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Taxation of Specific Entities and Transactions - Coggle Diagram
Taxation of Specific Entities and Transactions
Mining Tax
Unit 1.1 Introduction and Definitions
Unit 1.2 Mining Income and Expenditure
Unit 1.3 Special Deductions Relating to Mining
Unit 1.4 Contract Mining, Rehabilitation
Taxation of Interest
Jurisdiction
Residents taxed on WW income
Non-residents taxed on source interest
Source of interest contained in section 9
2) An amount is received by or accrues to a person from a source within the Republic if that amount
(b) constitutes interest as defined in section 24J where that interest-
(i) is attributable to an amount incurred by a person that is a resident, unless the interest is attributable to a permanent establishment which is situated outside the Republic; or
(ii) is received or accrues in respect of the utilisation or application in the Republic by any person of any funds or credit obtained in terms of any form of interest-bearing arrangement;
What is interest?
Payment for the use of money
No general definition in the ITA.
Section 24 J Defintion - Timing rules for accrual and incurring
“interest” includes the
(a) gross amount of any interest or similar finance charges, discount or premium payable or receivable in terms of or in respect of a financial arrangement;
(b) amount (or portion thereof) payable by a borrower to the lender in terms of any lending arrangement as represents compensation for any amount to which the lender would, but for such lending arrangement, have been entitled; and
(c) absolute value of the difference between all amounts receivable and payable by a person in terms of a sale and leaseback arrangement as contemplated in section 23G throughout the full term of such arrangement, to which such person is a party, irrespective of whether such amount is-
(i) calculated with reference to a fixed rate of interest or a variable rate of interest; or
(ii) payable or receivable as a lump sum or in unequal instalments during the term of the financial arrangement;
Debt v Equity
Debt
Interest received = gross income
Full taxable in the hands of a person other than natural
Subject to exemption for natural
Section 11(a) deduction for interest incurred in the production of income
Interest expenditure deductible
Expenditure incurred in the production of interest
Equity
Dividend received forms part of Gross income in para k of defintion
Subject to 10(1)(k) exemption
Taxable in terms of WHT on dividends
Dividends
not deductible
Taxed at 20%
Section 64D - section 64M
Expenditure incurred in the production of dividends not deductible
Section 24 J - Accrual and Incurral of interest
Timing provision
Application of a constant compounded rate over a period
Accrual periods
Based on yield to maturity
MAx 12 months
Al;ternative method
Should accord with GAAP
Applied consistently
Not resulting in significanlty different outcome
No deduction if not in the production of income
Section 24O = Deduction of interest not in the production of income
Limitation of interest dedcutions
23M
Formaul in 23M(3)
Controlling Relationship
23N
REorganisation and acquisition transactions
Finance transactions
Formula
WHTI
Anti-avoidance
VAT General Principles
Corporate Social Repsonsibility and Tax