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Cliffe Dekker Hofmeyr (CDH) believes the right partnership can lead to great things. The partnerships it cherishes and values most are those it has…
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Cliffe Dekker Hofmeyr | South Africa | 31 May 2019

Timing of tax on gift cards

The Cape Town Tax Court recently addressed the timing of income tax in relation to retailer gift cards. The court found that a taxpayer had been correct to have included its receipts for unredeemed gift cards as part of its gross income before the Consumer Protection Act came into force. During the case, the counsel for the commissioner of the South African Revenue Service raised an......
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Cliffe Dekker Hofmeyr | South Africa | 24 May 2019

Further amendments to VAT e-services regulations enter into force

Revised regulations clarifying the e-services supplied by foreign suppliers to South African consumers which are subject to value added tax were proposed in 2018, which significantly broadened the scope of e-services. In the 2019 Budget Review, the minister of finance announced that further amendments would be made to the e-services regulations to address certain oversights. The regulations......
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Cliffe Dekker Hofmeyr | South Africa | 17 May 2019

Preference share funding structures: overview of Companies Act and Income Tax Act provisions

Preference share funding structures are often preferred by banks and other financial institutions because dividends received by certain holders – including banks and other juristic persons – are exempt from income tax. As such, the provisions of the Companies Act and the Income Tax Act must be considered in the context of the outcome which a company wishes to achieve before it settles the......
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Cliffe Dekker Hofmeyr | South Africa | 10 May 2019

Creature of statute: decision about Tax Court's power to increase understatement penalties

The Supreme Court of Appeal recently ruled on the South African Revenue Service's (SARS's) right to impose understatement penalties on a taxpayer and the quantum thereof. The judgment will be welcomed by taxpayers involved in disputes with SARS regarding understatement penalties, as it reaffirms that the Tax Court cannot, of its own volition, increase an understatement penalty.
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Cliffe Dekker Hofmeyr | South Africa | 3 May 2019

Proposed amendments regarding dividend stripping rules in 2019 Budget: further reflection

This article delves into the National Treasury's proposal to address abusive arrangements aimed at avoiding the anti-dividend stripping provisions in the Income Tax Act. It first discusses the history of the amendments, followed by an examination of the anti-dividend stripping provisions and a brief discussion of the National Treasury's proposal in the 2019 Budget.
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Cliffe Dekker Hofmeyr | South Africa | 26 Apr 2019

Another win for the youth: proposed extension of employment tax incentive

The historically high level of unemployment among South Africa's youth has led to the introduction of various tax incentives and benefits which aim to encourage the employment and training of such persons. Among these is the employment tax incentive scheme. A review of the scheme has demonstrated positive outcomes, including a significant increase in the employment growth rate and the number......
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Cliffe Dekker Hofmeyr | South Africa | 19 Apr 2019

Company law versus income tax law: amalgamations now regularised

One of the amendments proposed by Budget 2019 aims to reconcile the incongruency that exists between South African company law and income tax law with regard to the deregistration or liquidation of companies that are involved in amalgamation transactions. The amendment is a welcome change, as it will ensure that the Companies Act and the Income Tax Act operate in conjunction with, and in......
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Cliffe Dekker Hofmeyr | South Africa | 12 Apr 2019

Domestic treasury management companies – alignment of tax and exchange control provisions

When the domestic treasury management company (DTMC) regime came into effect in 2013, a 'DTMC' was defined in the Income Tax Act as a company that is incorporated or deemed to be incorporated in South Africa. The 2019 Budget explains that in 2017 the Income Tax Act was amended to remove this requirement, which conflicts with the South African Reserve Bank's requirements, prompting calls for......
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Cliffe Dekker Hofmeyr | South Africa | 5 Apr 2019

Controlled foreign company comparable tax threshold to be decreased

The 2019 Budget noted that a global downward trend in corporate taxation rates may lead to an unintended increase in the imputation of the net income of controlled foreign companies (CFCs) in South African shareholders' taxable income. This could occur despite the fact that at its inception, a CFC has operated in a jurisdiction with tax rates which met the threshold contained in the Income......
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Cliffe Dekker Hofmeyr | South Africa | 29 Mar 2019

Deducting interest for debt incurred during acquisition of shares

It has always been a contentious issue whether a purchaser of shares can claim a deduction for the interest that it incurs on monies borrowed to acquire the shares. The legislature intervened by introducing Section 240 of the Income Tax Act, which allows purchasers to deduct interest for a debt that is used to fund the acquisition of shares in certain circumstances. However, the target must......
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