Pastel Tax Guide - Louis Marais and Partners tax guide 20132014 .pdf · • Access to previous...

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Tax Guide 2013/2014

Transcript of Pastel Tax Guide - Louis Marais and Partners tax guide 20132014 .pdf · • Access to previous...

Tax Guide2013/2014

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

• Allinformationcontainedhereinisbelievedtobecorrectatthetimeofpublication, 27February2013.Thecontentsshouldnotbeusedasabasisforactionwithout furtherprofessionaladvice.• Whileupmostcarehasbeentakeninthecompilationofthispublicationno responsibilitywillbeacceptedforanyinaccuracies,errorsoromissions.• Theinformationincorporatescommentaryfromthebudgetspeechbutthelegislation finallyenactedmaydifferconsiderably.• Changesinratesoftaxannouncedinthebudgetspeechforthetaxyear2014become effectiveonlyoncethelegislationisenactedbyParliament.• Copyrightsubsistsinthiswork.Nopartofthisworkmaybereproducedinanyformor byanymeanswithoutthepublisher’swrittenpermission.

chartered accountants& business advisers

1 Retirement Savings Reforms Anemployer’scontributiontoretirementfundsonbehalfofan employeewillbetreatedasataxablefringebenefitinthehandsofthe employee.Individualswillbeallowedtodeductupto27,5%ofthe higheroftaxableincomeoremploymentincomeforcontributionsto pension,providentandretirementannuityfundswithamaximum annualdeductionofR350000.Excesscontributionswillbecarried forward.2 Non-Retirement Reforms Taxpreferredsavingsandinvestmentaccountswillbeintroducedby April2015withaninitialannualcontributionlimitofR30000andalife- timelimitofR500000.Existinginterestexemptionswillberemoved.3 Tax Clearance Certificates Anautomatedtaxclearancesystemwillbeimplementedthisyear.4 Employment Incentive Anemploymentincentivewillbeintroducedthroughthetaxsystemfor firsttimejobseekers.5 Gambling Tax Agamblingtaxwasinitiallyproposedin2011.Thiswillbeimplemented bythecloseof2013attherateof1%ofgrossgamblingrevenue.6 Withholding Taxes Ithasbeenproposedthatcross-borderwithholdingtaxesbeextended toincludeservicefeesasfrom1March2014andalsothatthe implementationofchangesalreadylegislatedforwithholdingtaxon interestandroyaltiespaidtonon-residentsbedeferredtocoincide withthisdate.7 Small Business Corporations Simplificationofthetaxrequirementsforsmallbusinesseshasbeen proposed.TheturnoverthresholdwillincreasefromR14millionto R20millionandthegraduatedtaxratestructurewillbereviewed.8 Special Economic Zones Specialeconomiczoneswillbeestablishedwitha15%corporatetax rateandanemploymentincentiveallowanceforemployeesearning lessthanR16000perannum.9 Trusts Thetaxtreatmentregardingthedistributionofincomeandcapitalgains fromtrustswillbereviewed.

BUDGET PROPOSALS

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INDEX AdministrativePenalties 46ArbitrationAwards 16AssessedLossesRing-fenced 37BodyCorporates 41Bond/InstalmentRepayments 34Broad-BasedEmployeeEquity 9BudgetProposals 1BursariesandScholarships 9CapitalGainsTax 22CapitalIncentiveAllowances 19ConnectedPersons 27CorporateTransactions 25Deductions-Donations 41Deductions-Employees 11Deductions-Retirement 12Deductions-TravelExpenses 17DeemedCapital-DisposalofShares 27DeemedEmployees 8Directors-PAYE 27DividendsTax 3DonationsTax 47DoubleTaxationAgreements andWithholdingTaxes 30EffectiveTaxRate 4EnvironmentalExpenditure 39EstateDuty 47ExchangeControlRegulations 38ExecutorsRemuneration 47Exemptions-Individuals 11FarmingIncome 40ForeignCompanies/BranchTax 4FringeBenefits 14HeadquarterCompany 32HotelAllowances 18IndustrialPolicyProjects 26InterestRates-Changes 35IRP5Codes 42IT14SourceCodes 44LearnershipAllowance 26MarriedinCommunity ofProperty 46MedicalAidRebates/Credits 5MedicalExpenseDeduction/Credit 13NationalCreditAct 44Non-Residents 32OfficialInterestRates/Penalties 34Patent/IntellectualProperty 37

Pre-PaidExpenditure 25Pre-ProductionInterest 9Pre-TradingExpenditure 9PrimeOverdraftRates 35ProvisionalTax 10PublicBenefitOrganisations 41RecreationalClubs 41ReinvestmentRelief 25RelocationofanEmployee 18ResearchandDevelopment 25ResidenceBasedTaxation 28ResidentialBuildingAllowances 18RestraintofTrade 9RetentionofDocuments andRecords 48RetirementLumpSumBenefits 12RoyaltiestoNon-Residents 31SecuritiesTransferTax 27SkillsDevelopmentLevy 41SmallBusinessCorporations 7SecondaryTaxonCompanies 4StampDuty 27StrategicAllowances 22SubsistenceAllowances 16SuspensionofPayment 46TaxAdministrationBill 45TaxClearanceCertificates 45TaxRates-Companies 4TaxRates-Individuals 5TaxRates-Trusts 6TaxRebates 5TaxThresholds 5Transfer Duty 33TravelAllowances 16Trusts-Losses 6TurnoverTax-MicroBusinesses 6UnderstatementPenaltyTable 45UnquantifiedProceeds 33Value-AddedTax 36VariableRemuneration 17VATReliefforDevelopers 37VATReliefInter-group 37VentureCapitalInvestments 26VoluntaryDisclosureProgramme 45WearandTearAllowances 20WithdrawalLumpSumBenefits 12WithholdingTaxonInterest 32

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DIVIDENDS TAX

Asfrom1April2012,DividendsTaxbecameapplicabletoallSouthAfricanresidentcompaniesaswellasnon-residentcompanieslistedontheJSE.DividendsTaxisbornebytheshareholderatarateof15%(subjecttoanyreductionintermsofadoubletaxationagreement).Taxondividendsin specieremainstheliabilityofthecompanydeclaringthedividend.

Exemptions from Dividends TaxThefollowingshareholdersareexemptfromDividendsTax:SouthAfricanresidentcompanies,theGovernment,PBO’s,certainexemptbodies,closurerehabilitationtrusts,pension,providentandsimilarfunds,shareholdersinaregisteredmicrobusiness(providedthedividenddoesnotexceedR200000 inthatyearofassessment),andanon-residentreceivingadividendfromanon-residentcompanywhichislistedontheJSE,i.e.adual-listedcompany.Thesameexemptionsapplyinrespectofdividendsin specie.

Withholding Tax ObligationsInrespectofdividends,otherthandividendsin specie,thecompanydeclaringthedividendisrequiredtowithholdtheDividendsTaxonpayment.Liability forwithholdingtaxshiftsifthedividendispaidtoaregulatedintermediarywhichincludescentralsecuritiesdepositoryparticipants,brokers,collective investmentschemes,approvedtransfersecretariesandlistedinvestmentserviceproviders.DividendsTaxcanbeeliminatedorreduceduponthe timelyreceiptofawrittendeclarationthattheshareholderiseitherentitledtoanexemptionortodoubletaxationagreementreliefandawrittenunder- takingfromtheshareholderthatthecompanywillbeinformedshouldtherebeachangeinstatus.Inthecaseofdividendsin speciethereisnowithholdingobligationasthetaxremainsaliabilityofthecompanydeclaringthedividend.However,theDividendsTaxmaysimilarlybeeliminatedorreducedontimelyreceiptoftherelevantdeclarationsandundertakings.

STC CreditsSTCcreditsmustbeusedonorbefore1April2015.STCcreditswillbe exhaustedfirst.Allcompaniesweredeemedtohavedeclaredadividendof nilon31March2012inordertoascertaintheSTCcreditsthatwouldbe availableforset-offfrom1April2012.

Revised Dividend DefinitionAsfrom1January2011,thedefinitionofadividendhasbeensimplifiedand includesalldistributionstoashareholderotherthan,amongstothers,a reductionofcontributedtaxcapital(whichconsistsofuntaintedshare premiumandsharecapitalofacompany),capitalisationissuesandageneralsharebuy-backbyaJSElistedcompany.Inorderforadistributionofcontributedtaxcapitalnottoberegardedasa dividendthedirectorsmust,immediatelypriortothedistribution,recordinwritingthatcontributedtaxcapitalisbeingdistributed.

Interest-Free LoansThereisadeemeddividendimplicationwherealowinterestorinterest-freeloanoradvanceismadebyacompanytoaresidentnaturalpersonortrustwhichisconnectedtothecompanyortoaperson(otherthanacompany) whoisconnectedtosuchnaturalpersonortrust.Thedeemeddividendis calculatedbyapplyingtotheloanoradvancethedifferencebetweenthe officialinterestrateandtheratechargedbythecompany.

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Income TaxForyearsofassessmentendingduringthefollowingperiods:1April1994-31March1999 35%1April1999-31March2005 30%1April2005-31March2008 29%1April2008-31March2014 28%

TAX RATES COMPANIES

SA Income - Foreign Company/Branch TaxForyearsofassessmentendingduringthefollowingperiods:

1April1996-31March1999 40%1April1999-31March2005 35%1April2005-31March2008 34%1April2008-31March2012 33%1April2012-31March2014 28%

Secondary Tax on CompaniesDividenddeclaredbetween17March1993and21June1994 15%Dividenddeclaredbetween22June1994and13March1996 25%Dividenddeclaredbetween14March1996and30September2007 12,5%Dividenddeclaredbetween1October2007and31March2012 10%

EFFECTIVE TAXRATE

Assumesallprofitsaredeclaredasadividend.

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

Availablefordistribution 72,00 72,00 72,00 72,00Less:Dividend 65,45 65,45 72,00 72,00Less:STC 6,55 6,55 n/a n/a

Retained 0 0 0 0

Totaltax 34,55 34,55 38,80 38,80

Normaltax 28,00 28,00 28,00 28,00STC 6,55 6,55 n/a n/aDividendsTax n/a n/a 10,80 10,80

Effectiverate 34,55% 34,55% 38,80% 38,80%

2012 2013 2013 2014 Priorto From 1April2012 1April2012

Tax year

R R R R

Dividend TaxDividenddeclaredfrom1April2012 15%

TAX RATES INDIVIDUALS-2013

Taxable income Rates of taxR0-R160000 18%ofeachR1R160001-R250000 R28800+25%oftheamountover R160000R250001-R346000 R51300+30%oftheamountover R250000R346001-R484000 R80100+35%oftheamountover R346000R484001-R617000 R128400+38%oftheamountover R484000R617001+ R178940+40%oftheamountover R617000

TAX RATES INDIVIDUALS-2014

Amounts deductible from the tax payable 2013 2014Personsunder65 R11440 R12080Persons65andunder75 R17830 R18830Persons75andover R19960 R21080

Theserebatesareonlyavailabletoindividuals.

TAX REBATES

Monthly amounts deductible from tax payable 2013 2014Personsunder65 R230 R242Personsunder65withonedependant R460 R484Personsunder65withtwodependants R614 R646

EachadditionaldependantqualifiesforafurtherrebateorcreditofR162(2013:R154)permonth.

REBATES/CREDITS

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TAX THRESHOLDS

Taxable income 2013 2014Personsunder65 R63556 R67111Persons65andunder75 R99056 R104611Persons75andover R110889 R117111

MEDICAL AID

Taxable income Rates of taxR0-R165600 18%oftaxableincomeR165601-R258750 R29808+25%oftheamountover R165600R258751-R358110 R53096+30%oftheamountover R258750R358111-R500940 R82904+35%oftheamountover R358110R500941-R638600 R132894+38%oftheamountover R500940R638601+ R185205+40%oftheamountover R638600

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Taxable income Rate of taxAlltaxableincome 40%Specialtrustsaretaxedattheratesapplicabletoindividuals.Aspecial trustisonecreatedsolelyforthebenefitofapersonaffectedbyamentalillnessorseriousphysicaldisabilitywhichpreventsthatpersonfromearningsufficientincometomaintainhimself,oratestamentarytrustestablishedsolelyforthebenefitofminorchildrenwhoarerelatedtothedeceased.Wherethepersonforwhosebenefitthetrustwasestablished diespriortooronthelastdayoftheyearofassessmentortheyoungestbeneficiary,inthecaseofatestamentarytrust,turns18(2013:21)years ofagepriortooronthelastdayoftheyearofassessment,thetrustwill nolongerberegardedasaspecialtrust.

TAX RATES TRUSTS-2013AND2014

Alossincurredbyatrustcannotbedistributedtobeneficiaries.Thelossisretainedinthetrustandcarriedforwardtothenextyearasanassessedloss.

