On Monday 4th February 2019, the Minister of Finance and Economic Development (the Minister) presented the budget speech and proposed some changes to the fiscal legislation specifically the Capital Transfer Tax (CTT) Act.
For the purposes of this article we shall use the phrase “donations tax” to represent Capital Transfer Tax for ease of understanding. Donations tax is a tax charged on the recipient of a donation of any property, be it money, shares, movable goods and immovable property. The donation could happen during the donor’s lifetime or as an inheritance. The tax is charged at 5% at the highest bracket, i.e. for amounts in excess of P 500 000 in value.
The proposed changes will ensure that heirs enjoy full exemption from inheritance of household goods and personal belongings. Currently the exemption of donations tax in relation to inheritance of household goods is limited to P15, 000 of the aggregate value of inherited household goods received in a tax year (1st July to 30th June for individuals and financial year for companies). Therefore currently, if one inherits say P10, 000 worth of household goods from their uncle and P6, 000 from the grandfather, only P1, 000 (being P 16 000 less P 15 000) will be subject to donations tax.
The exemption doesn’t apply to a single donation but the aggregate donations in a tax year. Additionally, the exemption threshold of casual gifts shall be increased from an aggregate value of P5, 000 to P25, 000. Therefore if one receives P26, 000 worth of casual gifts from various sources, only P1, 000 will be subject to donations tax.
The proposed amendments will also ensure that all immoveable property exempt in terms of the Transfer Duty Act will be exempt from donations tax. It should be noted that these will include the proposed amendments as per the Transfer Duty Amendment bill to be re-tabled in March 2019. The following exemptions are contemplated in terms of the proposed Transfer Duty Amendment bill:
Transfer of property to one spouse after death or divorce Transfer of property to another spouse or company owned by spouse where they are married in community of property Donation of immoveable property to eligible beneficiaries in the Income Tax Act. They include donations to destitute people, institutions such as SOS, etc. Transfer of property to heirs in terms of a will or otherwise Transfer of property to a trust for support of a marriage by parents of spouses or the spouses (includes intended spouses) Partitioning of property that is jointly owned
Under the Transfer Duty Act the exemption on the above situations can only be enjoyed when the properties are transferred for free without any payment. Where there is a payment involved there is no exemption for Transfer Duty. It should be noted that exemption under these circumstances is not automatic and therefore an application has to be lodged with the Commissioner General detailing the type of exemption sought. It is expected that where an exemption certificate is issued under the Transfer Duty Act it will automatically cover exemption under the Capital Transfer Tax Act for those who are eligible for both.
The civic society organizations including religious organizations are advised to take advantage of these proposed exemptions and lobby for automatic exemption as currently only associations recommended for exemption by the Minister enjoy this. This is normally sought by application to the Minister.
Prior to the amendment of the Second Schedule to the Income Tax Act (in July 2004), these organizations used to enjoy exemption from donations tax when they were under Part 1 of the schedule. After being moved to Part II of the schedule they lost this exemption. In terms of lobbying, organizations such as political parties and unions are the only ones that enjoy these exemptions from donations tax as they are in Part I.
Part I of the Income Tax Act deals with exempt persons, that is, entities or individuals exempt from Income Tax and Part II deals with exempt income, that is, source of income that is exempt from Income Tax. Persons exempted from income tax do not submit income tax returns while persons whose income is exempt from income tax are required to submit returns and pay donations tax. Therefore contrary to popular belief that civic society organizations are tax exempt, they are required to register for tax and file income tax returns and pay donations tax.
There is a saying in South Africa which avers that, “the White man has no kin: his kin is money”. The saying rings very true considering what Mayer Amschel Rothschild – he of the planet’s wealthiest family – once said, that, “Permit me to issue and control the money of a nation, and I care not who makes its laws!”
To the white man, the dollar sign looms so large in his optics that it was precisely the reason he appropriated Africa towards the end of the 19th century. The idea was to develop his continent, Europe, at the same rate as he underdeveloped Africa. Yet he was driven as much by economic imperatives as by sheer greed and prejudice.
A “pagan” King violates the Jewish Temple by setting up an idol in the Holy of Holies
Why, General Atiku, has the Judean setting (present-day Israel/Palestine) being the focus of so much geopolitical fervour over the ages when it is so resource-poor and is not even that agriculturally fecund being a virtual desert? Why have all the superpowers of history locked horns over it since days immemorial?
Just a ‘teaser’: we are all complaining of the ‘hot weather’ and ‘heat’ – but think about it, is this a reminder / warning from the Almighty that if we find this weather ‘hot’ can you imagine what the ‘fires of hell’ will be like should we get there?
Let us take this as a reminder and a ‘warning’ that we should change our lifestyles so that we follow in the path of righteousness and that which our Lord has directed. Failing this we will face the ‘fire of hell’ which undoubtedly will be many times worse than what we are facing on this earth.
