Pastel Tax Guide - Louis Marais and Partners tax guide 2011.pdf · Title: Pastel Tax Guide Created...

TAX G UIDE

2011/2012

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This booklet is published by FHPKF Publishers (Pty) Ltd for and on behalf of

• Allinformationcontainedhereinisbelievedtobecorrectatthetimeofpublication,23February2011. Thecontentsshouldnotbeusedasabasisforactionwithoutfurtherprofessionaladvice.• Whileeverycarehasbeentakeninthecompilationofthispublicationnoresponsibilityshallbe acceptedforanyinaccuracies,errorsoromissions.• Theinformationispreparedfromthebudgetspeechandthelegislationfinallyenactedmaydiffer considerably.• Changesinratesoftaxannouncedinthebudgetspeechforthetaxyear2012becomeeffectiveonly oncethelegislationisenactedbyParliament.• Copyrightsubsistsinthiswork.Nopartofthisworkmaybereproducedinanyformorbyanymeans withoutthepublisher’swrittenpermission.

INDEX

AdministrativePenalties 14Bond/InstalmentRepayments 32Broad-BasedEmployeeEquity 13BudgetProposals 2BursariesandScholarships 13CapitalGainsTax 22CapitalIncentiveAllowances 19ConnectedPersons 35Deductions-Donations 15Deductions-Employees 9Deductions-Individuals 10DeemedCapital-DisposalofShares 35DeemedEmployees 7Directors-PAYE 30DividendsTax 3DonationsTax 36DoubleTaxationAgreements andWithholdingTaxes 29EnvironmentalExpenditure 39EstateDuty 36ExchangeControlRegulations 38ExecutorsRemuneration 36Exemptions-Individuals 9FarmingIncome 31FringeBenefits 16IndustrialPolicyProjects 35InterestRates-Changes 33LearnershipAllowance 30MarriedinCommunity ofProperty 39NationalCreditAct 34Non-Residents 28OfficialInterestRates andPenalties 32PassiveHoldingCompany 3Patent/IntellectualProperty 25Pre-paidExpenditure 25Pre-ProductionInterest 13Pre-TradingExpenditure 13

PrimeOverdraftRates 33ProvisionalTax 12PublicBenefitOrganisations 18RecreationalClubs 18RegionalHeadquarterCompany 13ReinvestmentRelief 25RelocationofanEmployee 18ResearchandDevelopment 25ResidenceBasedTaxation 26ResidentialBuildingAllowances 18RestraintofTrade 13RetentionofDocuments andRecords 40RetirementLumpSumBenefits 11Ring-FencedAssessedLosses 11RoyaltiestoNon-Residents 30SecuritiesTransferTax 35SkillsDevelopmentLevy 5SmallBusinessCorporations 8StampDuty 35StrategicAllowances 22TaxImpact-Companies 4TaxRates-Companies 4TaxRates-Individuals 5TaxRates-Trusts 6TaxRebates 5TaxThresholds 5TransferDuty 34TravelAllowances 14Trusts-Losses 6TurnoverTax-MicroBusiness 6Value-AddedTax 37Value-ExtractionTax 3VentureCapitalInvestments 30VoluntaryDisclosureProgramme 2WearandTearAllowances 20WithdrawalLumpSumBenefits 11WithholdingTaxonInterest 28

chartered accountants& business advisers

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1 Retirement Funding From1March2012,anemployer’scontributiontoretirementfunding willbetreatedasafringebenefit.Employeeswillbeallowedtodeduct upto22,5%oftaxableincomeforcontributionstopension,provident andretirementannuityfunds,subjecttoaminimumofR12000anda maximumofR200000peryear.

2 Medical Deductions From1March2012,monthlycontributionstomedicalschemesand qualifyingmedicalexpenseswillbeconvertedintotaxcreditsandnot treatedasdeductions.

3 Foreign Currency Capital Gain Duetothecostofcomplianceandcomplexity,itisproposedthatthe capitalgainchargeforforeigncurrencyberemovedforindividuals.

4 Learnership Allowances ThecurrentlearnershiptaxincentivewillexpireinSeptember2011. Ithasbeenproposedtoextendthisforafurtherfiveyears,subjectto ananalysisofitseffectivenessbyallstakeholders.

5 Youth Employment Subsidy Ayouthemploymentsubsidyintheformofataxcredittobe administeredthroughthePAYEsystemhasbeenproposed.

6 Micro Businesses From1March2012,microbusinessesregisteredforVATwillno longerbepreventedfromregisteringforturnovertax.

7 Gambling From1April2012,allgamblingwinnings,includingtheNationalLottery, overR25000willbesubjecttoafinalwithholdingtaxof15%.8 Tax Administration Bill ThisBillwillbeintroducedintheNationalAssemblyduring2011.

BUDGET PROPOSALS

Taxpayersareencouragedtomakedisclosureandregulariseboththeirtaxandexchangecontroldefaultsbefore31October2011.Adefaultwascommittedifthetaxpayerfailedtosubmitinformationor returnsorhassubmittedinaccurateinformationtoSARSand/orSARBbefore17February2010and28February2010respectively.ShouldanyuncertaintyexistastowhethertheapplicantqualifiesunderthetaxVDP, ananonymousapplicationmaybelodgedwithSARS.ThedefaultmaynotresultinarefundSARS.FurthermoreSARSmustnothavebeenawareofthisdefault.Ifthetaxpayeriscurrentlybeinginvestigated,limitedrelIefmaystillbeavailable.TheVDPcanbewithdrawnshoulditbeascertainedthat thedisclosurewasnotcompleteinallmaterialrespects.Thecapitalamountoftaxisstillpayable.Interest(limitedto50%ifthe applicantisunderinvestigation),penalties(apartfromadministrative penalties)andadditionaltaxwillbewaivedandnocriminalprosecution willbeinstitutedagainstthetaxpayer.Forexchangecontrolpurposestheapplicantmaybeliabletopaya10%levyifpaidfromforeignfundsanda12%levyifpaidfromlocalfunds.

VOLUNTARY DISCLOSUREPROGRAMME

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DIVIDENDS TAX

Dividendstax,applicabletoSouthAfricanresidentcompanies,willcomeinto operationon1April2012. Dividendstaxwillbebornebytheshareholderatarateof10%(subjecttoanyreductionintermsofdoubletaxationagreements).

Exemptions from Dividends TaxThefollowingshareholdersareexemptfromdividendstax:SouthAfrican residentcompanies,theGovernment,PBO’s,certainexemptbodies, rehabilitationtrusts,pension,providentandsimilarfunds,shareholdersinaregisteredmicrobusiness,providedthedividenddoesnotexceedR200000inayearofassessment,anaturalpersonuponreceiptofaninterestina qualifyingresidencebefore31December2012andanon-residentreceivingadividendfromanon-residentcompanywhichislistedontheJSE,i.e.adual-listedcompany.

Withholding Tax ObligationsDividendstaxinitiallyrequiresthecompanydeclaringthedividendtowithholddividendstaxonpayment.Liabilityforwithholdingtaxshiftsifthedividendispaidtoaregulatedintermediarywhichincludescentralsecuritiesdeposi-toryparticipants,brokers,collectiveinvestmentschemes,approvedtransfersecretariesandlistedinvestmentserviceproviders.Dividendstaxcanbeeliminatedorreduceduponthetimelyreceiptofawrittendeclarationthattheshareholderisentitledtoanexemptionortotaxtreatyreliefrespectively.

Use of Unutilised STC CreditsUnutilisedSTCcreditsmustbeutilisedwithinfiveyearsofthechangeover tothedividendstaxsystem.STCcreditswillbeexhaustedfirst.

Revised Dividend DefinitionAsfrom1January2011,thedefinitionofadividendhasbeensimplified andincludesalldistributionstoashareholderotherthanareductionofcontributedtaxcapital(whichconsistsofuntaintedsharepremiumandsharecapitalofacompany),capitilisationissues,asharebuy-backofaJSElistedcompany,oraredemptionofaparticipatoryinterestinaforeigncollectiveinvestmentscheme.Inorderforadistributionofcontributedtaxcapitalnottoberegardedasadividendthedirectorsmust,immediatelypriortothedistribution,recordinwritingthatcontributedtaxcapitalisbeingdistributed.

Introduction of Value-Extraction Tax (VET)Thisisananti-avoidancemeasuresimilartothedeemeddividendprovisionswhichwillbeintroducedwhendividendstaxiseffective.Itisaseparatetaxleviedonthecompanyandnottheshareholder.VETarisesonlyinrespectofSouthAfricanresidentcompaniesseekingtoextractvaluewithoutdeclaringdividendsandiscalculatedat10%ofthevalueextracted.Itisapplicablewhereacompanyprovideslowinterestloansoradvancestoapersonwhoisconnectedtothecompany,releasesorrelievesloanspreviouslymadetosuchconnectedperson,settlesaloanowedtoathirdpartybysuchconnectedpersonorceasestobeaSouthAfricanresident.

Passive Holding CompanyTopreventtheuseofprivateinvestmentcompaniesavoidingthepaymentofdividendstax,passiveholdingcompanies,whichearnmorethan80%oftheirgrossincomeintheformofinterest,dividendsandotherpassiveincomederivedfromfinancialinstrumentsandinwhichmorethan50%oftheparticipationrightsareheldbyfiveorlessresidentnaturalpersons,willbetaxedat10%ontheirdividendincomeandatarateof40%ontheirothertaxableincome,butwillnotberequiredtosubjectdividendstheydeclaretothedividendstax.

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RR R R

Taxableincome 100,00100,00 100,00 100,00Less:Normaltax 28,0028,00 28,00 28,00

72,0072,00 72,00 72,00Less:STC 6,556,55 6,55 6,55

Availablefordistribution 65,4565,45 65,45 65,45

Totaltaxpaid 34,5534,55 34,55 34,55

Effectiverateoftax 34,55%34,55% 34,55% 34,55%

Assumesallprofitsaredeclaredasdividends

Foryearsofassessmentendingduringthefollowingperiods:

1April1993-31March1994 40%

1April1994-31March1999 35%

1April1999-31March2005 30%

1April2005-31March2008 29%

1April2008-31March2012 28%

TAX RATES COMPANIES

TAX IMPACT COMPANIES

Note:CompaniesqualifyingundertheTaxHolidaylegislation(Section37H) weresubjecttotaxat0%.TheTaxHolidayendedon30September1999.

Branch Profits TaxForyearsofassessmentendingduringthefollowingperiods:

1April1996-31March1999 40%

1April1999-31March2005 35%

1April2005-31March2008 34%

1April2008-31March2012 33%

Note:Asfromyearsofassessmentendingonorafter31March2008theseratesapplytotheprofitsofanon-residentcompany.

STCDividenddeclaredonorafter 17March1993 15%

Dividenddeclaredonorafter 22June1994 25%

Dividenddeclaredonorafter 14March1996 12,5%

Dividenddeclaredonorafter 1October2007 10%

2009 2010 2011 2012

Tax year

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TAX RATES INDIVIDUALS-2011

Taxable income Rates of taxR0-R140000 18%ofeachR1R140001-R221000 R25200+25%oftheamountover R140000R221001-R305000 R45450+30%oftheamountover R221000R305001-R431000 R70650+35%oftheamountover R305000R431001-R552000 R114750+38%oftheamountover R431000R552001+ R160730+40%oftheamountover R552000

Taxable income Rates of taxR0-R150000 18%ofeachR1R150001-R235000 R27000+25%oftheamountover R150000R235001-R325000 R48250+30%oftheamountover R235000R325001-R455000 R75250+35%oftheamountover R325000R455001-R580000 R120750+38%oftheamountover R455000R580001+ R168250+40%oftheamountover R580000

TAX RATES INDIVIDUALS-2012

TAX THRESHOLDS

Amounts deductible from the tax payable 2011 2012Personsunder65 R10260 R10755Persons65andunder75 R15935 R16767Persons75andover R15935 R18767

Theserebatesarenotavailabletoeithernormalorspecialtrusts,andcompanies.

TAX REBATES

TheSkillsDevelopmentActseekstorestructuretheexistingtrainingsystemandupgradethelevelofskillsandaccesstoskillsbyworkers.Directorsremuneration,onthesamebasisasforPAYE,willbesubjecttotheSkillsDevelopmentLevy.TheSkillsDevelopmentLevyispayablebyemployersatarateof1%ofremunerationasfrom1April2001(previously0,5%).EmployerspayingannualremunerationoflessthanR500000areexemptfromthislevyasfrom1August2005.

SKILLS DEVELOPMENTLEVY

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Taxable income 2011 2012Personsunder65 R57000 R59750Persons65andunder75 R88528 R93150Persons75andover R88528 R104261

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TAX RATES TRUSTS-2011AND2012

Alossincurredbyatrustcannotbedistributedtobeneficiaries.Thelossisretainedinthetrustandcarriedforwardtothenextyearasanassessedloss.

