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The tax effect of terms of financing instruments
The case of Crookes Brothers Limited v C:SARS was widely commented as a rare case that deals with the South African transfer pricing provisions. The court considered the application of an exemption from the transfer pricing rules for loans with equity-like features...
SARS views on venture capital company rules
The venture capital company (VCC) tax incentive was introduced in 2008 to assist small and medium entities in raising equity funding. An investor in a VCC can deduct the amount of the investment from his taxable income, despite this being a capital investment. The VCC...
Prescription of self-assessed taxes arising from low-interest loans
The Tax Administration Act (TAA) makes provision for prescription of tax assessments. This provides taxpayers with finality in relation to assessments after a period of time. The SCA considered in CSARS v Char-Trade whether an assessment had prescribed by the time...
Understatement penalties – Part 2: Evaluating advice obtained
The previous article on the topic of understatement penalties (USP) concluded that taxpayers need to carefully consider the quality of and critically assess the soundness of advice obtained if they wish to rely on it as a basis to have reasonable grounds for a tax...
Tax implications of ceded dividend rights
ividend income is subject to tax treatment, which if viewed only from the perspective of the recipient thereof, is more favourable than most other income. It is exempt from normal tax. Dividends paid by one South African company to another are furthermore exempt from...
Understatement penalties – Part 1: Effect of advice obtained
Most additional assessments raised by SARS following an audit into the affairs of a taxpayer include the imposition of an understatement penalty (USP) in terms of the Tax Administration Act (TAA). The USP is determined as the shortfall amount multiplied by a...
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