Monthly Archives: January 2018

Newtons sponsors Mangaung Metro Chess teams in the 2017 Southern African Junior Chess Championships

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Newtons was one of the sponsors to the 13 Mangaung Metro Chess teams who participated in the 2017 Southern African Junior Chess Championships (SAJCC) in Johannesburg from the 3rd to the 8th of January 2018. The SAJCC is one of the premier chess events in South Africa and hosts in excess of 2,500 junior chess players and officials. The team tournament features regional teams of between 6 and 10 players who compete in age categories ranging from u/8 to u/20.

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One of the greatest highlights of the tournament was Chess Grandmaster Hikaru Nakamura’s presence at the tournament. He officially opened the SAJCC, played in the public finals of the Speed Chess Championship against GM Magnus Carlsen, then later on gave a chess lecture. He rounded off his visit by holding an impressive 101-game-simul, one of the biggest ever of its kind on African soil and then decided to assist and sponsor two lucky chess players who impressed him with their talent.

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MSI Global Alliance appoints accounting member in Finland

MSI Global Alliance, one of the world’s leading international associations of independent legal and accounting firms, is pleased to announce the admission accounting firm Greenstep Oy in Finland.

Greenstep Oy provides accounting, payroll, controller and CFO services as well as HR and advisory services to businesses of all sizes. Headquartered in the Helsinki area, the firm comprises over 170 professionals across its six offices and services a broad range of clients nationally and internationally.

Tore Teir, managing partner of Greenstep Oy, comments, ”Joining the MSI Global Alliance makes a lot of sense for us. Enhancing our international network of professionals and finding suitable local partners with high-quality service for our international clients will become significantly easier.”

Tim Wilson, chief executive of MSI, comments, “Greenstep Oy was recommended to MSI by our existing law member in Finland and came with strong endorsements. I am delighted to be strengthening our presence in the Nordic region with Greenstep’s assistance, which is an area in which MSI wishes to expand further.”

For further information please contact

MSI Global Alliance
Pauline Rottstock, Marketing and Business Development Manager
Tel: +44 20 7583 7000
Email: prottstock@msiglobal.org

About MSI Global Alliance

MSI is one of the world’s leading international associations of independent legal and accounting firms with over 250 carefully selected member firms in more than 100 countries. MSI was formed in 1990 in response to the growing need for cross-border co-operation between professional services firms.

MSI members worldwide work closely together to provide integrated, multidisciplinary services to meet each client’s legal and regulatory obligations and growth ambitions. MSI is ranked among the Top 20 international accounting and legal networks, associations & alliances.

Visit our website: www.msiglobal.org

MSI Global Alliance adds legal member in Switzerland

MSI Global Alliance, one of the world’s leading international associations of independent legal and accounting firms, is delighted to announce its new legal member firm Watt law in Switzerland.

Based in Geneva, Watt law provides comprehensive legal services in corporate and commercial matters as well global dispute resolution and advisory services to clients in Switzerland and worldwide.

Tim Wilson, chief executive of MSI, comments, “I welcome Watt law to MSI. The firm is new and dynamic and located in the key location of Geneva. The firm has already built a good reputation and I very much look forward to MSI assisting them with their growth and international engagement”.

Vincent Tattini, founder of Watt law, comments, “We are very proud to join MSI Global Alliance, which will enable us to provide our clients with the expertise and the specialised know-how of all MSI members”.

Watt law joins MSI Global Alliance with six lawyers.

For further information please contact

MSI Global Alliance
Pauline Rottstock, Marketing and Business Development Manager
Tel: +44 20 7583 7000
Email: prottstock@msiglobal.org

About MSI Global Alliance

MSI is one of the world’s leading international associations of independent legal and accounting firms with over 250 carefully selected member firms in more than 100 countries. MSI was formed in 1990 in response to the growing need for cross-border co-operation between professional services firms.

MSI members worldwide work closely together to provide integrated, multidisciplinary services to meet each client’s legal and regulatory obligations and growth ambitions. MSI is ranked among the Top 20 international accounting and legal networks, associations & alliances.

