- Sanchia Temkin - Business Day
A first of its kind publication by the South African Revenue Service (SARS) and the treasury is intended to provide tax practitioners, economists, taxpayers and other stakeholders with an in-depth analysis of tax revenue data
Treasury tax policy chief director Cecil Morden said yesterday that the government wanted to make the information available to as many parties as possible.
Parties would be able to use the data for structured analysis purposes rather than a time series analysis, Morden said. This was because in some instances an overview for all tax periods had not been provided.
The research provides an overview of tax revenues for the financial periods 2002- 03, and 2005- 06 and, in some instances, aggregate revenues for earlier and later periods .
The data is based on tax revenue collections and customs duties with the focus on three main taxes: personal income tax, corporate tax, and VAT.
Beric Croome, a tax executive at corporate law advisers Edward Nathan Sonnenbergs, said the initiative was a welcome publication for tax practitioners. There had long been a call for such information.
“It seemed at various stages to have been available to practitioners, such as in the budget review, and then suddenly it was no longer at hand,” Croome said. “The statistics will also give the government a better feel of where the revenue is coming from. It will help the government with their projections and budgeting, particularly in difficult economic times such as these, ” he said.
Morden said the treasury had used the data internally and it helped the government in instances with its budgeting.
Although the figures for registered companies and individuals were likely to be accurate, it was difficult to get an accurate figure for the registration of trusts, Croome said.
The masters of the high courts did not provide SARS with information such as the registration of a trust. Improvement in the quality of data and availability would also enhance the tax policy process, he said.
The number of registered individual taxpayers on the SARS database had increased from 3,4-million in the 2002-03 financial year, to 5,2-million last year.
Thursday, December 18, 2008
Thursday, December 11, 2008
Bill reverses change to company tax law
- Sanchia Temkin - Business Day
A SURPRISE and almost-invisible clause in the Revenue Laws Amendment Bill reverses one of the key amendments made last year to secondary tax on companies (STC) charged on dividends declared in the course of the liquidation of a company.
Jackie Arendse, Wits University tax associate professor, said at the weekend that the STC exemption for distributions of capital profits prior to October 1 2001, and the exemption for revenue profits prior to March 1 1993 in the course of a company’s liquidation, were removed in the Revenue Laws Amendment Act of 2007. “This removal is effective from January 1 next year,” Arendse said.
The amendment to the income tax laws was widely publicised and drove many companies to declare liquidation dividends before the end of this year, she said.
However, a further recent amendment to the income tax legislation repeals the 2007 bill, with effect from January 1 next year. “This means that, for the time being, the STC treatment of liquidation dividends goes back to its original form,” Arendse said.
Any portion of a liquidation dividend that consists of profits derived during any year of assessment which ended not later than March 31 1993; capital profits relating to the period prior to October 1 2001; and profits derived before the company became a (South African) resident, would be exempt from STC.
“It is likely that this STC exemption will continue until the new withholding tax on dividends is implemented, which is expected to be mid- to late 2009.”
New changes to the STC regime were announced last month by the government.
Johan Troskie, a director at Deneys Reitz Tax, said that SA’s tax system had moved away from a company tax to an effective tax on shareholders payable on the distribution of dividends by a company. As with STC, the dividend tax would remain at 10%.
Last year, Finance Minister Trevor Manuel announced a two-phased approach to the reform of STC.
The first involved the reduction of the STC rate.
The second phase of the STC reform entailed the replacement of the tax with a new levy on distributions of companies.
Under the new system, dividend tax would be payable on the payment of any dividend declared by a company.
A SURPRISE and almost-invisible clause in the Revenue Laws Amendment Bill reverses one of the key amendments made last year to secondary tax on companies (STC) charged on dividends declared in the course of the liquidation of a company.
Jackie Arendse, Wits University tax associate professor, said at the weekend that the STC exemption for distributions of capital profits prior to October 1 2001, and the exemption for revenue profits prior to March 1 1993 in the course of a company’s liquidation, were removed in the Revenue Laws Amendment Act of 2007. “This removal is effective from January 1 next year,” Arendse said.
The amendment to the income tax laws was widely publicised and drove many companies to declare liquidation dividends before the end of this year, she said.
