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Greenwashing: ASIC reports on greenwashing interventions 2023 - 2024
The Australian Securities and Investments Commission (ASIC) has just released its report into greenwashing interventions for the period 2023 – 2024 (Report).
Global | Publication | February 24, 2016
It was not clear what we expected from the 2016 budget speech which made it such a keenly anticipated event. The recent changes in personnel at the office of the Minister of Finance made it impossible to predict what Minister Gordhan’s priorities would be since his tenure in office has been so short.
There was a sense that much of the focus would be on trying to avoid a sovereign debt downgrade and to talk up programmes to stimulate growth in a flagging economy. From a tax perspective, the outcome was not as bad as some had suggested, but for those at the top end of the scale, the changes will be felt.
This was a budget with a focused mission and whether or not it achieves its goals will be seen in days to come. Evidence will lie in movements of the Rand and noises from the rating agencies. However, it was a return to form for the Minister who always guided the economy with a conservative yet subtle hand on the tiller and the Minister’s performance this year only reinforced how fortunate we were to have him back.
The main budget proposals for the 2016-17 fiscal year include the following –
Treasury has maintained its focus on eliminating base erosion and profit shifting, particularly in relation to hybrid debt instruments. With effect from 24 February 2016, the rules which reclassify interest payments on hybrid debt instruments as dividend payments for tax purposes will be amended to avoid an outright exemption where the issuer of the instrument is not a South African resident taxpayer.
A subordination of a debt can lead to an instrument being classified as a hybrid debt instrument. A concession will be introduced to exclude subordinated debt instruments from being regarded as hybrid debt instruments.
The taxation of trusts has been on the radar screen in the recent past and measures have been mooted to prevent tax avoidance through the use of trusts. Government has proposed that the assets transferred through a loan to a trust are to be included in the estate of the founder at death. Furthermore, interest-free loans to trusts will be subject to donations tax. Lastly, measures will be introduced to limit the use of discretionary trusts for the purposes of income-splitting.
Historically a share subscription coupled with buy-back has been used in certain transactions to pay a tax exempt dividend to the seller and to minimise capital gains tax. The use of these arrangements will be reviewed to determine if counter-measures are required which may see these arrangements taxed on similar terms to a share sale.
The current income tax and securities transfer tax relief for the transfer of collateral in securities lending arrangements is limited to lending arrangements shorter than 12 months. Concerns that have been raised regarding this time limitation will be considered by Treasury. In addition, the tax treatment of securities-lending arrangements will be reviewed to take into account corporate actions during the term of the lending arrangements.
Treasury will relax the anti-avoidance rules which recharacterise dividends received in respect of third-party backed shares as interest for transactions entered into before 2012.
It is also perceived that a number of schemes have been developed which circumvent these rules. New legislation will be introduced to curb these practices.
Additional amendments are proposed to provide extended roll-over relief for the migration of unregulated hedge funds to a new regulated regime, particularly in relation to trust structures.
Amendments are proposed relating to the “qualifying distribution” criterion in section 25BB of the Income Tax Act to take account of factors such as building allowances claimed when determining whether a distribution is a “qualifying distribution”.
The current provisions of section 9C of the Income Tax Act which treat shares held for 3 years or more as capital assets are inappropriate for REITs because dividends received from REITs are included in taxable income. Proposals are made to prevent the recoupment of expenditure under section 9C(5) of the Income Tax Act where a taxpayer disposes of shares in a REIT.
Service fees paid to non-residents were intended to attract a withholding tax of 15% as from 1 January 2017. Treasury has identified certain anomalies particularly in the application of the withholding tax to tax treaties. It is thus proposed that the withholding tax on service fees be withdrawn from the Income Tax Act and dealt with under the reportable arrangement provisions.
An alignment of the tax treatment in relation to exchange differences that are included or deducted from taxable income when a foreign denominated loan is advanced by a taxpayer to another, and the loan subsequently goes bad will be introduced. The bad debt deduction provisions will be amended to specifically include any exchange difference for a debt that has been included in income.
When interest is paid to a foreign person by a South African resident, there is a withholding tax of 15% that must be withheld and paid to SARS by the resident. The current tax provisions do not cater for instances where interest withholding tax has already been paid but the interest is subsequently written off as irrecoverable. It is proposed that there will be a mechanism for a refund of interest withholding tax in these circumstances.
