Capital gains tax (CGT) is not a separate tax but forms part of income tax. A capital gain arises when you dispose of an asset on or after 1 October 2001 for proceeds that exceed its base cost. The relevant legislation is contained in the Eighth Schedule to the Income Tax Act 58 of 1962. Capital gains are taxed at a lower effective tax rate than ordinary income. Pre- 1 October 2001 CGT capital gains and losses are not taken into account. Not all assets attract CGT and certain capital gains and losses are disregarded. A withholding tax applies to non-resident sellers of immovable property (section 35A). The amount withheld by the buyer serves as an advance payment towards the seller’s final income tax liability.

Who is it for?

CGT applies to individuals, trusts and companies. A resident, as defined in the Income Tax Act 58 of 1962, is liable for CGT on assets located both in and outside South Africa. A non-resident is only liable to CGT on immovable property in South Africa or assets of a “permanent establishment” (branch) in South Africa. Certain indirect interests in immovable property such as shares in a property company are deemed to be immovable property. Some persons such as retirement funds are fully exempt from CGT. Public benefit organisations may be fully or partially exempt.

Premiums:

Tax deductible, provided:

the employer actually paid the premiums;
the policy was on the life of an employer at the time of paying the premiums;
the policy was the property of the employer at the time of paying the premiums;
only the employer would have been entitled to the proceeds that were or could have become payable under the said policy;
no loan by third party secured by the policy is outstanding except in limited cases;
the policy was accepted before 1 June 1982 or proposed for before 25 May 1982 and accepted by 21 June 1982. In such cases the deduction is limited to the premiums as payable in terms of the policy conditions as at 31 May 1982;

OR

the policy is a term policy or personal accident policy;

OR

the policy conforms to the State President’s Regulations, premiums limited to 10% of the employee’s or director’s remunerations. To conform to the State President’s Regulations, the policy contract must have: a prescribed minimum element of life cover (lesser of the maturity term or 20 year x 80% of lowest net premium); only one life assured; regular premium payment periods

As from 1 March 2012, any premium paid by an employer to any insurer under an employer-owned insurance policy (Group life or disability plan) directly or indirectly, for the benefit of the employee, spouse, child, dependant or nominee will be taxed in the hands of the employee as a fringe benefit. The premium may, however, qualify as an income protection insurance contribution deduction by die employee. If the employer makes a lump sum payment for all employees the fringe benefit is determined in accordance with a formula, which will have effect of apportionment amongst all employees concerned

Proceeds:

Any premiums disallowed as a deduction may be offset against the taxable proceeds. If no premium was ever tax deductible, the proceeds will normally be tax free.

Loans:

Policy loans from the insurer are also taxable if premiums are tax deductible.

Termination Lump Sum from Employer:

Employer:

Tax deductible for the employer if incurred in the production of income, as evidenced by the payment over to the employee in terms of: a service agreement; or established employer practice

Employee:

As from 1 March 2011, employer provided severance payments for reasons of age, ill health and retrenchment are aligned with the taxation of lump sum benefits, including the R315 000 (2011:R300 000) exemption. This exemption does not apply to directors/members if they at any time held an interest of more than 5% in the entity Prior to 1 March 2011, a once off exemption of R30 00 applied where an employee had reached the age of 55 or the termination of services was due to ill health or the employee was retrenched because of the employer had ceased to operate or because of a reduction in personnel.

Individuals

1a. Offshore investment allowance

Taxpayers in good standing who are natural persons, over the age of 18: R4 million each
Tax clearance certificate required.
Income earned on investment may remain offshore.

1b. Setting-in allowance on emigration

Single persons: R4 million (Less any amount invested in terms of the foreign investment allowance)
Family unit: R8 million (Less any amount invested in terms of the foreign investment allowance)
Household and personal effects, motor vehicles, motorcycles, trailers, stamps and coins (excluding Kruger Rand) to the insured value of R2 million (These goods, other than clothing, must have been in the emigrant’s possession for at least one year prior to emigration.)

The distinction between the setting-in allowance and private individual allowance has fallen away.

Emigrants can, on application, request to transfer blocked assets in excess of the limit of R4 million per family unit or R2 million per single person, subject to an existing schedule, at the discretion of the Exchange Control Department of the South African Reserve Bank, and an exit charge of 10% of the amount. Persons who have emigrated, but have not fully utilised the current authorised foreign capital allowance, may be accorded additional capital transfers, provided the amount availed of does not exceed the current limits.

2. Travel allowance

A single discretionary allowance of R 1000 000 granted per individual for maintenance, gifts, travel and study. Travel Allowances for visits outside the Common Monetary Area (CMA) : Adults – the travel allowance forms part of the discretionary allowance referred to above. Persons under the age of 18 – R200 000 per calendar year. Travel facilities may be provided by way of travelers cheques, foreign bank notes and credit/debit cards. Travel facilities not availed of during one calendar year may not be carried forward to the following year. Travelers proceeding on visits outside the CMA are permitted to export up to R5000 per person in SA Reserve Bank notes. This is not regarded as being part of the travel allowance.