TRUSTS LOSSES

TURNOVER TAX MICROBUSINESSESAsfrom1March2009,asimplifiedturnover-basedtaxsystemwas introducedforsmallsoleproprietors,partnershipsandincorporated businesseswithaturnoveroflessthanR1millionperyear.Thissystemiselective.Witheffectfromyearsofassessmentcommencing 1March2012,amicrobusinesscanvoluntarilyexitthesystemattheendofanyyearofassessment.However,onceoutofthesystemthetaxpayerwill notbepermittedtore-enter.Priortothis,athreeyearlock-inperiodexistedforexitandre-entryintothesystem.Personalservicesrenderedunderemployment-likeconditionsandcertainprofessionalservicesareexcluded fromthissystemtowhichthefollowingratesapply:

Turnover R0-R150000 Nil

R150001-R3000001%oftheamountoverR150000

R300001-R500000 R1500+2%oftheamountoverR300000

R500001-R750000 R5500+4%oftheamountoverR500000

R750001-R1000000 R15500+6%oftheamountoverR750000

Rates of tax

Yearsofassessmentendingbetween1April2013and31March2014

Turnover R0-R150000 Nil

R150001-R3000001%oftheamountoverR150000

R300001-R500000 R1500+2%oftheamountoverR300000

R500001-R750000 R5500+4%oftheamountoverR500000

R750001-R1000000 R15500+6%oftheamountoverR750000

Rates of taxYearsofassessmentendingbetween1April2012and31March2013

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Yearsofassessmentendingbetween1April2013and31March2014

Yearsofassessmentendingbetween1April2012and31March2013

Applies if:• Allshareholdersormembersthroughouttheyearofassessmentare naturalpersonswhoholdnosharesinanyotherprivatecompaniesor members’interestsinanyotherclosecorporationsorco-operatives otherthanthosewhich: - areinactiveandhaveassetsoflessthanR5000;or - havetakenstepstoliquidate,wind-uporderegister(effectivefor yearsofassessmentcommencingonorafter1January2011).• GrossincomefortheyearofassessmentdoesnotexceedR20million (2013:R14million)• Notmorethan20%ofthegrossincomeandallthecapitalgains consistscollectivelyof investment incomeandincomefromrendering a personal service. Investment income includesanyannuity,interest,rentalincome,royalty oranyincomeofasimilarnature,localdividends,foreigndividends(from 1April2012)andanyproceedsderivedfrominvestmentortradingin financialinstruments(includingfutures,optionsandotherderivatives), marketablesecuritiesorimmovableproperty. 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 holdsaninterestinthecompany,co-operativeorclosecorporation, exceptwheresuchsmallbusinesscorporationemploysthreeormore unconnectedfull-timeemployeesforcoreoperationsthroughouttheyear ofassessment• Thecompany,closecorporationorco-operativeisnotanemployment entity.

Taxable income Rates of tax R0-R63556 NilR63557-R350000 7%oftheamountoverR63556R350001+ R20051+28%oftheamountoverR350000

Taxable income Rates of taxR0-R67111 NilR67112-R365000 7%oftheamountoverR67111R365001-R550000 R20852+21%oftheamountoverR365000R550001+ R59702+28%oftheamountoverR550000

SMALL BUSINESS CORPORATIONS

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

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Foryearsofassessmentcommencingonorafter1March2009:• A labour brokerisanaturalpersonwho,forreward,providesa clientwithotherpersonstorenderaservicefortheclientor procuresotherpersonsfortheclientandremuneratessuch persons• A personal service provider isacompany,closecorporationor trustwhereanyservicerenderedonbehalfoftheentitytoitsclient isrenderedpersonallybyanypersonwhoisaconnectedpersonin relationtosuchentity,andoneofthefollowingprovisionsapply: - thepersonwouldhavebeenregardedasanemployeeofthe client,iftheservicewasnotrenderedthroughanentity;or - thepersonorentityrenderingtheservicemustperformsuch servicemainlyatthepremisesoftheclientandsuchpersonor entityissubjecttothecontrolorsupervisionofsuchclientasto themannerinwhichthedutiesareperformed;or

- morethan80%oftheincomederivedfromservicesrenderedis receivedfromoneclientorassociatedpersoninrelationtothe client• Theentitywill,however,notberegardedasapersonal service provider wheresuchentityemploysthreeormoreunconnected full-timeemployeesforcoreoperationsthroughouttheyearof assessment.

Implications• Alabourbrokernotinpossessionofanexemptioncertificateis subjecttoPAYEonincomereceivedattheratesapplicableto individualtaxpayers.Deductibleexpenditureislimitedto remunerationpaidtoemployees• ApersonalserviceproviderissubjecttoPAYEattherateof 28%(2012:33%)inthecaseofacompanyand40%inthecase of a trust• NoPAYEisrequiredtobedeductedwheretheentityprovides anaffidavitconfirmingthatitdoesnotreceivemorethan80%ofits incomefromonesource• ThedeemedemployeemayapplytoSARSforataxdirectivefora lowerrateoftaxtobeapplied• Deductionsavailabletopersonalserviceprovidersarelimitedto remunerationtoemployees,contributionstopension,providentand benefitfunds,legalexpenses,baddebts,expensesinrespectof premises,financecharges,insurance,repairs,fuelandmaintenance inrespectofassetsusedwhollyandexclusivelyfortradeandany amountpreviouslyincludedintaxableincomeandsubsequently refundedbytherecipient.

Labour brokers andpersonalserviceprovidersareregardedasdeemedemployees.

DEEMED EMPLOYEES

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Thedeductionofexpenditureandlossesincurredinconnectionwith,butpriortothecommencementof,tradeisallowed,providedtheexpenditureandlosses,includingsection24Jinterest,wouldhavebeendeductiblehad thetradecommenced.Suchexpenditureandlossesarering-fencedand canonlybeset-offagainstincomefromthattrade.Thebalanceiscarriedforwardandcanbeclaimedinasubsequentyearofassessment.

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

PRE–TRADING EXPENDITURE

BROAD-BASED EMPLOYEEEQUITY

RESTRAINT OFTRADE

Gross IncomeAnyamountreceivedbyoraccruedtoanynaturalperson,labourbrokerorpersonalserviceproviderforarestraintoftradeimposedonsuchperson, isincludedintherecipient’sgrossincomeintheyearofreceiptoraccrual.DeductionWhereanexpensewasincurredinrespectofarestraintoftradeimposedonanyperson,thededuction,inayearofassessment,islimitedtothelesserof:• theexpenseapportionedovertheperiodforwhichtherestraintapplies;or• one-thirdoftheamountincurredperyear.Nodeductionisallowedwheretheexpensedidnotconstituteincomeinthehandsoftherecipient.

Priorto1January2012,interestandrelatedfinancechargesincurredonanyborrowingfortheacquisition,installation,erectionorconstructionofanymachinery,plant,buildingorimprovementstoabuildingorotherassets,includingland,weredeductiblewhentheassetwasbroughtintouseinthe productionofincome.Suchexpensesarenowdeductibleaspre-tradingexpenditure.

PRE–PRODUCTION INTEREST

BURSARIES ANDSCHOLARSHIPS

Bona fidescholarshipsorbursariesgrantedtoenableanypersontostudy atarecognisededucationalinstitutionareexemptfromtax.Wherethebenefitisgrantedtoanemployee,theexemptionwillnotapplyunlesstheemployeeagreestoreimbursetheemployerintheeventthatthestudiesarenotcompleted.Wherethebeneficiaryisarelativeoftheemployee,theexemptionwillonlyapplyiftheannualremunerationoftheemployeeislessthanR200000(2013:R100000)andtotheextentthatthebursarydoesnotexceedR30000(2013:R10000)inrespectofhighereducationandR10000(2013:R10000)forbasiceducation.

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PROVISIONAL TAX

Allprovisionaltaxpayersarerequiredtosubmittwoprovisionaltaxreturnsayear.Athirdvoluntarypaymentmaybemadetoavoidinterestbeingcharged.

First Year of AssessmentWhereataxpayerhasnotbeenassessedpreviously,areasonableestimateofthetaxableincomemustbemade.Thebasicamountcannotbeestimatedatnil,unlessfullymotivated.

First PaymentOnehalfofthetotaltaxinrespectoftheestimatedtaxableincomeforthe yearispayablewithinsixmonthsofthebeginningoftheyearofassessment.Theestimateoftaxableincomemaynotbelessthanthebasicamountwithout theconsentofSARS.

Second PaymentAtwo-tiersystemappliesdependingonthetaxpayer’staxableincome:• Actual taxable income of R1 million or less Toavoidanyadditionaltaxthebasicamount,asdefined,canbeused. Ifalowerestimateisused,theestimatemustbewithin90%ofthetaxable incomefinallyassessed.• Actual taxable income exceeds R1 million Toavoidanyadditionaltaxtheestimatemustbewithin80%ofthetaxable income,excludingretirementfundlumpsums,finallyassessed.Iftheaboverequirementsarenotmet,additionaltaxof20%oftheprovisionaltaxunderpaidwillbeimposed.

Third PaymentThirdprovisionalpaymentsareonlyapplicabletoindividualsandtrustswithtaxableincomeinexcessofR50000andcompaniesandclosecorporationswithtaxableincomeinexcessofR20000.Suchpaymentsmustbemadebefore30SeptemberinthecaseofataxpayerwithaFebruaryyearendandwithinsixmonthsofotheryearendstoavoidinterestbeingcharged.

Basic AmountThebasicamountisthetaxableincomeofthelatestprecedingyearof assessment,increasedby8%p.a.,ifthatassessmentismorethanayearold.

Permissable Reductions in the Basic AmountCapitalgainsandretirementfundlumpsumsarenotincludedinthebasicamount.However,ifanestimatelowerthanthebasicamountisused,capitalgainsmustbeincludedintheestimate. CapitalgainsmustbeincludedinthesecondprovisionaltaxestimateifthetaxableincomeisexpectedtoexceedR1million.

EstimatesSARShastherighttoincreaseanyprovisionaltaxestimate,evenifbasedonthebasicamount,toanamountconsideredreasonable.

Persons over 65 yearsPersonsover65years,excludingdirectorsofcompaniesandmembersofclosecorporations,whosetaxableincomedoesnotexceedR120000(2009:R80000)areexemptfromprovisionaltax,providedthatsuchincomeconsistsexclusivelyofremuneration,rental,interestorforeigndividends.

Persons under 65 yearsPersonsunder65yearswhodonotcarryonbusinessandwhosetaxable incomedoesnotexceedthetaxthresholdorwhoseinterest,foreign dividendsandrentalincomedonotexceedR20000(2008:R10000)areexemptfromprovisionaltax.

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Salariedemployeesorholdersofofficearerestrictedtothefollowing deductionsfromtheirremuneration:• Baddebtsallowance• Pensionorretirementannuityfundcontributions• DonationstocertainPBO’s• Doubtfuldebtsallowance• Homeofficeexpenses,subjecttocertainrequirements• Legalexpenses• Medicalaidfundcontributionsandotherqualifyingmedicalexpenses• Premiumspaidintermsofanallowableinsurancepolicy - totheextentthatthepolicycoversthepersonagainstlossof incomeasaresultofillness,injury,disabilityorunemployment,and - inrespectofwhichallamountspayableintermsofthepolicy constituteincomeasdefined• Refundedawardsforservicesrenderedandrefundedrestraintoftrade awardsasfrom1March2008• Wearandtearallowance.

• DividendsreceivedoraccruedfromSouthAfricancompaniesorJSEdual listednon-residentcompaniesaregenerallynotsubjecttoincometax.• Interestreceivedbyoraccruedtonon-residentsisexemptfromnormal taxunlesstheindividualwasphysicallypresentinSouthAfricafora periodexceeding183daysinagregateorcarriedonbusinessthrougha permanentestablishmentinSouthAfricaatanytimeduringthetwelve monthperiodpriortodateofreceiptoraccrual(upto30June2013: duringtheyearofassessment).• SouthAfricansourcedinterestreceivedbynaturalpersons: Personsunder65years R23800 (2013:R22800) Persons65yearsandolder R34500 (2013:R33000) Interestincludesdistributionsfrompropertyunittrustsaswellasforeign interest.• Asfrom1March2012,theforeigninterestanddividendexemption (2012:R3700)fallsaway.Theforeigndividendexemptionisreplaced byaformulawherebythemaximumeffectiverateoftaxationis15%.• Unemploymentinsurancebenefits.• RoadAccidentFundpayoutsasfrom1March2012.Termination Lump Sum from EmployerAsfrom1March2011,employerprovidedseverancepaymentsforreasons ofage,illhealthandretrenchmentarealignedwiththetaxationoflumpsumbenefits,includingtheR315000(2011:R300000)taxfreelimit.Inthecaseofretrenchmentthisconcessiondoesnotapplywherethatpersonatanytimeheldaninterestofmorethan5%inthatentity.CompensationAsfrom1March2007,compensationawardspaidbyanemployeronthedeathofanemployeeinthecourseofemploymentareexempttotheextentofR300000.Asfrom1March2011,previousretrenchmentexemptionsarenolongerset-offagainstthisamount.

DEDUCTIONS EMPLOYEES

EXEMPTIONS INDIVIDUALS

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Current Pension Fund ContributionsLimitedto7,5%ofremunerationfromretirement-fundingemploymentor R1750,whicheveristhegreater.Remunerationfromretirement-funding employmentreferstoincomewhichistakenintoaccounttodetermine contributionstoapensionorprovidentfund.Excesscontributionsarenotcarriedforwardtothenextyearofassessmentbutareaccumulatedforthepurposeofdeterminingthetax-freeportionofthelumpsumuponretirement.Arrear Pension Fund ContributionsUptoamaximumofR1800peryear.Anyexcessmaybecarriedforward.Current Retirement Annuity Fund ContributionsLimitedto15%oftaxableincomefromnon-retirement-fundingemploymentexcludinganyretirementfundlumpsumbenefits,orR3500lesscurrent contributionstoapensionfund,orR1750,whicheveristhegreater.Any excessmaybecarriedforward.Reinstated Retirement Annuity Fund ContributionsUptoamaximumofR1800peryear.Anyexcessmaybecarriedforward.Income Protection ContributionsInsurancepremiumspaidonincomeprotectionpoliciestotheextentthatsuchamountsreceivedunderthepolicyconstituteincomeasdefined.

