Mr Emil Brincker

Emil Brincker


Corporate Tax

Deducting interest for debt incurred during acquisition of shares
South Africa | 29 March 2019

It has always been a contentious issue whether a purchaser of shares can claim a deduction for the interest that it incurs on monies borrowed to acquire the shares. The legislature intervened by introducing Section 240 of the Income Tax Act, which allows purchasers to deduct interest for a debt that is used to fund the acquisition of shares in certain circumstances. However, the target must be an operating company and form part of the same group of companies as the acquirer.

Budget Day alert
South Africa | 04 March 2016

Budget Day saw the proposal of a number of measures affecting taxpayers. Key proposals cover the recharacterisation of proceeds in case of share buyback; the conversion of interest into dividends; the submission date of the estimate for the second provisional tax payment for the tax year; the withdrawal of the proposed withholding tax on service fees; and collective investment schemes.

Interpretation of fiscal legislation
South Africa | 09 January 2015

In Commissioner SARS v Bosch the Supreme Court of Appeal dealt with the fiscal consequences of a deferred delivery transaction. The judgment is important not only in the context of the meaning of simulation, but also with reference to the way in which legislation should be interpreted, especially regarding Section 8A of the Income Tax Act.

Budget 2012: tax proposals announced
South Africa | 23 March 2012

Specific tax proposals made in the minister of finance's 2012 budget speech include increases in the dividends tax and capital gains tax rates, a move towards mark-to-market taxation of financial instruments, reduction of the corporate income tax rate for foreign companies and ending the broker's exemption from the securities transfer tax.

Tax consequences of foreign partnerships
South Africa | 10 September 2010

The Taxation Laws Amendment Bill incorporates a number of new issues, including one relating to the concept of a foreign partnership and how it is dealt with for tax purposes. Essentially, it is indicated that a company does not include a foreign partnership on the basis that the conduit principle will apply in these instances.

Introduction of regional holding company regime
South Africa | 28 May 2010

As South Africa has concluded more than 60 double taxation treaties with foreign countries, it is thus perceived as a natural holding company gateway into Africa. Pursuant to the requirement to entice foreign multinationals to use South Africa as an entry point into investment into Africa, a number of more relaxed tax rules have recently been introduced.

Highlights of the recent Budget speech
South Africa | 19 March 2010

Finance Minister Pravin Gordhan recently delivered his Budget speech. A number of significant changes and amendments have been announced pursuant to the speech which are important for international taxpayers, including the implementation of a thin capitalization regime, the possible exemption of certain dividends and the announcement of a tax amnesty.

Beware of SARS posting cheques pursuant to refunds
South Africa | 26 February 2010

The High Court's judgment in the recent unreported case of Stabilpave (Proprietary) Limited v The South African Revenue Service should serve as a warning to taxpayers over refunds that may be due to them. In finding that Stabilpave had indicated that the refund should be made by cheque, the court concluded that Stabilpave had also accepted the risk of the cheque being stolen or fraudulently dealt with.

A new test to determine whether a receipt is of a capital nature
South Africa | 12 February 2010

A case before the Supreme Court of Appeal has highlighted that care must be taken to identify the income-earning structure of a taxpayer. A contract can form part of an income-earning structure. However, if a contract is concluded on the basis that it is not the means through which business is acquired or opportunities are created, compensation for cancellation of the contract may be of a revenue nature.

High Court Analyzes Nature of Partnership Income
South Africa | 18 December 2009

In the recent unreported case of JJ Grundlingh v CSIRS the High Court considered the nature of the income of a South African lawyer who was a partner in a separate Lesotho partnership. In deciding against the taxpayer, the court indicated that the taxpayer, not the partnership, was liable for tax (ie, individual partners are tax entities, not partnerships).

Non-compliant Vendors Could Be Removed from VAT Register
South Africa | 30 October 2009

The South African Revenue Service has announced plans to clean up the value added tax register and remove certain non-compliant vendors. During the first phase of the clean-up process, 20,665 vendors were identified for possible deregistration on account of their potential failure to meet the legal requirements for registration.

Apportionment of Purchase Price
South Africa | 28 August 2009

It is always contentious whether the revenue authorities will accept the allocation of a purchase price paid by a purchaser to a seller in respect of a business. In a recent case the Tax Court indicated that the allocation agreed upon by the parties would be accepted, provided that it complied with the established principles of offer and acceptance.