Common monetary area residents travelling to and from Namibia may be provided with Botswana Pula to an amount of R5 000 per annum over the above limits.

3. Blocked Rand

Unlimited blocked funds may be released locally for any purpose, except the granting of a loan to a South African resident.
The remaining assets constitute blocked assets and must be placed under control of an authorised dealer (the emigrant’s banker) with effect from the date of departure.
Authorised avenues for blocked Rand investments include SA securities and unit trusts.
Blocked assets can be used to pay premiums on policies and retirement annuity funds which existed prior to emigration.
New policies are not authorised avenues of investment. Special approval is required.
New emigrants wishing to transfer more than R2 million can apply to Exchange Control to do so, with approval subject to an exiting schedule and an exit charge of 10%.
Persons who have emigrated but have not fully utilised the current authorised foreign capital allowance, may be accorded additional capital transfers, provided the total amount availed of does not exceed the current limits are exceeded, an exit charge of 10% is payable.
There is no limit on the daily utilisation of blocked funds during a visit by an immigrant but these funds may not be loaned to an SA Resident.
Return airfares to and from the Republic may be paid from blocked Rand’s

4. Income from the Republic

Current income earned on blocked assets may be transferred to the emigrant’s new residence through normal banking channels. Income includes: interest, director’s fees, monthly pension payments, retirement annuity payments (specific approval required), the income portion only of a voluntary annuity.

5. Study allowances

Tuition fees may be paid in full on production of documentary evidence.
Travel and maintenance costs are included in the single discretionary allowance.

6. Maintenance payments

Maintenance payments to family members (mothers, fathers, sisters, brothers) of up to R9 000 per month are allowed on the production of certified documentary evidence proving need and the relationship.

7. Alimony

An amount of R9 000 more than the amount of the court order is allowed.

8. Inheritances

Inheritances bequeathed to non-residents are freely transferable.

9. Gifts

Residents may send gifts of money to the value of R30 000 per year to non-residents.

10. Reserve Bank notes

Up to R5 000 in cash may be taken in Rand notes when departing from the Republic, in addition to travel allowance.

11. Credit card payments

Credit card payment can be made for offshore purchases up to R20 000 per transaction.

Controls on SA and foreign corporates

Exchange control limits on new outward foreign direct investments by South African corporates are abolished. Requests by corporates to invest overseas are considered in the light of the national interest. Application to the Reserve Bank’s Exchange Control department is still required for monitoring purposes and for approval in terms of existing foreign direct investment criteria, including demonstrated benefit to South Africa. The South African Reserve Bank reserves the right to stagger capital outflows relating to very large foreign investments so as to manage any potential impact on the foreign exchange market. South Africa corporates will be able to retain foreign dividends offshore. Foreign dividends repatriated to South Africa after 26 October 2004 may be transferred offshore again at any time for any purpose. Foreign companies, governments and institutions may list on South Africa’s bond and securities exchanges, (South African private individuals will now be able to invest, without restriction, in inward listed instruments on South African exchanges.) Foreign portfolio investment by South African institutional investors As an interim step towards prudential regulation, retirement funds, long-term insurers, collective investment scheme management companies and investment managers are allowed to transfer funds from South Africa for investment abroad. The exchange control limit on foreign portfolio investment by institutional investors applies to an institution’s total retail assets. The foreign exposure of retail assets may not exceed 15% in the case of retirement funds, long-term insurers and 25% in the case of collective investment scheme management companies and investment managers registered as institutional investors for exchange control purposes. Institutional investors will on application, be allowed to invest an additional 5% of their total retail assets by acquiring foreign currency denominated portfolio assets in Africa through foreign currency transfers from South Africa or by acquiring inward listed securities.

Immigrants

On arrival, immigrants must notify their bank of their foreign assets and undertake not to dispose of these to residents. Within 5 Years of immigration, an immigrant may freely transfer from SA all assets brought into the country. After 5 Years, the same rules which are applicable to SA residents apply to that person.

Non-residents

Non-residents may freely invest in or disinvest from SA Non-residents have unrestricted rights to invest in gilts and shares listed on the JSE and export the proceeds on the sale thereof. Interest and dividends are also freely remittable. Loans by non-residents to SA individuals/entities require prior Exchange Control approval. Where certain assets such as unlisted shares, fixed property or businesses are transferred between non-residents and residents, the value of the asset must be verified by a commercial bank. Ex con approval is required for the remittance of certain income such as royalties and certain dividends.

