
Davey’s Locker
The Tax, Shock, Horror Newsletter by Tony Davey
Annuitization – Provident fund vested lump-sum retirement benefits and tax
The compulsory annuitization of benefits from a provident fund, despite a laboured birth since 2016, becomes a reality on 1 March 2021. See 212 tsh 2020. In essence, the harmonization of tax treatment of all retirement funds, whether pension, retirement annuity or...
SARS in Action
Common reporting standards (CRS) SARS is receiving information and now acting on the CRS automatic exchange of information with eighty-seven foreign jurisdictions concerning RSA taxpayers with offshore investments. Special voluntary disclosure program (SVDP) In...
Change of tax residency status and RSA trust beneficiaries
Change of tax-residency status I have already canvassed the criteria governing the change of residence of an RSA resident (see 192, 200 TSH 2019). In essence, one must have regard to: Any applicable double tax agreement. The case law on the expression ‘ordinarily...
Prescription – Assessments v tax debt
Taxpayers raising the procedural defence of prescription to a notification from SARS demanding tax payment of an amount of some historic tax year must distinguish between a prescribed assessment and a historic tax debt, since different prescription periods apply. For...
Proposed restrictions on retirement funds
Access upon emigration National Treasury has issued a draft Explanatory Memorandum on the Draft Taxation Laws Amendment Bill 2020, dated 31 July 2020. Under para 1.4 of the Explanatory Memorandum, the proposal is made to amend the definitions of a ‘pension...
Section 7C PBR 350 on beneficiary awards and loans
In 180 TSH 2018 I referred to what I described as a sui generis exception to s 7C of the Income Tax Act (deemed donation of non-charging of official rate of interest), namely a loan advance or credit in circumstances in which trustees vest an amount in a trust...
Non-meritorious additional assessments
Tax Ombud’s report 2020 Tucked away in point 38.2 of the sixty-one-page Report and occupying only a half-page is, in my experience of the tax dispute-resolution process, a valuable finding and recommendation by the Tax Ombud, on non-meritorious additional assessments:...
Third party tax debt recovery by SARS
Recent case In circumstances in which a taxpayer fails to pay a ‘tax debt’ (defined in s 1 read with s 169(1) of the Tax Administration Act as being an amount due or payable to SARS), a senior SARS official may, under s 179, issue a notice to a third party holding a...
Living annuity commutation threshold – Proposed increase
National Treasury, on 1 May 2020, issued an explanatory memorandum on the revised draft Disaster Management Tax Relief Bill, 2020 which, amongst other things, addresses a proposed increase in the living annuity commutation threshold. This is a draft Bill which is yet...
Living Annuity Drawdown Relief Under Covid-19
Living annuity Generally a living annuity (as distinct from a conventional life annuity, under which a fixed rate of return for life is contractually agreed) is a compulsory purchased investment from a financial institution with a minimum two-thirds of a retirement...
Waiver of trust loans – Donations tax and CGT
Historically, the R100 000 a year donations tax exemption was popularly applied to write down trust loan accounts by estate-planning trust founders/creditors. But, as I said in 201 TSH 2019, any tax-structuring should always take cognizance of its impact upon other...
Budget Review – Foreign earnings exemption increased
The s 10(1)(o)(ii) exemption for foreign employment income of tax residents was originally proposed to be limited to R1 million, with effect as from 1 March 2020. This will be increased to R1,25 million, according to Chapter 4 of the Budget Review, published along...

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