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South Africa Issues Final Consultation On Revenue Amendments

by Robert Lee, Tax-News.com, London

22 August 2008


The South African Treasury has released for comment a final set of proposed tax changes as part of the Revenue Laws Amendment Bills, 2008, which were released on 31st July, 2008.

In a media statement published on 20th August, the Treasury announced that these miscellaneous issues still needed "further deliberation." These proposals include changes relating to pension death benefits, exempt shareholder unbundlings, funding for foreign Public Benefit Organisations, tax treaty mutual assistance and accelerated payment/return dates.

The final set of legislative issues are as follows:

Pension Death Benefits: The proposed legislation eliminates the tax on pension fund benefits on death if these benefits are dedicated to remain within retirement and other funds such as beneficiary funds for minor beneficiaries or are utilised to provide an annuity to beneficiaries (even if a momentary withdrawal exists for recontribution to purchase an annuity).

Unbundlings with an Exempt Shareholder: Under current law, tax relief for unbundlings does not apply if the unbundling distribution is made to an exempt shareholder that receives 20% or more of the unbundling distribution. The 20% rule will be shifted so that unbundling relief will not apply if an exempt shareholder holds 20% of more of the unbundling company.

South African Funding for Foreign Public Benefit Organisations: The proposed legislation adds a public benefit activity exemption for South African public benefit organisations funding foreign public benefit organisations engaged in public benefit activities.

Mutual Assistance in Collections: Modern tax treaties provide for mutual assistance collection procedures so that one country can collect outstanding tax debts on behalf of the other. The proposed legislation updates the domestic legislative framework in support of these procedures.

Accelerated Payment/Return Date: The proposed legislation provides the Minister with the authority to accelerate payment/return dates by up to two days for income tax and value-added tax due on Government’s financial year-end (i.e. 31st March).

The statement also announced that, in view of comments already received, it has been decided that the proposed legislation dealing with passive holding companies should be re-released in revised form.

The National Treasury has requested that public comments be received on this final set of legislative issues by 5th September, 2008, so that the Revenue Laws Amendment Bills, 2008, can be introduced in a timely fashion.


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