In terms of the Seventh Schedule, the following fringe benefits which are provided to an employee or the holder of an office for a consideration less than the actual value or cost, give rise to a taxable benefit:
Kindly note that this is a broad summary of fringe benefit taxation

The acquisition of an asset
Right of use of an asset (other than residential accommodation any motor vehicle)
Meals, refreshments or vouchers for such
Free or cheap services
Use of residential accommodation*
Interest – free or low – interest loans
Housing loans or subsidies
Payment of an employee’s debt or release from such obligation
Private use of an employer – owned motor vehicle (company car)
Value placed on private use of a motor vehicle has been increased to 3.5% (from 2.5%) of the determined value of the motor vehicle including VAT but excluding finance charges and interest
There’s no relief if an employee gets travel allowance
Contributions to a medical aid scheme
Where the vehicle isthe subject of a maintenance plan when the employer acquired the vehicle the taxable value is 3.25% of the determined value

On assessment further relief is available for the cost of licence, insurance, maintenance and fuel for private travel if the full cost thereof has been borne by the employee and if the distance travelled for private purposes is substantiated by a logbook.
In addition, certain other perks are also treated as a taxable benefit:

Where the recipient is obliged to spend at least one night away from his/her usual place of residence on business and the accommodation to which that allowance or advance relates is in the Republic and the allowance or advance is paid or granted to pay for:
- Meals and incidental cost, one amount of R303 per day is deemed to have been expended
- Incidental costs only, an amount of R93 for each day is deemed to have been expended
Travelling allowances not used for business travel
Where the accommodation to which that allowance or advance relates is outside the Republic and that allowance or advance is paid or granted to defray the cost of meals and incidental cost, a specific amount per country is deemed to have been expeded. Details of these amounts are published on the SARS website under Lega&Policy / Legislation/ Regulations and Government Notices / Income Tax Act.1962. This allowance only applies to continuous periods not exceeding 6 weeks away from home.

Official rate of interest

As from 1 March 2011 the amount taxed is the difference between interest payable on the loan by die employee and the repo-rate +1%. No benefit is placed on a casual loan to an employee up to R3000 or a study loan to enable the employee to further his own studies.

Interest and foreign dividend exemption

Investment income derived from interest and certain foreign dividends:

For taxpayers under the age of 65: R22 800
For taxpayers aged 65 and older: R33 000

In addition, all domestic dividend income (except dividends distributed by a fixed property company and certain foreign source dividends) will be exempt from tax. Special rules apply to the taxation or exemption of dividends received from controlled foreign companies (CFC), depending on the level of shareholding and other conditions. We recommend that our clients seek expert tax advice in this regard.
Interest is exempt where earned by non-residents who are physically absent from SA for 183 days or more per annum and who are not carrying on business in SA.
The exemption for foreign dividends and interest is limited to R3 700

Deductions:

Medical, dental and physical disability expenses:

65 and older: no limit
Younger than 65 years:
Medical aid contributions may be claimed as a credit against tax payable as follows :

R230 per month each for the taxpayer and the first dependant
R154 per month for each additional dependant

Other medical exenses which may be claimed as a deduction against taxable income include:

so much of the medical aid contributions made by the taxpayer of or employer as exceeds four times the medical credit limit
other qualifying medical expenses

The taxpayer may deduct the other medical expenses to the extent that it exceeds 7.5% of taxable income before this deduction and any retirement lump sum benefit Taxpayers under the age of 65 may claim all qualifying medical expenses, where the taxpayer or the taxpayer’s spouse or child is a handicapped person, without the 7.5% limit. Any medical expenses paid by the estate of a deceased taxpayer are deemed to have been paid by the deceased taxpayer on the day before his or her death.
If paid by the employer of the taxpayer, the amount paid must, to the extent that it has been included in the income of the taxpayer as a taxable benefit in terms of the Seventh Schedule, be deemed to have been paid by that taxpayer.
As from 1 March 2010 the full contribution by an employers is a fringe benefit.
The fringe benefit has no value where the contribution is in respect of:

an employee retired due to superannuation or ill health
dependents of a deceased employee

What is it?

Income tax is the normal tax which is paid on your taxable income. Examples of amounts an individual may receive, and from which the taxable income is determined, include :–

Remuneration (income from employment), such as, salaries, wages, bonuses, overtime pay, taxable (fringe) benefits, allowances and certain lump sum benefits
Profits or losses from a business or trade
Income or profits arising from an individual being a beneficiary of a trust
Director’s fees
Investment income, such as interest and foreign dividends
Rental income or losses
Income from royalties
Annuities
Pension income
Certain capital gains

Who is it for?