DEDUCTIONS RETIREMENT

RETIREMENT LUMPSUMBENEFITSAsfrom1October2007,thetaxable portionofalumpsumfromapension,providentorretirementannuityfundonretirementordeathisthelumpsumlessanycontributionsthathavenotbeenallowedasataxdeductionplus the taxable portion of all lump sums previously received.Asfrom1March2011,certainseverancebenefitsarealsotaxedintermsofthistable.Thisamountissubjecttotaxatthefollowingratesless any tax previously paid:

Taxable portion of lump sum R0-R315000 0%R315001-R630000 18%oftheamountoverR315000R630001-R945000R56700+27%oftheamountoverR630000R945001+ R141750+36%oftheamountoverR945000

WITHDRAWAL LUMPSUMBENEFITSAsfrom1March2009,thetaxable portionofapre-retirementlumpsumfromapensionorprovidentfundistheamountwithdrawnlessanytransfertoanewfund 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

Thetaxablelumpsumcannotbeset-offagainstanyassessedlossofthetaxpayer.

13

MEDICAL EXPENSE DEDUCTION/CREDIT

2013 and 2014 Tax Years• 65 years and older Medicalaidcontributionspaidbythetaxpayeroremployerandotherqualifying medicalexpensesmaybeclaimedasadeductionagainsttaxableincome

• Younger than 65 years - Medicalaidcontributionsmaybeclaimedasamedical scheme fees tax creditagainsttaxpayableasfollows: - R242(2013:R230)permontheachforthetaxpayerandthefirst dependant - R162(2013:R154)permonthforeachadditionaldependant - Adeductionmaybeclaimedagainsttaxableincomeinrespectof: - somuchofthemedicalaidcontributionspaidbythetaxpayeror employerasexceedsfourtimesthemedical scheme fees tax credit and - otherqualifyingmedicalexpenses - Theamountclaimedislimitedtotheextentthatitexceeds7.5%oftaxable incomebeforethisdeductionandanyretirementfundlumpsumbenefitor severancebenefit

• Younger than 65 years if an immediate family member has a disability - Medicalaidcontributionsmaybeclaimedasamedical scheme fees tax credit againsttaxpayableasabove - Excesscontributionsandotherqualifyingmedicalexpensesmaybededucted againsttaxableincome,asabove,butwithoutthe7.5%limit.

2015 Tax Year• 65 years and older and younger than 65 years if an immediate family member has a disability Medicalaidcontributionsmaybeclaimedasamedical scheme fees tax credit againsttaxpayableasabove.

Excesscontributionsandotherqualifyingmedicalexpensesmaybeclaimedas an additional medical expenses tax creditcalculatedasfollows: - {[Medical aid contributions - (medical scheme fees tax credit x 3)] + other qualifying medical expenses}, dividedbyafactorof3.

• Younger than 65 years Medicalaidcontributionsmaybeclaimedasamedical scheme fees tax credit againsttaxpayableasabove.

Excesscontributionsandotherqualifyingmedicalexpensesmaybeclaimedas an additional medical expenses tax creditcalculatedasfollows: - Theamountbywhichtheformula{[medical aid contributions - (medical scheme fees tax credit x 4)] + other qualifying medical expenses} exceeds7.5%oftaxable income,dividedbyafactorof4.

Other qualifying medical expenses include:• paymentstomedicalpractitioners,nursinghomesandhospitals• paymentstopharmacistsforprescribedmedicines• paymentsforphysicaldisabilities,includingremedialteachingandexpenditure incurredformentallyhandicappedpersons.

Disabilitymeansamoderatetoseverelimitationofaperson’sabilitytofunctionorperformdailyactivitiesasaresultofphysical,sensory,communication,intellectualormentalimpairment,ifthelimitationlastsmorethanayearandisdiagnosedbyaregisteredmedicalpractitioner.

Recoveryofexpenses(includingamountsreceivedfromamedicalaidsavings account)reducestheclaim.

Expenditurepaidbyataxpayeronbehalfofaspouseorchildmustbeclaimedby the taxpayerwhopaidtheexpense.

14

Use of Company Provided Motor VehicleForvehiclesacquiredorfinanced,thedeterminedvalueforthefringebenefitisthecashcostincludingVATbutexcludingfinancechargesandinterest.Theemployeewillbetaxedon3.5%(2011:2.5%)permonthofthedeterminedvalueofthemotorvehiclelessanyconsiderationpaidbytheemployeetowardsthecostofthevehicle.Thefringebenefitisreducedto3.25%if,atthetimeacquired,thevehicleissubjecttoamaintenanceplanfornolessthanthreeyearsand/or60000kilometres.Asfrom1March2013,forvehiclesacquiredunderanoperatinglease,thevalueofthefringebenefitisbasedontherentalandfuelcosttotheemployer.Whereanemployeeisgiventheuseofmorethanonevehicleandcanshowthateachvehicleisusedprimarilyforbusinesspurposes,thevalueplacedontheprivateuseofallthevehiclesisdeterminedaccordingtothevalue attributedtothevehiclecarryingthehighestvalueforprivateuse.ForPAYEpurposestheemployerisrequiredtoincludeintheemployee’smonthlyremuneration80%ofthetaxablebenefit.Theinclusionratemaybe limitedto20%iftheemployerissatisfiedthatatleast80%oftheuseofthevehicleforayearofassessmentwillbeforbusinesspurposes.OnassessmentSARSmust,provideditissatisfiedthataccuraterecordshavebeenkeptinrespectofdistancestravelledfor:• businesspurposes,reducethevalueofthefringebenefitbythesame proportionthatthebusinessdistancebearstothetotaldistancetravelled duringtheyearofassessment• privatepurposesandtheemployeehasbornethecostofthefollowing vehiclerunningexpenses,reducethevalueofthefringebenefit: - bythesameproportionthattheprivatedistancebearstothetotal distancetravelledduringtheyearofassessment,inthecaseof licence,insuranceandmaintenancecosts - byapplyingtheprescribedrateperkilometretothekilometrestravelled forprivatepurposesinthecaseofthefuelcostpertainingtoprivateuse.Novalueisplacedontheprivateuseofacompanyownedvehicleif:• itisavailabletoandusedbyallemployees,privateuseisinfrequentand incidentaltothebusinessuseandthevehicleisnotnormallykeptator nearthatemployee’sresidencewhennotinuseoutsidebusinesshours• thenatureoftheemployee’sdutiesrequiresregularuseofthevehiclefor theperformanceofdutiesoutsidenormalhoursofworkandprivateuse isinfrequentorincidentaltobusinessuseorlimitedtotravelbetween placeofresidenceandplaceofwork.TheprovisionofacompanyownedvehicleconstitutesadeemedsupplywhichattractsoutputVATforthevendoremployer.Thedeemedconsiderationisasfollows:Motorvehicle/Doublecab 0,3%ofcostofvehicle(excl.VAT)permonthBakkies 0,6%ofcostofvehicle(excl.VAT)permonth

Use of Business Cellphones and ComputersAsfrom1March2008,notaxablevalueisplacedontheprivateuseby employeesofemployer-ownedcellphonesandcomputerswhichareusedmainlyforbusinesspurposes.

Low Interest/Interest-Free Loans• Thefringebenefitisthedifferencebetweentheinterestratechargedby theemployerandtheofficialinterestrateappliedtotheloanamount• NofringebenefitariseswheretheloanislessthanR3000• Nofringebenefitariseswherealoanismadetoanemployeetofurther hisownstudies.

FRINGE BENEFITS

15

Long Service and Bravery AwardsR5000ofthevalueofanyassetawarded,excludingcash,isnotsubjecttotax.

Medical Aid ContributionsAsfrom1March2010,thefullcontributionbyanemployerisafringebenefit.Iftheemployermakesalumpsumpaymentforallemployees,thefringe benefitisdeterminedinaccordancewithaformula,whichwillhavetheeffectofapportionmentamongstallemployeesconcerned.Thefringebenefithasnovaluewherethecontributionisinrespectof:• anemployeeretiredduetosuperannuationorillhealth• dependentsofadeceasedemployee.

Holiday AccommodationTheemployeeistaxedontheprevailingmarketrateifthepropertyisownedbytheemployerorrentedfromanassociatedentity,ortheactualrentaliftheemployerrentedtheaccommodationfromathirdparty.

Residential Accommodation Supplied by EmployerThevalueofthefringebenefittobetaxedistherentalvaluelessany considerationpaidbytheemployee.Wheretheaccommodationisnotownedbytheemployer,therentalvalueisthegreateroftheformulavalueortherentalandotherexpensespaidbytheemployer.Theformulavalueisused:• wheretheaccommodationisownedbytheemployer• wheretheaccommodationisnotownedbytheemployerbutisprovided for a bona fidebusinesspurposewhereitiscustomarytoprovidefreeor subsidisedaccommodationtoemployeesanditisnecessaryforthe particularemployertoprovidefreeaccommodationforproperperformance oftheemployee’sdutiesorasaresultoffrequentmovementofemployees orlackofexistingaccommodation.Asfrom1March2008,norentalvalueisplacedonthe:• supplyofaccommodationtoanemployeeawayfromhisusualplaceof residenceinSouthAfricafortheperformanceofhisduties• supplyofaccommodationinSouthAfricatoanemployeeawayfromhis usualplaceofresidenceoutsideSouthAfricaforatwoyearperiod.This concessiondoesnotapplyiftheemployeewaspresentinSouthAfricafor morethan90daysinthetaxyearpriortothedateofarrivalforthepurpose ofhisduties.ThereisamonthlymonetarycapofR25000.

Employer-Owned Insurance PoliciesAsfrom1March2012,anypremiumpaidbyanemployertoanyinsurerunderanemployer-ownedinsurancepolicy(grouplifeordisabilityplan),directlyorindirectly,forthebenefitoftheemployee,spouse,child,dependantornomineeistaxedinthehandsoftheemployeeasafringebenefit.Thepremiummay,however,qualifyasanincomeprotectioninsurancecontributiondeductionbytheemployee.Iftheemployermakesalumpsumpaymentforallemployees,thefringebenefitisdeterminedinaccordancewithaformula,whichwillhavetheeffectofapportionmentamongstallemployeesconcerned.

Uniform AllowanceAnemployermayprovideauniformtoanemployeeoranallowanceinorder topurchasesuchuniform.Novalueisplacedonthefringebenefitprovidedthattheemployeeisrequired,whileonduty,toweartheuniformanditisclearlydistinguishablefromordinaryclothing.

Free or Subsidised Meals and RefreshmentsFreeorsubsidisedmealsprovidedbytheemployergiverisetoafringebenefit.Thevalueofthisfringebenefitisthecosttotheemployerlessany considerationpaidbytheemployee.Novalueisplacedonthebenefitif:• itisprovidedinaplacemainlyorwhollypatronisedbytheemployeesora placeontheemployer’spremises• itisprovidedduringbusinesshours(normalorextended)oronaspecial occasion.

16

TRAVEL ALLOWANCESFixed Travel AllowancesAsfrom1March2010,80%ofthefixedtravelallowanceissubjecttoPAYE.Asfrom1March2011,wheretheemployerissatisfiedthatatleast80%oftheuseofthevehiclefortheyearofassessmentwillbeforbusinesspurposes,theinclusionratemaybelimitedto20%.Thefullallowanceisdisclosedontheemployee’sIRP5certificate,irrespectiveofthepercentageofbusinesstravel.Reimbursive Travel ExpensesWhereanemployeereceivesareimbursementbasedontheactualbusinesskilometrestravelled,noothercompensationispaidtotheemployeeandthecostiscalculatedinaccordancewiththeprescribedrateof324cents (2013:316cents)perkilometre,noPAYEisdeductible,providedthebusinesstraveldoesnotexceed8000kilometresperyear. Thereimbursementmustbedisclosedundercode3703ontheIRP5certificate.NoPAYEiswithheldandtheamountisnotsubjecttotaxationonassessment.Ifthebusinesskilometrestravelledexceed8000kilometresperyear,orifthereimbursiverateperkilometreexceedstheprescribedrate,orifother compensationispaidtotheemployeetheallowancemustbedisclosed separatelyundercode3702ontheIRP5certificate.Asfrom1March2013, PAYEiswithheldonapaymentbasis.

ARBITRATION AWARDSArbitrationawardsaregenerallyawardedduetounfairdismissal,terminationoftheemploymentcontractpriortotheexpirydateorunfairlabourpractices.Amountspaidduetounfairdismissalandearlyterminationofthecontractconstituteremunerationandaretaxable.Amountspaidduetounfairlabourpracticemaybeincludedinremuneration.

