Treasury proposes changes to tax treatment of collective investment schemes
The amendments would make explicit the difference between capital and revenue, rather than SARS having to rely on the circumstances of individual cases
The Treasury has proposed changes to the Income Tax Act to clarify the tax treatment of collective investment schemes. The proposed changes would bring certainty to tax rules regarding the distinction between capital and revenue, which is not explicitly stated in the Income Tax Act — which does not define income of a capital nature. Currently, SARS relies on the facts and circumstances of each particular case, and on case law, to determine this distinction, which the Treasury says has resulted in different applications of the law and an uneven playing field regarding the taxation of collective investment schemes. Treasury chief director of legal tax design said in a briefing to parliament’s finance committee on Thursday on the Draft Taxation Laws Amendment Bill that it had come to the government’s notice (via whistle-blowers) that some collective investment schemes "are, in fact, generating profits from the active, frequent trading of shares and other financial instruments rather th...
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