Taxable income Rate of taxAlltaxableincome 40%ofeachR1

Specialtrustsaretaxedattheratesapplicabletoindividuals.Aspecial trustisonecreatedsolelyforthebenefitofapersonaffectedbyamentalillnessorseriousphysicaldisabilitywhichpreventsthatpersonfromearningsufficientincometomaintainhimself,oratestamentarytrustestablishedsolelyforthebenefitofminorchildrenwhoarerelativesofthedeceased.Wherethepersonforwhosebenefitthetrustwasestablished diespriortooronthelastdayoftheyearofassessmentortheyoungestbeneficiary,inthecaseofatestamentarytrust,turns21yearsofageprior tooronthelastdayoftheyearofassessment,thetrustwillnolongerberegardedasaspecialtrust.

TRUSTS LOSSES

TURNOVER TAX MICROBUSINESSESAsfrom1March2009asimplifiedturnover-basedtaxsystemwas implementedforsmallsoleproprietors,partnershipsandincorporated businesseswithaturnoverlessthanR1millionperyear.Thisturnover-basedpresumptivetaxsystemiselective.Afterjoiningthesystem,qualifyingbusinessesaretoremaininthesystemforaminimumofthreeyears(providedtheyremainwithinthemonetarythreshold).Onceabusinesshaselectedtomigrateoutofthesystem,itwillnotbeabletomigratebackforaperiodofthreeyears.Personalservicesrenderedunderemployment-likeconditionsandcertainprofessionalservicesareexcluded fromthistaxsystem.

Turnover R0-R100000 Nil

R100001-R3000001%oftheamountoverR100000

R300001-R500000 R2000+3%oftheamountoverR300000



Rates of tax 2011

Turnover R0-R150000 Nil

R150001-R3000001%oftheamountoverR150000




Rates of tax 2012

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Foryearsofassessmentcommencingonorafter1March2009:• A labour brokerisanaturalpersonwho,forreward,providesaclient withotherpersonstorenderaservicefortheclientorprocures otherpersonsfortheclientandremuneratessuchpersons.• A personal service providerisacompany(includingaclose corporation)ortrustwhereanyservicerenderedonbehalfofthe entitytoitsclientisrenderedpersonallybyanypersonwhoisa connectedpersoninrelationtosuchentity,andoneofthefollowing provisionsapply: - thepersonwouldhavebeenregardedasanemployeeofthe client,iftheservicewasnotrenderedthroughanentity;or - thepersonorentityrenderingtheservicemustperformsuch servicemainlyatthepremisesoftheclientandsuchpersonor entityissubjecttothecontrolorsupervisionofsuchclientasto themannerinwhichthedutiesareperformed;or

- morethan80%oftheincomederivedfromservicesrenderedis receivedfromoneclientorassociatedpersoninrelationtothe client.• Theentitywill,however,notberegardedasapersonal service provider wheresuchentityemploysthreeormorefull-time employeesthroughouttheyearofassessment,noneofwhomare connectedpersonsinrelationtosuchentity.

Implications• Alabourbrokernotinpossessionofanexemptioncertificatewill besubjecttoPAYEonincomereceivedattheratesapplicableto individualtaxpayers.Deductionsofexpenditurewillbelimitedto remunerationpaidtoemployees.• ApersonalserviceproviderwillbesubjecttoPAYEattherateof 33%(2008:34%)inthecaseofacompanyand40%inthecase ofatrust.• NoPAYEwillberequiredtobedeductedwheretheentityprovides anaffidavitconfirmingthatitdoesnotreceivemorethan80%ofits incomefromonesource.• ThedeemedemployeemayapplytoSARSforataxdirectivefora lowerrateoftax.• Deductionsavailabletopersonalserviceproviderswillbelimitedto remunerationtoemployees,contributionstopension,providentand benefitfunds,legalexpenses,baddebts,expensesinrespectof premises,financecharges,insurance,repairs,fuelandmaintenance inrespectofassetsusedwhollyandexclusivelyfortradeandany amountpreviouslyincludedintaxableincomeandsubsequently refundedbytherecipient.

Labour brokers andpersonalserviceprovidersareregardedasdeemedemployees.

TAXATION DEEMEDEMPLOYEES

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Yearsofassessmentendingbetween1April2011and31March2012

Yearsofassessmentendingbetween1April2010and31March2011

Applies if:• Allshareholdersormembersthroughouttheyearofassessmentare naturalpersonswhoholdnosharesinanyotherprivatecompaniesor members’interestinanyotherclosecorporationsorco-operativesother thanthosewhich: - areinactiveandhaveassetsoflessthanR5000;or - havetakenstepstoliquidate,winduporderegister(effectivefor yearsofassessmentcommencingonorafter1January2011).

• GrossincomefortheyearofassessmentdoesnotexceedR14million (2006:R6million)

• Notmorethan20%ofthegrossincomeandallthecapitalgains consistcollectivelyof investment incomeandincomefromrendering a personal service. Investment income includesanyannuity,interest,rentalincome,royalty oranyincomeofasimilarnature,aswellasdividendsandanyproceeds derivedfrominvestmentortradinginfinancialinstruments(including futures,optionsandotherderivatives),marketablesecuritiesor immovableproperty. Personal serviceincludesanyserviceinthefieldofaccounting, actuarialscience,architecture,auctioneering,auditing,broadcasting, consulting,draughtsmanship,education,engineering,financialservice broking,health,informationtechnology,journalism,law,management, realestatebroking,research,sport,surveying,translation,valuationor veterinaryscience,whichisperformedpersonallybyanypersonwho holdsaninterestinthecompanyorclosecorporation,exceptwhere suchsmallbusinesscorporationemploysthreeormoreunconnected full-timeemployeesforcoreoperations.

• Thecompany,co-operativeorclosecorporationisnotanemployment entity.

Taxable income Rates of tax R0-R57000 NilR57001-R300000 10%oftheamountoverR57000R300001+ R24300+28%oftheamountoverR300000

Taxable income Rates of taxR0-R59750 NilR59751-R300000 10%oftheamountoverR59750R300001+ R24025+28%oftheamountoverR300000

TAXATION SMALLBUSINESSCORPORATIONS

Investment incentiveThefullcostofanyassetusedinaprocessofmanufactureandbroughtintouseforthefirsttimeonorafter1April2001,maybedeductedinthetaxyearinwhichtheassetisbroughtintouse.Asfrom1April2005,allotherdepreciableassetsarewrittenoffona50:30:20basis.

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Salariedemployeesorholdersofofficearerestrictedtodeductingthefollowingexpenditurefromtheirremuneration:• Baddebtsallowance• Deductionsinrespectofcontributionstoapensionfundorretirement annuity fund• DonationstocertainPublicBenefitOrganisations• Doubtfuldebtsallowance• Homeofficeexpenses,subjecttorequirements• Legalexpenses• Medicalexpensesandmedicalaidcontributions• Premiumspaidintermsofanallowableinsurancepolicy - totheextentthatthepolicycoversthepersonagainstlossof incomeasaresultofillness,injury,disabilityorunemployment,and - inrespectofwhichallamountspayableintermsofthepolicy constitutesincomeasdefined• Refundedawardsforservicesrenderedandrefundedrestraintoftrade awardsasfrom1March2008• Wearandtearallowance.

• DividendsreceivedoraccruedfromSouthAfricancompaniesare generallynotsubjecttotax.• Allinterestreceivedbyoraccruedtonon-residentsisexemptfromtax providedtheindividualisphysicallyabsentfromSouthAfricaforatleast 183daysordidnotcarryonbusinessinSouthAfricathrougha permanentestablishmentduringtheyearofassessment.• Interestreceivedbyresidentnaturalpersons: Personsunder65years R22800 (2011:R22300) Personsaged65yearsandover R33000 (2011:R32000) Interestincludesdistributionsfrompropertyunittrustsandforeign interestanddividends.Theforeigninterestanddividendexemptionis limitedtoR3700(2010:R3500).• Unemploymentinsurancebenefits.

Termination Lump Sum from EmployerAsfrom1March2011employerprovidedseverancepaymentsforreasons ofage,illhealthandretrenchmentarealignedwiththetaxationoflump sumbenefits,includingtheR315000(2011:R300000)exemption.Thisexemptiondoesnotapplytodirectorsofcompaniesormembersofclosecorporationsiftheyatanytimeheldaninterestofmorethan5%inthatentity.Priorto1March2011aonceoffexemptionofR30000appliedwhereanemployeehadreachedtheageof55yearsortheterminationofservices wasduetoillhealthortheemployeewasretrenchedbecausetheemployerhadceasedtooperateorbecauseofareductioninpersonnel.CompensationAsfrom1March2007,compensationawardspaidbyanemployeronthedeathofanemployeeinthecourseofemploymentwillbeexempttotheextentofR300000lessanypreviousretrenchmentexemptionenjoyedby thatemployee.

DEDUCTIONS EMPLOYEES

EXEMPTIONS INDIVIDUALS

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Current Pension Fund Contributions7,5%ofremunerationfromretirement-fundingemploymentorR1750,whicheveristhegreater.Retirement-fundingemploymentreferstoincomewhichistakenintoaccounttodeterminecontributionstoapensionor providentfund.Excesscontributionsarenotcarriedforwardtothenextyearofassessmentbutareaccumulatedforthepurposeofdeterminingthetax-freeportionofthelumpsumuponretirement.

Arrear Pension Fund ContributionsUptoamaximumofR1800peryear.Anyexcessmaybecarriedforward.

Current Retirement Annuity Fund Contributions15%oftaxableincomefromnon-retirement-fundingemployment,orR3500lesscurrentcontributionstoapensionfund,orR1750,whicheveristhegreater.Anyexcessmaybecarriedforward.

Reinstated Retirement Annuity Fund ContributionsUptoamaximumofR1800peryear.Anyexcessmaybecarriedforward.

Medical Expenses and Medical Aid Deductions• 65 years and older:Mayclaimallqualifyingexpenditureincurredand medicalaidcontributionspaidbythetaxpayeroremployer.• Younger than 65 years:Mayclaimmedicalaidcontributions,paidby thetaxpayeroremployer,uptothecappedamountandqualifying expendituretotheextentthatitexceeds7,5%oftaxableincomebefore thisdeduction.• Younger than 65 years (but with an immediate family member who has a disability):Ifthetaxpayer,spouseorchild(includinganadopted childorstepchild)hasadisability,thedeductionincludesallqualifying expenditureandmedicalaidcontributionspaidbythetaxpayeror employer.• ThecappedamountiscalculatedatR720(2011:R670)foreachofthe firsttwobeneficiariesandR440(2011:R410)foreachadditional beneficiaryasdefinedbythemedicalaidfund.• Qualifyingexpenditureincludes: - owncontributionstomedicalaidfundsinexcessofcappedamount - medicalaidfringebenefitdeterminedbytheemployerinexcessof cappedamount - paymentstomedicalpractitioners,nursinghomesandhospitals - paymentstopharmacistsforprescribedmedicines - paymentsforphysicaldisabilities,includingremedialteachingand expenditureincurredformentallyhandicappedpersons - paymentsforthebenefitofanydependents.• Disabilitymeansamoderatetoseverelimitationofaperson’sabilityto functionorperformdailyactivitiesasaresultofphysical,sensory, communication,intellectualormentalimpairment,ifthelimitationlasts morethanayearandisdiagnosedbyaregisteredmedicalpractitioner.• Recoveriesofexpenses(includingamountsreceivedfrommedicalaid savingsaccount)reducetheclaim.• Expenditurepaidbyataxpayeronbehalfofaspouseorchildrenmust beclaimedbythespousewhopaidtheexpense.

DEDUCTIONS INDIVIDUALS

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Asfrom1March2004,lossesfromsecondarytradeswillbering-fenced andwillnotbeavailableforset-offagainstincomefromanyothertrade.Itwillonlyapplytoanindividualwhosetaxableincome,beforesettingoffanyassessedlossorbalanceofassessedloss,isequaltoorexceedsthelevelatwhichthemaximumrateoftaxisapplicable.Fortherestrictionstoapplythepersonmusthaveincurredanassessedlossfromthesecondarytradeinatleastthreeyearsofassessmentduringanyfiveyearperiod,orhavecarriedonanyofthefollowing‘suspect’trades:• Anysportingactivities• Anydealingincollectables• Therentalofaccommodation,vehicles,aircraftorboats(unlessatleast 80%oftheassetisusedbypersonswhoarenotrelativesofsuch personforatleasthalfoftheyearofassessment)• Animalshowing• Farmingoranimalbreeding(otherwisethanonafull-timebasis)• Performingorcreativearts• Gamblingorbetting.Thetaxpayerwillbeabletocircumventtheseprovisionsifhecanprove thatthereisareasonableprospectofderivingtaxableincomewithina reasonableperiodandwherehecomplieswithothertests,unlesslosseshavebeenincurredinatleastsixoutoftenyears.

ASSESSEDLOSSESRING-FENCED

RETIREMENT LUMPSUMBENEFITS

Asfrom1October2007,thetaxable portionofalumpsumfromapension,providentorretirementannuityfundonretirementordeathisthelumpsumlessanycontributionsthathavenotbeenallowedasataxdeductionplus the taxable portion of all lump sums previously received.Thisamountissubjecttotaxatthefollowingratesless any tax previously paid:

Taxable portion of lump sum

R0-R315000 0%R315001-R630000 18%oftheamountoverR315000R630001-R945000R56700+27%oftheamountoverR630000R945001+ R141750+36%oftheamountoverR945000

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Thetaxablelumpsumcannotbeset-offagainstanyassessedlossofthetaxpayer.