Visit our website: www.msiglobal.org

VAT and transfer duty

We are often asked whether the sale or purchase of immovable property is subject to VAT or to transfer duty. Confusion appears to creep in especially in those cases where only either the seller or purchaser is a registered VAT vendor.

The answer to the question lies in the Transfer Duty Act, and specifically in sections 2 and 3 of that Act which determine that the transfer duty is payable on the value of immovable property acquired by any person, and that the duty is payable by the acquirer. In other words, the transfer duty is a tax on the purchaser.

Section 8 of the Transfer Duty Act provides for instances where the purchaser of the property will be exempt from transfer duty being levied against it. The list of potential exemption includes instances where the sale is a “VATable” transaction. In other words, where the sale of the immovable property concerned is therefore a taxable supply for VAT purposes, no transfer duty will be leviable. (This is however subject to certain compliance related requirements being met, including that the prescribed declarations are submitted, that security is tendered for the tax to the extent necessary and that the Commissioner issues a certificate that this transfer duty exemption’s requirements have all been met. )

By implication therefore, since the sale will have to be a taxable supply for VAT purposes for the transfer duty exemption to be met, the implication is that the sale must be made by a VAT vendor, and therefore subject to VAT. The status of the seller (i.e. whether it is VAT registered or not) determines whether the purchaser is liable for either VAT or the transfer duty.

To summarise therefore, whether transfer duty or VAT is payable by a purchaser of immovable property is determined with reference to the status of the seller: if VAT registered, VAT is levied and not transfer duty. If the seller is not VAT registered, transfer duty is payable as the default position (and unless any of the other exemptions in section 8 of the Transfer Duty Act applies). Therefore, the purchaser of immovable property will always as a default be required to pay transfer duty, unless the seller is a VAT vendor (and the property is sold as part of its enterprise). In such an instance, the sale will be subject to VAT at 14% and payable by the purchaser, rather than transfer duty which would otherwise have been payable and according to the applicable sliding scales.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Deductibility of SED and ED expenditure

The South African Revenue Service (“SARS”) recently issued a binding private ruling (“BPR”) in which the income tax consequences of expenditure in respect of socio-economic development (“SED”) and enterprise development (“ED”) obligations were considered.

The applicant in this case is a company that owns and operates a wind farm that generates electricity. In terms of the applicant’s electricity generation agreement and licence entered into with the South African government and the relevant regulator, it must commit a specified percentage of its annual revenue to SED and ED expenditure. Failure to incur these expenses could result in the electricity generation agreement being terminated. In order to meet these obligations, the applicant established a trust to undertake specific SED and ED projects directly, or to provide funding to other organisations that are approved by SARS as public benefit organisations in terms of section 30(3) which will undertake such projects. The applicant made contributions to this trust to fund its SED and ED projects.

Expenditure and losses will qualify for the general income tax deduction in section 11(a) and read with section 23(g) of the Income Tax Act to the extent that it is actually incurred in the production of the income, laid out or expensed for purposes of the taxpayer’s trade and such expenditure and losses are not of a capital nature. It is furthermore important to note that a donation for Donations Tax purposes include any gratuitous disposal of property including any gratuitous waiver or renunciation of a right (section 55(1) of the Income Tax Act). Any disposal of property for a consideration which, in the opinion of the Commissioner for SARS, is not an adequate consideration, is also deemed to be a donation (section 58 of the Income Tax Act).

Based on the facts set out above, SARS confirmed in the ruling that the contributions to the trust by the applicant in respect of the SED and ED commitments will be deductible under section 11(a) read with section 23(g). The income tax deduction in each year of assessment will be equal to the specified percentage of the applicant’s revenue (as defined in the agreement) earned in that year of assessment. The ruling also states that the contributions to the trust will not be a donation as defined in section 55(1) nor a deemed donation, as contemplated in section 58.

While binding private rulings are not binding on other taxpayers, it does however clarify how SARS would interpret and apply the provisions of the tax laws relating to a specific proposed transaction.

The take away is that taxpayers should consider the potential income tax deductibility of SED and ED expenses carefully, especially in instances where they are obliged in terms of an agreement to incur these costs.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)