Amendments to Controlled Foreign Company Imputation System
South Africa | 10 July 2009

In general, South African residents are required to impute into their net income an amount equal to the net income derived by controlled foreign companies (CFCs), to the extent that South African parties collectively hold more than 50% of the CFC participation rights. However, a number of exemptions apply in circumstances where a resident does not need to impute the CFC's income in its own income for tax purposes.

Share Issue Anomalies
South Africa | 12 June 2009

Section 24B of the Income Tax Act has recently been amended in regard to situations where a company acquires an asset from any person as consideration for shares issued by that company. However, the section, which was originally introduced to provide certainty for companies when they issue shares in return for the acquisition of an asset, seems to have created more problems than solutions over the years.

Deduction of Recurring Expenditure Incurred by Hybrid Debt Instruments
South Africa | 05 June 2009

The South African Revenue Service recently released the contents of a private binding ruling in which it confirmed that a bank was entitled to deduct recurring financing expenditure for hybrid debt instruments issued by it under the relevant regulations dealing with the sourcing of primary share capital by South African banks.

Tax Court Finds in Favour of Taxpayer in Convertible Loan Case
South Africa | 15 August 2008

The Tax Court recently gave judgment in favour of the taxpayer in a so-called ‘convertible loan’ case. The revenue authorities alleged that the taxpayer was dishonest and that it essentially acted fraudulently, or that it entered into a mere paper exercise. The court found that the transactions had the twofold purpose of enabling the taxpayer to borrow funding and of obtaining maximum tax benefit.

Treatment of Interest-Free Loans
South Africa | 30 May 2008

The treatment of interest-free loans has been under the spotlight pursuant to the recent judgment of the Supreme Court of Appeal in South African Revenue Service v Brummeria Renaissance. The court was asked to consider whether the taxpayer received an alleged benefit pursuant to the right to receive interest-free loans and, if so, whether such benefit fell within the definition of 'gross income'.

Proposed Amendments to Taxation Bill Regarding Non-residents
South Africa | 04 April 2008

A number of amendments to the Income Act have been proposed by the 2008 Taxation Laws Amendment Bill, which focuses on non-residents. These proposals relate mainly to anti-avoidance provisions which are to be introduced into the revenue laws in circumstances where structures have been introduced so as to avoid the payment of secondary tax on companies.

Change in Dividend Regime
South Africa | 01 February 2008

Dividends are determined and taxed pursuant to the Revenue Laws Amendment Act 2007. They are exempt from income tax. However, when a company declares the dividend, it is subject to a 10% secondary tax. This tax will be changed during 2008 to create a true withholding tax on dividends. The recipients will be subject to a withholding tax of 10%, rather than the company declaring the dividend as liable for tax.

Attorney Escapes Double Taxation Trouble
South Africa | 09 November 2007

In a recent case the courts had an opportunity to consider the effect of double taxation treaties that have been concluded by South Africa. The judgment is significant in view of the fact that Article 14 of the double taxation treaty with Lesotho was not relevant with reference to the profits derived by the taxpayer.

A Change in the Fiscal Consequences of Company Distributions
South Africa | 28 September 2007

The long-awaited draft Revenue Laws Amendment Bill 2007 was recently published for comment. A number of significant amendments are proposed to address company distributions and the associated consequences. To the extent that persons may have benefited from capital reductions in the period between October 1 2001 and July 1 2008, a tax liability will arise on July 1 2008 in respect of those capital distributions.

Use of Intellectual Property from a Tax Perspective
South Africa | 17 August 2007

The use of intellectual property in tax contexts has become increasingly controversial. The Supreme Court of Appeal recently held that royalty payments made by BP SA to its UK parent were deductible, as the taxpayer had acquired no right in and to the ownership of the trademark. However, the decision does not mean that all payments made to acquire or retain goodwill will always be deductible.

Deemed Capital Nature of Proceeds Associated with Sale of Shares
South Africa | 22 June 2007

Over the years the South African courts have devised various tests to determine when the proceeds from the sale of an asset are of a capital nature. It has recently been announced that the regime will be relaxed given the difficulties relating to the 'facts and circumstances' test. All shares (whether listed or not) disposed of after expiry of a period of three years will result in a capital gains tax event.