Ifanemployeeisobligedtospendatleastonenightawayfromhisusual residenceinSouthAfricaonbusiness,theemployermaypayanallowanceforpersonalsubsistenceandincidentalcostswithoutsuchamountsbeing includedintheemployee’staxableincome,subjecttotheemployeetravellingforbusinessbynolaterthantheendofthefollowingmonth.Ifsuchallowanceispaidtoanemployeeandthatemployeedoesnottravelforbusinesspurposesbytheendofthefollowingmonth,theallowancebecomessubjecttoPAYEinthatmonth.Iftheallowancesdonotexceedtheamountsorperiodsdetailedbelow,thetotalallowancemustbereflectedundercode3714ontheIRP5certificate.Wheretheallowancesexceedtheamountsorperiodsdetailedbelow,thetotalallowancemustbereflectedundercode3704(local)or3715(foreign)ontheIRP5certificate.Thefollowingamountsaredeemedtohavebeenexpendedbyanemployeeinrespectofasubsistenceallowance:Local travel• R98(2013:R93)perdayorpartofadayforincidentalcosts;or• R319(2013:R303)perdayorpartofadayformealsandincidental costs.Whereanallowanceispaidtoanemployeetocoverthecostofaccommo- dation,mealsandincidentalcosts,theemployeehastoprovehowmuchwasspentwhileawayonbusiness,whichislimitedtotheallowancereceived.Overseas travelActualaccommodationcostsplusanallowancepercountryassetouton www.sars.gov.za(2009:$215)perdayformealsandincidentalcostsincurredoutsideSouthAfrica.Thedeemedexpenditureisnotapplicablewherethe absenceisforacontinuousperiodinexcessofsixweeks.

SUBSISTENCE ALLOWANCES

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Accuraterecordsoftheopeningandclosingodometerreadingsmustbemaintainedinallcircumstances.Asfrom1March2010,theclaimmustbebasedontheactualdistance travelledassupportedbyalogbookandthedeemedkilometresmethodmaynolongerbeused.Thedeductioninrespectofbusinesstravelislimitedtotheallowancegrantedandmaybedeterminedaccordingtoactualexpenditureincurredoronadeemedcostperkilometrebasisintermsofthetablebelow.ThecostofthevehicleincludesVATbutexcludesfinancecosts.WhereactualexpenditureisusedthevalueofthevehicleislimitedtoR480000(2011:R400000)for purposesofcalculatingwearandtear,whichmustbespreadoverseven years. ThefinancecostsarealsolimitedtoadebtofR480000(2011:R400000).Inthecaseofaleasedvehicle,theinstalmentsinanyyearofassessmentmaynotexceedthefixedcostcomponentinthetable.

DEDUCTIONS TRAVELEXPENSES

DEEMEDEXPENDITURE-2013

DoesnotexceedR60000 19492 73,7 25,7ExceedsR60001butnotR120000 38726 77,6 29,0ExceedsR120001butnotR180000 52594 81,5 32,3ExceedsR180001butnotR240000 66440 89,6 36,9ExceedsR240001butnotR300000 79185 102,7 45,2ExceedsR300001butnotR360000 91873 117,1 53,7ExceedsR360001butnotR420000 105809 119,3 65,2ExceedsR420001butnotR480000 119683 133,6 68,3ExceedsR480000 119683 133,6 68,3

Fixed Fuel RepairsR cc

Cost of vehicle

DoesnotexceedR60000 19310 81,4 26,2ExceedsR60001butnotR120000 38333 86,1 29,5ExceedsR120001butnotR180000 52033 90,8 32,8ExceedsR180001butnotR240000 65667 98,7 39,4ExceedsR240001butnotR300000 78192 113,6 46,3ExceedsR300001butnotR360000 90668 130,3 54,4ExceedsR360001butnotR420000 104374 134,7 67,7ExceedsR420001butnotR480000 118078 147,7 70,5ExceedsR480000 118078 147,7 70,5

DEEMEDEXPENDITURE-2014Fixed Fuel Repairs

R cc Cost of vehicle

VARIABLE REMUNERATIONAsfrom1March2013,variableremuneration,suchascommission,bonuses,overtime,leavepayandreimbursivetravel,isaccountedforonapaymentbasis.ThisisapplicableinrespectofthedeductionofPAYE,theemployee’sgrossincomeinclusionandtheemployer’sincometaxdeduction.

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Asset type Conditions for annual allowance Annual allowance

Residential Buildingserectedonorafter1April1982and 2%ofcostandan buildings before21October2008consistingofatleast initialallowanceof fiveunitsofmorethanoneroomintendedfor 10%ofcost letting,oroccupationbybona fidefull-time employees

Newandunusedbuildingsacquired,erectedor 5%ofcostor10% improvedonorafter21October2008ifsituated ofcostforlowcost anywhereinSouthAfricaandownedbythetax- residentialunitsnot payerforuseinhistrade,eitherforlettingoras exceedingR300000 employeeaccommodation.Enhancedallowances forastandaloneunit areavailablewherethelowcostresidentialunit orR350000inthe 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

Thefollowingexpensesincurredbytheemployerforrelocation,appointmentorterminationareexemptfromtax:• transportationoftheemployee,membersofhishouseholdandpersonal possessions• hiringtemporaryresidentialaccommodationfortheemployeeand membersofhishouseholdforupto183daysaftertransfer• suchcostsasSARSmayallow,e.g.newschooluniforms,replacement ofcurtains,bondregistrationandcancellationfees,legalfees,transfer duty,motorvehicleregistrationfeesandestateagent’scommissionon saleofpreviousresidence.Expenseswhichdonotqualifyarethelossonsaleofthepreviousresidenceandarchitect’sfeesfordesignoforalterationstoanewresidence.

RELOCATION OF ANEMPLOYEE

HOTEL ALLOWANCES

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

Hotelequipment Machinery,implements,utensilsorarticles 20%ofcost broughtintouseonorafter16December1989

RESIDENTIAL BUILDING ALLOWANCES

Asset type Conditions for annual allowance Annual allowance

Note:• Refurbishmentisdefinedasanyworkundertakenwithintheexistingbuildingframework

Notes:1 Allowancesavailabletoownersasusersofthebuildingoraslessors/financiers2 Recoupmentsofallowancescanbedeductedfromthecostofthereplacementasset3 Whereplantandmachineryisusedinaprocessofmanufactureorasimilarprocess, thetaxpayerisobligedtomakeuseoftheallowancesandnotthewearandtearrates4 Asfrom1January2012,neworunusedassetsorbuildingsusedforthepurposeof researchanddevelopmentwillalsoqualifyfortheallowances.

CAPITAL INCENTIVE ALLOWANCES

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Asset type Conditions for annual allowance Annual allowance

Industrialbuildings Constructionofbuildingsorimprovementson 5%ofcost orimprovements orafter1January1989,whereabuildingisused (previously2%) (note4) whollyormainlyforaprocessofmanufacture (note2) orsimilarprocessorresearchanddevelopment. Constructionofbuildingsorimprovementsonor 10%ofcost after1July1996to30September1999andthe (note2) 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

Aircraft Acquiredonorafter1April1995 20%ofcost(note2)

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

Ships SouthAfricanregisteredshipsusedfor 20%ofcost prospecting,miningorasaforeign-going (note2) ship,acquiredonorafter1April1995

Plantandmachinery Neworunusedmanufacturingassetsacquired 40%in1styear (note4) onorafter1March2002willbesubjectto 20%ineachofthe allowancesoverfouryears 3subsequentyears (note 3) Usedmanufacturingassets 20%ofcost

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

20

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/server 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 4Forklifttrucks 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 6Hot-watersystems 5Incubators 6Ironingandpressingequipment 6Kitchenequipment 6Knittingmachines 6Laboratoryresearchequipment 5Lathes 6Laundromatequipment 5Lawreports 5

ALLOWANCESWEAR AND TEAR

21

Lift installations 12Medicaltheatreequipment 6Millingmachines 6Mobilecaravans 5Mobilecranes 4Mobilerefrigerationunits 4Motors 4Motorcycles 4Motorisedchainsaws 4Motorisedconcretemixers 3Motormowers 5Musicalinstruments 5Navigationsystems 10Neonsignsandadvertising boards 10Officeequipment-electronic 3Officeequipment-mechanical 5Oxygenconcentrators 3Ovensandheatingdevices 6Ovensforheatingfood 6Packagingequipment 4Paintings 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 6Runwaylights5

Type of No. of yearsasset for write-off

Type of No. of years asset for write-off

Sanders 6Scales 5Securitysystemsremovable 5Seedseparators 6Sewingmachines 6Shakers 4Shopfittings 6Solarenergyunits 5Specialpatternsandtooling 2Spindryers 6Spotweldingequipment 6Stafftrainingequipment 5Surgebins 4Surveyors: Fieldequipment 5 Instruments 10Taperecorders 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 Costsincurredinmovingbusinessassetsfromonelocationtoanotherarenot deductibleastheseareregardedasbeingcapitalinnature.Wearandtearmay beclaimedovertheremainingusefullifeoftheassets3 Whenanassetisacquiredfornoconsideration,awearandtearallowancemaybe claimedonitsmarketvalueatdateofacquisition4 Priorto1January2013,wearandtearonanyassetsacquiredfromaconnected personmayonlybeclaimedontheoriginalcosttothesellerlessallowancesclaimed bytheseller,plusrecoupmentsandCapitalGainsTaxincludedintheseller’sincome5 Theacquisitionof“small”itemsatacostoflessthanR7000(2009:R5000)peritem maybewrittenoffinfullduringtheyearofacquisition.

22

Asfrom1October2001,CapitalGainsTax(CGT)appliestoaresident’sworldwideassetsandtoanon-resident’simmovablepropertyorassetsofapermanentestablishmentinSouthAfrica.

DisposalsCGTistriggeredondisposalofanasset.• Important disposals include - abandonment,scrapping,loss,donation - vestingofaninterestinanassetofatrustinthebeneficiary - distributionofanassetbyacompanytoashareholder - granting,renewal,extensionorexerciseofanoption• Deemed disposals include - terminationofSouthAfricanresidency - achangeintheuseofanasset - thetransferofanassetbyapermanentestablishment - priorto1March2013,thereductionorwaiverofadebtbyacreditor withoutfullconsideration,subjecttocertainexclusions• Disposals exclude - thetransferofanassetassecurityforadebtorthereleaseof suchsecurity - issueof,orgrantofanoptiontoacquire,ashare,debentureor unit trust - loansandthetransferorreleaseofanassetsecuringdebt

STRATEGIC ALLOWANCES

CAPITAL GAINSTAX

Asset type Conditions for annual allowance Annual allowance

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

Pipelines Newandunusedstructurescontractedfor 10%ofcost andconstructioncommencedonorafter 23 February 2000

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

Airportand Newandunusedassetsandimprovementsbrought 5%ofcost Portassets intouseonorafter1January2008anduseddirectly andsolelyforpurposeofbusinessasairport, terminalortransportoperationorportauthority Rollingstock Broughtintouseonorafter1January2008 20%ofcost

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

Energyefficiency Allformsofenergyefficiencysavingsasreflected Determinedin savings onanenergysavingscertificateinanyyearof accordancewitha assessmentendingbefore1January2020 formula

Note:• Theallowanceislimitedtotheincomederivedfromtheindustrialprojectandtheexcessis deductibleintheimmediatelysucceedingyearofassessment,subjecttocertainotherlimits

23

Calculation of a Capital Gain/Loss• Acapitalgainorlossisthedifferencebetweentheproceedsandthebase cost.Anaggregatecapitallossiscarriedforwardandisavailableforset-off againstsubsequentcapitalgains

Base Cost• Expenditure included in the base cost - acquisition,disposal,transfer,stampduty,STTandsimilarcosts - remunerationofadvisors,consultantsandagents - costsofmovinganassetandimprovementcosts• Expenditure excluded from the base cost - expensesdeductibleforincometaxpurposes - interestpaid,raisingfees(exceptinthecaseoflistedsharesandbusiness assets) - expensesinitiallyrecordedandsubsequentlyrecovered• Methods for asset acquired before 1 October 2001 - Valuationasat1October2001 - 20%oftheproceeds - Timeapportionmentbasecost Example: IfanassetcostR250000on1October1998andwassoldon 30September2013forR450000,asCGTwasimplementedon 1October2001,thebasecostis:

Originalcostexpenditure R250000 Add: R40000*

*Proceedsfromdisposal R450000 Less:Basecostexpenditure (R250000)

Timeapportionmentbasecost R290000

Note 1:Whendeterminingthenumberofyearstobeincludedinthetime apportionmentcalculation,apartoftheyearistreatedasafullyear. Note 2:Whereexpenditureinrespectofapre-valuationdateassetwasincurred onorafter1October2001andanallowancehasbeenallowedinrespectofthat asset,anextendedformulaisapplied. • Part disposals - Basecosttobeapportioned

Proceeds• Thetotalamountreceivedoraccruedfromthedisposal• Excluded - amountsincludedingrossincomeforincometaxpurposes - amountsrepaidorrepayableorareductioninthesaleprice• Specific transactions - connectedpersons-deemedtobeatmarketvalue - deceasedpersons-marketvalueasatdateofdeath - deceasedestates-thebequestisdeemedtobeatthebasecost i.e.marketvalueatdateofdeath

} x 315/

20122013/2014 2012 2013/2014Individuals/SpecialTrusts 25% 33,3% 10% 13,3%Companies 50% 66,6% 14% 18,6%Trusts 50% 66,6% 20% 26,7%

Inclusion rate Max effective rateInclusion Rates and Effective Rates

InthecaseofUnitTrusts(CIS),theunitholderisliablefortheCGT.RetirementFundsareexemptfromCGT.

