Taxation Laws Amendment Bill published

The draft legislation gives tax proposals announced by Finance Minister Pravin Gordhan in this year's budget.

The Treasury said certain proposals requiring more consultation, including trust reforms, pre-retirement preservation and taxation of long-term insurers, would be dealt with later this year or as part of the next year's process.

The Taxation Laws Amendment Bill proposes a beneficial tax regime for companies located in special economic zones approved by the finance minister.

It contains proposals to revitalise the maritime sector in South Africa by implementing an attractive shipping tax regime.This would exempt qualifying shipping companies from income tax, capital gains tax, dividends tax and withholding tax on interest.

The bill also addresses the taxation of dividends received for services rendered under normal income tax rules. A company paying the dividend would, subject to certain conditions, be entitled to an income tax reduction.

Tax breaks

With regard to retirement funds, the new bill provides that most individuals will be able to qualify for a higher reduction in respect to their contributions in South Africa from March 2015.

In addition, employers will, in future, be able to assist their low-income employees to acquire houses below market value without tax being payable by the employee.

The Treasury said housing programmes initiated by employers for the benefit of their employees were hindered by the fringe benefit tax an employee had to pay on the difference between the market value of the property and the purchase price.

To eliminate this obstacle, there would be no tax payable if an employee earning a total salary of not more than R200,000 acquired property with a cost to the employer of not more than R350,000.

Through this, the Treasury aimed to stimulate the provision of affordable housing in South Africa and to address some of the challenges in the mining sector.

The Tax Administration Laws Amendment Bill also gives customs officials wide powers to search any premises, at any time, without a warrant. However a Western High Court judgment found that this provision was unconstitutional and as a result the bill seeks to correct this by establishing broad principles that an officer cover search and seizure operation without a warrant.

The bill will also seek to more strictly regulate tax practitioners.

Source: Sapa via I-Net Bridge