On 1 July 2013 the Tax Season for 2013 officially opened for individuals (provisional and non-provisional taxpayers) and trusts. The most significant policy change to be introduced in the 2013 Tax Season is the raising of the annual income threshold from R120 000 to R250 000 for the filing of income tax returns. This change was announced in the 2013 Budget by Finance Minister Pravin Gordhan.

 

As from this year, any taxpayer whose gross income for the year is below R250 000 needs 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 DTA.

 

Should you have missed any of our previous editions of Tax Flash, you can catch up on our website.

 

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 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.