Because as humans we have been favoured and bestowed with the power of intellect thus we enjoy greatness over other creation, coupled with a greater responsibility. Should that responsibility be misused then only on the Day of Reckoning will he know we will live in joy or in grief forever.
Since the dawn of creation Allah has sent down thousands of messengers, dozens of Divine Books but only ONE universal Message to humanity. That message of Divine Revelation and guidance is clear, unambiguous and eternal:
Allah is One, He is Master and Creator of the universe and of mankind and to Him is due all worship and obedience.
He has sent humanity Divine Revelation and guidance through His Messengers and His Books.
As death is inevitable in this world, equally is our resurrection in the Hereafter where everyone will face the consequences of their belief, unbelief and conduct in this temporal world.
This is the basic message, teaching and belief of every religion and without doubt we will all be called to account for our lives in this world and the manner in which we conducted ourselves, will be rewarded thereafter, the consequences of which may be joy forever for some or grief forever for others.
“It is He [Allah] Who created Death and Life, that He may try which of you is best in deeds and He is Exalted in Might, Oft-Forgiving.” (Qur’an: 67: 2)
In Islam the teachings of the Qur’an and the Last and Final Prophet Muhammad (PBUH) give clear guidance to the believer on how to live a life in this world so as to achieve success in the Hereafter.
‘If any do wish for the transitory things of this life, We readily grant them, such things as We will, to such persons as We will…… those who wish for the things of the Hereafter and strive for them with all due striving, and have faith, they are the ones whose striving is acceptable to Allah’ (Qur’an 17: 18-19)
In this world when a person sets out on a journey towards our Maker (Allah), he finds two paths, one leading to God and the other path to different destinations. A sincere and faithful believer will always try to find the right path and to live by the Divine injunctions, laws and code that his religion lays down. This requires us to live in harmony with the will of the Creator, in harmony with our own selves, and with the needs of the rest of creation. Unfortunately we have a tendency at times to toy with Divine Law and to surrender it to the laws of man and in the process to translate and interpret them into what fits in with our lifestyle of today.
If we are to use the intellect and the freedom of choice bestowed to us by God Almighty and follow His guidance, we will then live consciously in a state of “submission’ to Him, thus we will be virtuous. On the other hand when we ignore our Creators injunctions we work against the natural order, we tend to create discord, injustice and evil – and we become one without guidance. Therefore it is the intellect and the freedom of choice given to us that we are fully responsible for whatever we do.
However, it would be foolish for us to think of ourselves as totally independent and self-sufficient. If a person thinks in this manner, we become proud and. We will be inclined to become ungrateful for the bounties that we enjoy – the air that we breathe and the food we eat to sustain us, the eyes and ears we use to perceive the world around us, the tongue and lips we use to express our needs, wants and our inner most feelings and emotions. And being ungrateful, we will be inclined to forget or to reject the truth of the existence of God Almighty.
Unfortunately, people have varying views with regards to what the most important characteristic of a person is: for some it is the colour of his skin; for others, it is his economic situation – whether he is wealthy or poor; others think it is his , social or political standing, whether he is ruler or ruled; for others it is his social standing as an aristocrat, middle or working class; yet for some is his birth place and the language he speaks or the tribe he belongs to, etc..
‘Do men think that they will be left alone on saying “We believe”, and they will not be tested? We tested those before them, and Allah will certainly those who are true and those who are false’. (Quran 29: 2-3)
In Islam, these have no significance rather they are merely taken as signs of the creative power of God to enable people to recognise one another. The Almighty declares “O Mankind! Indeed we have created you as male and female, and have placed you in nations and tribes that you may have mutual recognition. However, the most honourable of you, in the sight of Allah is the one who is most God-conscious” (Qur’an: 49: 13)
Hence, the most important characteristic of a person is whether he is conscious of his Creator, believes in Him and through that consciousness submits to Him at all times and in all circumstances.
According to the Islamic view man is created by Allah in a pure state, free from sin. He also created us with the capacity or power to do both good and evil. He gave us the freedom to choose between doing good or evil. The good and evil therefore is connected with mankind’s freedom of choice and responsibility for their actions. “Good” may be whatever is pleasing to Allah and therefore beneficial to us. Whereas “Bad/evil” may be whatever incurs the anger of God and is therefore harmful to man.
‘By the soul, and the proportion and order given to it; And its enlightenment as to its wrong and its right – truly he that succeeds that purifies it, and he fails that corrupts it….. (Quran 91: 7-10)
Therefore one of mankind’s main tasks is to keep away from and ward off evil. This is why Taqwa, piety and God consciousness is repeatedly mentioned in the Qur’an as the most important quality a person should develop in this regard. This means one must be conscious at all times not to over step the limits set by God. It works as a defence against evil and temptation by keeping a person within the boundaries of piety.