You are liable to pay income tax if you earn more than R70 700 in the 2014 year of assessment, and are younger than 65 years of age. If you are 65 years of age or older, the tax threshold (i.e. the amount above which income tax becomes payable) increases to R110 200. For taxpayers aged 75 years and older, this threshold is R123 350.
Where taxpayers receive remuneration which is less than R250 000, they may elect not to submit an income tax return, provided the following criteria are met:

Their remuneration is from a single employer;
Their remuneration is for a full year of assessment (1 March – 28/29 February);
No allowance was paid, from which employees’ tax was not fully deducted;
No further deductions need to be claimed or income declared.

The rates of tax chargeable on taxable income are determined annually by Parliament, and are generally referred to as “marginal rates of tax” or “statutory rates”. The rate of tax levied on an individual is set on a sliding scale which results in the tax increasing as taxable income increases. Every year, the Minister of Finance announces the rates to be levied by publishing the applicable tax tables during the annualbudget speech.

What steps must I take to ensure compliance?

Step one: You must register for income tax

If you earn a taxable income which is above the tax threshold (see above), you must register as a taxpayer with SARS. To register for income tax, you must complete an IT77 registration form which can be obtained from the SARS website, namelywww.sars.gov.za. The form can also be requested from any SARS branch or the SARS Contact Centre. Once it has been completed, it can be taken to any SARS branch for processing or the form can be posted to SARS. To find your nearest branch visit our branch locator.

Step two: You must submit a return

If you are registered for income tax, you will be required to submit an annual income tax return to SARS. See the 2014/2015 Tax Tables. The 2014 year of assessment (commonly referred to as a “tax year”) runs from 1 March 2014 to 28 February 2015. Every year, SARS announces its Tax Season, a period during which you are required to submit your annual income tax return. The tax season for the 2014 tax year opens on 1 July 2014. The income tax return which should be completed by individuals is known as the ITR12 form. For more information, see ourITR12 Comprehensive Guide, source codes and live stock values.

When should it be submitted?

The deadline for all taxpayers will be published once this has been made available in the Goverment Gazette. If you don’t submit your income tax return on time, you may be liable for penalties.

Top Tip: When completing your return, you will require the following documentation in order to verify the existing, pre-populated information that appears in the return, as well as to complete any remaining portions:

IRP5: This is the employees’ tax certificate your employer issues to you.
Certificates you received for local interest income earned.
Any other documentation relating to income received or accrued, such as remuneration that has not been reported to SARS by your employer, or business or investment income, etc.
Details of medical expenses paid and medical scheme contributions made.
The relevant certificates reflecting your retirement annuity fund contributions made.
A logbook and other documents in support of business travel expenses (if the travel allowance is part of your remuneration or if you have the right of use of a company car taxable benefit).
Any other documentation relating to the allowable deductions you wish to claim.

What’s new?

The following legal changes impacting Dividends Tax as per the SARS BRS 2013 Dividends Tax V1.0.0 came into effect on 26 April 2014:

The maximum rate of tax for certain oil and gas profits will reduce from 5% to 0% (as under Secondary Tax on Companies (STC))
New rules will apply for listed and unlisted companies as to the date a dividend is deemed to be paid. For listed companies, tax is now triggered by the actual payment only, whereas for unlisted companies the dividends tax is still triggered when the dividend is paid or becomes due and payable (whichever is earlier). For dividends in specie the same rules apply as for unlisted companies.
New valuation rules for distributions of assets in specie apply. Where an asset is a financial instrument listed on a recognised stock exchange, the ruling price on the day before the dividend is deemed to be paid will apply. For any other assets the market value of the asset on the day before the dividend is deemed to be paid will apply.
Deemed dividends as a result of a debt owing to the company by a connected person are deemed to be dividends in specie and the tax has therefore to be paid by the company and not the beneficial owner.
Anti-avoidance provisions covering certain dividend cessions, share borrowing and share re-sales were added.

The following changes apply to the use of Secondary Tax Credits credits:

Where an error is made in claiming an STC credit the liability for the shortfall of dividends tax as a result thereof falls on the company and not the beneficial owner.
The following dividends do not qualify in calculating the STC credit:
- Dividends which had to be disregarded in calculating the “net amount” under STC
- Foreign dividends
The carry forward period was reduced from five (5) to three (3) years (i.e. all remaining STC credits expire on 1 April 2015)
A dividends tax return will be required with every dividend payment (and no longer only if tax is payable) and/or the receipt of a dividend which was exempt
Late rebate claims can now result in refunds
In terms of rebates the withholding agent needs to have proof of the foreign taxes paid before it may reduce the amount it withholds.

Due date for 2014 Dividends Tax Legal Changes data submissions

Further to previous communiques regarding trade testing currently in progress, SARS would like to advise that the due date for Dividends Tax Legal Changes data submissions is effective from 1 May 2014. Trade testing concluded on 12 April 2014 and provides an opportunity to prepare your systems for electronic submissions through one of the following channels:

Connect:Direct™: suitable for bulk submissions (more than 50 000 lines of third party data)
HTTPS: suitable for submissions up to 50 000 lines

This new data platform was launched on 26 April 2014.

