Draft Revenue Laws Amendment Bill, 2008 and Comments on Draft Revenue Laws Amendment Bill, 2008 and Draft Revenue Laws Second Amendment Bill, 2008

General comments Clause 4 - Insertion of section 25B into Estate Duty Act 45 Business purpose test? Clause 6(1)(b) - Definition of “contributed tax capital” What about existing companies Clause 6(1)(f) - Definition of “pension fund” Typing correction

Clause 11(1)(a) and 11(2) – Insertion of section 8C(1A) capital distributions in respect of restricted equity instruments received or accrued between 1 October 2007 and 22 September 2008? Clause 15(b) – Increase in basic exemption for recreational clubs Will it apply to dividends once the withholding tax is introduced?

Clause 21 - Insertion of section 12J of the Act Business plan VCC’s gross income “solely from financial instruments” Impact on “small business corporation” status of another company owned by the shareholder Clause 25 – Deduction in respect of the sale of certain residential units interest on amount owing

Clause 61 - “Personal service provider” Includes independent contractors? Tax rate Employment companies? Application of section 23(k) Effective date 1 March 2008 Safe harbour: 3 or more full-time employees Para 5(a) of the Fourth Schedule: labour broker exemption certificates

Clause 62(e) – Payroll giving Deduction limited to 5% of remuneration Section 18A deduction 10% Re-determination provision required Clause 107 - VAT Act: Amendment of section 41B Publication of rulings

Clause 66 – Insertion of the Sixth Schedule: Presumptive turnover tax Exclusion of professionals Also debarred from small business corporation concession until 3 or more full-time employees Exclusion of vendors Exclusion of trusts Permitted investments dormant companies Exclusion if proceeds from capital asset disposals exceed R1 million over a 3-year period

Presumptive turnover tax (cont.) Taxation of capital gains Previous allowances to be added back but assessed losses are foregone Transitional rules on deregistration Provisional tax? Records of assets and liabilities?

II. Draft Revenue Laws Second Amendment Bill, 2008 Clause 13: Deleted of “basic amount” rule Unrealistic to estimate 90% of taxable income by the last day of the financial year Proposal to bring last date for payment forward by 2 days at end-March Current provision for interest (section 89sex)

Thank you!