You can apply for an ATR if, say, you'll be buying an asset you'll bring into the country, but it's in bits and pieces and is similar in nature to the type of stock you manufacture. And you have to assemble it on arrival.
The questions that could arise regarding this transaction are: Will SARS treat this as a capital asset? Or, will it treat it as trading stock since it arrived in a similar fashion?
The only way to know beforehand is to apply to SARS for an ATR before you even enter into the transaction to find out how they'll tax this transaction in future.
But that's not the only time to apply for ATR.
Here are the other five situations when you can apply for an ATR
#1: The Practical Tax Loose Leaf Service recommends you apply for an ATR if an employee benefit scheme is introduced and your company requires a ruling on whether the benefit forms part of the gross income for your employees.
#2: Are you a landlord? If so, you can apply for an ATR if you want to know if the value of improvements on leasehold property, if effected by the tenant, will form part of your gross income.
#3: Your may request a ruling for the treatment of certain aspects of a proposed black economic empowerment (BEE) transaction.
#4: As a taxpayer, you can request a ruling on whether or not an amount to be received will be treated as revenue or capital in nature when SARS taxes the transaction.
#5: You may request a ruling about whether or not the ring-fencing provisions of section 20A of the Income Tax Act will apply to assessed losses from a proposed new trade.
Knowing when it's appropriate to apply for ATR will help ensure you know how SARS will treat a transaction for tax purposes.
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