WITHDRAWAL LUMPSUMBENEFITSAsfrom1March2009,thetaxable portionofapre-retirementlumpsumfromapensionorprovidentfundisthewithdrawallessanytransfertoanewfund plus all withdrawal lump sums previously received.Thisamountissubjecttotaxatthefollowingratesless any tax previously paid:

Taxable portion of withdrawal R0-R22500 0%R22501-R600000 18%oftheamountoverR22500R600001-R900000R103950+27%oftheamountoverR600000R900001+ R184950+36%oftheamountoverR900000

Rates of tax

Rates of tax

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PROVISIONAL TAX

Allprovisionaltaxpayersarerequiredtoremittwoprovisionaltaxpaymentsayear.Athirdvoluntarypaymentmaybemadetoavoidinterestbeingcharged.First Year of AssessmentWhereataxpayerhasnotbeenassessedpreviously,areasonableestimateofthetaxableincomemustbemade.Thebasicamountcannotbeestimatedatnil,aswaspreviouspractice,unlessfullymotivated.First PaymentOnehalfofthetotaltaxinrespectoftheestimatedtaxableincomeforthe yearispayablesixmonthsbeforethefinancialyearend.Theestimateof taxableincomemaynotbelessthanthebasicamountwithouttheconsent ofSARS.Second PaymentAtwo-tiersystemappliesdependingonthetaxpayer’staxableincome: • Actual taxable income equal to or less than R1 million Toavoidanyadditionaltaxontheunderestimationoftaxableincome thiscanbebasedonthebasicamountasdefined,orifalowerestimate isused,theestimatemustbewithin90%ofthetaxableincomefinally assessed.• Actual taxable income exceeds R1 million Toavoidanyadditionaltaxontheunderestimationtheestimatemustbe within80%ofthetaxableincomefinallyassessed.Iftheaboverequirementsarenotmet,additionaltaxof20%oftheprovisionaltaxunderpaidmaybeimposed.Third PaymentThirdprovisionalpaymentsareonlyapplicabletoindividualsandtrustswithtaxableincomeinexcessofR50000andcompaniesandclosecorporationswithtaxableincomeinexcessofR20000.Suchpaymentsshouldbemadebefore30SeptemberinthecaseofataxpayerwithaFebruaryyearendandwithinsixmonthsofotheryearendstoavoidinterestbeingcharged.Basic AmountThebasicamountisthetaxableincomeofthelatestprecedingyearof assessmentincreasedby8%p.a.ifthatassessmentismorethanayearold.Permissable Reductions in the Basic AmountCapitalgainsandtaxableportionsoflumpsumsarenotincludedin thebasicamountforthefirstperiodorthesecondperiod,wherethetaxableincomeisnotexpectedtoexceedR1million.Ifhoweveranestimatelowerthanthebasicamountisused,suchamountsmustbeincludedinthe estimate.TheseamountshavetobeincludedinthesecondprovisionaltaxpaymentswherethetaxableincomeisexpectedtoexceedR1million.EstimatesSARShastherighttoincreaseanyprovisionaltaxestimate,evenifbasedonthebasicamount,toanamountconsideredreasonable.Persons over 65Personsover65years,excludingdirectorsofcompaniesandmembersofclosecorporations,whosetaxableincomedoesnotexceedR120000(2009:R80000)areexemptfromprovisionaltax,providedthatsuchincomeconsistsexclusivelyofremuneration,rental,interestordividends.Persons under 65Personsunder65yearswhodonotcarryonbusiness,andwhosetaxable incomedoesnotexceedthetaxthresholdorwhoseinterest,foreign dividendsandrentalincomedoesnotexceedR20000(2008:R10000)areexemptfromprovisionaltax.

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Thedeductionofexpenditureandlossesincurredinconnectionwith,butpriortothecommencementof,tradeisallowedprovidedtheexpenditureandlossesincludingsection24Jinterestcouldhavebeendeductiblehad thetradecommenced.Suchexpenditureandlossesarering-fencedinthattheycanonlybesetoffagainstincomefromthattrade.Thebalanceiscarriedforwardandcanbeclaimedinasubsequentyearofassessment.

EmployercompaniesmayissuequalifyingsharesuptoacumulativelimitofR50000(2008:R9000)peremployeeinrespectofthecurrenttaxyearandtheimmediatelyprecedingfour(2008:two)taxyears.AtaxdeductionlimitedtoamaximumofR10000(2008:R3000)peryearperemployeewillbeallowedintheemployer’shands.Providedtheemployeeholdsontothesharesforatleastfiveyearstherewillbenotaxconsequencesfortheemployee,otherthanCGT.

PRE–TRADING EXPENDITURE

BROAD BASED EMPLOYEEEQUITY

RESTRAINT OFTRADE

Gross IncomeAnyamountreceivedbyoraccruedtoanynaturalperson,labourbrokerorpersonalserviceproviderforarestraintoftradeimposedonsuchperson, shouldbeincludedintherecipient’sgrossincomeintheyearofreceiptor accrual.DeductionWhereanamountwasincurredinrespectofarestraintoftradeimposedonanyperson,thededuction,inayearofassessment,islimitedtothelesserof:• theamountapportionedovertheperiodforwhichtherestraintapplies;or• one-thirdoftheamountincurredperyearNodeductionisallowedwheretheamountdidnotconstituteincomeinthehandsoftherecipient.

Interestandrelatedfinancechargesincurredonanyborrowingforthe acquisition,installation,erectionorconstructionofanymachinery,plant,buildingorimprovementstoabuildingorotherassets,includingland,aredeductiblewhentheassetisbroughtintouseintheproductionofincome.

PRE–PRODUCTION INTEREST

BURSARIES ANDSCHOLARSHIPS

Bona fidescholarshipsorbursariesgrantedtoenableanypersontostudy atarecognisededucationalinstitutionareexemptfromtax.Wherethebenefitisgrantedtoanemployee,theexemptionwillnotapplyunlesstheemployeeagreestoreimbursetheemployerintheeventthatthestudiesarenotcompleted.Wherethebeneficiaryisarelativeoftheemployee,theexemptionwillonlyapplyiftheannualremunerationoftheemployeeislessthanR100000(2007:R60000)andtotheextentthatthebursarydoesnotexceedR10000(2007:R3000).

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TRAVEL ALLOWANCES

Reimbursive Travel ExpensesWhereanemployeereceivesareimbursementbasedontheactualbusinesskilometrestravelled,noothercompensationispaidtothe employeeandthecostiscalculatedinaccordancewiththeprescribedrateof305cents(2009:292cents)perkilometre,noemployeestaxneedbededucted,providedthebusinesstraveldoesnotexceed8000kilometresperyear.Thereimbursementmustbedisclosedundercode3703ontheIRP5certificate.NoPAYEiswithheldandtheamountisnotsubjecttotaxationonassessment.Ifthebusinesskilometrestravelledexceed8000kilometresperyear,orifthereimbursiverateperkilometreexceedstheprescribedrate,orifothercompensationispaidtotheemployeetheallowancemustbedisclosedseparatelyundercode3702ontheIRP5certificate.NoPAYEiswithheldbuttheamountissubjecttotaxationonassessment.

Fixed Travel AllowancesAsfrom1March2010,80%(2007:60%)ofthefixedtravelallowanceissubjecttoPAYE.Asfrom1March2011,wheretheemployerissatisfiedthatatleast80%oftheuseofthevehiclefortheyearofassessmentwillbeforbusinsspurposes,theinclusionratesmaybelimitedto20%.Thefullallowanceisdisclosedontheemployee’sIRP5certificate, irrespectiveofthequantumofbusinesstravel.

Failuretosubmitcertainreturnsorinformationwillgiverisetothe followingfixedratepenalties:

ADMINISTRATIVE PENALTIES

Thepenaltywillautomaticallybeimposedmonthlyuntilthetaxpayerremediesthenon-compliance.• Late payment of PAYE and provisional tax attracts a penalty of 10% of the amount due.• ThelatesubmissionofthePAYEreconciliationattractsapenalty of 10% of the PAYE deducted for the tax year.

Assessed loss or taxable income Penalty for preceding year

Assessedloss R 250R0–R250000 R 250R250001–R500000 R 500R500001–R1000000 R 1000R1000001–R5000000 R 2000R5000001–R10000000 R 4000R10000001–R50000000 R 8000AboveR50000000 R16000

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Accuraterecordsoftheopeningandclosingodometerreadingsmust bemaintainedinallcircumstances.Priorto1March2010,intheabsenceofaccuratetravelrecords,the first18000kilometrestravelledweredeemedprivatetravelandthemaximumbusinesskilometreswhichwereclaimablewaslimitedto 14000kilometres.Asfrom1March2010,theclaimmustbebasedontheactualdistancetravelledassupportedbyalogbookandthedeemedkilometres methodmaynolongerbeused.

DEDUCTIONS TRAVELEXPENSES

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DEEMEDEXPENDITURE-2011 Cost of vehicle DoesnotexceedR40000 14672 58,6 21,7ExceedsR40000butnotR80000 29106 58,6 21,7ExceedsR80000butnotR120000 39928 62,5 24,2ExceedsR120000butnotR160000 50749 68,6 28,0ExceedsR160000butnotR200000 63424 68,8 41,1ExceedsR200000butnotR240000 76041 81,5 46,4ExceedsR240000butnotR280000 86211 81,5 46,4ExceedsR280000butnotR320000 96260 85,7 49,4ExceedsR320000butnotR360000 106367 94,6 56,2ExceedsR360000butnotR400000 116012 110,3 75,2ExceedsR400000 116012 110,3 75,2

Fixed Fuel RepairsR cc

DEEMEDEXPENDITURE-2012 Cost of vehicle DoesnotexceedR60000 19492 64,6 26,4ExceedsR60001butnotR120000 38726 68,0 29,2ExceedsR120001butnotR180000 52594 71,3 31,9ExceedsR180001butnotR240000 66440 77,7 35,0ExceedsR240001butnotR300000 79185 87,0 44,7ExceedsR300001butnotR360000 91873 93,9 54,2ExceedsR360001butnotR420000 105809 100,9 65,8ExceedsR420001butnotR480000 119683 113,1 67,6ExceedingR480000 119683 113,1 67,6

Fixed Fuel RepairsR cc

DonationstocertaindesignatedPBO’swillqualifyforataxdeductionIndividuals-limitedto10%(2007:5%)oftaxableincomebeforethe deductionofdonationsandmedicalexpensesCompanies-limitedto10%(2007:5%)oftaxableincomebeforethe deductionofdonations.

DEDUCTIONS DONATIONS

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Thecashequivalentoftaxablebenefitsgrantedtoemployeesistaxable.Use of Company Owned Motor VehicleThedeterminedvalueforthefringebenefitisthecashcostincludingVATbutexcludingfinancechargesandinterest.Theemployeewillbetaxedon3.5%(2011:2.5%)permonthofthedeterminedvalueofthemotorvehiclelessanyconsiderationpaidbytheemployeetowardsthecostofthevehicle.Thefringebenefitisreducedto3.25%if,atthetimeacquired,itissubjecttoamaintenanceplanfornolessthanthreeyearsand/or60000kilometres.Whereanemployeeisgiventheuseofmorethanonemotorvehicleandcanshowthateachvehicleisusedprimarilyforbusinesspurposes,thevalue placedontheprivateuseofallthevehiclesisdeterminedaccordingtothe valueattributedtothevehiclecarryingthehighestvalueforprivateuse.ForPAYEpurposestheemployerisrequiredtoincludeintheemployee’smonthlyremuneration80%ofthefringebenefit.Theinclusionratemaybe limitedto20%iftheemployerissatisfiedthatatleast80%oftheuseofthemotorvehicleforayearofassessmentwillbeforbusinesspurposes.OnassessmenttheCommissionermust,providedheissatisfiedthataccuraterecordshavebeenkeptinrespectofdistancestravelledfor:• businesspurposes,reducethevalueofthefringebenefitbythesame proportionthatthebusinessmileagebearstothetotaldistancetravelled duringtheyearofassessment;• privatepurposesandthattheemployeehasbornethecostofthefollowing vehiclerunningexpenses,reducethevalueofthefringebenefit: - bythesameproportionthatthebusinessmileagebearstothetotal distancetravelledduringtheyearofassessment,inthecaseof licence,insuranceandmaintenancecosts; - byapplyingtheprescribedrateperkilometretothekilometrestravelled forprivatepurposesinthecaseoffuelcostpertainingtoprivateuse.Novalueisplacedontheprivateuseofacompanyownedvehicleif:• itisavailabletoandusedbyallemployees,privateuseisinfrequentand incidentaltothebusinessuseandthevehicleisnotnormallykeptator nearthatemployee’sresidencewhennotinuseoutsidebusinesshours,or• thenatureoftheemployee’sdutiesrequiresregularuseofthevehicle fortheperformanceofdutiesoutsidenormalhoursofworkandprivateuse isinfrequentorincidentaltobusinessuseorlimitedtotravelbetweenplace ofresidenceandplaceofwork.TheprovisionofacompanyownedvehicleconstitutesadeemedsupplywhichattractsoutputVATforthevendoremployer.Thedeemedconsiderationisasfollows:Motorvehicle/Doublecab 0,3%ofcostofvehicle(excl.VAT)permonthBakkies 0,6%ofcostofvehicle(excl.VAT)permonthMedical Aid ContributionsAsfrom1March2010,thefullcontributionbyanemployerisafringebenefit.Theamountbywhichanemployer’scontributiontoamedicalaidfundexceedsR720(2011:R670)foreachofthefirsttwobeneficiariesasdefinedbythemedicalaidfundandR440(2011:R410)foreachadditionalbeneficiaryissubjecttoPAYE.Iftheemployermakesalumpsumpaymentforallemployees,theeffectivebenefitisdeterminedinaccordancewithaformula,whichwillhavetheeffectofapportionmentamongstallemployeesconcerned.Subsistence AllowancesIfanemployeeisobligedtospendatleastonenightawayfromhisusual residenceinSouthAfricaonbusiness,theemployermaypayanallowanceforpersonalsubsistenceandincidentalcostswithoutsuchamountsbeing includedintheemployee’staxableincome,subjecttotheemployeetravellingforbusinessbynolaterthantheendofthefollowingmonth.