What is Dividends Tax?

Dividends Tax is a tax charged at 15% on shareholders when dividends are paid to them, and, under normal circumstances, is withheld from their dividend payment by a withholding agent (either the company paying the dividend or, where a regulated intermediary is involved, by the latter). A dividend is defined in section 1 of the Act, but in essence is any payment by a company for the benefit of a shareholder in respect of a share in that company (excluding the return of contributed tax capital, i.e. consideration received by a company for the issue of shares). It is triggered by the payment of a dividend by any:

South African tax resident company; or
Foreign Company whose shares are listed on the JSE.
Dividend payments by headquarter companies are not subject to Dividends Tax.

Dividends Tax replaced Secondary Tax on Companies (STC) in order to:

align South Africa with the international norm where the recipient of the dividend, not the company paying it, is liable for the tax (South Africa was one of a few countries with a corporate level tax on dividends, such as STC)
make South Africa a more attractive destination for international investment by eliminating the perception of a higher corporate tax rate (STC is an extra corporate tax) coupled with lower accounting profits (STC had to be accounted for in the Statement of Comprehensive Income (Income Statement))

Some beneficial owners of dividends are entitled to an exemption or a reduced rate (foreigners) under the Dividends Tax system, whereas dividends received by them under the STC system were taxed in full in the hands of the declaring company.

Who should pay it?

Generally speaking Dividends Tax is payable by the beneficial owner of the dividend, but is withheld from the dividend payment and paid to the SARS by a withholding agent . The person liable for the tax, however, remains ultimately responsible to pay the tax should the withholding agent fails to or withholds the incorrect tax. An exception to this general principle is where a dividend consists of a distribution of an asset in specie, resulting in the liability for the tax falling on the company itself (such as with STC), which means that it may not withhold the tax from the dividend payment.

When should it be paid?

Dividends Tax applies to any dividend declared and paid from 1 April 2012 onwards, and the withholding agent (either the company or the regulated intermediary) should pay the tax withheld to SARS on or before the last day of the month after the month in which the dividend was paid. Dividends Tax payments should be accompanied by a return (DTR01/02). Penalties and interest may be levied for late payments of dividends tax or the late submission of dividends tax returns.

What steps must I take?

As a shareholder (in either a company that is resident in South Africa or in a foreign company whose shares are listed at the JSE) you will become liable for the Dividend Tax when a dividend is paid to you. However, the relevant withholding agent will have to withhold and pay the tax to SARS. The withholding agent should also send you the required declaration and undertaking form(s) for completion if you wish to qualify for any of the exemptions (section 64F) or a reduced rate in terms of a DTA (foreign residents only). The completed form must be sent to the withholding agent before it may exempt the dividend payment or withhold at a reduced rate.

What is the difference between Dividends Tax & Secondary Tax on Companies?

The main difference lies in who is liable for the tax. Dividends Tax is a tax levied on shareholders (beneficial owners of dividends) when they receive dividends, but STC is a tax levied on companies on the declaration of dividends. There will not be overlap between STC and Dividends Tax. If a dividend is declared before 1 April 2012 (irrespective of actual payment date) it will be subject to STC. Only where the dividend is declared and paid on or after 1 April 2012 will it be subject to Dividends Tax

Taxation Laws Amendment Act 2007

Certain lump sum payments received on termination of service, qualify for taxation at the average rate of tax. The average rate of tax to be used in determining the tax liability on the lump sum will be the higher of the average rate of tax in respect of taxable income (Excluding the lump sum) accrued in the current and preceding years of assessment. Lump sum payments received by the taxpayer from his employer by way of bonus, gratuity or compensation upon either reaching the age of 55, retirement due to superannuation, ill health or other infirmity is tax free to a maximum of R30 000 over the lifetime of the taxpayer. Furthermore, all employees who lose their jobs as a result of either the employer ceasing to operate or because of a general reduction of staff, will qualify for the R30 000 tax free concession regardless of age. This exemption will however not apply to any present or past director of the employer company nor to any shareholder who holds or held more than 5% of a company’s shares. Lump sums paid by the employer as a result of the death of any person that arises out of the course of the employment of that person, may qualify for an exemption up to the amount of R315 000. The exempt amount must be reduced with the portion of a lump sum that qualified for the R30 000 exemption, as mentioned in the prior paragraph. Lump sum benefits payable by approved funds are aggregated for tax purposes and subject to tax as detailed below.

