Unit 2.1 The Language of Income Tax (10) Flashcards
Income tax is a tax governed by the
Income Tax Act No 58 of 1962 (as amended). The amendments are bills promulgated from time to time as an Act of Parliament by publication in the Government Gazette. These Acts then become part of the main Act as amended.
In certain instances the direction described by the Act is
Not clear and a dispute arises between SARS and the taxpayer. Such court outcomes are regarded as interpretation rules. SARS also executes certain practices which are published from time to time as Interpretation Notes.
The Act contains provisions for five different types of tax
normal tax
donations tax
turnover tax
dividends tax (replaced secondary tax on companies)
withholding tax
Normal tax is the
Income tax imposed on all persons who have a taxable income
Tax for natural persons or individuals is
Progressive and computed at a sliding scale rate of taxable income
Tax for legal persons is a
Proportional tax computed as a fixed percentage of taxable income
Income tax is a
Tax levied on the annual taxable income on a person for a specific year of assessment
For natural persons the year of assessment is
The 12 month period ending on the last day of February of each year
Legal persons normally have a year of assessment that is the same as
Their financial year. The financial year of a legal person is the 12 month financial period for operations.
If SARS has changed the official company tax rate from one tax year to the next, companies will have to apportion their taxable profits and pay two different rates on each portion.
Dividends to shareholders are subject
To an additional, separate tax.
Also applied at a flat rate.
Previous was secondary tax on companies (paid by company) and now dividends tax (paid by shareholder, company withholds it from dividend payout and pays to SARS on shareholders behalf)
