SARS, together with National Treasury, released a media statement on 29 June 2011, in order to provide some certainty as to the principles and process in respect of the proposed suspension of section 45 of the Income Tax Act No. 58 of 1962 by the draft Taxation Laws Amendment Bill, 2011.
In principle, SARS is sensitive to the issues of stakeholders and the legitimate use of roll-over relief such as for facilitating BEE transactions and commercial activities that encourage economic growth. However, SARS is adamant that the fiscus is at risk when it comes to certain transactions that form part of tax avoidance schemes and that this risk must be eliminated.
However, recognising that a balance needs to be struck, SARS stated that they are committed to developing revised proposals. With this in mind, they invite interested parties to meet with them between 30 June 2011 and 8 July 2011 and to show SARS details of their transactions. From these consultations SARS hopes to identify characteristics of legitimate transactions so that rules and principles can be developed and eventually included in the amended legislation.
SARS indicated that proposed rules will be published for comment in mid-July and that a final response document will be published in mid-August. This will be followed by revised amendment bills that are to be introduced to Parliament in September and passed by 30 November 2011.
The window provided by SARS for engagement is very small given that interested parties will effectively only have one week to make representations to SARS during the initial stage. However, interested parties are encouraged to take up the opportunity and talk to SARS.
Emil Brincker and Heinrich Louw