On retirement or death:

Pension Funds, Retirement Annuity Funds and Provident Funds.
A maximum of one third of the taxpayer’s entitlement from a pension or retirement annuity fund may be commuted to a lump sum.
The taxable portion of the lump sum from a pension, provident or retirement annuity fund received on or after 1 October 2007 as a result of death or retirement is calculated as :
The total lump sum less the deductible amount
The deductible amount is calculated by means of a formula B which is as follows :
Z = C + E – D where Z is the deductible amount / C is a fixed amount of R315 000 less any withdrawal benefit deducted after 1 March 2009 the taxpayer qualifies for this deduction once during his or her lifetime / E is the sum total of fund contributions made by the taxpayer that did not qualify as a deduction during prior years / D is the sum of all the Z-values deductible amounts allowed in prior years.
The taxable portion of the lump sum on death or retirement is taxed separately from the other taxable income of the taxpayer at the following tax rate :

Retirement or death:

Taxable Amount	Tax Liability
Up to R315 000	0%
R315 001 – R630 000	18% x taxable amount in excess of R315 000
R630 001 – R945 000	R56 700+ 27% of the amount above R630 000
R945 001 and above	R141 750 + 36% of the amount above R945 000

On withdrawal of the fund:

With effect from 1 March 2009, the exempt portions, upon withdrawal, will be as follows : Pension funds: The tax-free portion will be R22 500 plus any amount paid into any approved pension fund or retirement annuity fund Retirement annuity fund: The tax-free portion will be R22 500, plus the amount paid into another retirement annuity fund or used to purchase an approved insurance policy that provides benefits similar to a retirement annuity fund. Provident funds: The tax-free portion will be R22 500, plus any amount paid into any approved pension, provident or retirement annuity fund. The taxable portion of a lump sum upon withdrawal from a fund will be taxed separately from other taxable income, with effect from 1 March 2009. The rate will be as follows :

Withdrawal from retirement savings:

Taxable Amount	Tax Liability
R0 – R22 500	0%
R22 501 – R600 000	18% of the amount above R22 500
R600 001 – R900 000	R103 950 + 27% of the amount above R600 000
R900 001 and above	R184 950 + 36% of the amount above R900 000

In all cases, the tax-free portions from either a pension, provident or retirement annuity fund shall not be less than the lesser of the lump sum benefit or any contributions made to the fund by the member which were not previously allowed as deductions.

New Proposed Rules on Withdrawal of Pension, Provident Funds, Preservations Funds is NOT YET being applied by SARS. The new changes to tax on withdrawal (As announced in the Budget Speech for 2009) have not yet been promulgated into law. This causes much confusion as Sars is applying the new R22500 tax free allowance but the balance of the benefit is still being taxed at old average rates as was the case prior to 1/3/2009. SARS have confirmed that they will only change their systems to apply the table when it is passed into law which they expect will be in the latter part of this year. As the expectation is that it will apply retrospectively to 1 March 2009 SARS have advised that any member who is over taxed as a result of this will be reimbursed with their next assessment. (i.e. 2010 tax year.)

Small annuities – retirement benefits of R75 000 or less, may now be commuted in full as a lump sum. Previously pension and retirement annuity funds could pay out only up to one third of the retirement benefit in a lump sum and the balance of the fund was used to purchase a compulsory annuity and only benefits of R25 200 could be commuted in full. Draft legislation to be tabled in Parliament shortly should bring relief to divorcees who have been unable to access their share of their former spouses’ retirement funds despite recent changes to the law and a ruling on the matter by the Pension Funds Adjudicator. A Personal Finance report says the draft General Financial Services Laws Amendment Bill contains provisions to amend the Pension Funds Act to clearly state thatevery divorcee who has been awarded a share of a former spouse’s retirement fund in a divorce order will be able to access the benefits with effect from 13 September 2007. The efforts of many divorcees who were divorced before this date to access these benefits have been thwarted by retirement funds and their administrators, which claimed that the law was unclear. An amendment to the Pension Funds Act promulgated in September was intended to introduce a ‘clean break’ in pension interests on divorce for all divorcees. But legal advisers to funds and their administrators argued that it was incorrectly drafted and applied only to divorce orders made after the amendment was promulgated.

What is it?

Provisional tax is not a separate tax. It is a method of paying tax due, to ensure the taxpayer does not pay large amounts on assessment, as the tax load is spread over the relevant year of assessment. It requires the taxpayers to pay at least two amounts in advance, during the year of assessment, which are based on estimated taxable income. Final liability, however, is worked out upon assessment and the payments will be off-set against the liability for normal tax for the applicable year of assessment.The aim is to help taxpayers meet their liabilities in the form of two payments, instead of in the form of a single, large sum on assessment. A third payment is optional after the end of the tax year, but before the issuing of the assessment.

Who is it for?

