A number of draft interpretation notes have been issued by SARS

The draft interpretation notes (“INs”) issued by SARS for public comment, as well as the details of what the draft INs relate to, are listed below:

1. Draft IN on sale and leaseback arrangements and related simulated transactions.

• This IN, published on 18 February 2022, provides guidance on the application of sections 23D and 23G to certain sale and leaseback arrangements. The IN does not address sale and leaseback arrangements in general and takes into account simulated transactions where loan agreements may be concealed and it is necessary to consider the true nature of such transactions.
• A copy of the draft IN can be accessed here
• Due date for public comment: 31 March 2022

2. Draft IN on effect on the date of issue of a share arising from a change in the redemption features

• This IN, published on 18 February 2022, considers whether adding redemption features or making a change to the existing redemption features of a share constitutes a new date of issue for purposes of section 8E.
• A copy of the draft IN can be accessed here
• Due date for public comment: 31 March 2022

3. Draft IN – Public benefit organisations: provision of residential care for retired persons

• This IN, published on 22 February 2022, provides guidance on the interpretation and application of Public Benefit Activity 3(c) relating to the provision of residential care for retired persons.
• A copy of the draft IN can be accessed here
• Due date for public comment: 13 May 2022

4. Draft IN – Public benefit activity: bid to host or hosting any international event

• This IN, published on 22 February 2022, provides guidance on the interpretation and application of public benefit activity (PBA) 11(b) relating to the bid to host or hosting of any international event approved by the Minister having regard to specified prescribed criteria.
• A copy of the draft IN can be accessed here
• Due date for public comment: 13 May 2022

5. Draft IN – Understatement penalty: meaning of “maximum tax rate applicable to the taxpayer” under Section 222(5) of the Tax Administration Act

• The IN, published on 22 February 2022, provides clarity on the interpretation and application of the phrase “maximum tax rate applicable to the taxpayer” used in section 222(5) when the tax rate applicable to the shortfall determined under subsections (3) and (4) is applied.
• A copy of the draft IN can be accessed here
• Due date for public comment: 27 May 2022

6. Draft IN – Recoupment of amounts deducted or set off when an asset commences to be held as trading stock which was previously not so held

• This draft IN, published on 22 February 2022, provides guidance on the interpretation and application of section 8(4)(k)(iv) that applies when any asset on which an allowance or deduction under a provision referred to in section 8(4)(a) has been granted, commences to be held as trading stock.
• A copy of the draft IN can be accessed here
• Due date for public comment: 3 June 2022

7. Draft IN – Mining rehabilitation company or trust: deductibility of amounts paid and compliance with section 37A

• This draft IN, published on 22 February 2022, provides guidance on the interpretation and application of section 37A which deals with payments made by persons to a mining rehabilitation company or trust where that company or trust has been established for the purposes of conducting rehabilitation upon the closure of a mine and the cessation of mining activities. This rehabilitation is to also cover any latent and residual environmental impacts of the mining activities. The IN also discusses the special tax relief provided for persons contributing cash to a mining rehabilitation company or trust, as well as specific anti-avoidance rules designed to prevent misuse or abuse of those provisions.
• A copy of the draft IN can be accessed here.
• Due date for public comment: 24 June 2022

25/02/2022