ISSN: 1996-2207
Affiliations: University of Johannesburg
Source: Tydskrif vir die Suid-Afrikaanse Reg, Issue 4, 2024, p. 848-849
https://doi.org/10.47348/TSAR/2024/i4a16
None
ISSN: 1996-2207
Affiliations: University of Johannesburg
Source: Tydskrif vir die Suid-Afrikaanse Reg, Issue 4, 2024, p. 850-851
https://doi.org/10.47348/TSAR/2024/i4a17
None
ISSN: 2219-1585
Affiliations: Senior Consultant, Bowmans Attorneys
Source: Business Tax & Company Law Quarterly, Volume 15 Issue 3, 2024, p. 1 – 8
This article deals with the obligation of trustees to submit an electronic register of the beneficial owners of a trust to the Master of the High Court. The article explores the aim of these disclosure requirements and considers the application of the beneficial ownership definition in the Trust Property Control Act to employee share ownership plan trusts. The writer laments the fact that share ownership plans are not excluded from these disclosure obligations, taking into account the comprehensive tax reporting obligations of a share ownership plan.
ISSN: 2219-1585
Affiliations: Honorary Member, Cape Bar; Member, Cape Bar
Source: Business Tax & Company Law Quarterly, Volume 15 Issue 3, 2024, p. 9 – 22
A director owes duties to the company of which he or she is director. These include, in the main, a fiduciary duty and a duty to exercise reasonable care, skill and diligence. This is the position at common law, as well as under the Companies Act. Sections 77 and 162 of the Companies Act contain the two principal remedies for breach of these duties. Section 77 provides for the director concerned to be liable for loss sustained by the company as a consequence of the breach. Section 162 provides for the director to be declared delinquent or under probation. Both sections have time-barring provisions. In terms of the existing section 77(7), proceedings by the company concerned to recover loss from the director may not be commenced more than three years after the act or omission that gave rise to the liability — i e irrespective of when the company did, or could have, acquired knowledge of the act or omission in question. In terms of the existing section 162(2)(a), stakeholders in a particular company wishing to bring delinquency proceedings against an individual who was, but no longer is, a director of the company, are required to do so within 24 months of the date on which the individual ceased to be a director — i e, even if the stakeholder concerned did not have knowledge of the delinquent conduct, and could not reasonably have acquired it, within the stipulated 24-month period. These time-barring provisions have the potential to operate harshly — and so it has been contended, unconstitutionally. In light thereof, and following recommendations by the Zondo Commission, the time-periods have been revisited, and substantially ameliorated, in the recently enacted Companies Second Amendment Act. As part of these amendments, a discretion is now conferred on the court, in the context of both remedies, to extend the relevant time-period on good cause shown. The article analyses the existing time-barring regime (i e, that are currently in place and which will remain in place until the Companies Second Amendment Act comes into operation); identifies the deficiencies in that regime and the likely rationale for amendment thereof; and explores the pros and cons of the more flexible time-barring regime introduced by the Companies Second Amendment Act.
ISSN: 2219-1585
Affiliations: Independent Consultant
Source: Business Tax & Company Law Quarterly, Volume 15 Issue 3, 2024, p. 23 – 30
In the previous edition of this journal, the writer dealt with the substantive issue that was required to be addressed by the Constitutional Court in Capitec Bank Ltd v Commissioner for the South African Revenue Service, namely whether Capitec Bank Ltd was entitled to claim a deduction under section 16(3)(c) of the Value-Added Tax Act, 1991, in respect of amounts credited to borrowers accounts under a loan cover arrangement on the happening of specified events, namely the death or retrenchment of the borrower. Capitec had essentially undertaken to apply the claim proceeds derived by it under a credit life policy entered into with an insurer against the indebtedness of the borrower on his or her death or retrenchment. No consideration was payable for the loan cover by Capitec. This Part of the article address the remaining issues dealt with in this seminal case, namely apportionment, capitalisation and supplies for no consideration. It is, with respect, submitted that the court addressed these related issues succinctly and appropriately. As regards apportionment, the court held that while section 16(3)(c) did not deal specifically with apportionment, it would in essence be fair and reasonable to do so given that the loan cover related to the bank’s taxable and exempt activities. As noted by the writer, the court’s dicta is apposite as regards supplies that fall to be dealt with under section 8(15). Section 8(15) provides that where a single supply of goods or services would, if separate considerations had been payable, been standard rated and zero rated, each part of the single supply is deemed to be a separate supply. However, there are no rules as to how the consideration related to each notional separate supply is to be determined. Rogers J in Capitec Bank provides a practical answer — apportionment under general principals. As regards capitalisation, Rogers J held that the components of the borrowers’ accounts retain their character of interest (exempt) and fees (taxable) and fell to be dealt as such for VAT purposes. While the writer acknowledges the correctness of the analysis and conclusion arrived at by the court, he notes that this approach gives rise to issues where a trust makes distributions to a beneficiary after many years out of capitalised trust capital and is required to apply Binding General Ruiling No 16 (‘BGR 16’) in relation to that distribution. BGR 16 provides for a mandatory apportionment methodology, the so-called turnover-based method. The writer suggest this is something that needs to be considered by SARS. The final issue relates to supplies made for no consideration. The court confirmed that a supply for no consideration does not per se mean that the underlying supply is not an ‘enterprise’ (taxable) supply in every circumstance. Rather, it must be considered to what extent the free supply is a part of the enterprise (taxable) activities carried on by the vendor. Where for example, a vendor gives a free giveaway to encourage the purchase of the vendor’s wares, the supply of the giveaways for no consideration is still in the course or furtherance of the vendor’s enterprise, albeit for nil consideration (section 10(23)). In the context of the Capitec Bank case, the court had accepted that the supply of the loan cover related to both taxable and non-taxable supplies.