The Companies and Intellectual Property Commission reported that between 2011 and 2018, a total of 2 867 South African companies initiated business rescue proceedings in terms of Chapter 6 of the Companies Act, 2008 (the “Companies Act”), with South African Airways SOC Limited (“SAA”) being the latest addition to this list. The purpose of these proceedings is to provide distressed companies with a fresh start by creating the potential for them to be rescued, to avoid insolvency and to ultimately be wound-up.
The Fourth Schedule of the Insolvency Act is amended to amend priority in which preferential creditors have to be paid.
Under the Fourth Schedule of the Insolvency Act (the “IA”), unpaid wages and salaries, up to a maximum of Rs 50,000, must now be paid after the liquidator or Official Receiver has settled the cost of the liquidator under sub-paragraph (1) of paragraph of the Fourth Schedule.
The Gauteng Division of the High Court recently delivered a judgment in the matter of The Commissioner for the South African Revenue Service and Logikal Consulting (Pty) Ltd and Others, Case No. 96768/2016, in which the court had to interpret, among other things, what comprises a “class” of creditors as contemplated in s155(2) of the Companies Act, No 71 of 2008.
Following on from our previous tax alerts regarding the various proposed amendments pursuant to the draft Taxation Laws Amendment Bill, 2018 (draft TLAB) published for public comment on 17 July 2018, we discuss in this Tax Alert another significant proposed legislative amendment, specifically related to the allowance for doubtful debts set out in s11(j) of the Income Tax Act, No 58 of 1962 (Act).
On July 19 2017, the National Treasury published the Draft Taxation Laws Amendment Bill 2017. The bill proposes to clarify the tax implications that arise when a person assumes contingent liabilities under the corporate reorganisation rules contained in Sections 41 to 47 of the Income Tax Act (58/1962).
Even the taxman must stand in line with other Creditors before the Liquidator. This is according to the recent Supreme Court of Appeal ("SCA") decision of CSARS v Van der Merwe NO. This appellate case dealt with a dispute about whether or not certain provisions of the Customs and Excise Act created an embargo in favour of the Commissioner of the South African Revenue Services (“CSARS”), thus preventing a Liquidator from taking possession of goods in terms of the Insolvency Act until all duty and VAT is paid.
The South African Revenue Service (SARS) released Binding Private Ruling 210 (Ruling) on 11 November 2015. The Ruling sets out the tax consequences of a ‘liquidation distribution’, as defined in s47(1)(a) of the Income Tax Act, No 58 of 1962 (Act), followed by an ‘amalgamation transaction’ as contemplated in s44(1)(a) of the Act.
The South African Revenue Service (SARS) published Binding Private Ruling No. 198 on 7 July 2015 (Ruling). The Ruling deals with the distribution by a South African resident company (Subsidiary) of its loan account to its South African holding company (Holding Company) in anticipation of the Subsidiary’s deregistration.
The applicable provisions in the Income Tax Act, No 58 of 1962 (Act) are s10(1)(k), s47, s64D and s64FA(1)(b).
The relevant facts relating to the Ruling are as follows:
Judge Andre van Niekerk handed down an interesting judgment in the High Court of South Africa (North Gauteng Division) on 30 September 2013. In my respectful opinion the judgment is insightful and is correct. The facts are fairly simple. Miles Plant Hire (Pty) Ltd (MPH) had a tax liability of R37 441 090.59 to the commissioner of the South African Revenue Services (SARS). SARS had levied a tax assessment in this amount on MPH, which included penalties and interest.
Interim costs awards in arbitration proceedings are not often the precursors to winding up applications. However, it may happen that if such an award of costs is not paid, the possibility of winding up the non-paying party may arise. This possibility leads to the following question, "Is a bill of costs drafted pursuant to an arbitration award and taxed by the taxing master of the High Court a "debt" for purposes of section 345 of the Companies Act 61 of 1973?"