However, a further recent amendment to the income tax legislation repeals the 2007 bill, with effect from January 1 next year. “This means that, for the time being, the STC treatment of liquidation dividends goes back to its original form,” Arendse said.
Any portion of a liquidation dividend that consists of profits derived during any year of assessment which ended not later than March 31 1993; capital profits relating to the period prior to October 1 2001; and profits derived before the company became a (South African) resident, would be exempt from STC.
“It is likely that this STC exemption will continue until the new withholding tax on dividends is implemented, which is expected to be mid- to late 2009.”
New changes to the STC regime were announced last month by the government.
Johan Troskie, a director at Deneys Reitz Tax, said that SA’s tax system had moved away from a company tax to an effective tax on shareholders payable on the distribution of dividends by a company. As with STC, the dividend tax would remain at 10%.
Last year, Finance Minister Trevor Manuel announced a two-phased approach to the reform of STC.
The first involved the reduction of the STC rate.
The second phase of the STC reform entailed the replacement of the tax with a new levy on distributions of companies.
Under the new system, dividend tax would be payable on the payment of any dividend declared by a company.
Tuesday, December 2, 2008
Manuel praises dedicated finance staff
- Anton Ferreira - The Times
Attention has focused in recent months on how much longer finance minister Trevor Manuel will stay in his job — but equally important to South Africa’s economic stability are the public servants who do the nuts-and-bolts work of the Treasury.
Manuel said as much himself this week, calling the men and women in the Department of Finance an invaluable resource that the country should do all it could to preserve.
Briefing parliament’s finance portfolio committee on the global financial crisis, Manuel said: “If you’re looking for policy continuity, forget about the individuals who are elected as political office bearers. The strength of the policy is in the competence of the public servants.”
Manuel lavished praise on his staff, led by director-general Lesetja Kganyago, for the hard work they put in to draw up the national budget, and took a dig at unnamed cabinet colleagues whose departments were less committed.
“When I say to my colleagues that we table the budget in February — the fact that I know the date, I say the date is February 11 — there aren’t that many of my colleagues who have that relationship, either with their professionals or with parliament, to be able to (set a date) so far in advance,” said Manuel.
Some ministers, he said, expressed surprise that he did not have to change his plans “every two months”.
“The reason we don’t is that we have this intensive budget process that goes on for days and weeks... if anyone were to peek at the e-mail exchanges, what time they come through: 2:30am one day, 3:45am the next,” he said.
Manuel also stressed that the people who worked for him were not “yes-men”, who feared losing their jobs if they dared to offer an opposing view.
“We fight and we disagree and each one will have his own PowerPoint projection and so on... and sometimes the temperature is very, very high in the room,” he said.
“But it’s an important facility that we have because I firmly believe that if we don’t get thinking, competent professionals as public servants, who can say: ‘Minister, with respect, I disagree with what you’re asking me to do.’ if you don’t get public servants like that, we can’t work.”
His comments echoed recent criticism by public service watchdog, the Public Service Commission, which said the process of appointing heads of department in some parts of government was too politicised. The commission said that too often heads of department believed their continued tenure depended on keeping on the right side of their minister or MEC.
Manuel said Treasury wonks were not in government service for the money, which was less than what they could get in the private sector.
“We are greatly privileged to have this, because it’s not about what people can get out of it. It’s about putting heads together to produce a product. We know they could go to the private sector and command salaries that would be many times what they’re earning in the public sector.
“They’re here because of a desire to make a contribution and because they have the space to think and to contribute. We should not mess it up.”
Speculation about Manuel’s future has been rife since the ANC’s Polokwane conference a year ago, when the Zuma camp, backed by the Congress of South African Trade Unions and the South African Communist Party, took control.
Communists and trade unionists have become increasingly vocal in criticising Manuel, particularly over inflation targeting and his belief in budget surpluses.
Finance portfolio committee member Kobus Marais, of the Democratic Alliance, said he backed Manuel’s view of the Treasury staff. “My personal experience has been that the Treasury Department, and the South African Revenue Service and, to a large extent, Stats SA, have been incredibly competent,” he said.
“Manuel is giving them the political backing for what they believe in, and they are giving him the technical know-how, so it’s really a team effort.”