Any person who receives income (or to whom income accrues) other than a salary, is a provisional taxpayer. A provisional taxpayer is defined in paragraph 1 of the Fourth Schedule of the Income Tax Act, No.58 of 1962, as any – person (other than a company) who derives income, other than remuneration or an allowance or advance as mentioned in section 8(1); company; or person who is told by the Commissioner that he or she is a provisional taxpayer. Excluded from being a provisional taxpayer as defined are any – approved public benefit organisations or recreational clubs; body corporates, share block companies or certain associations of persons; and persons who are exempt from paying provisional tax, namely: Non-resident owners or charterers of ships or aircraft; Any natural person who is under the age of 65 and who does not earn any income from carrying on a business – provided that person’s taxable income will not be more than the threshold (R63 556 for 2013 and R67 111 for 2014); or the taxable income of that person (earned from interest, foreign dividends and rental) will not be more than R20 000; Any natural person who is 65 years or older – provided that person’s taxable income will not be derived in any way from carrying on any business; will not be more than R120 000; and will not be derived otherwise than from remuneration (such as salary), interest, foreign dividends or property rental. Examples of income that will make you a provisional taxpayer include rental income, interest income or other income from the carrying on of any trade. Companies automatically fall into the provisional tax system. There is no formal registration or deregistration needed to be a provisional taxpayer. If a taxpayer is liable for provisional tax, he or she merely needs to request and submit an IRP6 return.

What steps must I take to work out the amounts due?

The amount of provisional tax payable is worked out on the estimated taxable income for that particular year of assessment, as follows: The First Period: Half of the total estimated tax for the full year; Less the employees tax for this period (6 months); Less any allowable foreign tax credits for this period (6 months). The Second Period: The total estimated tax for the full year; Less the employees tax paid for the full year; Less any allowable foreign tax credits for the full year; Less the amount paid for the first provisional period. The Third Period (voluntary): The total tax estimated payable for the full year; Less the employees tax paid for the full year; Less any allowable foreign tax credits for the full year; Less the amount paid for the 1st and 2nd provisional tax periods.

How should it be paid?

SARS has introduced changes to provisional tax which affect the way in which provisional taxpayers file their IRP6 returns. With most provisional taxpayers making their submissions electronically, SARS will no longer mail IRP6 returns to provisional taxpayers nor can it be downloaded on the SARS website. You will now be asked to send your IRP6 using one of the methods below: Register for SARS eFiling. The eFiling facility allows you to ask for your IRP6 return and make your submission and payments online, and makes sure you get fast turnaround times for assessment and refund payments. If you are already an eFiler, simply add provisional tax to your profile so that you can access and file your IRP6 return online. Call the SARS Contact Centre on 0800 00 SARS (7277) to ask for an IRP6 return or find out more about the new Provisional Tax process. Visit the SARS branch nearest you where our staff will help you to fill in and send your IRP6 electronically.

When should it be paid?

The first provisional tax payment must be made within six months of the start of the year of assessment for 28 February or six months after the approved financial year end date . The second payment must be made no later than the last working day of the year of assessment ending 28 February. The third payment is voluntary and may be made – within seven months of the year of assessment, where the year of assessment ends in February, which is 30 September and within six months of the year of assessment, in any other case.

	Taxable Deductible	Life Office Tax	Personal Income Tax on Benefits/Proceeds	Capital Gains Tax	Estate Duty
1	Shares	No	-		?	?
2	Bank Investments	No	-	?	-	?
3	Unit Trust	No	-	?	?	?
4	Lisp	No	-	?	?	?
5	Life Policy	No	?	-	-	?
6	Endowment Policy	No	?	-	-	?
7	Sinking Fund Policy	No	?	-	-	?
8	Retirement Annuity	Yes	-	?	-	?
9	Pension/provident funds	Yes	-	?	-	?
10	Compulsory Annuity	No	-	-	?	-
11	Voluntary annuity	No	-	-	?	-
12	Disability income replacement policy	Yes	?	?	-	-
13	Second-hand policy	No	?	-	?	?
	Number – see notes		? = Tax applies	– = Tax does not apply

The Taxation Laws Amendment Act No 3 of 2008 (“the Act”) was promulgated on 22 July 2008. Below is a brief summary of some of the provisions of the Act. Please Note: Where the amendments affect any of our retirement funds, rule amendments may be necessary before we can give effect to the amended legislation.

1. Retirement Annuities

The maximum retirement age of 70 years has been removed. Members of retirement annuity funds can now retire at ANY age after age 55 Retirement annuity benefits can be commuted on emigration. The emigration must be recognised by the South Africa reserve bank for the purposes of exchange control. The benefit may be subject to tax depending on the specific circumstances of the member Commutation of a lump sum from a “paid up” retirement annuity fund prior to retirement is provided for. The amount which can be commuted will be as determined by the Minister by notice in the Gazette. Currently the Gazetted amount is R7000.