24

Exclusions and Rebates• Annual exclusion NaturalpersonsandspecialtrustsR30000(2012:R20000) NaturalpersonsintheyearofdeathR300000(2012:R200000)• Other exclusions - Aprimaryresidence,ownedbyanaturalpersonoraspecialtrust, usedfordomesticresidentialpurposes,wheretheproceedsdonot exceedR2million.WheretheproceedsexceedR2million,the exclusionisR2million(2012:R1,5million)ofthecalculatedcapitalgain - Personaluseassetsownedbyanaturalpersonoraspecialtrust,not usedforthecarryingonofatrade - Lumpsumsfrominsuranceandretirementbenefits.Thisexclusion doesnotapplytosecond-handpoliciesunlesstheyarepurerisk policieswithnoinvestmentorsurrendervalue - Smallbusinessassetsoraninterestinasmallbusiness,limitedto R1,8million(2012:R900000)ifcertainrequirementsaremet,including: - thegrossassetvalueofthebusinessislessthanR10million (2012:R5million) -thenaturalpersonwasasoleproprietor,partneroratleast10% shareholderforatleastfiveyears,isatleast55yearsold,or suffersfromill-health,isinfirmordeceased - Compensation,prizesanddonationstocertainPBO’s - Assetsusedbyregisteredmicrobusinessesforbusinesspurposes.Rollover ReliefThecapitalgainisdisregardeduntilultimatedisposaloftheassetorinthecaseofareplacementassetitisrecognisedoverafiveyearperiod commencingwhenthereplacementassetisbroughtintouseunlessdisposedof earlier.Thisreliefappliestothefollowing:• Certaininvoluntarydisposalsandthereplacementofqualifyingbusiness assets• Transferofassetsbetweenspouses• Shareblockconversionstosectionaltitleorfulltitle• Transferofresidencefromaqualifyingcorporateentityortrustbetween 11February2009and31December2012.Iftransferoccurredafter 1October2010,thetransferringentitymustbeterminated.ValuationsValuationsshouldhavebeenobtainedonorbefore30September2004.Forcertaincategoriesofassetsthesevaluationsshouldhavebeenlodgedwith thefirsttaxreturnsubmittedafter30September2004,orsuchothertimeasSARSmayallow,providedthevaluationwasinfactdonepriortotherequisitedate• WherethemarketvalueofanyintangibleassetexceedsR1million• WherethemarketvalueofanyunlistedinvestmentexceedsR10million• WherethemarketvalueofanyotherassetexceedsR10million.Non-resident Sellers of Immovable PropertyAsfrom1September2007,whereanon-residentdisposesofimmovable propertyinSouthAfricainexcessofR2million,thepurchaserisobligedtowithholdthefollowingtaxesfromtheproceeds(unlessadirectivetothe contraryhasbeenissued):Seller’s status Withholding taxNaturalperson 5,0%Company 7,5%Trust 10,0%

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Expenditurepaidshouldbeapportionedtotheextentthatonlyexpenditureactuallyincurredinayearofassessmentisdeductible.Theremainderofthepre-paidexpenditurewillbedeductibleinsubsequentyearsofassessment.Thisdoesnotapply:• wherethegoods,servicesorbenefitsaresuppliedorrenderedwithinsix monthsaftertheendoftheyearofassessment• wherethetotalpre-paidexpendituredoesnotexceedR100000 (2012:R80000)• toexpenditure,thetimingandaccrualofwhichisspecifically determined• topre-paidexpenditurepayableintermsofalegislativeobligation.

PRE-PAID EXPENDITURE

Asfrom2November2006,thefollowingdeductionsisallowedforexpenditureincurredinrespectofqualifyingresearchanddevelopment:Prior to 1 October 2012• 150%ofoperatingresearchanddevelopmentcostsinrespectofactivities undertakeninSouthAfricaforthepurposesofthediscoveryofnovel, practicalandnon-obviousinformation;ordevising,developingorcreating anyinvention,designorcomputerprogramasdefinedintherelevantacts; orknowledgeessentialtotheuseofsuchresearchproperty• Researchanddevelopmentcapitalcosts(includinganybuildingorpart thereof,machinery,plant,implements,utensilorarticleorimprovements theretoofacapitalnature)arewrittenoffona50:30:20basis.As from 1 October 2012• 100%automaticdeductionofexpenditureincurredsolelyanddirectlyin respectofseparatelyidentifiableresearchanddevelopmentactivities• 50%additionaldeductionofexpenditureincurredsolelyanddirectlyin respectofseparatelyidentifiableresearchanddevelopmentactivities. Thisdeductionissubjecttopre-approvalbytheDepartmentofScience andTechnology• Researchanddevelopmentcapitalassetsarewrittenoffasfollows: - Machinery,plant,utensilsorarticlesona40:20:20:20basis - Buildingsorimprovements5%peryear.

RESEARCH ANDDEVELOPMENT

Taxreliefexistsforcertaintransactions.Theseare:• Assetforsharetransactions• Amalgamationandunbundlingtransactions• Intra-grouptransactions• Liquidation,windinguporderegistrationtransactionswithinagroup.ThisreliefalsoappliestotransactionsinvolvingspecificCFC’s.

Taxpayerscandefertaxablerecoupmentsandcapitalgainsonthesaleofbusinessassets(excludingbuildings)iftheyfullyreinvestthesaleproceedsinotherqualifyingassetswithinaperiodofthreeyears.Taxontherecoupmentandcapitalgainuponthedisposaloftheoldassetisspreadoverthesameperiodaswearandtearmaybeclaimedforthereplacementasset.

REINVESTMENT RELIEF

CORPORATE TRANSACTIONS

26

Asfrom1July2009,ataxpayerisentitledtoadeductionof100%ofthecostofsharesissuedbyaventurecapitalcompanysubjecttothe followinglimitations:• anaturalpersonmaydeductR750000inayearofassessmentanda totalofR2250000• alistedcompanyandanycompanyheld70%directlyorindirectlyby thatlistedcompanycandeductamaximumofthecostofupto40%of thetotalequityinterestintheventurecapitalcompany• theventurecapitalcompanymustbeapprovedbySARSasaqualifying companyandsatisfyanumberofpre-conditions.

Asfrom1January2012,alltaxpayersareentitledtothisdeductionwithoutanylimitationimposedontheamount,providedtheexpenditurecomprisesaninvestmentinequityshares,theinvestorisnotaconnectedpersonaftermakingtheinvestmentandisgenuinelyexposedtotheriskofeconomic lossintheeventoffailureoftheventure.Variousthresholdsregardingthelevelandnatureofexpenditurebytheventurecapitalcompanyhavealsobeenrelaxedtoattractmoreinterestinthisactivity.

VENTURE CAPITALINVESTMENTS

LEARNERSHIP ALLOWANCE

Employersareallowedtoclaimlearnershipallowancesforregistered learnerships(enteredintobefore1October2016)overandabovethe normalremunerationdeduction.Foryearsofassessmentendingonor after1January2010:• Whereanemployerispartytoalearnership,thelearnershipallowance consistsoftwobasicthresholds:arecurringannualallowanceof R30000andacompletionallowanceclaimableattheendofthe learnershipofR30000.Wherethelearnershipexceeds24monthsthe completionallowanceisclaimedcumulativelyforeverycompletedyear• Forlearnerswithdisabilitiestherelevantallowancesareincreasedto R50000• Learnershipsoflessthan12fullmonthsareeligibleforapro-rata amountoftheannualallowance(regardlessofthereasonthatthe learnershipfallsshortofthe12monthperiod).Ifalearnershipfalls overtwoyearsofassessment,theannualallowanceisallocated pro-ratabetweenbothyearsbasedonthecalendarmonths applicabletoeachyearbymultiplyingtheannualallowanceby thetotalcalendarmonthsofthelearnershipover12.

INDUSTRIAL POLICY PROJECTS

Anadditionalinvestmentallowanceforanapprovedprojectisavailabletobrownfieldprojectexpansionorupgrade,oragreenfieldprojectinrespectofnewandunusedmanufacturingitems.Subjecttocertainlimits,theadditionalallowanceis55%ofthecostofassetsforgreenfieldprojectsand35%forbrownfieldprojects.

Wheretheprojectisundertakeninanindustrialdevelopmentzonethe allowancesareincreasedto100%and75%respectively. ThereisalsoanadditionalprojectrelatedtrainingallowanceofR36000per employee,limitedtoR30millionorR20millionifnopreferredstatusapplies.

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DIRECTORS PAYE

Directorsofprivatecompaniesandmembersofclosecorporationsare deemedtohavereceivedamonthlyremuneration,subjecttoPAYE, calculatedinaccordancewithaformula.Theformulacalculatedremunerationdoesnotapplytodirectorsofprivatecompaniesandmembersofclosecorporationswhoearnatleast75%of theirremunerationintheformoffixedmonthlypayments.

SECURITIES TRANSFERTAX

Asfrom1July2008,SecuritiesTransferTax(STT)ispayableatarateof0,25%oftheconsideration,closingpriceormarketvalue(whicheverisgreater)onthetransfer,cancellationorredemptionofanylistedorunlistedshare,member’sinterestinaclosecorporationorcessionofarighttoreceivedistributionsfromacompanyorclosecorporation.• Onlistedsecurities,thismustbepaidbythe14thofthemonthfollowing themonthduringwhichthetransferoccurred• Onunlistedsecurities,thismustbepaidbytheendofthesecondmonth followingtheendofthemonthduringwhichthetransferoccurred• Ifnotpaidinfullwithintheprescribedperiodinterestisimposedatthe prescribedrateanda10%penaltyispayable• NoSTTispayableiftheconsideration,closingpriceormarketvalueis lessthanR40000.

CONNECTED PERSONS

Priorto1January2013,whereadepreciableassetwasacquiredbyatax- payeranditwasheldbyaconnectedpersonatanytimeduringaperiod oftwoyearsbeforethatacquisition,thepurchasercouldclaimcapital allowancesonthelowerofthepurchasepriceorthefollowingdeemedcost:• thenettaxvalueoftheassettotheseller,plus• therecoupmentonthedisposalbytheseller,plus• thetaxablecapitalgainonthedisposalbytheseller.

DEEMED CAPITAL DISPOSALOFSHARES

Asfrom1October2007,theproceedsonthesaleofanequityshareor collectiveinvestmentschemeunitwillautomaticallybeofacapitalnatureifheldcontinuouslyforatleastthreeyearsexcept:• ashareinashareblockcompany• ashareinanon-residentcompany• ahybridequityinstrument.Previouslythetaxpayercouldelectthattheproceedsonthesaleofalistedshareheldforatleastfiveyearsbetreatedascapital.

Nostampdutyispayableonleasesofimmovablepropertyenteredintoafter1April2009.

STAMP DUTY

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Asfrom1January2001,residentsofSouthAfricaaretaxableontheir worldwideincome.

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

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

Exemptions• RemunerationforservicesrenderedoutsideSouthAfricaduringthetax yearifsuchpersonwasoutsideSouthAfricaforperiodsinaggregateof morethan183days,ofwhichmorethan60dayswerecontinuous• Non-SouthAfricanpensionandsocialsecuritypayments.

Foreign DividendsForeigndividendsreceivedfromanon-residentcompanyanddividendsreceivedfromaheadquartercompanyaretaxable,exceptif:• theshareholderholdsatleast10%oftheequityandvotingrightsofthe distributingcompany• thedistributingcompanyislistedontheJSEandthedividendisnota dividendin specie• thedistributingcompanyisacontrolledforeigncompany(CFC)and thedividendsdonotexceedamountsdeemedtobetheresident shareholder’sincomeundertheCFCrules• foreigndividendsdeclaredbyonecompanytoanothercompanyresident inthesamecountry.Anyremainingtaxableforeigndividendissubjecttoaformulawherebythemaximumrateoftaxationis15%subjecttoareductionintermsofaDTA.Aresidentisentitledtoacreditforanywithholdingtaxpaidinrespectofaforeigndividendthatisincludedingrossincome.Asfrom1April2012,nodeductionisallowedforinterestincurredintheproductionofforeigndividends.

Controlled Foreign CompaniesACFCisanon-residentcompanyinwhichresidents,otherthanahead-quartercompany,directlyorindirectlyownorcontrolmorethan50%oftheparticipationorvotingrights.Asfrom1April2012,aresidentholdingbetween10%and20%ofaforeigncompany,maynolongerelecttotreatthecompanyasaCFC.

RESIDENCE BASED TAXATION

29

• Aresidentmustincludeinhisincome:

Resident’s participation rights in the CFC

Total participation rights in the CFC• 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,theproportionateamountofthenet incomeofaCFC,foreigndividends,orotherattributableamounts,a rebateinrespectofanyforeigntaxespaidorpayableinrespectofsuch amounttoaforeigngovernmentisallowed• Therebateislimitedtotheforeigntaxpayableandmaynotexceed:

Taxable foreign income

Total taxable income• Iftheforeigntaxpaidexceedsthelimitsetoutabove,theexcessforeign taxmaybecarriedforwardforamaximumofsevenyears• Asfrom1January2012,foreigntaxeswithheldonincomearisingfrom servicesrenderedinSouthAfricamaybeclaimedasarebate.