FRINGE BENEFITS

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Ifsuchallowanceispaidtoanemployeeandthatemployeedoesnottravelforbusinesspurposesbytheendofthefollowingmonth,theallowancebecomessubjecttoPAYEinthatmonth.Iftheallowancesdonotexceedtheamountsorperiodsdetailedbelow,thetotalallowancemustbereflectedundercode3714ontheIRP5certificate.Wheretheallowancesexceedtheamountsorperiodsdetailedbelow,thetotalallowancemustbereflectedundercode3704(local)or3715(foreign)ontheIRP5certificate.Thefollowingamountsaredeemedtohavebeenexpendedbyanemployeeinrespectofasubsistenceallowance:Local travel• R88(2011:R85)perdayorpartofadayforincidentalcosts;or• R286(2011:R276)perdayorpartofadayformealsandincidentalcosts.Whereanallowanceispaidtoanemployeetocoverthecostofaccommo- dation,mealsorotherincidentalcosts,theemployeehastoprovehowmuchwasspentwhileawayonbusiness.Thisclaimislimitedtotheallowance received.Overseas travelActualaccommodationcostsplusanallowancepercountryassetouton www.sars.gov.za(2009:$215)perdayformealsandincidentalcostsincurredoutsideSouthAfrica.Thedeemedexpenditurewillnotapplywherethe absenceisforacontinuousperiodinexcessofsixweeks.Low Interest/Interest-Free Loans• Asfrom1March2011theamounttaxedisthedifferencebetweeninterest payableontheloanbytheemployeeandtherepo-rate+1% (2010:officialinterestrate).• Short-termloans,whicharebelowR3000,arenottaxablebenefits• Aloantotheemployeetoenablehimtofurtherhisownstudiesisnota taxablebenefit.Holiday AccommodationTheemployeeistaxedontheprevailingmarketrateifthepropertyisownedbytheemployerorrentedfromanassociatedentity;ortheactualrentaliftheemployerrentedtheaccommodation.Long Service and Bravery AwardsThefirstR5000ofthevalueofanyassetawarded,excludingcash,isnotsubjecttotax.Use of Business Cellphones and ComputersAsfrom1March2008notaxablevaluewillbeplacedontheprivateuseby employeesofemployer-ownedcellphonesandcomputerswhichareusedmainlyforbusinesspurposes.Residential Accommodation Supplied by EmployerAsfrom1March1999,whereaccommodationisprovidedtoanemployeeandisnotownedbytheemployerorassociatedentity,thevalueofthefringe benefittobetaxedshallbethegreateroftheformulavalueortherentalandotherexpensespaidbytheemployer.Ifhousingisprovidedforabona fidebusinesspurposewhereitiscustomarytoprovidefreeorsubsidisedaccommodationtoemployeesanditisneces-saryfortheparticularemployertoprovidefreeaccommodationforproperperformanceoftheemployee’sdutiesorasaresultoffrequentmovementofemployeesorlackofexistingaccommodationtheformulamaybeused.Asfrom1March2008,norentalvaluewillbeplacedonthe:• supplyofaccommodationtoanemployeeawayfromhisusualplaceof residenceinSouthAfricafortheperformingofduties• supplyofaccommodationinSouthAfricatoanemployeeawayfromhis usualplaceofresidenceoutsideSouthAfricaforatwoyearperiod.This concessiondoesnotapplyiftheemployeewaspresentinSouthAfricafor morethan90daysinthetaxyearpriortothedateofarrivalforthepurpose ofhisduties.ThereisamonthlymonetarycapofR25000.

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Asset type Conditions for annual allowance Annual allowance

Residential Buildingprojectserectedonorafter1April1982 2%ofcostandan buildings andbefore21October2008consistingofatleastinitialallowanceof fiveunitsofmorethanoneroomintendedfor 10%ofcost letting,oroccupationbybonafidefull-time employees

Newandunusedbuildingsacquired,erectedor 5%ofcostor10% improvedonorafter21October2008ifsituated ofcostforlowcost anywhereinSouthAfricaandownedbythetax- residentialunitsnot payerforuseinhistradeeitherforlettingoras exceedingR200000 employeeaccommodation.Enhancedallowances forastandaloneunit areavailablewherethelowcostresidentialunit orR250000inthe issituatedinanurbandevelopmentzone caseofanapartment

Employee 50%ofthecostsincurredorfundsadvancedor R6000priorto housing donatedtofinancetheerectionofhousingfor 1March2008 employeesonorbefore21October2008 R15000between subjecttoamaximumperdwelling 1March2008and 20October2008

Employee Allowanceonamountsowingoninterestfree 10%ofamount housing loanaccountinrespectoflowcostresidential owingattheend loans unitssoldatcostbythetaxpayertoemployees ofeachyearof andsubjecttorepurchaseatcostonlyincaseof assessment repaymentdefaultorterminationofemployment

Thefollowingitemsofexpenditurebornebytheemployerforrelocation, appointmentorterminationareexemptfromtax:• transportationoftheemployee,membersofhishouseholdandpersonal possessions• hiringtemporaryresidentialaccommodationfortheemployeeand membersofhishouseholdforupto183daysaftertransfer• suchcostsasSARSmayallow,e.g.newschooluniforms,replacementof curtains,bondregistrationandlegalfees,transferduty,motorvehicle registrationfees,cancellationofbondandagent’sfeeonsaleofprevious residenceExpenseswhichdonotqualifyarelossonsaleofthepreviousresidenceandarchitect’sfeesfordesignoforalterationstoanewresidence.

RELOCATION OF ANEMPLOYEE

AnorganisationqualifiesasaPBOifitcarriesoutpublicbenefitactivitiesinanon-profitmannersubstantiallyinSouthAfrica.TheannualtradingincomeexemptionforPublicBenefitOrganisationsis R200000(2010:R150000).

PUBLIC BENEFITORGANISATIONS

Arecreationalclubisanon-profitorganisationwhichprovidessocialandrecreationalamenitiesorfacilitiesforitsmembers.TheannualtradingincomeexemptionforrecreationalclubsisR120000 (2010:R100000).

RECREATIONAL CLUBS

RESIDENTIAL BUILDING ALLOWANCES

18


Industrialbuildings Constructionofbuildingsorimprovementson 5%ofcost orimprovements orafter1January1989,providedbuilding (previously2%) isusedwhollyormainlyforcarryingon (note3) processofmanufactureorsimilarprocess Constructionofbuildingsorimprovementsonor 10%ofcost after1July1996to30September1999andthe (note3) buildingsortheimprovementsarebroughtinto usebefore31March2000andusedinaprocess ofmanufactureorsimilarprocess

Newcommercial Anycostincurredinerectinganynewand 5%ofcost buildings(otherthan unusedbuilding,orimprovinganexistiing residential buildingonorafter1April2007whollyormainly accommodation) usedforthepurposesofproducingincomeinthe (note1) courseoftrade

Buildinginanurban Costsincurredinerectingorextendingabuilding 20%infirstyear developmentzone inrespectofdemolishing,excavatingtheland,or 8%ineachofthe (note1) toprovidewater,powerorparking,drainageor 10subsequentyears security,wastedisposaloraccesstothebuilding Improvementstoexistingbuildings 20%ofcost

Hotelbuildings Constructionofbuildingsorimprovements, 5%ofcost providedusedintradeashotelkeeperorused by lessee in trade as hotelkeeper Refurbishments(note2)whichcommenced 20%ofcost onorafter17March1993

Hotelequipment Machinery,implements,utensilsorarticles 20%ofcost broughtintouseonorafter16December1989

Aircraft Acquiredonorafter1April1995 20%ofcost(note3)

Farmingequipment Machinery,implements,utensilsorarticles 50%infirstyear (otherthanlivestock)broughtintouseonor 30%insecondyear after1July1988.Biodieselplantandmachinery 20%inthirdyear broughtintouseafter1April2003

Ships SouthAfricanregisteredshipsusedfor 20%ofcost prospecting,miningorasaforeign-going (note3) ship,acquiredonorafter1April1995

Plantandmachinery Neworunusedmanufacturingassetsacquired 40%in1styear onorafter1March2002willbesubjecttowear 20%ineachofthe andtearallowancesoverfouryears 3subsequentyears (note4)

Plantandmachinery Newandunusedplantormachinerybroughtinto 100%ofcost (smallbusiness useonorafter1April2001andusedbythetax- corporationsonly) payerdirectlyinaprocessofmanufacture

Non-manufacturing Acquiredonorafter1April2005 50%infirstyear assets(smallbusiness 30%insecondyear corporationsonly) 20%inthirdyear

Licences Expenditure,otherthanforinfrastructure, Evenlyoverthe toacquirealicencefromagoverment periodofthelicence, bodytocarryontelecommunicationservices, subjecttoa exploration,productionordistributionof maximumof petroleumortheprovisionofgamblingfacilities 30years Notes:1 Allowancesavailabletoownersasusersofthebuildingoraslessors/financiers2 Refurbishmentisdefinedasanyworkundertakenwithintheexistingbuildingframework3 Recoupmentsofallowancescanbedeductedfromthecostofthereplacementasset4 Whereplantandmachineryisusedinaprocessofmanufactureorasimilarprocess, thetaxpayerisobligedtomakeuseoftheallowancesandnotthewearandtearrates

CAPITAL INCENTIVE ALLOWANCES

19

20 21

ThefollowingratesofwearandtearareallowedbySARSintermsofInterpretationNote47:

Type of No. of yearsasset for write-off

Type of No. of years asset for write-off

Addingmachines 6Air-conditioners window 6 mobile 5 roomunit 10Air-conditioningassets absorptiontypechillers 25 airhandlingunits 20 centrifugalchillers 20 coolingtowers 15 condensingsets 15Aircraft(lightpassengerorcommercialhelicopters) 4Arcweldingequipment 6Artefacts 25Balers 6Batterychargers 5Bicycles 4Boilers 4Bulldozers 3Bumpingflaking 4Carports 5Cashregisters 5Cellphoneantennae 6Cellphonemasts 10Cellulartelephones 2Cheque-writingmachines 6Cinemaequipment 5Colddrinkdispensers 6Communicationsystems 5Compressors 4Computers mainframe 5 personal 3Computersoftware(mainframes) purchased 3 self-developed 1Computersoftware(personalcomputers) 2Concretemixersportable 4Concretetransitmixers 3Containers 10Cropsprayers 6Curtains 5Debarkingequipment 4Deliveryvehicles 4Demountablepartitions 6Dentalanddoctors’equipment 5Dictaphones 3Drillingequipment(water) 5

Drills 6Electricsaws 6Electrostaticcopiers 6Engravingequipment 5Escalators 20Excavators 4Faxmachines 3Fertiliserspreaders 6Firearms 6Fireextinguishers(looseunits) 5Firedetectionssystems 3Fishingvessels 12Fittedcarpets 6Foodbins 4Food-conveyingsystems 4Fork-lifttrucks 4Front-endloaders 4Furnitureandfittings 6Gantrycranes 6Gardenirrigationequipment(movable) 5Gascuttingequipment 6Gasheatersandcookers 6Gearboxes 4Gearshapers 6Generators(portable) 5Generators(standby) 15Graders 4Grindingmachines 6Guillotines 6Gymnasiumequipment Cardiovascular 2 Healthtesting 5 Weightsandstrength 4 Spinning 1 Other 10Hairdressers’equipment 5Harvesters 6Heatdryers 6Heatingequipment 6Hotwatersystems 5Incubators 6Ironingandpressingequipment 6Kitchenequipment 6Knittingmachines 6Laboratoryresearchequipment 5Lathes 6Laundromatequipment 5Lawreports 5