Fiscal Consequences of the Use of Intellectual Property
South Africa | 18 May 2007

The fiscal consequences of the use of intellectual property in a South African context have been the subject of much debate. In BP (Southern Africa) (Pty) Ltd v Commissioner for the South African Revenue Service the Supreme Court of Appeal has clarified the issue of whether a South African licensee is entitled to claim a deduction of the royalties paid to a non-resident from a tax perspective.

Budget Developments: Abolishment of Secondary Tax on Companies
South Africa | 16 March 2007

In a widely acclaimed move, the minister of finance has announced during his budget speech that the secondary tax on companies will be abolished and replaced by a dividend tax. The reason for the change is that only two other countries have a formal dividend tax liability at company level and that international investors are more familiar with a dividend tax at shareholder level.

Binding Private Rulings by the Revenue Authorities
South Africa | 12 January 2007

Taxpayers have been pleasantly surprised since the introduction of the advance tax ruling system, which came into operation in 2006. In particular, the Revenue Authorities have started accepting applications for binding private rulings; such rulings by the commissioner have binding effect on the commissioner, but taxpayers can decide not to adhere to the ruling and test the principles in court.

Report your Transactions or Pay Up
South Africa | 15 December 2006

A far-reaching amendment to the Revenue Laws Amendment Bill has been proposed with regard to the obligation to report certain transactions entered into by taxpayers. This provision is designed to serve as an 'early warning system' for the South African Revenue Service in order to identify potentially aggressive transactions.

Introduction of Revised General Anti-avoidance Rule
South Africa | 27 October 2006

The latest proposal for a new general anti-avoidance rule has recently been published and is likely to be promulgated without much amendment. This update reviews the requirements that must be met in order for the new rule to be implemented. Among these requirements, the presence of a tainted element is probably the most significant.

Taxation of Non-resident Individuals
South Africa | 15 September 2006

South Africa has moved from a source-based to a residency-based system of taxation in respect of all income derived by residents of South Africa. Two tests are applied to determine whether an individual is a resident of South Africa: the ordinary residence test and the physical presence test.

Supreme Court of Appeal Denies Deduction of Prepaid Rentals
South Africa | 16 June 2006

The Supreme Court of Appeal has recently handed down its long-awaited verdict in a case involving BP South Africa, which claimed a deduction of prepaid rentals from an income tax perspective. The court held that such payments constituted a foundation for the earning of profits. Therefore, the profits for a particular year would be distorted if these payments were allowed as a deduction.

Introduction of Advance Tax Ruling System
South Africa | 13 April 2006

The minister of finance recently indicated during his budget speech that an advance tax ruling system is likely to be introduced in South Africa towards the middle of the year. The introduction of this system will hopefully go a long way towards providing clarity to taxpayers in their business dealings.

Distinction Between Capital and Revenue Proceeds
South Africa | 17 March 2006

One of the key features of the South African fiscal context is the fact that one cannot predict with any degree of certainty whether the proceeds from the disposal of an asset will be of a capital or revenue nature. The legislature should review the distinction between revenue and capital later this year.

Advance Tax Rulings to Be Issued
South Africa | 04 February 2005

The Second Revenue Laws Amendment Act provides, among other things, that the South African Revenue Service may issue advance tax rulings with effect from a date to be fixed by the president. The procedures and guidelines which will make use of the advance ruling system still have to be finalized by the tax commissioner.

Further Amendments to Income Tax Act
South Africa | 03 December 2004

The recent Revenue Laws Amendment Bill introduced a number of amendments to the South African Income Tax Act. Among other things, the amendments concern share incentive schemes, the accrual of amounts in respect of assets acquired or disposed of for contingent or unquantified amounts, and hybrid instruments.

Tech, Data, Telecoms & Media

Withholding Tax for Sportspersons
South Africa | 18 May 2006

Legislation has recently been passed to the effect that a withholding tax will be introduced on amounts payable to sportspersons. In particular, a withholding tax of 15% will be levied on all amounts received by or accruing to a sportsperson. The legislation will come into force on a date to be fixed in the Official Gazette.