingsedananddouble-cabs)andentertainment.
Allfee-basedfinancialservicesaresubjecttoVATwiththeexceptionof:
• premiumspayableinrespectoflifepoliciesissuedintermsofthe
Long-termInsuranceActandcontributionstopension,provident,
retirementannuityandmedicalaidfunds;and
• buyingorsellingofderivativesorgrantingofoptions.
Registration Requirements
Asfrom1March2009,avendorisrequiredtoregisterforVATifturnoverina
12monthperiodislikelytoexceedR1million.Whereturnoverislessthan
R1million,butexceedsR50000andR60000inthecaseofcommercialrental
establishmentsina12monthperiod,avendorcanregistervoluntarily.All
vendorsthatderegisterfromtheVATsysteminlightoftheincreaseintheVAT
registrationthresholdtoR1millionwillbeallowedtopaytheexitVATovera
periodofsixmonths.
Foryearsofassessmentcommencingonorafter1March2012,aregistered
microbusinessmayalsoberegisteredasavendorforVATpurposes.
WhereturnoverislessthanR1,5millionina12monthperiod,VATreturnsmay
berenderedeveryfourmonths.WhereturnoverislessthanR30millionina
12monthperiod,VATreturnsmayberenderedeverytwomonths.Turnoverin
excessofR30millionresultsinVATreturnshavingtoberenderedevery
month.Farmers,withaturnoveroflessthanR1,5millionmayrenderVAT
returnseverysixmonths.
NormallyavendoraccountsforVATonaninvoicebasis.However,where
turnoverina12-monthperiodislikelytobelessthanR2,5million,thevendor
canapplytobeplacedonapaymentsbasisifthevendorisanaturalperson
oranunincorporatedbodyofpersonswhosemembersarenaturalpersons.
Ataxinvoicemustreflectthepurchaser’stradenameandVATregistration
number,ifthevalueisinexcessofR3000.
36
VAT R ELIEF FORDEVELOPERS
Propertydeveloperswholetresidentialpropertypriortoasalehavebeen
grantedtemporaryrelieffromtheVATchangeinuserules.Thereliefwillapply
foramaximumperiodof36monthsifthedeveloperisunabletosellthe
propertyduetoalackofdemand.Iftherentalperiodexceeds36months,the
deemedchangeinusewillapply,basedonthemarketvalueofthepropertyon
thatdate.Theconcessionperiodisfrom28December2011until31December
2017.
VAT R ELIEF INTER-GROUP
Asfrom10January2012,groupdebtolderthan12monthswillnotbesubject
totheVATchargebackprovisionandthegroupcreditorwillnotbeentitledto
claimaVATinputdeductionforabaddebtwrittenoff.
ASSESSED L OSSES RING-FENCED
Asfrom1March2004,lossesfromsecondarytradesarering-fencedandarenot
availableforset-offagainstincomefromanyothertrade.
Itwillonlyapplytoanindividualwhosetaxableincome,beforesettingoffany
assessedlossorbalanceofassessedloss,isequaltoorexceedsthelevelat
whichthemaximumrateoftaxisapplicable.
Fortherestrictionstoapplythepersonmusthaveincurredanassessedloss
fromthesecondarytradeinatleastthreeyearsofassessmentduringanyfive
yearperiod,orhavecarriedonanyofthefollowing‘suspect’trades:
• Anysportingactivities
• Anydealingincollectables
• Therentalofaccommodation,vehicles,aircraftorboats(unlessatleast
80%oftheassetisusedbypersonswhoarenotrelativesofsuch
personforatleasthalfoftheyearofassessment)
• Animalshowing
• Farmingoranimalbreeding(otherwisethanonafull-timebasis)
• Performingorcreativearts
• Gamblingorbetting.
Thetaxpayerwillbeabletocircumventtheseprovisionsifhecanprovethat
thereisareasonableprospectofderivingtaxableincomewithinareasonable
periodandwherehecomplieswithothertests,unlesslosseshavebeenincurred
inatleastsixoutoftenyears.
