Tax

The treatment of foreign pensions

In terms of s10(1)(gC)(ii) of the Income Tax Act, No 58 of 1962 (Act) a pension received by or accrued to a resident from a source outside South Africa as consideration for past employment outside South Africa is exempt from the payment of tax. In terms of s9(1)(i) of the Act it is indicated that an amount is deemed to be sourced within South Africa if the amount constitutes a pension or annuity and the services in respect of which the amount is received or accrued were rendered within South Africa. However, if an amount is received or accrued in respect of services which were rendered partly within and partly outside South Africa, only so much of the amount as bears to the total of the amount the same ratio as the period during which the services were rendered in South Africa bears to the total period during which the services were rendered must be regarded as having been received by or accrued to the person from a source within South Africa.

McLaren Motor Racing team cannot deduct a penalty not incurred wholly and exclusively for purposes of trade

The South African Revenue Service (SARS) released Interpretation Note 80 on 5 November 2014 which deals with the income tax treatment of stolen money. Apart from the fact that it is indicated in the Interpretation Note that stolen monies must be included in gross income in the year of receipt, it is indicated further that the stealing of money cannot be described as a trade and that the thief will thus not qualify for a deduction to the extent that the monies must be repaid. It has been indicated that, even though certain elements of a trade, for example the intention to make a profit, repeated activities, planning and organisation, may be present in the case of a thief, the thief’s activities lack the key commercial character of a trade when it comes to sourcing the goods. Stolen monies and/or other goods are not obtained through normal commercial means and are not received as a reward for the provision of any goods or services. On that basis the act of embezzlement, fraud or theft does not constitute a trade.

Government provides tax incentive to avoid those rainy days

Structural tax reform needed to promote economic growth: PwC Tax Services

A reform of South Africa’s tax system is high on the agenda. This comes in the wake of Finance Minister Nhlanhla Nene’s recent Medium Term Budget Policy statement that changes are set to be made to tax policy in the 2015 Budget. The government is proposing a fiscal package that reduces the expenditure ceiling and raises tax revenues by at least R44 billion over the next three years.