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Tax Avoidance & Tax Administration (Avoidance vs Evasion (Avoidance: …
Tax Avoidance & Tax Administration
Avoidance vs Evasion
Avoidance:
-TP arranges affairs in legal manner
-In intent to reduce TI
Evasion:
-Illegal activities by TP
-To free TP of tax burden
Tax Life Cycle
Registration
Return
Assessment
Dispute Resolution
Payment/ Refund
Recovery/ Collection
Registration
-Apply within 21 business days after becoming obliged to register
-Prescribed form
-SARS allocates tax reference number
-TP must inform SARS of changes within 21 business days
Return
-E-filing
-Return= form, declarations, document
-Prescribed form
-On date as in act or per public notice
-SARS can request proof for amounts in returns
-Keep proof/ records for prescribed time
Assessment
-Calculation by SARS using info in return
-Original assessment
-Additional assessment
-Reduced assessment
-Jeopardy assessment
Dispute Resolution
-Burden of proof
-If TP doesn't agree with assessment
-Objection
-Within 30 days after assessment date
ADR (completed within 90 days)
-Tax board
-Tax court
-Appeal to High Court
Payment
-2nd date on assessment
-Have to pay, even if there is an objection
-May request senior SARS official to suspend pmt of tax
-Payment is allocated to oldest debt
-Interest charged if amount not paid
Recovery/ collection
-If TP didn't pay on time, SARS can recover outstanding amount by sequestration/ liquidation
-Refunds must be claimed within 3/5 years
Penalties
-Non- compliance
-Tax evasion
-Secrecy provisions
-Filing return without authority
-TP can be subject to fine & imprisonment
Environmental Provisions
STICK AND CARROT
Stick= Additional taxes/ levies
-CO2 taxes
-Levies on plastic bags
-Light bulbs
Carrot= Allowances (deducted in inc. tax calc)
-S37B
-S37C
-S37D
S37B
Deduction as allowance on:
-Assets used for environmental treatment recycling; or
-Assets used to dispose of environmental waste
New & unused treatment & recycling= 40/20/20/20
New & unused environmental waste disposal assets= 5% p/a on cost
S37C
Biodiversity Management agreements
-Deduction of Nature conservation maintenance expenditure incurred on pvt. land
-Land used in TP's trade
-Expenses deductible
-Ltd. to income
Protected area agreements
-TP remains owner of land
-deduction under S18A
S37D
-Deduction as allowance for expenses incurred on land declared as national park/ nature reserve
On Land & Improvements
4% p/a (over 25 years) on cost/ formula