PATENT / INTELLECTUALPROPERTY
Ataxpayermayclaimanallowanceforthecostofacquiringanyinvention,
patent,design,copyright,otherpropertywhichisofasimilarnatureorknowledgeconnectedwiththeuseofsuchpatent,design,copyrightorotherproperty
ortherighttohavesuchknowledgeimparted.
WherethecostexceedsR5000,theallowanceislimitedto:
• 5%ofthecostinrespectofanyinvention,patent,copyrightorother
propertyofasimilarnature
• 10%ofthecostofanydesignorotherpropertyofasimilarnature.
Wheretheintangiblewasacquiredfromaconnectedpersontheallowanceis
limitedtothecosttotheconnectedsellerlessallowancesclaimedbytheseller
plusrecoupmentsandCGTincludedintheseller’sincome.
No allowance isallowedinrespectofanyexpenditureincurredbythe
taxpayerinrespectoftheacquisitionofanytrademarkorpropertyofasimilar
natureonorafter29October1999.
37
EXCHANGE CONTROL REGULATIONS
Foreign Investment Allowance
Individuals,olderthan18years,ingoodstandingwithSARS,caninvest
R4millionpercalendaryear(priorto5November2010:R4millionperlifetime)abroadsubjecttothecompletionofformMP1423,accompaniedbya
SARStaxclearancecertificate.Incomeaccruingthereonmayalsoberetained
abroad.
Single Discretionary Allowance
Individuals,olderthan18years,haveasinglediscretionaryallowanceof
R1million(2010:R750000)percalendaryearwhichcanbeapportionedto
coverdonationstomissionaries,maintenance,giftsandloans,travel,study,
alimonyandchildsupport,weddingexpensesandforeigncapitalallowance.
ApplicationsinexcessoftheR1millionwillbeconsideredonacasebycase
basis.Individuals,youngerthan18years,haveatravelallowanceofR200000
(2010:R160000)percalendaryear.
Specialised Medical/Dental Expenses Abroad
Nolimit,providedsupportedbyoriginaldocumentaryevidenceofexpenses.
Directors Fees
Nolimitisapplicabletodirectorsfeespaidtonon-residentsincluding
emigrants.Requeststotransfersuchfeesmustbeaccompaniedbyacopyof
theresolutionoftheboardoftheremittingcompanyconfirmingtheamountto
bepaidtothedirectorandproofthatthedirectorisnon-resident.
Guarantees
Nolimitisapplicabletoguaranteesgivenbynon-residentsforfinancial
assistancetoSouthAfricanresidentswhoarenotaffectedpersons.
Emigrants
Wheretheforeigninvestmentallowancehasnotbeenfullyutilised,emigrants
arepermittedatop-upto:
• R8millionpercalenderyearperfamilyunit
• R4millionpercalenderyearpersingleemigrant
Householdandpersonalandothereffects(excludingcoinswhicharelegal
tenderinSouthAfrica)maybeexportedwithinanoverallinsuredvalueof
R2millionperfamilyunitorsingleemigrant.
Inadditiontheunutilisedportionofthesinglediscretionaryallowancemay
alsoberemitted.
Inheritances
Non-residentsareentitledtotransfertheirinheritance,irrespectiveofwhether
thedeceasedwasresidentornon-residentinSouthAfrica.FormerSouth
Africanresidentsmusthavecompletedemigrationformalitiestoqualify.
Foreign Investment in South Africa
Non-residentsenjoyunrestrictedrightstoinvestingiltsandshareslistedon
theJSEandexporttheproceedsonthesalethereof.Interestanddividends
arealsofreelyremittable.Loansbynon-residentstoSouthAfricanresidents
aresubjecttospecificcriteriaandrecordingrules.
Remittable Income
Certainformsofincomeearnedbyanemigrantonhisblockedassetsare
freelyremittableabroad,afterprovidingforincometax.