2. Preservation Funds

Pension and provident preservation funds are now defined in the Income Tax Act The Act also serves to govern (together with the Pension Funds Act) preservation funds and the intention is that this legislation should replace the SARS retirement fund notes (RF1/98 and its addenda etc.) which previously governed preservation funds Where a benefit is being transferred from an occupational pension or provident fund to a preservation fund there is no longer a requirement for a “participating employer” Where a benefit is being transferred from one preservation fund to another preservation fund the “eligibility” requirements as set out in RF1/98 no longer apply. More specifically it is no longer a requirement that the member: be employed; and/or be contributing to an employer’s retirement fund Benefits paid to non-member spouses in terms of valid divorce orders and unclaimed befits can be transferred into preservation funds

3. Living Annuities

Living annuities are now defined in the Income Tax Act The Act also serves to govern (together with the Long Term Insurance Act) living annuities and the intention is that this legislation should replace the SARS retirement fund notes (RF1/96 and its addenda etc.) which previously governed living annuities More specifically the Act provides for the following: Commutation from living annuities up to an amount prescribed by the Minister by notice in the Gazette. We have been verbally advised that this amount is likely to be R75 000 That the amount of income which can be drawn from a living annuity will be prescribed by the Minister by notice in the Gazette. Consequently this amount will remain within the existing parameters of 2.5%-17.5% until the Minister determines that it should be amended On the death of an annuitant the value of the annuity may be paid to the beneficiary/ies or the deceased estate as a lump sum. Alternatively, the beneficiary/ies may elect to receive an annuity

What is it?

Transfer Duty is a tax levied on the value of any property acquired by any person by way of a transaction or in any other way. It’s based on the value by which any property has increased when you come to dispose of that property. For the purpose of Transfer Duty, property means land and fixtures and includes real rights in land, rights to minerals, a share or interest in a “residential property company” or a share in a share-block company. All Conveyancers are requested to register with SARS. These are the Transfer Duty rates applied to properties acquired on or after 23 February 2011, and apply to all persons (including Companies, Close Corporations and Trusts):

VALUE OF PROPERTY (Rand)	RATE
R0 → R600 000	0%
R600 000 → R1 000 000	3% on the value above R600 000, but not exceeding R1 000 000
R1 000 000 → R1 500 000	R12 000 plus 5% on the value above R1 000 000, but not exceeding R1 500 000
R1 500 000 and above	R37 000 plus 8% on the value above R1 500 000

Who pays Transfer Duty?

For acquisitions: The person acquiring the property For renunciations: The person in whose favour or for whose benefit, any interest in or restriction upon the use or disposal of property has been renounced.

How do I submit my Transfer Duty Declaration?

A Transfer Duty Declaration can be submitted to SARS in one of two ways: Through eFiling, Through Third Party Conveyance systems which integrate with eFiling. Should supporting documents be required, it will be requested of the Conveyancer to upload such electronically. Once satisfied, the application will be approved. If no payment is required, the system will automatically release the receipt after approval. Should a payment be required, the Conveyancer will make such electronically after which the receipt will be issued. It is advised that all parties ensure their tax affairs are in order as property transfers are used in an attempt to ensure tax compliance across all taxes. If, for example, you are not registered or you have outstanding tax returns or payments, you will be given the opportunity to correct matters with SARS. Should matters not be resolved, steps will be taken to ensure compliance and this may delay the transfer of the property. One such step that may be taken is the appointment of the Conveyancer or any other person as an agent with the instruction to pay SARS from the proceeds of the sale. It is further recommended that you ensure that your personal details (ID number, Income Tax/VAT number) on our systems are correct as any disparity could also cause delays. A taxable supply is a supply on which VAT must be charged at the standard rate (currently 14%) or at the zero rate. To be a taxable supply, the supplier (seller or transferor) must be a “vendor” and the supply of the property must be in the course or furtherance of an “enterprise.” The supply of an entire enterprise with all its assets (including any fixed property) as a “going concern” may qualify as a zero-rated taxable supply if all the conditions in section 11(1)(e) of the VAT Act are met. Refer to Interpretation Note 57: Sale of an enterprise or part thereof as a going concern and VAT News 15 – August 2000 for more details in this regard.

When should it be paid?

Duty is payable within six (6) months from the date of acquisition. If the Transfer Duty is not paid within this period, interest calculated at 10% per annum for each completed month. A completed month is calculated as the first day from the expiry of the interest free 6 month period to the date of payment. Interest will be charged at the “prescribed rate”. However, these specific provisions did not come into effect from 1 October 2012 when the Tax Administration Act became effective, but will come into effect way of Presidential Proclamation in the Government Gazette at a later date. Remember that in the case of conditional sales the period of 6 months commences from the date on which the transaction was entered into (i.e. the last date of party signature to the agreement), and not the date when the contract becomes binding upon the parties (i.e. the date the conditions are fulfilled.)

How should it be paid?

From 1 April 2011 all Transfer Duty must be paid electronically via eFiling. This will normally be done by a Conveyancer, who acts on your behalf. See the video guide to Transfer Duty and eFiling below.

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