As a CA(SA) tax does form part of ones basket of goodies.
The thing is that one does not have to be an expert. There are plenty of very smart people who have made tax their speciality and you always have the option to consult with them at your will.
The main issue is not so much the detail as the concept.
As a strategic CA(SA) there are, in my opinion 3 areas in tax that need to be always on the table.
Before we get into this detail it is important to remember that any tax benefit that you uncover can be deducted off the next provisional tax payment. Hence the real cash flow advantage is not necessarily at your next assessment date, but is at most 6 months away.
So let’s have a look at the detail:
In any transaction that crosses your desk the issue of VAT needs to be considered. Always ask the question “Can I save the VAT/Can I get a refund/Can I claim it back”.
Of course the answers are not immediately apparent but by asking the question you are setting in motion a possible saving. You can then go and see the best tax brains in town and say to them you need a way to not pay the VAT! But if you don’t do that nobody else will. Definitely not your auditors!
Knowing your Group tax profile is an essential part of solid tax strategy. If there are companies in the Group with assessed losses, there is always a need to focus on how to use those losses. There are two things to consider:
- Assessed losses fall away if the company does not trade a period of one year
- The anti-avoidance sections are tricky and require proper application
Clever upfront planning on any new transaction could allow for existing assessed loss utilisation.
This is where you fit in. By making the statement that you want to use these losses sets in action a process to find the smartest people who can help you achieve this end. I talk from experience on this issue and was able to save a substantial amount of cash tax by working with a very smart tax consultant. All was above board, was properly documented and comfortably accepted by the taxman.
This is the classic tax saver and has two sides to it:
- If it is a cost, it must be deducted as an ‘expense’
- It is a profit it must be shown as a ‘capital gain‘
Of course this is simplistic, but if you are not asking the question, no-one else will.
The conundrum needs once again be presented to a top tax brain with the requirement of “how do we turn this cost into an expense and this profit into capital”.
To any of these issues do not expect to have the answers – what you need to be doing is asking the questions!