ALLOWANCESWEAR AND TEAR

20 21

Liftinstallations 12Medicaltheatreequipment 6Millingmachines 6Mobilecaravans 5Mobilecranes 4Mobilerefrigerationunits 4Motors 4Motorcycles 4Motorisedchainsaws 4Motorisedconcretemixers 3Motormowers 5Musicalinstruments 5Navigationsystems 10Neonsignsandadvertisingboards 10Officeequipment-electronic 3Officeequipment-mechanical 5Oxygenconcentrators 3Ovensandheatingdevices 6Ovensforheatingfood 6Packagingequipment 4Paintings(valuable) 25Pallets 4Passengercars 5Patterns,toolinganddies 3Pelletmills 4Perforatingequipment 6Photocopyingequipment 5Photographicequipment 6Planers 6Pleasurecraft,etc 12Ploughs 6Portablesafes 25Powertools(hand-operated) 5Powersupply 5Publicaddresssystems 5Pumps 4Racehorses 4Radarsystems 5Radiocommunication 5Refrigeratedmilktankers 4Refrigerationequipment 6Refrigerators 6

Type of No. of yearsasset for write-off

Type of No. of years asset for write-off

Runwaylights5Sanders 6Scales 5Securitysystemsremovable 5Seedseparators 6Sewingmachines 6Shakers 4Shopfittings 6Solarenergyunits 5Specialpatternsandtooling 2Spindryers 6Spotweldingequipment 6Stafftrainingequipment 5Surgebins 4Surveyors: Fieldequipment 10 Instruments 5Tape-recorders 5Telephoneequipment 5Televisionandadvertisingfilms 4Televisionsets,videomachinesanddecoders 6Textbooks 3Tractors 4Trailers 5Traxcavators 4Trollies 3Trucks(heavy-duty) 3Trucks(other) 4Truck-mountedcranes 4Typewriters 6Vendingmachines(includingvideogamemachines) 6Videocassettes 2Warehouseracking 10Washingmachines 5Waterdistillationandpurificationplant 12Watertankers 4Watertanks 6Weighbridges(movableparts) 10Wirelinerods 1Workshopequipment 5X-rayequipment 5

Notes1 Wearandtearmaybeclaimedoneitheradiminishingvaluemethodoronastraight- linebasis,inwhichcasecertainrequirementsapply2 Removalcostsincurredinmovingbusinessassetsfromonelocationtoanotherare notdeductibleastheseareregardedasbeingcapitalinnature.Wearandtearmay beclaimedovertheremainingusefulllifeoftheassets3 Whenanassetisacquiredfornoconsideration,awearandteardeductionmaybe claimedonitsmarketvalueatdateofacquisition4 Whereanassetisacquiredfromaconnectedperson,wearandtearmayonlybe claimedontheoriginalcosttothesellerlessallowancesclaimedbytheconnected personplusrecoupmentsandCGTincludedintheseller’sincome5 Theacquisitionof“small”itemsatacostoflessthanR7000(2009:R5000)peritem maybewrittenoffinfullduringtheyearofacquisition

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Strategicprojects Anadditionalindustrialinvestmentallowanceis 100%ofcost (note) allowedonnewandunusedassetsusedforpre- ferredqualifyingstrategicprojectswhichwere approvedbetween31July2001and31July2005 Anyotherqualifyingstrategicprojects 50%ofcost

Pipelines Newandunusedstructurescontractedfor 10%ofcost andconstructioncommencedonorafter 23February2000

Electricityand Newandunusedstructurescontractedfor 5%ofcost telephonetrans- andconstructioncommencedonorafter missionlinesand 23February2000 railwaytracks

Airporthangars Constructioncommencedonorafter 5%ofcost andrunways 1April2001

Rollingstock Broughtintouseonorafter1January2008 20%ofcost

Portassets Broughtintouseforthefirsttimebythetaxpayer 5%ofcost onorafter1January2008

Environmental Asfrom8January2008fornewandunusedassets 40%in1styear assets Environmentaltreatmentandrecyclingassets 20%ineachofthe 3subsequentyears Environmentalwastedisposalassetsofa 5%ofcost permanentnature

Energyefficiency Allformsofenergyefficiencysavingsasreflected Determinedin savings onanenergysavingscertificateinanyyearof accordancewitha assessmentendingbefore1January2020 formulaNote:• Theallowanceislimitedtotheincomederivedfromtheindustrialprojectandtheexcessis deductibleintheimmediatelysucceedingyearofassessment,subjecttocertainotherlimits

CapitalGainsTax(CGT),applicablesince1October2001,appliestoaresident’sworldwideassetsandtoanon-resident’simmovablepropertyorassetsofapermanentestablishmentinSouthAfrica.DisposalsCGTistriggeredondisposalofanasset.• Importantdisposalsinclude: - abandonment,scrapping,loss,donation - vestingofaninterestinanassetofatrustinthebeneficiary - distributionofanassetbyacompanytoashareholder - granting,renewal,extensionorexcerciseofanoption• Deemeddisposalsinclude: - terminationofSouthAfricanresidency - achangeintheuseofassets - thetransferofanassetbyapermanentestablishment - thereductionorwaiverofadebtbyacreditorwithoutfull consideration,subjecttocertainexclusions• Disposalsexclude: - thetransferofanassetassecurityforadebtorthereleaseof suchsecurity - issueof,orgrantofanoptiontoacquire,ashare,debentureor unit trust - loansandthetransferorreleaseofassetsecuringdebt

STRATEGIC ALLOWANCES

CAPITAL GAINSTAX

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Calculation of a Capital Gain/Loss• Acapitalgainorlossisthedifferencebetweentheproceedsandthe basecost.Acapitallossiscarriedforwardandisavailableforsetoffin thefollowingtaxyearBase Cost• Expenditureincludedinthebasecost: - costofacquisition,transfer,stampduty,STTandsimilarcosts - remunerationofadvisors,consultantsandagents - costsofmovinganassetandimprovementcosts• Expenditureexcludedfromthebasecost: - expensesdeductibleforincometaxpurposes - interestpaid,raisingfees(exceptinthecaseoflistedsharesand business assets) - expensesinitiallyrecordedandsubsequentlyrecovered• Methodsforassetacquiredbefore1October2001: - Timeapportionmentbasecost Example: IfanassetcostR250000on1October1998andwassoldon 30September2010forR450000,asCGTwasimplementedon 1October2001,thebasecostis: Originalcostexpenditure R250000 Add: R50000*

*Proceedsfromdisposal R450000 Less:Basecostexpenditure (R250000)

Timeapportionmentbasecost R300000

Note 1:Whendeterminingthenumberofyearstobeincludedinthetime apportionmentcalculation,apartoftheyearistreatedasafullyear. Note 2:Whereexpenditureinrespectofapre-valuationdateassetwasincurred onorafter1October2001andanallowancehasbeenallowedinrespectofthat asset,asecondtimeapportionmentformulaisapplied. - Valuationasat1October2001 - 20%oftheproceeds• Partdisposals: - BasecosttobeapportionedProceeds• Thetotalamountreceivedoraccruedfromthedisposal• Excluded: - amountsincludedingrossincomeforincometaxpurposes - amountsrepaidorrepayableorareductioninthesaleprice• Specifictransactions: - connectedpersons-deemedtobeatmarketvalue - deceasedpersons-marketvalueasatdateofdeath - deceasedestates-thedisposalisdeemedtobeatthebasecost i.e.marketvalueatdateofdeathInclusion Rates And Effective Rates Inclusion rate Max effective rateIndividualsandspecialtrusts 25% 10%Companies 50% 14%Trusts 50% 20%UnitTrusts(CIS):theunitholderistaxableRetirementFunds:nottaxable

} x 312/

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Exclusions and Rebates• Annual exclusion NaturalpersonsandspecialtrustsR20000(2010:R17500). NaturalpersonsintheyearofdeathR200000(2010:R120000)• Exclusions • Aprimaryresidence,ownedbyanaturalpersonoraspecialtrust, usedfordomesticresidentialpurposes,wheretheproceedsdonot exceedR2milllion.WheretheproceedsexceedR2million,the exclusionisR1,5million(2006:R1million)ofthecalculatedcapital gain. • Personaluseassets,notusedforthecarryingonofatrade • Lumpsumsfrominsuranceandretirementbenefits.Thisexclusion doesnotapplytosecond-handpolicies • Smallbusinessassetsoraninterestinasmallbusiness,limitedto R900000(2010:R750000)ifcertainrequirementsaremet,including: - thegrossassetvalueofthebusinessislessthanR5million -thenaturalpersonwasasoleproprietor,partneroratleast10% shareholderforatleastfiveyears,isatleast55yearsold,or suffersfromill-health,isinfirmordeceased • Compensation,prizesanddonationstocertainPBO’s • AssetsusedbyregisteredmicrobusinessesforbusinesspurposesRollover ReliefGainisdisregardeduntilultimatedisposaloftheassetsorinthecaseofareplacementassetitisrecognisedoverafiveyearperiodcommencingwhenthereplacementassetisbroughtintouseunlessdisposedofearlier• Certaininvoluntarydisposalsandthereplacementofqualifying business assets• Transferofassetsbetweenspouses• Shareblockconversionstosectionaltitle• Transferofresidencefromaqualifyingcorporateentityortrustbetween 11February2009and31December2012.Iftransferoccurredafter 1October2010transferringentitytobeterminatedCorporate TransactionsIncometaxandCGTreliefexistsforcertaintransactions.Theseare:• Assetforsharetransactions• Amalgamationtransactions• Intra-grouptransactions• Unbundlingtransactions• Liquidation,windinguporderegistrationtransactionswithinagroup.ValuationsValuationsshouldhavebeenobtainedonorbefore30September2004.Forcertaincategoriesofassetsthesevaluationsshouldhavebeenlodgedwiththefirsttaxreturnsubmittedafter30September2004,orsuchothertimeastheCommissionermayallow,providedthevaluationwasinfactdonepriortotherequisitedate• WherethemarketvalueofanyintangibleassetexceedsR1million• WherethemarketvalueofanyunlistedinvestmentexceedsR10million• WherethemarketvalueofanyotherassetexceedsR10millionNon-resident Sellers of Immovable PropertyAsfrom1September2007,whereanon-residentdisposesofimmovablepropertyinSouthAfricaforR2millionormore,thepurchaserwillbeobligedtowithholdthefollowingtaxesfromtheproceeds: Seller’sstatus WithholdingtaxNaturalperson 5,0%Company 7,5%Trust 10,0%

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Expenditurepaidshouldbeapportioned,totheextentthatonlyexpenditureactuallyincurredinayearofassessmentisdeductible.Theremainderofthepre-paidexpenditurewillbedeductibleinsubsequentyearsofassessment.Thisdoesnotapply:• wherethegoods,servicesorbenefits,inrespectofwhichthe expenditurewasincurred,aresuppliedorrenderedwithinsixmonths aftertheendoftheyearofassessment• wherethetotalpre-paidexpendituredoesnotexceedR80000 (2008:R50000)• toexpenditure,thetimingandaccrualofwhichisspecifically determined• topre-paidexpenditurepayableintermsofalegislativeobligation.

PRE-PAID EXPENDITURE

PATENT / INTELLECTUALPROPERTYAtaxpayermayclaimanallowanceforthecostofacquiringanyinvention, patent,design,copyright,otherpropertywhichisofasimilarnatureorknowledgeconnectedwiththeuseofsuchpatent,design,copyrightorotherpropertyortherighttohavesuchknowledgeimparted.WherethecostexceedsR5000,theallowanceislimitedto:• 5%ofthecostinrespectofanyinvention,patent,copyrightorother propertyofasimilarnature;or• 10%ofthecostofanydesignorotherpropertyofasimilarnature.WheretheintangiblewasacquiredfromaconnectedpersontheallowanceislimitedtothecosttotheconnectedpersonlessallowancesclaimedbytheconnectedpersonplusrecoupmentsandCGTincludedintheseller’sincome.No allowance isallowedinrespectofanyexpenditureincurredbythetaxpayerinrespectoftheacquisitionofanytrademarkorpropertyofasimilarnatureonorafter29October1999.

Whereexpenditureisincurredinrespectofqualifyingscientificandtechnologicalresearchanddevelopmentonorafter2November2006,thefollowingdeductionswillbeallowed:• 150%ofoperatingresearchanddevelopmentcostsinrespectofactivities undertakeninSouthAfricaforthepurposesofthediscoveryofnovel, practicalandnon-obviousinformation;ordevising,developingorcreating anyinvention,designorcomputerprogramasdefinedintheirapplicable acts,orknowledgeessentialtotheuseofsuchresearchproperty.• Researchanddevelopmentcapitalcosts(includingthecostofany buildingorpartthereof,machinery,plant,implements,utensilorarticleor improvementstheretoofacapitalnature)ona50:30:20basis.

RESEARCH ANDDEVELOPMENT

Taxpayerscandefertaxablerecoupmentsandcapitalgainsonthesaleofbusinessassets(excludingbuildings)iftheyfullyreinvestthesaleproceedsinotherqualifyingassetswithinaperiodofthreeyears.Taxontherecoupmentandcapitalgainuponthedisposaloftheoldassetisspreadoverthesameperiodaswearandtearmaybeclaimedforthereplacementasset.