Blocked Assets
Unlimitedblockedfundsmaybereleasedlocallyforanypurpose,exceptthe
grantingofaloantoaSouthAfricanresident.
38
Local Visits by Emigrants
Thereisnolimitonthedailyutilisationofblockedfundsduringavisitbyan
emigrantbutthesefundsmaynotbeloanedtoaSouthAfricanresident.
Directreturnairflightsmaybepaidlocallyfromblockedfunds.
Restrictions on Local Financial Assistance
The3:1ratiorestrictiononlocalfinancialassistancehasbeenabolishedfor
affectedpersonswheretheborrowingisforworkingcapital.
Localfinancialassistancesubjecttothe1:1ratioisavailableto:
• emigrants,whereblockedrandbalancesorblockedrandassetsareused
ascollateral
• non-residents,iftheborrowingisrequiredfortheacquisitionof
residentialorcommercialpropertyinSouthAfricaand/orforfinancial
transactions
• affectedpersons,iftheborrowingisrequiredfortheacquisitionof
residentialpropertyinSouthAfricaorforfinancialtransactions
• non-residentwhollyownedsubsidiaries,iftheborrowingisrequiredfor
theacquisitionofresidentialpropertyinSouthAfricaorforfinancial
transactions.
Outbound Investments by Companies
ThelimitthatcanbeapprovedbyAuthorisedDealersisR500million
(2008:R50million)percalendaryear.ExchangeControlapprovalwillhaveto
beobtainedforinvestmentsexceedingthislimit.SouthAfricancompaniesare
nowallowedtomakebona fidenewoutwarddirectinvestmentsoutsidetheir
currentlineofbusinessexcludingpassiveinvestments.AuthorisedDealers
mayalsoallowadditionalworkingcapitalfundinguptotheoveralllimitof
R500millionpercalendaryear.SouthAfricancompaniesmaynowacquire
between10%and20%equityand/orvotingrightsinaforeigntargetentity
whichmayholdinvestementsand/ormakeloansintoanyCMAcountry.
Forward Cover
SouthAfricancompaniesmaycoverforwardupto75%ofbudgetedimport
commitmentsorexportaccrualsinrespectoftheforthcomingfinancialyear
withoutExchangeControlapproval.
International Headquarter Companies
ForeignindividualswhohaveestablishedheadquartercompaniesinSouth
Africamay,subjecttoapproval,investoffshorewithoutrestriction,subjectto
certainshareholdingandassetcriteria.
ENVIRONMENTAL EXPENDITURE
Expenditureincurredbyataxpayertoconserveormaintainlandis
deductibleifitiscarriedoutintermsofabiodiversitymanagementagreement
withadurationofatleastfiveyearsandthelandusedbythetaxpayerinhis
tradeconsistsof,includes,orisincloseproximitytothelandwhichissubject
tothisagreement.Wheretheconservationormaintenanceoflandownedby
thetaxpayeriscarriedoutintermsofadeclarationofatleast30years’
duration,theexpenditureincurredisdeemedtobeadonationtothe
Governmentwhichqualifiesasadeductionundersection18A.
Incertaincircumstanceswherethelandisdeclaredanationalparkornature
reserveanannualdonationbasedon10%ofthelesserofcostormarket
valueofthelandisdeemedtobemadetotheGovernmentandqualifiesfor
asection18Adeductionintheyearthedeclarationismadeandineachof
thesubsequentnineyears.
Recoupmentsarisewherethetaxpayerbreachestheagreementorviolates
thedeclaration.
39
TAXATION OF FARMINGINCOME
FarmingincomeissubjecttotheprovisionsoftheFirstScheduletothe
IncomeTaxAct.
