THE BANKING ASSOCIATION SOUTH AFRICA
COMMENT ON THE REVENUE LAWS AMENDMENT BILL PORTFOLIO COMMITTEE ON FINANCE
OCTOBER 2005
Overview of Presentation
Equity
· Limitation of medical allowances supported under principle of progressive taxation. (illustrated by impact assessment.)
· Use of allowances for specific industries can result in distortions or can be abused. (film production, PBOs and accelerated depreciation.)
· Consider more use of impact assessments
· Consider alternative of grants and where grants used, ensure benefits are cost effective.
Consistency
· Accelerated allowance for small businesses supported but to be accompanied by relaxing leasing restrictions.
· Banks play an intermediation role and give effect to the policy decisions.
· Restriction of leasing will restrict ability of small businesses to invest.
· Co-operation and convergence in SADC region.
· Farm valuations should not be 30% less than market value (Estate Duty)
Simplicity
· Substantial resources to interpret and apply tax rules.
· UK and USA convergence
· Adoption of International Accounting Standards to resolve ambiguity of derivatives.
· Valuation and taxation of share incentive schemes.
· Need to be regionally and internationally compatible
Certainty
· Reportable Arrangements need to be revisited.
· Penalties for misinterpretation to be waived.
· Increased issue of Practice Notes by SARS welcomed.
· Further steps towards introduction of Advanced Ruling procedures needed.
· Foreign investors welcome greater certainty.
Summary of Recommendations
· Tax amendments for policy objectives to be supported by financial impact assessments.
· Task group to be formed to seek convergence with international best practice and lAS.
· Incentive allowances for small business investments should not be constrained by restricting leasing allowances.
· Resolution of ambiguity in Reportable Arrangements and waive penalties until resolved.