REINVESTMENT RELIEF

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Asfrom1January2001,residentsofSouthAfricaaretaxableontheir worldwideincome.

Resident means• AnaturalpersonwhoisordinarilyresidentinSouthAfrica;or• Asfrom1March2005,anaturalpersonwhoisphysicallypresentin SouthAfricaforatleast91daysinthecurrentandeachofthe precedingfivetaxyearsandatleast915daysduringthefivepreceding taxyears;or• Acompanyortrustthatisincorporated,established,formedorwhich hasitsplaceofeffectivemanagementinSouthAfrica.

Resident excludes• Anaturalperson,whowaspreviouslyregardedasadeemedresident,if physicallyabsentfromSouthAfricaforacontinuousperiodofatleast 330daysfromthedateofdeparture• Apersonwhoisdeemedtobeexclusivelyaresidentofanothercountry forthepurposesoftheapplicationofanydoubletaxationagreement.

Exemptions• RemunerationforservicesrenderedoutsideSouthAfricaduringthetax yearifsuchpersonwasoutsideSouthAfricaforperiodsinaggregateof atleast183days,ofwhich60dayswerecontinuous• Non-SouthAfricanpensionandsocialsecuritypayments.

Foreign DividendsForeigndividendsreceivedfromanon-residentcompany,includingdeemeddividends,aretaxable,exceptif:• Theshareholderholdsatleast20%oftheequityandvotingrightsofthe distributingcompany• ThedistributingcompanyislistedonboththeJSEandarecognised foreignexchange• Thedistributingcompanyisacontrolledforeigncompany(CFC)and thedividendsdonotexceedamountsdeemedtobetheresident shareholder’sincomeundertheCFCrules• ThedividendisdeclaredfromamountsalreadytaxableinSouthAfrica.Interestisdeductiblewhereitisincurredintheproductionofforeign dividendstotheextentthattheyareincludedingrossincome.Excess interestpaidmaybecarriedforwardtothenexttaxyear.Aresidentisentitledtoacreditforanywithholdingtaxpaidinrespectofaforeigndividendthatisincludedingrossincome.

Controlled Foreign CompaniesACFCisanon-residentcompanyinwhichresidents,otherthanahead-quartercompany,directlyorindirectlyownorcontrolmorethan50%oftheparticipationorvotingrights.Aresident,aloneorwithconnected persons,holdingatleast10%,butnotmorethan20%oftheparticipationrights,mayelectthattheforeigncompanyisdeemedtobeaCFC.

RESIDENCE BASED TAXATION

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• Aresidentmustincludeinhisincome:

Resident’sparticipationrightsinCFC

TotalparticipationrightsintheCFC• ThenetincomeofaCFCshouldbecalculatedaccordingtoSouth Africantaxprinciples.Ifthecalculationresultsinaloss,thedeductions arelimitedtoincomeandtheexcessiscarriedforward.

Exemptions• Thenetincome(includingcapitalgains)oftheCFCthatisderivedfrom anactivebona fideforeignbusinessestablishmentsituatedoutside SouthAfrica(subjecttocertainexclusions)• IncomeoftheCFCotherwisetaxedinSouthAfricaatnormalrates• ForeigndividendsreceivedbytheCFCfromanotherCFCtotheextent thattheincomefromwhichthedividendisdeclaredhasalreadybeen includedintheresident’staxableincomeundertheCFCrules• Netincomeattributabletointerest,royaltiesorsimilarincomepayable totheCFCbyotherforeigncompaniesformingpartofthesamegroup ofcompanies.

Tax Rebates• Wherearesidenthastoincludeinhistaxableincomeanyforeign sourcedincomeorcapitalgain,proportionateamountofthenetincome ofaCFC,foreigndividends,orotheramountsattributedintermsofthe IncomeTaxAct,arebateinrespectofanyforeigntaxespaidorpayable inrespectofsuchamounttoaforeigngovernmentisallowed• Therebateislimitedtotheforeigntaxpayableandmaynotexceed:

Taxableforeignincome

Totaltaxableincome• Iftheforeigntaxpaidexceedsthelimitsetoutabove,theexcessforeign taxmaybecarriedforwardforamaximumofsevenyears

General• AlossincurredincarryingonabusinessoutsideSouthAfricamaynotbe setoffagainstincomeinSouthAfrica• TheamountofforeigntaxpayablemustbetranslatedtoSouthAfrican currencyatthelastdayofthetaxyearbyapplyingtheaverageexchange rateforthattaxyear• ForeignincomeisconvertedtoRandsbyapplyingthespotexchange rateatthedatetheincomeaccrues.Naturalpersonsandnon-trading trustsmayelecttoapplytheaverageexchangerateforthattaxyear• Whereforeignincomemaynotberemittedbecauseofrestrictions imposedbythesourcecountry,suchincomeisincludedintheresident’s grossincomeinthetaxyearduringwhichthatamountmayberemitted toSouthAfrica• TaxwithheldinaforeigncountryinrespectofSouthAfricansourced incomeisrecognisedasadeductionagainstsuchincomeratherthanas arebateagainstSouthAfricantaxpayableonthatincome.

NetincomeofCFCx

TotalSouthAfricannormaltaxx

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Asfromyearsofassessmentcommencingonorafter1January2011,anewheadquartercompanyregimeprovidesthefollowingbenefits:• itssubsidiariesarenottreatedascontrolledforeigncorporations• dividendsarenotsubjecttoSTCortheproposeddividendwithholdingtax• noapplicationofthincapitalisationrulesmerelybecauseoftheexistence ofback-to-backcrossborderloans;and• exemptionfromthependingwithholdingtaxoninterestinrespectof back-to-backloansAregionalinvestmentfundregimealsoappliesfromyearsofassessmentcommencingonorafter1January2011.QualifyingforeigninvestorswillberegardedaspassiveinvestorswithnoexposuretoSouthAfricantaxbecause oftheuseofaSouthAfricanportfoliomanager.

InterestAllinterestreceivedbyoraccruedtonon-residentsisexemptfromtaxunlessthatperson: • atanytimeduringthatyearcarriedonbusinessthroughapermanent establishmentinSouthAfrica;or• isanaturalpersonwhowasphysicallypresentinSouthAfricaformore than183daysinaggregateduringthatyear.DividendsAnewdividendstaxhasbeenintroducedwithaneffectivedatestilltobe announced.Thisdividendstaxwillbebornebytheshareholderatarateof10%(subjecttoanyreductionintermsofdoubletaxationagreements).RoyaltiesSubjecttothedoubletaxationagreements,royaltiespaidtonon-residentsaresubjecttoafinalwithholdingtaxof12%.ResidentsrequireGovernmentandExchangeControlapprovalforroyalty paymentstoanon-resident.Other IncomeNon-residentswillcontinuetobetaxedonSouthAfricansourceanddeemedsourceincomeonly.Payment to Non-resident EntertainersAwithholdingtaxof15%ispayablebynon-residentsportspersonsand entertainersonincomeearnedinSouthAfrica.

TAXATION OF NON-RESIDENTS

REGIONAL HEADQUARTERCOMPANY

Asfrom1January2013,interestaccruingtoanon-resident,excludinga controlledforeigncompany,willbesubjecttoa10%withholdingtaxon payment,exceptinterest:• arisingonanygovernmentdebtinstrument• arisingonanylisteddebtinstrument• arisingonanydebtowedbyaBankorSARB• arisingfromabillofexchangeorletterofcreditwheregoodsareimported intoSouthAfricaandwhereanauthoriseddealerhascertifiedsuchonthe instrument• payabletoaheadquartercompany• accruingtoaforeignnaturalpersonwhowasphysicallypresentinSouth Africaforaperiodexceeding183daysinaggregate,duringthatyear,or carriedonabusinessthroughapermanentestablishmentinSouthAfrica.

WITHHOLDING TAX ONINTEREST

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DoubleTaxationAgreementsprovideforreliefinrespectofroyaltiesandknow-howwithholdingtaxes.

Non-Treaty Countries 12

Treaty CountriesAlgeria 10Australia 5Austria 0Belarus 5/10Belgium 0Botswana 10Brazil 10/15Bulgaria 5Canada 10Croatia 5Cyprus 0CzechRepublic 10Denmark 0Egypt 12Ethiopia 20Finland 0France 12Germany 12Ghana 10Greece 5/7Grenada* 12Hungary 0India 10Indonesia 10Iran 10Ireland 0Israel 12Italy 6Japan 10Korea 10Kuwait 10Lesotho 10Luxembourg 0Malawi 12Malaysia 5Malta 10

Mauritius 0Mexico 10Mozambique 5Namibia 10Netherlands 0NewZealand 10Nigeria 7.5Norway 0Oman 8Pakistan 10PeoplesRepublicofChina 7/10Poland 10Portugal 10Romania 12RussianFederation 0Rwanda 10SaudiArabia 10Seychelles 0SierraLeone* 12Singapore 5SlovakRepublic 10Spain 5Swaziland 10Sweden 12Switzerland 0Taiwan 10Tanzania 10Thailand 12Tunisia 10Turkey 10Uganda 10Ukraine 10UnitedKingdom 0USA 0Zambia 12Zimbabwe 12

*PartoftheDTAwiththeUnitedKingdom

Notes1 Iftheroyaltyissubjecttotaxintherecipient’scountryofresidencethereisno withholdingtax.

2 Theaboveratesareprovidedasaguideonly.AnumberoftheaboveDTA’s provideforalternativerates,includingzero,tobeappliedinspecific circumstances.ToviewthecompleteDoubleTaxAgreementsreferto www.sars.gov.za.

3 CurrentlySouthAfricahasnowithholdingtaxondividendsorinterest.A newdividendwithholdingtaxistoreplaceSTCwitheffectfrom1April2012. Awithholdingtaxoninterestpaidtonon-residentswillbeintroducedfrom 1January2013.

DOUBLE TAXATION AGREEMENTSANDWITHHOLDINGTAXES

Royalties % Royalties %

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LEARNERSHIP ALLOWANCE

Asfrom1July2009ataxpayerwillbeentitledtoadeductionof100%ofthecostofsharesissuedbyaventurecapitalcompanysubjecttothefollowing limitations:• anaturalpersonmaydeductR750000inayearofassessmentanda totalofR2250000• alistedcompanyandanycompanyheld70%directlyorindirectlyby thatlistedcompanycandeductamaximumofthecostofupto40%of thetotalequityinterestintheventurecapitalcompany• theventurecapitalcompanymustbeapprovedbySARSasaqualifying companyandfulfilanumberofpre-conditions.

VENTURE CAPITALINVESTMENTS

Employersareallowedtoclaimlearnershipallowancesinrespectofregisteredlearnershipsoverandabovethenormalremunerationdeduction.Foryearsofassessmentendingonorafter1January2010:• Whereanemployerispartytoalearnership,thelearnershipallowance consistsoftwobasicthresholds,namelyarecurringannualcommence- mentallowanceofR30000andacompletionallowanceclaimableatthe endofthelearnershipofR30000.Thecompletionallowanceisclaimable cumulativelyforeverycompletedyearwherethelearnershipexceeds24 months• Forlearnerswithdisabilitiestherelevantallowancesareincreasedto R50000• Learnershipsoflessthan12fullmonthswillbeeligibleforapro-rata amountofthecommencementallowance(regardlessofthereasonthat thelearnershipfallsshortofthe12monthperiod).Ifalearnershipfalls overtwoyearsofassessment,thecommencementallowanceisallocated pro-ratabetweenbothyearsbasedonthecalendarmonthsapplicableto eachyearbymultiplyingthecommencementamountbythetotalcalendar monthsofthelearnershipover12.

ROYALTIES TO NON-RESIDENTSAsfrom1January2009,nodeductionwillbeallowedinrespectofroyaltypaymentsif:• theintellectualpropertywasatanytimewhollyorpartlyownedbythe taxpayeroranotherSouthAfricanresident,or• theintellectualpropertywasdevelopedbythetaxpayeroraconnected personwhoisaresident.Iftheroyaltyissubjecttoawithholdingtaxatarateofatleast10%thenadeductionofonethirdoftheroyaltywillbeallowed.

DIRECTORS PAYEDirectorsofprivatecompaniesandmembersofclosecorporationsare deemedtohavereceivedamonthlyremuneration,subjecttoPAYE, calculatedinaccordancewithaformula.Theformulacalculatedremunerationdoesnotapplytodirectorsofprivatecompaniesandmembersofclosecorporationswhoearnatleast75%of theirremunerationintheformoffixedmonthlypayments.

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FarmingincomeissubjecttotheprovisionsoftheFirstScheduletothe IncomeTaxAct.