Summary Of The First Schedule’s Main Paragraphs
2–5&9
6–7
8
11
12
13
Valuationoflivestockandproduce
Electionofstandardvalues
Ring-fencingoflivestockacquisitions
Donations and in speciedividends
Capitaldevelopmentexpenditure
Forcedsalesanddroughtrelief
provisions
14–16
17
19
20
Plantationfarming
Sugarcanedestroyedby
fire
Ratingformulaforfarmers
(whoarenaturalpersons)
Expropriationoffarming
land
Rating Formula Applicable To Farmers
Becauseafarmer’sincomefluctuatesfromyeartoyear,afarmerwhoisa
naturalpersonmayelecttobetaxedinaccordancewitharatingformula.
Theformulaisbasedontheaveragetaxablefarmingincomeinthecurrent
andprecedingfouryears.Shouldheelecttomakeuseofthisformula,it
isbindinguponhiminfutureyearsandheisnotpermittedtomakeuseof
theprovisionsrelatingtogovernmentlivestockreductionschemes,rating
formulaforplantationfarmersandprovisionsrelatingtosugarcanefarmers.
Forafarmercommencingfarmingoperationstheaveragetaxableincome
fromfarminginthefirstyearofassessmentendingonorafter1January
2008willbetwo-thirdsofthetaxableincomeforthatperiod.
Capital Development Expenditure (Paragraph 12)
Thefollowingitemsofcapitalexpenditure,incurredduringayearof
assessment,aredeductibleagainstfarmingincome:
• expenditurewhichisnotrestrictedtotaxableincomefromfarming:
- eradicationofnoxiousweedsandinvasivealienvegetationand
preventionofsoilerosion
• expenditurewhichisrestrictedtotaxableincomefromfarming:
- dippingtanks,buildingofroadsandbridgesforfarmingoperations
- dams,irrigationschemes,boreholes,pumpingplantsandfences
- additions,erectionof,extensionsandimprovementstofarmbuildings
notusedfordomesticpurposes
- costsofestablishingtheareaforandtheplantingoftrees,shrubs
and perennial plants
- carryingofelectricpowerfrommainpowerlinestofarmmachinery andequipment.
Theexcessexpenditureovertaxableincomefromfarmingiscarriedforward
tothenextyearofassessment.
Machinery,implements,utensilsandarticlesforfarmingpurposesarewritten
offoverthreeyearsona50:30:20basis.Thisdoesnotapplytomotor
vehiclesusedtoconveypassengers,caravans,aircraft(excludingcropsprayingaircraft)orofficefurnitureandequipment.Normalwearandtear
maybeclaimedontheseitems.
Non-Farming Income
Incomefromnon-farmingsourcesshouldbeshownseparately.
Themostcommonexamplesofnon-farmingincomeinclude:
• interestreceived
• incomederivedbyafarmerfromcarryingonatradeotherthanfarming
• annuities
• rentalincomefromfarmland.
40
DEDUCTIONS DONATIONS
DonationstocertaindesignatedPBO’swillqualifyforataxdeduction
Companies-limitedto10%(2007:5%)oftaxableincomebeforethe
deductionofdonations.
Individuals-limitedto10%(2007:5%)oftaxableincomebeforethe
deductionofdonationsandmedicalexpenses.
EmployeesmayalsoenjoyPAYEreductionswhenregulardonationsare
madebywayofsalarydeductionsnotexceeding5%ofnetremuneration.
PUBLIC BENEFITORGANISATIONS
Anorganisationqualifiesasapublicbenefitorganisation(PBO)ifitcarries
outpublicbenefitactivitiesinanon-profitmannersubstantiallyinSouth
Africa.
TheannualtradingincomeexemptionforaPBOisR200000
(2010:R150000).
Incomeinexcessofthisexemptionissubjecttotaxat28%.
AnapprovedPBOisexemptfromprovisionaltax.
RECREATIONAL CLUBS
Arecreationalclubisanon-profitorganisationwhichprovidessocialand
recreationalamenitiesorfacilitiesforitsmembers.
TheannualtradingincomeexemptionforrecreationalclubsisR120000
(2010:R100000).