Marais said it was unclear what would happen to the department if Manuel were to be replaced by a minister who shared the views of Cosatu and the SACP. “I do believe that what is happening, in terms of our economic policy, has got a lot to do with the director-general and his staff. There’s no doubt about that.”
Marais said the Treasury was the most important government department, drafting medium-and long-term goals that were fundamental to the country’s economic health.
He added that if the new leadership were to alienate Finance Department officials, “competent people would be grabbed by the private sector”.
They would be replaced by staff chosen for their political loyalties, and the Treasury would sink into the kind of incompetence that paralysed other departments, said Marais.
Attention has focused in recent months on how much longer finance minister Trevor Manuel will stay in his job — but equally important to South Africa’s economic stability are the public servants who do the nuts-and-bolts work of the Treasury.
Manuel said as much himself this week, calling the men and women in the Department of Finance an invaluable resource that the country should do all it could to preserve.
Briefing parliament’s finance portfolio committee on the global financial crisis, Manuel said: “If you’re looking for policy continuity, forget about the individuals who are elected as political office bearers. The strength of the policy is in the competence of the public servants.”
Manuel lavished praise on his staff, led by director-general Lesetja Kganyago, for the hard work they put in to draw up the national budget, and took a dig at unnamed cabinet colleagues whose departments were less committed.
“When I say to my colleagues that we table the budget in February — the fact that I know the date, I say the date is February 11 — there aren’t that many of my colleagues who have that relationship, either with their professionals or with parliament, to be able to (set a date) so far in advance,” said Manuel.
Some ministers, he said, expressed surprise that he did not have to change his plans “every two months”.
“The reason we don’t is that we have this intensive budget process that goes on for days and weeks... if anyone were to peek at the e-mail exchanges, what time they come through: 2:30am one day, 3:45am the next,” he said.
Manuel also stressed that the people who worked for him were not “yes-men”, who feared losing their jobs if they dared to offer an opposing view.
“We fight and we disagree and each one will have his own PowerPoint projection and so on... and sometimes the temperature is very, very high in the room,” he said.
“But it’s an important facility that we have because I firmly believe that if we don’t get thinking, competent professionals as public servants, who can say: ‘Minister, with respect, I disagree with what you’re asking me to do.’ if you don’t get public servants like that, we can’t work.”
His comments echoed recent criticism by public service watchdog, the Public Service Commission, which said the process of appointing heads of department in some parts of government was too politicised. The commission said that too often heads of department believed their continued tenure depended on keeping on the right side of their minister or MEC.
Manuel said Treasury wonks were not in government service for the money, which was less than what they could get in the private sector.
“We are greatly privileged to have this, because it’s not about what people can get out of it. It’s about putting heads together to produce a product. We know they could go to the private sector and command salaries that would be many times what they’re earning in the public sector.
“They’re here because of a desire to make a contribution and because they have the space to think and to contribute. We should not mess it up.”
Speculation about Manuel’s future has been rife since the ANC’s Polokwane conference a year ago, when the Zuma camp, backed by the Congress of South African Trade Unions and the South African Communist Party, took control.
Communists and trade unionists have become increasingly vocal in criticising Manuel, particularly over inflation targeting and his belief in budget surpluses.
Finance portfolio committee member Kobus Marais, of the Democratic Alliance, said he backed Manuel’s view of the Treasury staff. “My personal experience has been that the Treasury Department, and the South African Revenue Service and, to a large extent, Stats SA, have been incredibly competent,” he said.
“Manuel is giving them the political backing for what they believe in, and they are giving him the technical know-how, so it’s really a team effort.”
Marais said it was unclear what would happen to the department if Manuel were to be replaced by a minister who shared the views of Cosatu and the SACP. “I do believe that what is happening, in terms of our economic policy, has got a lot to do with the director-general and his staff. There’s no doubt about that.”
Marais said the Treasury was the most important government department, drafting medium-and long-term goals that were fundamental to the country’s economic health.
He added that if the new leadership were to alienate Finance Department officials, “competent people would be grabbed by the private sector”.
They would be replaced by staff chosen for their political loyalties, and the Treasury would sink into the kind of incompetence that paralysed other departments, said Marais.
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