Summary Of The First Schedule’s Main Paragraphs

Rating Formula Applicable To FarmersBecauseafarmer’sincomefluctuatesfromyeartoyear,afarmerwhoisanaturalpersonmayelecttobetaxedinaccordancewitharatingformula.Theformulaisbasedontheaveragetaxablefarmingincomeinthecurrentandprecedingfouryears.Shouldheelecttomakeuseofthisformula,itisbindinguponhiminfutureyearsandheisnotpermittedtomakeuseoftheprovisionsrelatingtogovernmentlivestockreductionschemes,ratingformulaforplantationfarmersandprovisionsrelatingtosugarcanefarmers.Forafarmercommencingfarmingoperationstheaveragetaxableincomefromfarminginthefirstyearofassessmentendingonorafter1January2008willbetwo-thirdsofthetaxableincomeforthatperiod.

Capital Development Expenditure (Paragraph 12)Thefollowingitemsofcapitalexpenditure,incurredduringayearof assessment,aredeductibleagainstfarmingincome:• expenditurewhichisnotrestrictedtotaxableincomefromfarming: - eradicationofnoxiousweedsandinvasivealienvegetationand preventionofsoilerosion• expenditurewhichisrestrictedtotaxableincomefromfarming: - dippingtanks,buildingofroadsandbridgesforfarmingoperations - dams,irrigationschemes,boreholes,pumpingplantsandfences - additions,erectionof,extensionsandimprovementstofarmbuildings notusedfordomesticpurposes - costsofestablishingtheareaforandtheplantingoftrees,shrubs and perennial plants - carryingofelectricpowerfrommainpowerlinestofarmmachinery andequipment.Theexcessexpenditureovertaxableincomefromfarmingiscarriedforwardtothenextyearofassessment.Machinery,implements,utensilsandarticlesforfarmingpurposesarewrittenoffoverthreeyearsona50:30:20basis.Thisdoesnotapplytomotor vehiclesusedtoconveypassengers,caravans,aircraft(excludingcrop- sprayingaircraft)orofficefurnitureandequipment.Normalwearandtearmaybeclaimedontheseitems.

Non-farming IncomeIncomefromnon-farmingsourcesshouldbeshownseparately.Themostcommonexamplesofnon-farmingincomeare:• interestreceived• incomederivedbyafarmerfromcarryingonatradeotherthanfarming• annuities• rentalincomefromfarmland.

14–16 Plantationfarming17 Sugarcanedestroyedby fire19 Ratingformulaforfarmers (whoarenaturalpersons)20 Expropriationoffarming land

2–5&9 Valuationoflivestockandproduce6–7 Electionofstandardvalues8 Ring-fencingoflivestockacquisitions11 Donationsandinspeciedividends12 Capitaldevelopmentexpenditure13 Forcedsalesanddroughtrelief provisions

TAXATION OF FARMINGINCOME

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ThefollowingtablereflectsrepaymentsoneveryR1000borrowed.Example:AbondofR80000at10,5%over20yearsR80000÷R1000x09,98=R798.40amonthovera20yearperiod.

Mortgage Bonds Short Term FinancingRate 10 Yrs 20 Yrs 25 Yrs 30 Yrs 36 Months 48 Months 60 Months

07,0% 11,61 07,75 07,07 06,65 30,88 23,95 19,0807,5% 11,87 08,06 07,39 06,99 31,11 24,18 20,0408,0% 12,13 08,36 07,72 07,34 31,34 24,41 20,2808,5% 12,40 08,68 08,05 07,69 31,57 24,65 20,5209,0% 12,67 09,00 08,39 08,05 31,80 24,89 20,7609,5% 12,94 09,32 08,74 08,41 32,03 25,12 21,0010,0% 13,22 09,65 09,09 08,78 32,27 25,36 21,2510,5% 13,49 09,98 09,44 09,15 32,50 25,60 21,4911,0% 13,78 10,32 09,80 09,52 32,74 25,85 21,7411,5% 14,06 10,66 10,16 09,90 32,98 26,09 21,9912,0% 14,35 11,01 10,53 10.29 33,21 26,33 22,2412,5% 14,64 11,36 10,90 10,67 33,45 26,58 22,5013,0% 14,93 11,72 11,28 11,06 33,69 26,83 22,7513,5% 15,23 12,07 11,66 11,45 33,94 27,08 23,0114,0% 15,53 12,44 12,04 11,85 34,18 27,33 23,2714,5% 15,83 12,80 12,42 12,25 34,42 27,58 23,5315,0% 16,13 13,17 12,81 12,64 34,67 27,83 23,7915,5% 16,44 13,54 13,20 13,05 34,91 28,08 24,0516,0% 16,75 13,91 13,59 13,45 35,16 28,34 24,3216,5% 17,60 14,29 13,98 13,85 35,40 28,60 24,58

BOND / INSTALMENT SALE REPAYMENTS

Type Reason Basis of charge

Provisional 1stand2nd 10%penaltyplusinterestchargeddailyfromtax paymentlate duedatetodateofpayment

Provisional 3rdpayment Interestchargeddailyfromeffectivedatetotax late earlierofpaymentdateorassessmentdate. Effectivedateissixmonthsafteryear-end, exceptinthecaseofFebruaryyear-ends, wheretheeffectivedateis30September

Provisional Overpayment Crediteddailyfromeffectivedatetodateoftax refund

Assessment Latepayment Interestchargedoneachcompletedmonth fromfirstduedatetodateofpayment

Loanto Deemedfringe Officialrateforfringebenefitlessactualemployee benefit ratexloanxactualmonthsdividedby12

VAT Latepayment 10%penaltyplusinterestattheprescribed rate

VAT Refund Calculatedmonthly,starting21businessdays afterreceiptofreturntodateofpayment. Periodissuspendedwhenvendordenies SARSaccesstobooksifrequested

Employees Latepayment 10%penaltyplusinterestchargeddailyfromtax duedatetodateofpayment

SkillsDevelopment Latepayment 10%penaltyplusinterestchargeddailyfromLevy duedatetodateofpayment

OFFICIAL INTERESTRATESANDPENALTIES

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Prescribed rate - Late payment of assessed and provisional tax and under-payment of provisional taxDate of change Rate %1August2009 11,51September2009 10,51July2010 9,51March2011 8,5Allpaymentsarefirstsetoffagainstpenalties,theninterestandfinallytax.

Prescribed rate - Late payment of VATDate of change Rate %1September2009 10,51July2010 9,51March2011 8,5Allpaymentsarefirstsetoffagainstpenalties,theninterestandfinallytax.

Prescribed rate - Refund of overpayment of provisional taxDate of change Rate %1July2009 8,51August2009 7,51September2009 6,51July2010 5,51March2011 4,5Interestonoverpaymentofprovisionaltaxisonlypayableiftaxableincome exceedsR50000(individualsandtrusts)R20000(companiesandclose corporations)ortherefundexceedsR10000,regardlessoftaxableincome.Prescribed rate - Refund of VAT after prescribed periodDate of change Rate %1September2009 10,51July2010 9,51March2011 8,5

Prescribed rate - Refund on successful objection, appeal or conceded appealDate of change Rate %1March2011 8,5

Official rate - Fringe benefitsDate of change Rate %1July2009 8,51September2009 8,01October2010 7,0Asfrom1March2011theofficialrateisequaltotheSouthAfricanrepurchaserateplus100basispoints.

INTEREST RATES CHANGES

Rate RateDate of change % Date of change %

04May2009 12,0029May2009 11,0014August2009 10,5026March2010 10,0010September2010 09,5019November2010 09,00

07December2007 14,5011April2008 15,0013June2008 15,5012December2008 15,0006February2009 14,0025March2009 13,00

TheabovedatesareapplicabletoStandardBank.Banksdonotalwaysadjusttheirratesonthesameday.

RATESPRIME OVERDRAFT RATES

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On Immovable Property (on or after 23 February 2011)Payablebynaturalpersonsandlegalentities:

• NotransferdutyispayableifthetransactionissubjecttoVAT• Ifaregisteredvendorpurchasespropertyfromanon-vendor,theVAT notionalinputtaxcreditislimitedtotheVATfraction(14/114)ofthelower oftheselllingprice,openmarketvalue,currentmunicipalvalueortheVAT inclusivepurchaseprice(includingimprovements)paidbythenon-vendor seller. Anotionalinputtaxcreditisonlyclaimabletotheextenttowhichthe purchasepricehasbeenpaid• Certainexemptionsapplytocorporaterestructuring• Theacquisitionofacontingentrightinatrustthatholdsaresidential propertyorthesharesinacompanyorthemember’sinterestinaclose corporation,whichownsresidentialproperty,comprisingmorethan50% ofitsCGTassets,issubjecttotransferdutyattheapplicablerate• Liabilitiesoftheentityaretobedisregardedwhencalculatingthefair valueofthecontingentrightinthetrust,thesharesinthecompanyorthe member’sinterestintheclosecorporation• Residentialpropertyincludesdwellings,holidayhomes,apartmentsand similarabodes,improvedandunimproved,zonedforresidentialpurposes. Itexcludesastructureoffiveormoreunits,rentedbyfiveormore unconnectedpersons.Italsoexcludesfixedpropertyformingpartofthe enterpriseofaVATvendor• Anypersonwhodoesoromitstodoanythingwiththeintenttoevade transferdutymaybechargedwithadditionaldutyuptotwicetheamount ofdutypayable.Suchapersonisguiltyofanoffenceandliableon convictiontoafineorimprisonmentforaperiodnotexceeding60months• Notransferdutyispayableinrespectoftheacquisitionbyaqualifying naturalpersonofaprimaryresidencefromaqualifyingcorporateentity ortrustbetween11February2009and30September2010.From 1October2010to31December2012thisexemptionisextendedto includemulti-tieredstructures.Afterthetransferoftheresidence,allthe entitiesmustbewounduporterminated.

Property value Rates of tax

R0-R600000 0% R600001-R1000000 3%onthevalueaboveR600000 R1000001-R1500000 R12000plus5%onthevalueaboveR1000000 R1500001andabove R37000plus8%onthevalueaboveR1500000

TRANSFER DUTY

Themaximumlendingratesofinterestarecalculatedasfollows:

NATIONAL CREDIT ACT

TheNationalCreditActdoesnotapplytolargeagreementsasdefined,orto creditagreementswheretheconsumerisajuristicpersonwithaturnoverabove adefinedthreshold,thestateoranorganofthestate,orwherethelenderistheSouthAfricanReserveBankoraforeigner.

Mortgageagreements {(Reporatex2.2)+5%}peryearCreditfacilities {(Reporatex2.2)+10%}peryearUnsecuredcredittransactions {(Reporatex2.2)+20%}peryearShorttermcredittransactions 5%permonthOthercreditagreements {(Reporatex2.2)+10%}peryearIncidentalcreditagreements 2%permonth

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Nostampdutyispayableonleasesofimmovablepropertyenteredintoafter1April2009.

STAMP DUTY

SECURITIES TRANSFERTAXAsfrom1July2008securitiestransfertaxispayableatarateof0,25%oftheconsideration,closingpriceormarketvalue(whicheverisgreater)onthetransfer,cancellationorredemptionofanylistedorunlistedshare,members’interestinaclosecorporationorcessionofarighttoreceivedistributionsfromacompanyorclosecorporation.• Onlistedsecurities,thismustbepaidbythe14thofthemonthfollowing themonthduringwhichthetransferoccurred• Onunlistedsecurities,thismustbepaidbytheendofthesecondmonth followingtheendofthemonthduringwhichthetransferoccurred.• Ifnotpaidinfullwithintheprescribedperiodinterestwillbeimposedat theprescribedrateanda10%penaltywillbepayable• Dutyof0,5%ispayableonthecreationorincreaseinauthorisedshare capitalintermsoftheCompaniesAct• NoSTTispayableiftheconsideration,closingpriceormarketvalueis lessthanR40000.

INDUSTRIAL POLICY PROJECTSAnadditionalinvestmentallowanceforanapprovedprojectisavailabletobrownfieldprojectexpansionorupgradeoragreenfieldprojectinrespectofnewandunusedmanufacturingitems.Theadditionalinvestmentallowance,subjecttolimitations,is55%ofthecostoftheassetsor35%ifnopreferredstatusapplies.ThereisalsoanadditionalprojectrelatedtrainingallowanceofR36000peremployeelimitedtoR30millionorR20millionifnopreferredstatusapplies.

CONNECTED PERSONSWhereadepreciableassetisacquiredbyataxpayeranditwasheldbyaconnectedpersonwithinaperiodoftwoyearsbeforethatacquisition,thepurchasermayclaimcapitalallowancesonthelowerofthepurchaseprice orthefollowingdeemedcost:

• thenettaxvalueoftheassettotheseller,plus• therecoupmentonthedisposalbytheseller,plus• thetaxablecapitalgainonthedisposalbytheseller.

DEEMED CAPITAL DISPOSALOFSHARESAsfrom1October2007,theproceedsonthesaleofanequityshareor collectiveinvestmentschemeunitwillautomaticallybeofacapitalnatureifheldcontinuouslyforatleastthreeyearsexcept:• ashareinashareblockcompany• ashareinanon-residentcompany• ahybridequityinstrument.Previouslythetaxpayercouldelectthattheproceedsonthesaleofalistedshareheldforatleastfiveyearsbetreatedascapital.