Incomeinexcessofthisexemptionissubjecttotaxat28%.
BODY CORPORATES
Leviesreceivedbysectionaltitlebodycorporatesorshareblockcompanies
areexemptfromIncomeTax.
Inadditionaltothisexemptionallotherreceiptsandaccrualsareexemptup
toamaximumofR50000perannum.
Incomeinexcessofthisexemptionissubjecttotaxat28%.
Sectionaltitlebodycorporateorshareblockcompanyisexemptfrom
provisionaltax.
PASSIVE HOLDINGCOMPANIES
Governmentinitiallyproposedapassiveholdingcompanyregimetocome
intoeffectwiththeimplementationofthedividendwithholdingtaxtocorrect
potentialarbitragebetweendifferenttaxrates.Withthedividendwithholding
taxcomingintoeffectata15%rate,thesearbitrationconcernsaregreatly
reduced.Theinitiallyproposedpassiveholdingcompanyregimewillbe
abandoned.
41
IRP5 CODES
Normal Income Codes
3601
3602
3603
3605
3606
3608
3610
3611
3613
3614
3615
3616
3617
Income
Nowincludes3607(Overtime)
Income(Excl)
Nowincludes3604(Pension),3609(ArbitrationAward),and
3612(PurchasedAnnuity)
Pension
AnnualPayment
Commission
ArbitrationAward
RAAnnuity
PurchasedAnnuity
RestraintofTrade
OtherRetirementLumpSums
DirectorsRemuneration
IndependentContractors
LabourBrokers(PAYE/IT)
Allowance Codes
3701
3702
3703
3704
3707
3708
3713
3714
3715
3717
3718
TravelAllowance
ReimbursiveTravelAllowance(IT)
ReimbursiveTravelAllowance(Excl)
SubsistenceAllowance-LocalTravel(IT)
ShareOptionsExercised(Section8A)
PublicOfficeAllowance
OtherAllowances
Nowincludes3706(Entertainment),3710(Tool)and3711(Computer)
and3712(Telephone/Cellphone)
OtherAllowance-(Excl)
Nowincludes3705(S&TLocalTravel),3709(Uniform)and
3716(S&TForeignTravel)
SubsistenceAllowance-ForeignTravel(IT)
Broad-BasedEmployeeSharePlan(Section8B)
EmployeeEquityInstruments(Section8C)
Fringe Benefit Codes
3801
3802
3805
3806
3808
3809
3810
3813
3815
GeneralFringeBenefits
Nowincludes3803(UseofAsset),3804(Meals)and3807(Loans)
RightofUseofMotorVehicle
Accommodation
Services
PaymentofDebt
Bursaries
CompanyContributiontoMedicalAid
CostrelatedtoMedicalServicespaidbyCompany
NonTaxableBursariesandScholarshipstoEmployeesandtheir
Dependants
Gross Remuneration Codes
3696
3697
3698
GrossNon-TaxableIncome
GrossRetirementFundingEmploymentIncome
GrossNon-RetirementFundingEmploymentIncome
Lump Sum Codes
3901
3906
Gratuities(Retirement/Retrenchment)
SpecialRemuneration(e.g.proto-teams)
42
3907
3908
3909
3915
3920
3921
OtherLumpSums(e.g.backdatedsalariesextendedoverprevious
taxyear,non-approvedfunds)
SurplusApportionmentsonorafter1January2006
UnclaimedBenefitspaidbyFund
Pension,ProvidentorRetirementAnnuityFundLumpSumBenefits
paidonorafter1October2007
LumpSumWithdrawalBenefitsfromRetirementFundsafter
28February2009
LivingAnnuityandSection15CSurplusApportionmentsaccruing
after28February2009
Deduction Codes
4001
4002
4003
4005
4006
4007
4011
4015
4017
4018
4019
4022
4024
4026
4027
4028
4030
4040
4044
4048
4149
4474
4493
4497
CurrentPensionFundContributions
ArrearPensionFundContributions
CurrentandArrearProvidentFundContributions
MedicalAidContributionspaidbyEmployerorPensionFund
CurrentRetirementAnnuityFundContributions