The primary rebate and the bottom three income brackets will be adjusted by 1.8% and 3.4% respectively. The new tax brackets are illustrated below:
2015/2016 | 2016/2017 | ||
---|---|---|---|
Taxable income (R) | Rates of tax | Taxable income (R) | Rates of tax |
R0 - R181 900 | 18% of each R1 | R0 - R188 000 | 18% of each R1 |
R181 901 – R284 100 | R32 742 +26% of the amount above R181 900 | R188 001 – R293 600 | R33 840 + 26% of the amount above R188 000 |
R284 101 – R393 200 | R59 314 + 31% of the amount above R284 100 | R293 601 – R406 400 | R61 296 + 31% of the amount above R293 000 |
R393 201 – R550 100 | R93 135 + 36% of the amount above R393 200 | R406 401 – R550 100 | R96 264 + 36% of the amount above R406 400 |
R550 101 – R701 300 | R149 619 + 39% of the amount above R550 100 | R550 101 – R701 300 | R147 996 + 39% of the amount above R550 100 |
R701 301 and above | R208 587 + 41% of the amount above R701 300 | R701 301 and above | R206 964 + 41% of the amount above R701 300 |
Rebates: | 2015/2016 | Rebates: | 2016/2017 |
---|---|---|---|
Primary | R13 257 | Primary | R13 500 |
Secondary | R7 407 | Secondary | R7 407 |
Third | R2 466 | Third | R2 466 |
Tax threshold: | 2015/2016 | Tax threshold: | 2016/2017 |
---|---|---|---|
Below age 65 | R73 650 | Below age 65 | R75 000 |
Age 65 and over | R114 800 | Age 65 and over | R116 150 |
Age 75 and over | R128 500 | Age 75 and over | R129 850 |
The table below illustrates the proposed increased inclusion rates:
2015/2016 | 2016/2017 | |
---|---|---|
Individuals | 33.3% | 40% |
Companies | 66.6% | 80% |
Trusts | 66.6% | 80% |
Individuals annual exclusion | R30 000 | R40 000 |
The maximum effective capital gains tax rate for individuals has increased from 13.7% to 16.4%, and for companies from 18.6% to 22.4%. The effective capital gains tax rate relating to trusts increases from 27.3% to 32.8%.
The new rates will become effective for years of assessment beginning on or after 1 March 2016.
A number of fairly subtle amendments have been proposed in relation to the taxation rules governing pension and provident funds, as well as the rules around employee/employer contributions to such funds. These include –
A number of issues surrounding private travel and the calculation of fringe benefit tax have come up in recent times. This is particularly so with employers providing private travel to expatriate employees who are located in South Africa. What comprises “private travel” for the purposes of the Income Tax Act has different meanings in different parts of the act. This concept and the meaning of “private travel” is to be aligned to create clarity going forward.
The tax-free investments account was recently introduced to encourage savings amongst South Africans. As with other dispensations, a number of proposed changes have been suggested –
The taxation of share incentive schemes is always controversial. A number of clarifications to the share incentive scheme have been proposed including –
The Minister of Finance has announced that a Special Voluntary Disclosure Programme will commence from 1 October 2016 to 31 March 2017, to give non-compliant taxpayers an opportunity to voluntarily disclose offshore assets and income from a tax and exchange control perspective.
With a new global standard for the automatic exchange of information between tax authorities providing SARS with additional information from 2017, time is now running out for taxpayers who still have undisclosed assets abroad.
Only 50% of the total amount used to fund the acquisition of offshore assets (also known as “seed money”) will be excluded from taxable income and subject to normal tax, where those funds did not comply with a tax act administered by SARS before 1 March 2015.
Investment returns in respect of those offshore assets received or accrued from 1 March 2010 onward will be included in taxable income in full and subject to normal tax. Therefore investment returns prior to 1 March 2010 will be exempt.
Interest on tax debts will only commence from 1 March 2010; and no understatement penalties will apply to the tax debt, if the application is successful.
SARS will not pursue any criminal prosecution under the Special Voluntary Disclosure Programme.
Applicants who are granted administrative relief in respect of unauthorised foreign assets or structures will only be required to pay reduced penalties of -
on the current market value at 29 February 2016, rather than the 10% – 40% penalty that would be imposed in normal circumstances.
The budget proposals recognise that obesity stemming from overconsumption of sugar has become a global concern and that fiscal interventions in the form of taxes are increasingly regarded as complementary tools throughout the world to assist in tackling this epidemic. Government therefore proposes to introduce a sugar tax from 1 April 2017 as a measure to assist the public in reducing their sugar intake.
2015/2016 | 2016/2017 | ||
---|---|---|---|
Property value (R) | Rates of tax | Property value (R) | Rates of tax |
R0 - R750 000 | 0% of property value | R0 - R750 000 | 0% of property value |
R750 001 - R1 250 000 | 3% of property value above R750 000 | R750 001 - R1 250 000 | 3% of property value above R750 000 |
R1 250 001 - R1 750 000 | R15 000 + 6% of property value above R1 250 000 | R1 250 001 - R1 750 000 | R15 000 + 6% of property value above R1 250 000 |
R1 750 001 - R2 250 000 | R45 000 + 8% of property value above R1 750 000 | R1 750 001 - R2 250 000 | R45 000 + 8% of property value above R1 750 000 |
R2 250 001+ | R85 000 + 11% of property value above R2 250 000 | R2 250 001 – R10 000 000 | R85 000 + 11% of property value above R2 250 000 |
R10 000 001 and above | R937 500 + 13% of property value above R10 000 000 |
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