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Donationstaxispayableatarateof20%onthevalueofanyproperty disposedofgratuitouslybyaSouthAfricanresident(naturalperson, corporateentityortrust)excludingdonationsexemptfromthetax.Thetax ispayablewithinthreemonthsofthedonationtakingeffect.

Exempt donations include:• DonationsbynaturalpersonsuptoR100000peryearafter 1March2007(2006:R50000)• Donationsbycorporateentitiesnotconsideredtobepubliccompanies uptoR10000peryear• Donationsbetweenspousesnotseparated• Bonafidemaintenancepayments• DonationstoPublicBenefitOrganisationsandqualifyingtraditional councilsandcommunities• Donationswherethedoneewillnotbenefituntilthedeathofthedonor• Donationsmadebycompanieswhicharerecognisedaspublic companiesfortaxpurposes• Donationscancelledwithinsixmonthsoftheeffectivedate• Propertydisposedofunderandinpursuanceofanytrust• DonationofpropertyorarightinpropertysituatedoutsideSouthAfrica ifacquiredbythedonor: - beforebecomingresidentinSouthAfricaforthefirsttime,or - byinheritanceordonationfromanon-resident• Donationsbetweencompaniesformingpartofthesamegroupof companies.

Rates of Estate Duty• Personsdeceasedpriorto1October2001-25%• Personsdeceasedonorafter1October2001-20%

Exemptions from Estate Duty include:• Personsdeceasedpriorto1March2006,thefirstR1500000• Personsdeceasedonorafter1March2006,thefirstR2500000• Personsdeceasedonorafter1March2007,thefirstR3500000• Anybequesttoasurvivingspouseorapublicbenefitorganisation• Whereasurvivingspousediesonorafter1January2010,theunutilised portionoftheexemptionofthefirstdeceasedspousemaybecarried forwardtotheestateofthesurvivingspouse.

Anexecutorisentitledtothefollowingremuneration:•theremunerationfixedbydeceasedinthewill,or• 3,5%ongrossassetsand6%onincomeaccruedandcollectedfrom date of deathExecutorsremunerationissubjecttoVATwheretheexecutorisregisteredasavendor.

ESTATE DUTY

DONATIONS TAX

EXECUTORS REMUNERATION

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VATwasintroducedon30September1991at10%andincreasedto14%on7April1993.TheVATsystemcomprisesthreetypesofsupplies:

• Standard-rated supplies–suppliesofgoodsandservicessubjecttothe VATrateinforceatthetimeofsupply

• Exempt supplies–suppliesofcertainservicesnotsubjecttoVAT. Vendorsmakingexemptsuppliesarenotentitledtoinputcredits

• Zero-rated supplies–suppliesofcertaingoodsorservicessubjectto VATatzeropercent.Thefollowingare,amongstothers,specificallyzero- rated:brownbread,maizemeal,samp,mealierice,driedmaize,dried beans,lentils,pilchards(excludingpetfoodorsardinessuppliedintins), milkpowder(unflavoured),dairypowderblend,rice,freshvegetables (excludingcanned,bottledanddehydrated),freshfruit,vegetableoilused forcooking(excludingoliveoil),milkincludinglong-lifemilk(excluding condensed,flavoured,sweetenedandevaporatedmilk),culturedmilk, brownwheatenflour,raweggs,podvegetables,diesel,petroland illuminatingparaffin.Exportsalesandservicesarezero-rated,subjectto specificrequirements.SuppliesfromSouthAfricatoanIndustrial DevelopmentZonewillbetreatedasexports.

VATinputtaxcreditsmayingeneralnotbeclaimedinrespectof entertainmentandsedananddouble-cabtypemotorvehicles.

Allfee-basedfinancialservicesaresubjecttoVATwiththeexceptionof:• premiumspayableinrespectoflifepoliciesissuedintermsofthe InsuranceActandcontributionstopension,provident,retirement annuityandmedicalaidfunds;and• buyingorsellingofderivativesorgrantingofanoption.

Registration RequirementsAsfrom1March2009avendorisrequiredtoregisterforVATifturnoverina12monthperiodislikelytoexceedR1million(previouslyR300000).WhereturnoverislessthanR1million,butexceedsR50000(2009:R20000)andR60000inthecaseofcommercialrentalestablishmentsina12monthperiod,avendorcanregistervoluntarily.AllvendorsthatderegisterfromtheVATsysteminlightoftheincreaseintheVATregistrationthresholdtoR1millionwillbeallowedtopaytheexitVAToveraperiodofsixmonths.AregisteredmicrobusinessmaynotberegisteredforVAT.WhereturnoverislessthanR1,5million(previouslyR1,2million)ina12monthperiod,VATreturnsmayberenderedeveryfourmonths.WhereturnoverislessthanR30millionina12monthperiod,VATreturnsmayberenderedeverytwomonths.TurnoverinexcessofR30millionresultsinVATreturnshavingtoberenderedeverymonth.Farmers,withaturnoveroflessthanR1,5million(previouslyR1,2million),mayrenderVATreturnseverysixmonths.NormallyavendoraccountsforVATonaninvoicebasis.However,whereturnoverina12-monthperiodislikelytobelessthanR2,5million,onecanapplytobeplacedonapaymentsbasisifthevendorisanaturalpersonoranunincorporatedbodyofpersonswhosemembersarenaturalpersons.Ataxinvoicemustreflectthepurchaser’stradenameandVATregistrationnumber,ifthevalueisinexcessofR3000.

VALUE-ADDED TAX (VAT)

38 39

Foreign Capital AllowanceIndividuals,olderthan18years,ingoodstandingwithSARS,caninvestR4millionpercalendaryear(priorto5November2010:R4millionperlife-time)abroad.Incomeaccruingthereonmayalsoberetainedabroad.

Single Discretionary AllowanceIndividuals,olderthan18years,haveasinglediscretionaryallowanceof R1million(2010:R750000)percalendaryearformaintenance,gifts,travelandstudy.Individuals,youngerthan18years,haveatravelallowanceof R200000(2010:R160000)percalendaryear.

Miscellaneous TransfersApplication,supportedbythenecessarydocuments,canbemadefortheremittanceofalimonyandchildsupport,legalfees,feesforexaminationsheldinSouthAfrica,weddingexpensesandBarorBatMitzvahceremonies,seminarfees,subscriptionsandsportingevents,subjecttocertainmonetarylimitations.

Specialised Medical/Dental Expenses AbroadNolimit,providedsupportedbyoriginaldocumentaryevidenceofexpenses.

Full-time StudentsTravelandmaintenancecostsareincludedinthesinglediscretionary allowance.Tuitionandacademicfeesmaybepaiddirectlytotheinstitutionconcernedagainstoriginaldocumentaryevidence,withoutanylimit.

Philatelic and Numismatic ImportsNolimitapplicable,excludingSouthAfricangoldcoinsmintedafter1961.

Directors FeesNolimitisapplicabletodirectorsfeespaidtonon-residentsincluding emigrants.Applicationstobesupportedbyacopyofthedirectorsresolutionconfirmingtheamountpaidtogetherwithproofofnon-residentstatus.

GuaranteesNolimitisapplicabletoguaranteesgivenbynon-residentsforfinancial assistancetoSouthAfricanresidentswhoarenotaffectedpersons.

EmigrantsWheretheforeigncapitalallowancehasnotbeenfullyutilised,emigrantsarepermittedatop-upto:• R8millionpercalenderyearperfamilyunit• R4millionpercalenderyearpersingleemigrantHouseholdandpersonalandothereffects(excludingcoinswhicharelegaltenderinSouthAfrica)maybeexportedwithinanoverallinsuredvalueof R2millionperfamilyunitorsingleemigrant.Inaddition,theunutilisedportionofthesinglediscretionaryallowancemay beremitted60dayspriortodeparturebutnotafterdeparture.

InheritancesNon-residentsareentitledtotransfertheirinheritance,irrespectiveofwhetherthedeceasedwasresidentornon-residentinSouthAfrica.FormerSouthAfricanresidentshavetocompleteemigrationformalitiestoqualify.

Remittable IncomeTheincomeearnedbyanemigrantonhisblockedassetsisfreelyremittableabroad,afterprovidingforincometax.

Blocked AssetsUnlimitedblockedfundsmaybereleasedlocallyforanypurpose,exceptthegrantingofaloantoaSouthAfricanresident.

EXCHANGE CONTROL REGULATIONS

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Local Visits by EmigrantsThereisnolimitonthedailyutilisationofblockedfundsduringavisitbyanemigrantbutthesefundsmaynotbeloanedtoaSouthAfricanresident.Directreturnairflightsmaybepaidlocallyfromblockedfunds.

Restrictions on Local Financial AssistanceThe3:1ratiorestrictiononlocalfinancialassistancehasbeenabolishedforaffectedpersonswheretheborrowingisforworkingcapital.Localfinancialassistancesubjecttothe1:1ratioisavailableto: • Emigrantswhereblockedrandbalancesorblockedrandassetsareused ascollateral• Non-residentsiftheborrowingisrequiredfortheacquisitionof residentialorcommercialpropertyinSouthAfricaand/orfinancial transactions• Affectedpersonsiftheborrowingisrequiredfortheacquisitionof residentialpropertyinSouthAfricaorfinancialtransactions• Non-residentwhollyownedsubsidiariesiftheborrowingisrequiredfor theacquisitionofresidentialpropertyinSouthAfricaorfinancial transactions.

Foreign Investment in South AfricaNon-residentsenjoyunrestrictedrightstoinvestingiltsandshareslistedontheJSEandexporttheproceedsonthesalethereof.Interestanddividendsarealsofreelyremittable.Loansbynon-residentstoSouthAfricanindividuals/entitiesrequirepriorExchangeControlapproval.

Outbound Investments by CompaniesThelimitthatcanbeapprovedbyAuthorisedDealersisR500million (2008:R50million).ExchangeControlapprovalwillhavetobeobtainedforinvestmentsexceedingthislimit.

ENVIRONMENTAL EXPENDITUREExpenditureincurredbyataxpayertoconserveormaintainlandis deductibleifitiscarriedoutintermsofabiodiversitymanagementagreementwithadurationofatleastfiveyearsandthelandusedbythetaxpayerinhistradeconsistsof,includes,orisincloseproximitytothelandwhichissubjecttothisagreement.Wheretheconservationormaintenanceoflandownedbythetaxpayeriscarriedoutintermsofadeclarationofatleast30years’ duration,theexpenditureincurredisdeemedtobeadonationtothe Governmentwhichqualifiesasadeductionundersection18A.Incertaincircumstanceswherethelandisdeclaredanationalparkornaturereserveanannualdonationbasedon10%ofthelesserofcostormarketvalueofthelandisdeemedtobemadetotheGovernmentandqualifiesfor asection18Adeductionintheyearthedeclarationismadeandineachof thesubsequentnineyears.Recoupmentsarisewherethetaxpayerbreachestheagreementorviolatesthedeclaration.

Taxpayerswhoaremarriedincommunityofpropertyaretaxedonhalfoftheirowninterest,dividend,rentalincomeandcapitalgainandhalfoftheirspouses’interest,dividend,rentalincomeandcapitalgain,nomatterinwhosenametheassetisregistered(exceptforassetsexcludedfromthejointestate).Allothertaxableincomeistaxedonlyinthehandsofthespousewhoreceivesthatincome.

MARRIED INCOMMUNITYOFPROPERTY

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Retention periods commence from the date of the last entry in the particular record

Companies (IntermsofGovernmentGazettedated25November1983)

CertificateofIncorporation Indefinite CertificateofChangeofName Indefinite MemorandumandArticlesofAssociation Indefinite CertificatetoCommenceBusiness Indefinite Minutebook,CM25andCM26,aswellasresolutions passedatgeneralmeetings Indefinite

AnnualFinancialStatements 15years Booksofaccount 15years Supportingschedulestobooksofaccountand ancillarybooksofaccount 15years Fixedassetregisters 15years Proxyforms 3years

Close Corporations FoundingStatement(CK1) Indefinite AmendedFoundingStatement(CK2) Indefinite Minutebook Indefinite

AnnualFinancialStatements 15years Booksofaccount 15years Accountingrecordsincludingsupportingschedules 15years Fixedassetregisters 15years

When a company or close corporation reproduces its records on microfilm, the original may be destroyed after a period of three years The microfilm copies must be retained indefinitely

Other Suggested Periods of Retention(Whererelevantstatutoryorlegalrequirementshavebeentakenintoaccount)

Recordsoftrustmonies

Taxreturnsandassessments(afterdateofassessment) 5years

Staffpersonnelrecords(afteremploymentceased) 3years Salaryandwageregisters 3years

Paidchequesandbillsofexchange 6years

Invoices–salesandpurchases 5years Bankstatementsandvouchers 5years Stocksheets–listedcompany 6years Stocksheets–unlistedcompany 5years Year-endworkingpapers 5years VATrecords 5years Othervouchersandgeneralcorrespondence 5years

The above list is not comprehensive

RECOMMENDED GUIDELINE FOR THERETENTIONOFDOCUMENTSANDRECORDS

Retentionperiod

Indefinite

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