Arrear(Re-Instated)RetirementAnnuityFundContributions
AllowableDonations-section18A
TravelExpenses-employeedoesnotreceivetravelallowance
ExpenseIncurrediroSubsistenceAllowance(local)
PremiumspaidforLossofIncomePolicies
ExpenseIncurrediroSubsistenceAllowance(foreign)
ExpenseNotRecoveredbyMedicalAidinrespectofDisabledPerson
MedicalServicesCostsDeemedpaidforImmediateFamily
ArrearPensionFundContributions-Non-StatutoryForces
WearandTearonAssets,ownedbytheemployee,usedforbusiness
HomeOfficeExpenditure(amountissubjecttotheformula)
DonationspaidbytheEmployertotheOrganisation
MedicalAidContributionspaidbytheEmployee
LegalExpensesIncurrediroSalaryIncome
DonationtoMinorChild
TotalSDLandUIF
EmployersMedicalAidContributions
EmployersMedicalAidContributionsi.r.o.RetiredEmployees
TotalDeductions
Employees Tax Deduction and Reason Codes
4101
4102
4115
4116
4141
4142
4150
SITE
PAYE
TaxonRetirementLumpSumBenefits
MedicalSchemeFeesTaxCredit
UIFEmployeeandEmployerContribution
SDLContribution
01-InvalidfromMarch2002
02-EarnLessthantheTaxThreshold
03-IndependentContractor
04-NonTaxableEarnings(includingnildirective)
05-ExemptForeignEmploymentIncome
06-DirectorsRemuneration-IncomeDeterminedintheFollowing
TaxYear
07-LabourBrokerwithIRP30
Foreign Employment Income
Foremployeeswithforeignemploymentincomethevalueof50mustbeadded
toeachrelevantIRP5code.
Example:Code3601willbecome3651forForeignIncome.
43
IT14 SOURCE CODES SUMMARY
Source Code Description
0100
0200
0300
0400
0500
0600
0700
0800
0900
1000
1100
1200
1300
1400
1500
1600
1700
1800
1900
2000
2100
2200
2300
2400
2500
2600
2700
2800
2900
3000
3100
3200
3300
3400
3500
Agriculture,forestryandfishing
Miningandquarrying
Food,drinkandtobacco
Textiles
Clothingandfootwear
Leather,leathergoodsandfur(excludingfootwearand
clothing)
Wood,wood-productsandfurniture
Paper,printingandpublishing
Chemicalsandchemical,rubberandplasticproducts
Coalandpetroleumproducts
Bricks,ceramic,glass,cementandsimilarproducts
Metal
Metalproducts(exceptmachineryandequipment)
Machineryandrelateditems
Vehicles,partsandaccessories
Transportequipment(exceptvehicles,partsand
accessories)
Scientific,opticalandsimilarequipment
Othermanufacturingindustries
Electricity,gasandwater
Construction
Wholesaletrade
Retailtrade(includingmailorder)
Cateringandaccommodation
Transport,storageandcommunication
Financing,insurance,realestateandbusinessservices
Long-terminsurers
Educationalservices
Researchandscientificinstitutes
Medical,dentalandotherhealthandveterinaryservices
Socialandrelatedcommunityservices
Recreationandculturalservices
Personalandhouseholdservices
Specialisedrepairservices
Agenciesandotherservices
Employment(salary)
ThecompletesourcecodelistingisavailableontheSARSwebsitewww.sars.gov.za
44
TAX ADMINISTRATIONBILL
TheTaxAdministrationBillhasbeentabledinParliamentandisawaitingthe
signatureofthePresidentandfinalpromulgation.Amongstotherthingsthis
willconsolidatealladminstrationprovisonsoftheactsadministeredby
SARS,exceptforCustomsDuty,intoasingleadministrationact.
