Tax Season updates from SARS
The Tax Season for individuals (provisional and non-provisional taxpayers) and trusts officially opened on 1 July 2013. This Tax Season, the annual income threshold for the filing of income tax returns has been raised from R120,000 to R250,000, as announced by Finance Minister Pravin Gordhan in the 2013 Budget.
As from this year, any taxpayer whose gross income for the year is below R250,000 need not file a tax return if they meet the following criteria:
- they only earn one salary from one employer (i.e. they only have one IRP5);
- they do not have any other form of income (e.g. interest or rental income); and
- they need not claim deductions such as medical expenses, retirement annuities or travel expenses.
This month's Tax Flash emphasises the importance of 'place of effective management' and the importance of Binding Private Ruling 148 for determining 'effectively connected with such permanent establishment', for dividends withholding taxes imposed by a Double Taxation Agreement (DTA).
The relevance and meaning of the term 'place of effective management'
It is of the utmost importance, when establishing a group structure, to ensure that the 'place of effective management' of the entities is indeed situated in the desired jurisdiction.
Dividends tax rate for a 'permanent establishment' in South Africa
SARS' Binding Private Ruling 148 dealt with the appropriate dividends tax rate applicable to a permanent establishment in South Africa of a Japanese company, which was not a resident of South Africa having regard to the application of the South Africa/Japan DTA.
For more information, go to www.sars.gov.za.
