Comments on Draft Revenue Laws Amendment Bill 2008
Comments on Draft Revenue Laws Amendment Bill, 2008 and Draft Revenue Laws Second Amendment Bill, 2008
General comments • Clause 4 - Insertion of section 25 B into Estate Duty Act 45 – Business purpose test? • Clause 6(1)(b) - Definition of “contributed tax capital” – What about existing companies • Clause 6(1)(f) - Definition of “pension fund” – Typing correction
• Clause 11(1)(a) and 11(2) – Insertion of section 8 C(1 A) – capital distributions in respect of restricted equity instruments received or accrued between 1 October 2007 and 22 September 2008? • Clause 15(b) – Increase in basic exemption for recreational clubs – Will it apply to dividends once the withholding tax is introduced?
• Clause 21 - Insertion of section 12 J of the Act – – – • Business plan VCC’s gross income “solely from financial instruments” Impact on “small business corporation” status of another company owned by the shareholder Clause 25 – Deduction in respect of the sale of certain residential units – interest on amount owing
• Clause 61 - “Personal service provider” – Includes independent contractors? • Tax rate – Employment companies? • Application of section 23(k) • Effective date 1 March 2008 • Safe harbour: 3 or more full-time employees – Para 5(a) of the Fourth Schedule: labour broker exemption certificates
• Clause 62(e) – Payroll giving – Deduction limited to 5% of remuneration – Section 18 A deduction 10% – Re-determination provision required • Clause 107 - VAT Act: Amendment of section 41 B – Publication of rulings
Clause 66 – Insertion of the Sixth Schedule: Presumptive turnover tax • Exclusion of professionals – Also debarred from small business corporation concession until 3 or more full-time employees • Exclusion of vendors • Exclusion of trusts • Permitted investments – dormant companies • Exclusion if proceeds from capital asset disposals exceed R 1 million over a 3 -year period
Presumptive turnover tax (cont. ) • Taxation of capital gains • Previous allowances to be added back but assessed losses are foregone • Transitional rules on deregistration – Provisional tax? • Records of assets and liabilities?
II. Draft Revenue Laws Second Amendment Bill, 2008 • Clause 13: Deleted of “basic amount” rule – Unrealistic to estimate 90% of taxable income by the last day of the financial year • Proposal to bring last date for payment forward by 2 days at end-March – Current provision for interest (section 89 sex)
Thank you!
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