VOLUNTARY DISCLOSUREPROGRAMME
TherecentVoluntaryDisclosureProgrammeinrespectofdefaultscommitted
priorto28February2010endedon31October2011.
ThenewTaxAdministrationBill,oncepromulgated,willintroduceanongoing
VoluntaryDisclosureProgrammeformalisingpreandpostauditnotification
voluntarydisclosures.
Thenewreliefwillonlybeinrespectofadditionaltaxandpenaltiesbutnot
interest.
UNDERSTATEMENT PENALTYTABLE
Behaviour
Standard
case
Obstructive
or repeat
case
Voluntary
disclosure
after audit
notification
Voluntary
disclosure
before audit
notification
Substantial
understatement
25%
50%
5%
0%
Reasonablecare
not taken in
completingreturn
50%
75%
25%
0%
75%
100%
35%
0%
Grossnegligence
100%
125%
50%
5%
150%
200%
75%
37%
Noreasonable
groundsfortax
position
Intentionaltax
evasion
SKILLS DEVELOPMENTLEVY
TheSkillsDevelopmentActseekstorestructuretheexistingtrainingsystem
andupgradethelevelofskillsandaccesstoskillsbyworkers.
Directorsremuneration,onthesamebasisasforPAYE, willbesubjecttothe
SkillsDevelopmentLevy.
TheSkillsDevelopmentLevyispayablebyemployersatarateof1%of
remunerationasfrom1April2001(previously0,5%).
EmployerspayingannualremunerationoflessthanR500000areexempt
fromthislevyasfrom1August2005.
45
ADMINISTRATIVE PENALTIES
Failuretosubmitcertainreturnsorinformationwillgiverisetothe
followingfixedratepenalties:
Assessed loss or taxable income
for preceding year
Penalty
Assessedloss
R0–R250000
R250001–R500000
R500001–R1000000
R1000001–R5000000
R5000001–R10000000
R10000001–R50000000
AboveR50000000
R 250
R 250
R 500
R 1000
R 2000
R 4000
R 8000
R16000
Thepenaltywillautomaticallybeimposedmonthlyuntilthetaxpayer
remediesthenon-compliance.
• Late payment of PAYE and provisional tax attracts a penalty of
10% of the amount due.
• LatesubmissionofthePAYEreconciliationattractsapenaltyof
10% of the PAYE deducted for the tax year.
NATIONAL CR EDIT
ACT
Themaximumlendingratesofinterestarecalculatedasfollows:
Mortgageagreements
{(Reporatex2.2)+5%}peryear
Creditfacilities
{(Reporatex2.2)+10%}peryear
Unsecuredcredittransactions
{(Reporatex2.2)+20%}peryear
Shorttermcredittransactions
5%permonth
Othercreditagreements
{(Reporatex2.2)+10%}peryear
Incidentalcreditagreements
2%permonth
TheNationalCreditActdoesnotapplytolargeagreementsasdefined,orto
creditagreementswheretheconsumerisajuristicpersonwithaturnoverabove
adefinedthreshold,thestateoranorganofthestate,orwherethelenderisthe
SouthAfricanReserveBankoraforeigner.
MARRIED INCOMMUNITYOFPROPERTY
Taxpayerswhoaremarriedincommunityofpropertyaretaxedonhalfof
theirowninterest,dividend,rentalincomeandcapitalgainandhalfoftheir
spouses’interest,dividend,rentalincomeandcapitalgain,regardlessof
whosenametheassetisregisteredin,(exceptforassetsexcludedfromthe
jointestate).Allothertaxableincomeistaxedonlyinthehandsofthespouse
whoreceivesthatincome.
46
DONATIONS TAX
DonationsTaxispayableatarateof20%onthevalueofanyproperty
disposedofgratuitouslybyaSouthAfricanresident(naturalperson,
corporateentityortrust)excludingdonationsexemptfromthetax.Thetax
ispayablewithinthreemonthsofthedonationtakingeffect.
