Page 390 - SAIT Compendium 2016 Volume2

IN 27
4.3.2
Income Tax acT: InTeRPReTaTIon noTes IN 28 (2)
The shareholder’s or director’s right to recover
Where a shareholder or director is personally liable for the payment of employees’ tax, additional tax, penalty or interest, and paid it as such, the shareholder or director will be entitled to recover the amount paid to the Commissioner from the person on whose behalf it was paid. Recovery may take place by retaining any money that may be in its possession or may come to it in its representative capacity.*
5. General overview
• • •
Paragraph 30 (1) (a) and (b) provide for a ne and imprisonment on conviction of any person who — fails to deduct or withhold the correct amount of employees’ tax from remuneration; or
fails to pay such amounts over to SARS within the prescribed period; or
uses or applies any employees’ tax for purposes other than the payment thereof to SARS.
This, together with the amendments to paragraph 16 of the Fourth Schedule will assist efforts to reduce opportunities for employers and representative employers to evade their responsibility to deduct or withhold employees’ tax and pay it over to SARS.
Income Tax Interpretation Note 28 (Issue 2)
Deductions: Home of ce expenses incurred by persons in employment or persons holding an of ce
DATE: ACT: SECTION: SUBJECT:
Preamble
15 March 2011
INCOME TAX ACT, 1962 (the Act)
Sections 11(a), 11(d), 23(b) and 23(m)
Deductions of home of ce expenses incurred by persons in employment or persons holding an of ce
References to sections are to sections of the Act, unless otherwise stated.
1. Purpose
This Note provides clarity on the deductibility of home of ce expenses incurred by persons in employment or persons holding an of ce. This update incorporates the changes made, in terms of section 37(1)(c) of the Revenue Laws Amendment Act No. 60 of 2008, to section 23(m).
2. Background
Expenses in maintaining a home of ce have been a controversial issue since the judgment handed down in KBI v Van der Walt.† The legislation relating to home of ce expenditure that a taxpayer may claim has been periodically amended since 1990. The most recent amendment to have an effect on the deduction of home of ce expenditure was the amendment to section 23(m).
Section 23(m) prohibits, subject to speci c exceptions, the deduction of certain expenditure, losses and allowances that relate to employment or the holding of an of ce. For a detailed discussion on the operation of section 23(m), see Interpretation Note No. 13 (Issue 3) dated 15 March 2011: “Deductions: Limitation of Deductions for Employees and Of ce Holders”. The effect of this section on the deductibility of home of ce expenditure is the topic of this Note.
3. The law
For ease of reference, the relevant sections of the Act are quoted in Annexure C.
4. Application of the law on the deductibility of home of ce expenses
4.1 What constitutes home of ce expenditure?
Typically, home of ce expenditure will be the type of expense referred to in section 23(b), namely, – • rent of the premises;
• interest on bond;
• cost of repairs to the premises; and
• other expenses in connection with the premises.
In addition to these expenses, other typical home of ce expenditure may include –
• phones;
• stationery;
• rates and taxes;
• cleaning;
• of ce equipment; and
• wear-and-tear.
4.2 The general rule
The deductibility of expenses relating to a home of ce is determined by reference to section 11, in particular paragraphs (a), (d) and (e), read together with sections 23(b) and 23(m). This means that for a home of ce expense to be deductible the requirements of sections 11, 23(b) and 23(m) must all be met.
* Paragraph 16(2A) of the Fourth Schedule † 48 SATC 104, 1986 (4) SA 303(T).
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