General• AlossincurredincarryingonabusinessoutsideSouthAfricamaynotbe set-offagainstincomeinSouthAfrica• Theamountofforeigntaxpayablemustbeconvertedtorandsatthe lastdayofthetaxyearbyapplyingtheaverageexchangerateforthat taxyear• Foreignincomeisconvertedtorandsbyapplyingthespotexchange rateatthedatetheincomeaccrues.Naturalpersonsandnon-trading trustsmayelecttoapplytheaverageexchangerateforthattaxyear• Whereforeignincomemaynotberemittedbecauseofrestrictions imposedbythesourcecountry,suchincomeisincludedintheresident’s grossincomeinthetaxyearduringwhichthatamountmayberemitted toSouthAfrica• TaxwithheldinaforeigncountryinrespectofSouthAfricansourced income(exceptforincomearisingonservicesrenderedinSouthAfrica) isrecognisedasadeductionagainstsuchincomeratherthanasarebate againstSouthAfricantaxpayableonthatincome.

Net income of CFC x

Total South African normal tax x

30

DoubleTaxationAgreementsprovideforreliefinrespectofroyalties,know-how,dividendsandinterestwithholdingtaxes.

Algeria 10 10/15 10Australia 5 5/15 10Austria 0 5/15 0Belarus 5/10 5/15 5/10Belgium 0 5/15 10Botswana 10 10/15 10Brazil 10/15 10/15 10/15Bulgaria 5/10 5/15 5Canada 6/10 5/15 10Croatia 5 5/10 0Cyprus 0 0 0CzechRepublic 10 5/15 0DemocraticRepublicofCongo 10 5/15 10Denmark 0 5/15 0Egypt 15 15 12Ethiopia 15 10 8Finland 0 5/15 0France 0 5/15 0Germany 0 7.5/15 10Ghana 10 5/15 5/10Greece 5/7 5/15 8Hungary 0 5/15 0India 10 10 10Indonesia 10 10/15 10Iran 10 10 5Ireland 0 5/10 0Israel 0/15 15 15Italy 6 5/15 10Japan 10 5/15 10Korea 10 5/15 10Kuwait 10 0 0Lesotho 10 15 10Luxembourg 0 5/15 0Malawi 15 15 15Malaysia 5 5/10 10Malta 10 5 10Mauritius 0 5/15 0Mexico 10 5/10 10Mozambique 5 8/15 8Namibia 10 5/15 10Netherlands 0 5/10 0NewZealand 10 5/15 10Nigeria 7.5 7.5/10 7.5

DOUBLE TAXATION AGREEMENTSANDWITHHOLDINGTAXES

Treaty Countries

Non-Treaty Countries 15 15 15

Royalties % Interest %Dividends %

31

Notes

1 Thetablereflectsthepositionfrom1July2013.Theratesareprovidedasa guideonly.AnumberoftheaboveDTA’sprovideforalternativerates,including zero,tobeappliedinspecificcircumstances.Onlyinvestorswithameaningful shareholdingwillbeentitledtoareducedrateofDividendsTax.Toviewthe completeDoubleTaxAgreementsseewww.sars.gov.za.

2 Thewithholdingtaxonroyaltieswillchangefrom12%to15%asfrom 1July2013.Thismaybedelayedto1March2014.

3 Awithholdingtaxoninterestpaidtonon-residentswillbeintroducedfrom 1July2013atarateof15%.Thismaybedelayedto1March2014.

Norway 0 5/15 0Oman 8 0 0Pakistan 10 10/15 10PeoplesRepublicofChina 7/10 5 10Poland 10 5/15 10Portugal 10 10/15 10Romania 15 15 15RussianFederation 0 10/15 10Rwanda 10 10/15 10SaudiArabia 10 5/10 5Seychelles 0 5/10 0Singapore 5 5/15 0SlovakRepublic 10 5/15 0Spain 5 5/15 5Swaziland 10 10/15 10Sweden 0 5/15 0Switzerland 0 5/15 5Taiwan 10 5/15 10Tanzania 10 10/15 10Thailand 15 10/15 10/15Tunisia 10 10 5/12Turkey 10 10/15 10Uganda 10 10/15 10Ukraine 10 5/15 10UnitedKingdom 0 5/10/15 0USA 0 5/15 0Zambia 15 15 15Zimbabwe 15 15 15

Royalties % Dividends % Interest %

ROYALTIES TO NON-RESIDENTSAsfrom1January2009,nodeductionisallowedinrespectofroyalty paymentsif:• theintellectualpropertywasatanytimewhollyorpartlyownedbythe taxpayeroranotherSouthAfricanresident,or• theintellectualpropertywasdevelopedbythetaxpayeroraconnected personwhoisaresident.Iftheroyaltyissubjecttoawithholdingtaxatarateofatleast15%thenadeductionofonethirdoftheroyaltyisallowed.

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Theheadquartercompanyregimeappliesfromyearsofassessment commencingonorafter1January2011andprovidesforseveralbenefits,including:• itssubsidiariesarenottreatedascontrolledforeigncompanies• dividendsarenotsubjecttoDividendsTax• noapplicationofthincapitalisationortransferpricingrulesmerely becauseoftheexistenceofback-to-backcross-borderloans• exemptionfromthependingwithholdingtaxoninterestinrespectof back-to-backloans.Aregionalinvestmentfundregimealsoappliesfromyearsofassessmentcommencingonorafter1January2011.QualifyingforeigninvestorswillberegardedaspassiveinvestorswithnoexposuretoSouthAfricantaxbecause oftheuseofaSouthAfricanportfoliomanager.

InterestInterestreceivedbyoraccruedtonon-residentsisexemptfromnormaltax unlesstheindividualwasphysicallypresentinSouthAfricaforaperiodof morethan183daysinaggregateorcarriedonbusinessthroughapermanentestablishmentinSouthAfricaatanytimeduringthetwelvemonthperiod priortodateofreceiptoraccrual(priorto1July2013:duringtheyearof assessment).DividendsAsfrom1April2012,DividendsTaxisbornebytheshareholderatarateof15%(subjecttoanyreductionintermsofadoubletaxationagreement).RoyaltiesSubjecttoadoubletaxationagreement,royaltiespaidtonon-residentsaresubjecttoafinalwithholdingtaxof15%(priorto1July2013:12%).ResidentsrequireGovernmentandSARBapprovalforroyaltypaymentsto anon-resident.Other IncomeNon-residentsaretaxedonSouthAfricansourcedincomeonly.Payment to Non-Resident EntertainersAwithholdingtaxof15%ispayablebynon-residentsportspersonsand entertainersonincomeearnedinSouthAfrica.

TAXATION OF NON-RESIDENTS

HEADQUARTER COMPANY

Asfrom1July2013,interestpaidtoorforthebenefitofanynon-residentfromaSouthAfricansourcewillbesubjecttoafinalwithholdingtaxof15%onthedateitispaidorbecomesdueandpayableexceptinterest:• payablebyanysphereoftheSouthAfricanGovernment• arisingonanylisteddebtinstrument• arisingonanydebtowedbyabank,theDBSA,theIDCortheSARB• arisingfromabillofexchangeorletterofcreditwheregoodsareimported intoSouthAfricaandwhereanauthoriseddealerhascertifiedsuchonthe instrument• payablebyaheadquartercompanywheretransferpricingdoesnotapply• accruingtoanon-residentnaturalpersonwhowasphysicallypresentin SouthAfricaforaperiodexceeding183daysinaggregate,duringthat year,orcarriedonabusinessthroughapermanentestablishmentin SouthAfrica• payablebylocalstockbrokertoanon-resident.

WITHHOLDING TAX ONINTEREST

33

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

• NotransferdutyispayableifthetransactionissubjecttoVAT• Ifaregisteredvendorpurchasespropertyfromanon-vendor,theVAT notionalinputtaxcreditislimitedtotheVATfraction(14/114)ofthelower ofthesellingpriceortheopenmarketvalue.Anotionalinputtaxcreditis onlyclaimabletotheextenttowhichthepurchasepricehasbeenpaid andthepropertyisregisteredintheDeedsOffice• Asfrom10January2012,therestrictionthatthenotionalinputislimited tothetransferdutypaidisnolongerapplicable• Certainexemptionsapplytocorporaterestructuring• Theacquisitionofacontingentrightinatrustthatholdsaresidential propertyorthesharesinacompanyorthemember’sinterestinaclose corporation,whichownsresidentialproperty,comprisingmorethan50% ofitsCGTassets,issubjecttotransferdutyattheapplicablerate• Liabilitiesoftheentityaretobedisregardedwhencalculatingthefair valueofthecontingentrightinthetrust,thesharesinthecompanyor themember’sinterestintheclosecorporation• Residentialpropertyincludesdwellings,holidayhomes,apartmentsand similarabodes,improvedandunimproved,zonedforresidentialpurposes. Itexcludesastructureoffiveormoreunits,rentedbyfiveormore unconnectedpersons.Italsoexcludesfixedpropertyformingpartofthe enterpriseofaVATvendor• Anypersonwhodoesoromitstodoanythingwiththeintenttoevade transferdutymaybechargedwithadditionaldutyuptotwicetheamount ofdutypayable.Suchapersonisguiltyofanoffenceandliableon convictiontoafineorimprisonmentforaperiodnotexceeding60months• Notransferdutywaspayableinrespectoftheacquisitionbyaqualifying naturalpersonofaresidence,mainlyusedfordomesticpurposes (includingholidayhomes),fromaqualifyingcorporateentityortrust between11February2009and31December2012,subjecttothewinding uporterminationofcertainoftheentitieswithinsixmonthsofthedisposal.

Property value Rates of tax

R0-R600000 0% R600001-R1000000 3%onthevalueaboveR600000

R1000001-R1500000 R12000plus5%onthevalueaboveR1000000

R1500001andabove R37000plus8%onthevalueaboveR1500000

TRANSFER DUTY

UNQUANTIFIED PROCEEDSWhereanassetisdisposedofforanunquantifiedamount,theportionofthepurchasepricewhichcannotbequantifiedinthatyearisdeemedtoaccrueintheyearthatitbecomesquantifiable.Anyrecoupment,capitalgain/lossarisingfromsuchtransactionisdeferreduntilsuchtimeastheconsiderationbecomesquantifiable.Forexample,iftheassetisbroughtintouseinyear1,buttheconsiderationonlybecomesquantifiableinyear2,thewearandtearforyear1andyear2willbeclaimedinyear2.

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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 INTEREST RATES &PENALTIES

35

Rate RateDate of change % Date of change %

Prescribed rate - Late payment of assessed and provisional tax and underpayment 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 8,5Prescribed rate - Refund on successful objection, appeal or conceded appealDate of change Rate %1March2011 8,5Official rate - Fringe benefitsDate of change Rate %1July2009 8,51September2009 8,01October2010 7,01March2011 6,51August2012 6,0Asfrom1March2011theofficialrateisequaltotheSouthAfricanrepurchaserateplus 100 basis points.

INTEREST RATES CHANGES

29May2009 11,0014August2009 10,5026March2010 10,0010September2010 09,5019November2010 09,0020July2012 08,50

11April2008 15,0013June2008 15,5012December2008 15,0006February2009 14,0025March2009 13,0004May2009 12,00

TheabovedatesareapplicabletoStandardBank.Banksdonotalwaysadjusttheirratesonthesameday.

RATESPRIME OVERDRAFT

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VATwasintroducedon30September1991at10%andincreasedto14%on 7April1993.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,vegetableoil usedforcooking(excludingoliveoil),milkincludinglong-lifemilk (excludingcondensed,flavoured,sweetenedandevaporatedmilk), culturedmilk,brownwheatenflour,raweggs,podvegetables,diesel, petrolandilluminatingparaffin.Exportsalesandservicesarezero-rated, subjecttospecificrequirements.SuppliesfromSouthAfricatoan IndustrialDevelopmentZonewillbetreatedasexports. Vendorsmakingzero-ratedsuppliesareentitledtoinputcredits

VATinputtaxcreditsmayingeneralnotbeclaimedinrespectofmotor vehicles(includingsedananddouble-cabs)andentertainment.

Allfee-basedfinancialservicesaresubjecttoVATwiththeexceptionof:• premiumspayableinrespectoflifepoliciesissuedintermsofthe Long-termInsuranceActandcontributionstopension,provident, retirementannuityandmedicalaidfunds;and• buyingorsellingofderivativesorgrantingofoptions.

Registration RequirementsAsfrom1March2009,avendorisrequiredtoregisterforVATifturnoverina 12monthperiodislikelytoexceedR1million.Whereturnoverislessthan R1million,butexceedsR50000andR60000inthecaseofcommercial rentalestablishmentsina12monthperiod,avendorcanregistervoluntarily.AllvendorsthatderegisteredfromtheVATsysteminlightoftheincreasein theVATregistrationthresholdtoR1millionmaybeallowedtopaytheexit VAToveraperiodoftime.Foryearsofassessmentcommencingonorafter1March2012,aregisteredmicrobusinessmayalsoberegisteredasavendorforVATpurposes.WhereturnoverislessthanR1,5millionina12monthperiod,VATreturnsmayberenderedeveryfourmonths.WhereturnoverislessthanR30millionina12monthperiod,VATreturnsmayberenderedeverytwomonths.TurnoverinexcessofR30millionresultsinVATreturnshavingtoberenderedevery month.Farmers,withaturnoveroflessthanR1,5millionmayrenderVATreturnseverysixmonths.NormallyavendoraccountsforVATonaninvoicebasis.However,where turnoverina12-monthperiodislikelytobelessthanR2,5million,thevendorcanapplytobeplacedonapaymentsbasisifthevendorisanaturalperson oranunincorporatedbodyofpersonswhosemembersarenaturalpersons.Ataxinvoicemustreflectthepurchaser’stradenameandVATregistration number,ifthevalueisinexcessofR5000(2013:R3000).