Exempt donations include:
•
•
•
•
•
•
•
•
•
•
•
DonationsbynaturalpersonsuptoR100000peryearafter
1March2007(2006:R50000)
Donationsbycorporateentitiesnotconsideredtobepubliccompanies
uptoR10000peryear
Donationsbetweenspousesnotseparated
Bona fidemaintenancepayments
DonationstoPBO’sandqualifyingtraditionalcouncilsandcommunities
Donationswherethedoneewillnotbenefituntilthedeathofthedonor
Donationsmadebycompanieswhicharerecognisedaspublic
companiesfortaxpurposes
Donationscancelledwithinsixmonthsoftheeffectivedate
Propertydisposedofunderandinpursuanceofanytrust
DonationofpropertyorarightinpropertysituatedoutsideSouthAfrica
ifacquiredbythedonor:
- beforebecomingresidentinSouthAfricaforthefirsttime
- byinheritanceordonationfromanon-resident
Donationsbetweencompaniesformingpartofthesamegroupof
companies.
ESTATE DUTY
Rates of Estate Duty
• Personsdeceasedpriorto1October2001-25%
• Personsdeceasedonorafter1October2001-20%
Exemptions from Estate Duty include:
•
•
•
•
•
Personsdeceasedpriorto1March2006,thefirstR1500000
Personsdeceasedonorafter1March2006,thefirstR2500000
Personsdeceasedonorafter1March2007,thefirstR3500000
Anybequesttoasurvivingspouseorapublicbenefitorganisation
Asfrom1January2010,theunutilisedportionoftheexemptionof
thefirstdeceasedspousemaybecarriedforwardtotheestateofthe
survivingspouse.
EXECUTORS REMUNERATION
Anexecutorisentitledtothefollowingremuneration
•theremunerationfixedbydeceasedinthewill
• 3,5%ongrossassetsand6%onincomeaccruedandcollectedfrom
date of death
ExecutorsremunerationissubjecttoVATwheretheexecutorisregistered
asavendor.
47
RETENTION OF DOCUMENTS/RECORDS
RECOMMENDEDGUIDELINES
Retention periods commence from the date of the last entry in the particular record
Companies
Retention
period
CertificateofIncorporation/RegistrationCertificate
CertificateofChangeofName
MemorandumandArticlesofAssociation/Incorporation
CertificatetoCommenceBusiness
Share/SecuritiesRegister,MinuteBook,CM25andCM26
Rules
Indefinite
Indefinite
Indefinite
Indefinite
Indefinite
Indefinite
AnnualFinancialStatements
BooksofAccount
Supportingschedulestobooksofaccountand
ancillarybooksofaccount
FixedAssetRegisters
ProxyForms
15years
15years
15years
15years
3years
Close Corporations
FoundingStatement(CK1)
AmendedFoundingStatement(CK2)
MinuteBook
Indefinite
Indefinite
Indefinite
15years
15years
15years
15years
AnnualFinancialStatements
BooksofAccount
Accountingrecordsincludingsupportingschedules
FixedAssetRegisters
When a company or close corporation reproduces its records on
microfilm, the original may be destroyed after a period of three years
The microfilm copies must be retained indefinitely
Other Suggested Periods of Retention
(Whererelevantstatutoryorlegalrequirementshavebeentakenintoaccount)
Recordsoftrustmonies
Indefinite
Taxreturnsandassessments(afterdateofassessment)
5years
Staffpersonnelrecords(afteremploymentceased)
Salaryandwageregisters
3years
3years
Paidchequesandbillsofexchange
6years
5years
5years
6years
5years
5years
5years
5years
Invoices–salesandpurchases
Bankstatementsandvouchers
Stocksheets–listedcompany
Stocksheets–unlistedcompany
Year-endworkingpapers
VATrecords
Othervouchersandgeneralcorrespondence
The above list is not comprehensive
48