If you happen to find yourself in a situation where you're not quite sure of the tax implications on a particular transaction, in other words there are no tax laws which cover the transaction, you can apply for what's known as an advanced ta ruling (ATR).
But you can only do so in certain situations. These include...
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· If you create an employee benefit scheme and it forms part of the employees' gross income, your company will be able to apply for an advanced tax ruling;
· If you're a landlord, you may wish to know if the value of any upgrades on a leasehold property, if made by the tenant, will form part of the gross income in your hands;
· If there's a newly introduced section to the Income Tax Act,
coming into effect soon, you may request an advanced tax ruling because you're not sure how this new section will affect your future transactions; and
· You can request an advanced tax ruling if you need to know whether an amount you receive will be revenue or capital when SARS taxes the transaction.
Now, there are other situations in which you can apply for an ATR, but they're at the complete discretion of SARS. In other words, while the law doesn't require the Commissioner to reject them, it doesn't stop him from doing it either.
These rejections are referred to as discretionary exclusions.
And in order to prevent any unnecessary surprises and disappointments, you need to know what they are.
Here are the seven situations in which your ATR application may receive a discretionary exclusion…
Material facts in relation to an issue that can't be established at the time of application.
An issue that relies on assumptions for a future event. In other words, it can't be reasonably determined at the time of application.
You fail, or refuse, to provide information that has been requested by the Commissioner
To learn what the other four situations that can easily lead to a discretionary exclusion are, simply page over to Chapter A 04
in your Practical Tax Loose Leaf Service
handbook, or click here
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