Unit 1 Flashcards
Intro to tax
Main legislative pieces in SA
Income Tax Act and Tax Administration Act
Highest Court to hear tax matters
Constitutional Court
When will you pay tax?
When you receive income above the threshold set by SARS
What are the 2 shadows?
Who is responsible for INTEREST and TAX
Name 8 types of tax
Normal tax Donations tax Withholding tax Turnover tax Dividends tax Capital Gains Tax Value-Added Tax Estate Duty
What is NB when litigating against SARS?
To use the correct address (of the specific office being sued)
What was the interpretive approach before the Constitution?
Black letter approach
WWhat was the interpretive approach after the Constitution?
Purposive approach (contextual approach)
Name 6 aids to use when interpreting tax law
Constitution Case law Different forums (tax board, tax court, HC) Rules of interpretation International law Interpretation Act
What is the maximum value of a dispute that can be referred to the Tax Board?
Name 4 facts about the Tax Court
It was previously the Special Court of Income Tax Appeals
Not a court of law
Not bound by own decisions
Bound by provincial divisions of HC & SCA
What are the 5 rules/types of interpretation?
Literal approach Purposive approach Objective approach Contra fiscum rule Substance over form
If in conflict, which takes precedence: ITA or TAA?
ITA
Discuss 2 points each about unambiguous and ambiguous text ito the literal approach
English law follows literal/textual approach Unambiguous: 1. Grammatical meaning 2. Ordinary, natural use Ambiguous: 1. Disregard literal meaning 2. Avoid absurdity
Name 3 points about the purposive approach (as now used in SA)
Contextual approach
Ss 39(1) & (2) of the Constitution
CSARS v Airworld
What is the main point emphasised in CSARS v Airworld?
Emphasis is placed on the purpose with which the Legislature has enacted the relevant provision and the interpreter must give effect to such purpose; and such purpose must be used in conjunction with the appropriate meaning of the language of the provision.
I.e. Intention (Constitution) + literal meaning
What is the main point emphasised in Natal Joint Municipal Pension Fund v Endumeni Municipality?
Whatever the nature, consideration must be given to the language used in light of ordinary rules of grammar and syntax; the context in which the provision appears; and the apparent purpose. Where more than one meaning is is possible, each possibility must be weighed in light of all these factors.
I.e. Tax context + purpose
What does the contra fiscum rule mean?
When there is ambiguity in tax legislation, then you interpret that in the favour of the tax payer.
What does substance over form mean?
SARS will consider the contents (substance) of a document/matter rather than the name (form).
Does Ministerial regulations have the same power as legislation?
Yes.
Name 4 points related to Practice Notes & Interpretation Notes
Not legislative
Published by SARS
Assists with interpretation
Same as Magistrates’ & High Court’s Rules
Which legislative provision establishes liability for normal/income tax?
Section 5(1) of the ITA
Upon whom is normal tax imposed?
Natural persons Pty Ltds Closed Corporations Trusts, estates, associations, and clubs Excludes foreign partnerships
On which income is normal tax applicable?
Taxable income
From when to when does a YOA run?
From 1 March to last day of February
When the YOA broken?
Death
Birth
Insolvency
Is the rate of normal tax a fixed rate?
No, it ranges from 18% to 45%
What are the 2 ways of becoming liable for tax in SA?
- Being a resident for tax purposes
2. Being a non-resident, but being in SA long enough that you are considered a resident
What is the correct interpretive approach to tax legislation?
The Constitutional (purposive) approach.
What are the two periods that a YOA could be?
- Usually 12 months; but
2. Could be 6 months
Name 2 types of special trusts
Mentally/physically disabled person
Relatives + youngest under 18 years old
At what rate are trusts (excl. special trusts) taxed?
45%
What types of rebates are available to natural persons?
Primary rebate (for being a natural person) Secondary rebate (if above 65yo) - in addition to primary rebate Tertiary rebate (if above 75yo)
When are tax rates determined?
Annually by Parliament (delivered in Budget Speech)
At what rate are companies (Pty & CCs) taxed?
28%
What is the tax rate for companies in special economic zones?
15%