VALUE-ADDED TAX (VAT)

37

Asfrom10January2012,propertydeveloperswholetresidentialpropertypriortoasalearegrantedtemporaryrelieffromtheVATchangeinuserules.Thereliefappliesforamaximumperiodof36monthsifthedeveloperisunabletosellthe propertyduetoalackofdemand.Iftherentalperiodexceeds36months,thedeemedchangeinusewillapply,basedonthemarketvalueofthepropertyonthatdate.Theconcessionceasestoapplyon1January2015.

VAT RELIEF FORDEVELOPERS

VAT RELIEF INTER-GROUPAsfrom10January2012,groupdebtolderthan12monthsisnotbesubjecttotheVATchargebackprovisionandthegroupcreditorisnotbeentitledtoclaimaVATinputdeductionforabaddebtwrittenoff.

Asfrom1March2004,lossesfromsecondarytradesarering-fencedandarenotavailableforset-offagainstincomefromanyothertrade.Itwillonlyapplytoanindividualwhosetaxableincome,beforesettingoffany assessedlossorbalanceofassessedloss,isequaltoorexceedsthelevelatwhichthemaximumrateoftaxisapplicable.Fortherestrictionstoapplythepersonmusthaveincurredanassessedloss fromthesecondarytradeinatleastthreeyearsofassessmentduringanyfiveyearperiod,orhavecarriedonanyofthefollowing‘suspect’trades:• Anysportingactivities• Anydealingincollectables• Therentalofaccommodation,vehicles,aircraftorboats(unlessatleast 80%oftheassetisusedbypersonswhoarenotrelativesofsuch personforatleasthalfoftheyearofassessment)• Animalshowing• Farmingoranimalbreeding(otherwisethanonafull-timebasis)• Performingorcreativearts• Gamblingorbetting.Thetaxpayerwillbeabletocircumventtheseprovisionsifhecanprovethatthereisareasonableprospectofderivingtaxableincomewithinareasonableperiodandwherehecomplieswithothertests,unlesslosseshavebeenincurredinatleastsixoutoftenyears.

PATENT / INTELLECTUALPROPERTYAtaxpayermayclaimanallowanceforthecostofacquiringanyinvention, patent,design,copyright,otherpropertywhichisofasimilarnatureorknow-ledgeconnectedwiththeuseofsuchpatent,design,copyrightorotherpropertyortherighttohavesuchknowledgeimparted.WherethecostexceedsR5000,theallowanceislimitedto:• 5%ofthecostinrespectofanyinvention,patent,copyrightorother propertyofasimilarnature• 10%ofthecostofanydesignorotherpropertyofasimilarnature.WheretheintangiblewasacquiredfromaconnectedpersontheallowanceislimitedtothecosttotheconnectedsellerlessallowancesclaimedbythesellerplusrecoupmentsandCGTincludedintheseller’sincome.Noallowance isallowedinrespectofanyexpenditureincurredbythetaxpayer inrespectoftheacquisitionofanytrademarkorpropertyofasimilarnatureon orafter29October1999.

ASSESSED LOSSES RING-FENCED

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Foreign Investment AllowanceIndividuals,olderthan18years,ingoodstandingwithSARS,caninvestR4millionpercalendaryear(priorto5November2010:R4millionperlife-time)abroadsubjecttothecompletionofformMP1423,accompaniedbyaSARStaxclearancecertificate.Incomeaccruingthereonmayalsoberetainedabroad.IndividualswhowishtoinvestamountsinexcessofR4millionmaymakeanapplicationtoFinSurvtogetherwiththerelevanttaxclearancecertificateforconsideraton.

Single Discretionary AllowanceIndividuals,olderthan18years,haveasinglediscretionaryallowanceof R1million(2010:R750000)percalendaryearwhichcanbeapportionedtocoverdonationstomissionaries,maintenance,giftsandloans,travel,study,alimonyandchildsupport,weddingexpensesandforeigncapitalallowance.ApplicationsinexcessoftheR1millionwillbeconsideredonacasebycasebasis.Individuals,youngerthan18yearsonlyhaveatravelallowanceof R200000(2010:R160000)percalendaryear.

Specialised Medical/Dental Expenses AbroadNolimit,providedsupportedbyoriginaldocumentaryevidenceofexpenses.

Directors FeesNolimitisapplicabletodirectorsfeespaidtonon-residentsincluding emigrants.Requeststotransfersuchfeesmustbeaccompaniedbyacopyoftheresolutionoftheboardoftheremittingcompanyconfirmingtheamounttobepaidtothedirectorandproofthatthedirectorisnon-resident.

GuaranteesNolimitisapplicabletoguaranteesgivenbynon-residentsforfinancial assistancetoSouthAfricanresidentswhoarenotaffectedpersons.

EmigrantsWheretheforeigninvestmentallowancehasnotbeenfullyutilised,emigrantsarepermittedatop-upto:• R8millionpercalenderyearperfamilyunit• R4millionpercalenderyearpersingleemigrantHouseholdandpersonalandothereffects(excludingcoinswhicharelegaltenderinSouthAfrica)maybeexportedwithinanoverallinsuredvalueof R2millionperfamilyunitorsingleemigrant.Inadditionatravelallowancesubjecttothesinglediscretionaryallowancelimitmaybeaccordedoncewithin60dayspriortodeparture.

InheritancesNon-residentsareentitledtotransfertheirinheritance,irrespectiveofwhetherthedeceasedwasresidentornon-residentinSouthAfrica.FormerSouthAfricanresidentsmusthavecompletedemigrationformalitiestoqualify.

Foreign Investment in South AfricaNon-residentsenjoyunrestrictedrightstoinvestingiltsandshareslistedontheJSEandexporttheproceedsonthesalethereof.Interestanddividendsarealsofreelyremittable.Loansbynon-residentstoSouthAfricanresidentsaresubjecttospecificcriteriaandrecordingrules.

Outbound Investments by CompaniesThelimitthatcanbeapprovedbyAuthorisedDealersisR500million (2008:R50million)percalendaryear.ApprovalfromFinSurvwillhavetobeobtainedforinvestmentsexceedingthislimit.SouthAfricancompanies areallowedtomakebona fidenewoutwarddirectinvestmentsoutsidetheir

EXCHANGE CONTROL REGULATIONS

39

currentlineofbusinessexcludingpassiveinvestments.AuthorisedDealersmayalsoallowadditionalworkingcapitalfundinguptotheoveralllimitof R500millionpercalendaryear.SouthAfricancompaniesmaynowacquirebetween10%and20%equityand/orvotingrightsinaforeigntargetentitywhichmayholdinvestmentsand/ormakeloansintoanyCMAcountry.

Local Visits by EmigrantsThereisnolimitonthedailyutilisationofblockedfundsduringavisitbyanemigrantbutthesefundsmaynotbeloanedtoaSouthAfricanresident.Directreturnairflightsmaybepaidlocallyfromblockedfunds.

Remittable IncomeCertainformsofincomeearnedbyanemigrantonhisblockedassetsarefreelyremittableabroad,afterprovidingforincometax.

Blocked AssetsUnlimitedblockedfundsmaybereleasedlocallyforanypurpose,exceptthegrantingofaloantoaSouthAfricanresident.

Restrictions on Local Financial AssistanceThe3:1ratiorestrictiononlocalfinancialassistancehasbeenabolished.Localfinancialassistancesubjecttothe1:1ratioisavailableto:• emigrants,whereblockedrandbalancesorblockedrandassetsareused ascollateral• non-residents,iftheborrowingisrequiredfortheacquisitionofresidential orcommercialpropertyinSouthAfricaand/orforfinancialtransactions• affectedpersons,iftheborrowingisrequiredfortheacquisitionof residentialpropertyinSouthAfricaorforfinancialtransactions• non-residentwhollyownedsubsidiaries,iftheborrowingisrequiredfor theacquisitionofresidentialpropertyinSouthAfricaorforfinancial transactions.

Forward CoverSouthAfricancompaniesmaycoverforwardupto75%ofbudgetedimportcommitmentsorexportaccrualsinrespectoftheforthcomingfinancialyearwithoutFinSurvapproval.

Headquarter CompaniesForeignindividualswhohaveestablishedheadquartercompaniesinSouthAfricamay,subjecttoapproval,investoffshorewithoutrestriction,subjecttocertainshareholdingandassetcriteria.

ENVIRONMENTAL EXPENDITUREExpenditureincurredtoconserveormaintainlandisdeductibleifitiscarriedoutintermsofabiodiversitymanagementagreementwithadurationofatleastfiveyears.Wheretheconservationormaintenanceoflandownedbythetaxpayeriscarriedoutintermsofadeclarationofatleast30years’duration,theexpenditureincurredisdeemedtobeadonationtotheGovernmentwhichqualifiesasadeductionundersection18A.Incertaincircumstanceswherethelandisdeclaredanationalparkanannualdonationbasedon10%ofthelesserofcostormarketvalueofthelandisdeemedtobemadeandqualifiesforasection18Adeductionintheyearthedeclarationismadeandineachofthesubsequentnineyears.Recoupmentsarisewherethetaxpayerbreachestheagreement.

Treasury Outsourcing Companies/Foreign Exchange BrokersTreasuryoutsourcingcompaniesandforeignexchangebrokersmustobtainapprovalfromFinSurvpriortocommencinganyforeignexchangebusinessthatmustbeconductedthroughanAuthorisedDealer.

40

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-farmingincomeinclude:• interestreceived• incomederivedbyafarmerfromcarryingonatradeotherthanfarming• annuities• rentalincomefromfarmland.

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

2–5&9 Valuationoflivestockandproduce6–7 Electionofstandardvalues8 Ring-fencingoflivestockacquisitions11 Donations and in speciedividends12 Capitaldevelopmentexpenditure13 Forcedsalesanddroughtrelief provisions

TAXATION OF FARMINGINCOME

41

Anorganisationqualifiesasapublicbenefitorganisation(PBO)ifitcarriesoutcertaindefinedandapprovedpublicbenefitactivitiesinanon-profitmannersubstantiallyinSouthAfrica.TheannualtradingincomeexemptionforaPBOisthegreaterof:• 5%oftotalreceiptsandaccruals;or• R200000(2010:R150000).Incomeinexcessofthisexemptionissubjecttotaxat28%.AnapprovedPBOisexemptfromprovisionaltax.

PUBLIC BENEFITORGANISATIONS

Arecreationalclubisanon-profitorganisationwhichprovidessocialandrecreationalamenitiesorfacilitiesforitsmembers.Theannualtradingincomeexemptionforrecreationalclubsisthegreaterof:• 5%oftotalmembershipfeesandsubscriptions;or• R120000(2010:R100000).Incomeinexcessofthisexemptionissubjecttotaxat28%.

RECREATIONAL CLUBS

LeviesreceivedbysectionaltitlebodycorporatesorshareblockcompaniesareexemptfromIncomeTax.InadditiontothisexemptionallotherreceiptsandaccrualsareexemptuptoamaximumofR50000perannum.Incomeinexcessofthisexemptionissubjecttotaxat28%.Sectionaltitlebodycorporatesandshareblockcompaniesareexemptfrom provisionaltax.

BODY CORPORATES

DonationstocertaindesignatedPBO’swillqualifyforataxdeduction:Companies-limitedto10%(2007:5%)oftaxableincomebeforethe deductionofdonations.Individuals-limitedto10%(2007:5%)oftaxableincomebeforethe deductionofdonationsandmedicalexpenses.EmployeesmayalsoenjoyPAYEreductionswhenregulardonationsaremadebywayofsalarydeductionsnotexceeding5%ofnetremuneration.

DEDUCTIONS DONATIONS

TheSkillsDevelopmentActseekstorestructuretheexistingtrainingsystemandupgradethelevelofskillsandaccesstoskillsbyworkers.TheSkillsDevelopmentLevyispayablebyemployersatarateof1%ofremunerationasfrom1April2001(previously0,5%).Asfrom1August2005,employerspayingannualremunerationoflessthanR500000areexemptfromthislevy.Directorsremuneration,onthesamebasisasforPAYE,willbesubjecttotheSkillsDevelopmentLevy.

SKILLS DEVELOPMENTLEVY

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Normal Income Codes3601 Income Nowincludes3607(Overtime)3602 Income(Excl) Nowincludes3604(Pension),3609(ArbitrationAward),and 3612(PurchasedAnnuity)3603 Pension3605 AnnualPayment3606 Commission3608 ArbitrationAward3610 AnnuityfromaRetirementAnnuityFund3611 PurchasedAnnuity3613 RestraintofTrade3614 OtherRetirementLumpSums3615 DirectorsRemuneration3616 IndependentContractors3617 LabourBrokers(PAYE/IT)

Allowance Codes3701 TravelAllowance3702 ReimbursiveTravelAllowance(IT)3703 ReimbursiveTravelAllowance(Excl)3704 SubsistenceAllowance-LocalTravel(IT)3707 ShareOptionsExercised(Section8A)3708 PublicOfficeAllowance3713 OtherAllowances Nowincludes3706(Entertainment),3710(Tool)and3711(Computer) and3712(Telephone/Cellphone)3714 OtherAllowance-(Excl) Nowincludes3705(S&TLocalTravel),3709(Uniform)and 3716(S&TForeignTravel)3715 SubsistenceAllowance-ForeignTravel(IT)3717 Broad-BasedEmployeeSharePlan(Section8B)3718 EmployeeEquityInstruments(Section8C)

Fringe Benefit Codes3801 GeneralFringeBenefits Nowincludes3803(UseofAsset),3804(Meals)and3807(Loans) 3802 RightofUseofMotorVehicle3805 Accommodation3806 Services3808 PaymentofDebt3809 BursariesorScholarships3810 CompanyContributiontoMedicalAid3813 CostrelatedtoMedicalServicespaidbyCompany3815 NonTaxableBursariesorScholarshipstoEmployeesand/ortheir Dependants

Gross Remuneration Codes3696 GrossNon-TaxableIncome3697 GrossRetirementFundingEmploymentIncome3698 GrossNon-RetirementFundingEmploymentIncome

Lump Sum Codes3901 Gratuities(Retirement/Retrenchment)3906 SpecialRemuneration(e.g.proto-teams)

IRP5 CODES

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3907 OtherLumpSums(e.g.backdatedsalariesextendedoverprevious taxyear,non-approvedfunds)3908 SurplusApportionmentsonorafter1January20063909 UnclaimedBenefitspaidbyFund3915 Pension,ProvidentorRetirementAnnuityFundLumpSumBenefits paidonorafter1October20073920 LumpSumWithdrawalBenefitsfromRetirementFundsafter 28February20093921 LivingAnnuityandSection15CSurplusApportionmentsaccruing after28February2009

Deduction Codes4001 CurrentPensionFundContributions4002 ArrearPensionFundContributions4003 CurrentandArrearProvidentFundContributions4005 MedicalAidContributionspaidbyEmployerorPensionFund4006 CurrentRetirementAnnuityFundContributions4007 Arrear(Re-Instated)RetirementAnnuityFundContributions4011 AllowableDonations-section18A4015 TravelExpenses-employeedoesnotreceivetravelallowance4017 ExpenseIncurrediroSubsistenceAllowance(local)4018 PremiumspaidforLossofIncomePolicies4019 ExpenseIncurrediroSubsistenceAllowance(foreign)4022 ExpenseNotRecoveredbyMedicalAidinrespectofDisabledPerson4024 MedicalServicesCostsDeemedpaidforImmediateFamily4026 ArrearPensionFundContributions-Non-StatutoryForces4027 WearandTearonAssets,ownedbytheemployee,usedforbusiness 4028 HomeOfficeExpenditure(amountissubjecttotheformula)4030 DonationspaidbytheEmployertotheOrganisation4040 MedicalAidContributionspaidbytheEmployee4044 LegalExpensesIncurrediroSalaryIncome4048 DonationtoMinorChild4149 TotalSDLandUIF4474 EmployersMedicalAidContributions4493 EmployersMedicalAidContributionsi.r.o.RetiredEmployees4497 TotalDeductions

Employees Tax Deduction and Reason Codes4101 SITE4102 PAYE4115 TaxonRetirementLumpSumBenefits4116 MedicalSchemeFeesTaxCredit4141 UIFEmployeeandEmployerContribution4142 SDLContribution4150 01-InvalidfromMarch2002 02-EarnLessthantheTaxThreshold 03-IndependentContractor 04-NonTaxableEarnings(includingnildirective) 05-ExemptForeignEmploymentIncome 06-DirectorsRemuneration-IncomeDeterminedintheFollowing TaxYear 07-LabourBrokerwithIRP30

Foreign Employment IncomeForemployeeswithforeignemploymentincomethevalueof50mustbeaddedtoeachrelevantIRP5code.Example:Code3601willbecome3651forForeignIncome.

44

Source Code Description0100 Agriculture,forestryandfishing0200 Miningandquarrying0300 Food,drinkandtobacco0400 Textiles0500 Clothingandfootwear0600 Leather,leathergoodsandfur(excludingfootwearand clothing)0700 Wood,wood-productsandfurniture0800 Paper,printingandpublishing0900 Chemicalsandchemical,rubberandplasticproducts1000 Coalandpetroleumproducts1100 Bricks,ceramic,glass,cementandsimilarproducts1200 Metal1300 Metalproducts(exceptmachineryandequipment)1400 Machineryandrelateditems1500 Vehicles,partsandaccessories1600 Transportequipment(excludingvehicles,partsand accessories)1700 Scientific,opticalandsimilarequipment1800 Othermanufacturingindustries1900 Electricity,gasandwater2000 Construction2100 Wholesaletrade2200 Retailtrade(includingmailorder)2300 Cateringandaccommodation2400 Transport,storageandcommunication2500 Financing,insurance,realestateandbusinessservices2600 Long-terminsurers2700 Educationalservices2800 Researchandscientificinstitutes2900 Medical,dentalandotherhealthandveterinaryservices3000 Socialandrelatedcommunityservices3100 Recreationandculturalservices3200 Personalandhouseholdservices3300 Specialisedrepairservices3400 Agenciesandotherservices3500 Employment(salary)

IT14 SOURCE CODES SUMMARY

ThecompletesourcecodelistingisavailableontheSARSwebsitewww.sars.gov.za

Themaximumlendingratesofinterestarecalculatedasfollows:

NATIONAL CREDIT ACT

TheNationalCreditActdoesnotapplytolargeagreementsasdefined,orto creditagreementswheretheconsumerisajuristicpersonwithaturnoveraboveadefinedthreshold,thestateoranorganofthestate,orwherethelenderistheSouthAfricanReserveBankoraforeigner.

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

45

TheTaxAdministrationActwaspromulgatedon4July2012andiseffectivefrom1October2012.ThisactconsolidatesalladminstrationprovisionsofthevariousactsadministeredbySARS,exceptforCustomsDuty,intoasingleadministrationact.

TAX ADMINISTRATIONACT

ThenewTaxAdministrationActintroducesanongoingVoluntaryDisclosureProgrammeformalisingpreandpostauditnotificationvoluntarydisclosures.Thenewreliefwillonlybeinrespectofpenalties(excludinglatesubmission),additionaltaxandcriminalprosecutionbutnotinterestandforeignexchangecontraventions.

VOLUNTARY DISCLOSURE

Behaviour Standard Obstructive Voluntary Voluntary case or repeat disclosure disclosure case after audit before audit notification notification

Substantial 25% 50% 5% 0% understatement

Reasonablecare 50% 75% 25% 0% not taken in completingreturn

Noreasonable 75% 100% 35% 0% groundsfortax position

Grossnegligence 100% 125% 50% 5%

Intentionaltax 150% 200% 75% 10% evasion

UNDERSTATEMENT PENALTIES

SARSmaywaivetheunderstatementpenaltyifthetaxpayerisinpossessionofanopiniongivenbyaregisteredtaxpractitionerbeforethereturnwasdueandthepractitionerhadbeengivenallthematerialfactsandconcludedthatthetaxpayerwasmorethanlikelycorrectinthetaxtreatmentofthetransaction.

Ataxclearancecertificatecanonlybeobtainedifthetaxpayerisregisteredfortaxanddoesnothaveanytaxdebtoutstanding(exceptifthedebthasbeensuspendedpendingobjectionorappealorislessthanR100)orreturnsoutstanding(exceptifarrangementsareinplacetosubmitthosereturns).SARSisobligedtoissueordeclinetheclearance,within21businessdaysfromtheapplicationdate.SARSmaywithdrawacertificate,witheffectfromtheoriginaldateofissueifthecertificatewasissuedinerrororobtainedonthebasisofmisrepresentation.

TAX CLEARANCE CERTIFICATES

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Failuretosubmitcertainreturnsorinformationwillgiverisetothe followingfixedratepenalties:

ADMINISTRATIVE PENALTIES

Thepenaltywillautomaticallybeimposedmonthlyuntilthetaxpayerremediesthenon-compliance.• At present this penalty is only leviable if a taxpayer has more than one year’s tax return outstanding• Late payment of PAYE and provisional tax attracts a penalty of 10% of the amount due• Late submission of the PAYE reconciliation attracts a penalty 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

Taxpayerswhoaremarriedincommunityofpropertyaretaxedonhalfoftheirowninterest,dividend,rentalincomeandcapitalgainandhalfoftheirspouses’interest,dividend,rentalincomeandcapitalgain,regardlessofthespouseinwhosenametheassetsareregistered(otherthanassetsexcludedfromthejointestate).Allothertaxableincomeistaxedonlyinthehandsofthespousewhoreceivesthatincome.

MARRIED INCOMMUNITYOFPROPERTY

SUSPENSION OFPAYMENTSubjecttoaformalapplicationtoSARSthepaymentoftaxmaybe suspendedpendinganobjectionorappeal.SARSisrequiredtoconsiderthecompliancehistoryofthetaxpayer,theriskofdissipationofassetsduringtheperiodofsuspension,thesecurity provided,whethertheamountsinvolvedwouldcauseirreparablefinancialhardshiptothetaxpayer,whetherliquidationisimminent,whetherfraudwas involvedandwhetherthetaxpayerfurnishedinformationasrequested.Thesuspensionmayberevokedwithimmediateeffectifnoobjectionislodged,theobjectionisfoundtobefrivolousorvexatious,thereisa materialchangeinanyofthefactorspreviouslyconsideredordilatorytacticsarebeingemployed.NorecoveryproceedingsmaybetakenbySARSfortenbusinessdays afternoticeoftheSARSdecisionorrevocation,unlessthereisariskof dissipationofassetsbythepersonconcerned.

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DonationsTaxispayableatarateof20%onthevalueofanyproperty disposedofgratuitouslybyaSouthAfricanresident(naturalperson, corporateentityortrust)excludingdonationsexemptfromthetax.Thetax ispayablewithinthreemonthsofthedonationtakingeffect.

Exempt donations include:• DonationsbynaturalpersonsuptoR100000peryear(2006:R50000)• Donationsbycorporateentitiesnotconsideredtobepubliccompanies uptoR10000peryear• Donationsbetweenspousesnotseparated• Bona fidemaintenancepayments• DonationstoPBO’sandqualifyingtraditionalcouncilsandcommunities• Donationswherethedoneewillnotbenefituntilthedeathofthedonor• Donationsmadebycompanieswhicharerecognisedaspublic companiesfortaxpurposes• Donationscancelledwithinsixmonthsoftheeffectivedate• Propertydisposedofunderandinpursuanceofanytrust• DonationofpropertyorarightinpropertysituatedoutsideSouthAfrica ifacquiredbythedonor: - beforebecomingresidentinSouthAfricaforthefirsttime - byinheritanceordonationfromanon-resident• Donationsbetweencompaniesformingpartofthesamegroupof companies.

ESTATE DUTY

DONATIONS TAX

EXECUTORS REMUNERATION

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

Exemptions from Estate Duty include:• Personsdeceasedpriorto1March2006,thefirstR1500000• Personsdeceasedonorafter1March2006,thefirstR2500000• Personsdeceasedonorafter1March2007,thefirstR3500000• Anybequesttoasurvivingspouseorapublicbenefitorganisation• Asfrom1January2010,theunutilisedportionoftheexemptionof thefirstdeceasedspousemaybecarriedforwardtotheestateofthe survivingspouse.

Anexecutorisentitledtoeitherofthefollowingremuneration:•theremunerationstipulatedinthewill• 3,5%onthevalueofgrossassetsand6%onincomeaccruedand collectedfromdateofdeathExecutorsremunerationissubjecttoVATwheretheexecutorisregistered asavendor.

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

Companies

CertificateofIncorporation/RegistrationCertificate Indefinite CertificateofChangeofName Indefinite MemorandumandArticlesofAssociation/Incorporation Indefinite CertificatetoCommenceBusiness Indefinite Share/SecuritiesRegister,MinuteBook,CM25andCM26 Indefinite Rules 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

RETENTION OF DOCUMENTS/RECORDSRECOMMENDEDGUIDELINES

Retentionperiod

Indefinite

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South African businesses

Sage Pastel Accounting www.pastel.co.zaJohannesburg: Switchboard +27113043000 [email protected] Town:Switchboard +27215227400 [email protected]: Switchboard +27315377100 [email protected] Sales +27113043650 [email protected] Desk +27113043300 [email protected]

Sage Pastel Payroll & HR www.pastelpayroll.co.zaJohannesburg: Switchboard +27113044000 [email protected] Town: Switchboard +27215227400 [email protected]: Switchboard +27315377100 [email protected] Sales +27113044100 [email protected] Desk +27113044300 [email protected] Seminars www.pastelseminars.co.zaSeminar Bookings +27113044390 [email protected] Pastel Placements www.pastelpeopleplacements.co.zaRecruitment Enquiries +2786100HIRE(4473) [email protected]

Tax Guide2013/2014

www.pastel.co.za • www.pastelpayroll.co.za