A critical analysis of the practical man principle in Commissioner for Inland Revenue v Lever Brothers and Unilever Ltd
- Authors: Grenville, David Paul
- Date: 2014
- Subjects: Unilever (Firm) , South African Revenue Service , Taxation -- Law and legislation -- South Africa , Income tax -- Law and legislation -- South Africa -- Cases , Income tax -- South Africa -- Cases , Business enterprises -- Taxation -- South Africa , Law -- South Africa -- Philosophy
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:909 , http://hdl.handle.net/10962/d1013238
- Description: This research studies the practical person principle as it was introduced in the case of Commissioner for Inland Revenue v Lever Brothers and Unilever Ltd 1946 AD 441. In its time the Lever Brothers case was a seminal judgment in South Africa’s tax jurisprudence and the practical person principle was a decisive criterion for the determination of source of income. The primary goal of this research was a critical analysis the practical man principle. This involved an analysis of the extent to which this principle requires judges to adopt a criterion that is too flexible for legitimate judicial decision-making. The extent to which the practical person principle creates a clash between a philosophical approach to law and an approach that is based on common sense or practicality was also debated. Finally, it was considered whether adopting a philosophical approach to determining the source of income could overcome the problems associated with the practical approach. A doctrinal methodology was applied to the documentary data consisting of the South African and Australian Income Tax Acts, South African and other case law, historical records and the writings of scholars. From the critical analysis of the practical person principle it was concluded that the anthropomorphised form of the principle gives rise to several problems that may be overcome by looking to the underlying operation of the principle. Further analysis of this operation, however, revealed deeper problems in that the principle undermines the doctrine of judicial precedent, legal certainty and the rule of law. Accordingly a practical approach to determining the source of income is undesirable and unconstitutional. Further research was conducted into the relative merits of a philosophical approach to determining source of income and it was argued that such an approach could provide a more desirable solution to determining source of income as well as approaching legal problems more generally.
- Full Text:
- Date Issued: 2014
- Authors: Grenville, David Paul
- Date: 2014
- Subjects: Unilever (Firm) , South African Revenue Service , Taxation -- Law and legislation -- South Africa , Income tax -- Law and legislation -- South Africa -- Cases , Income tax -- South Africa -- Cases , Business enterprises -- Taxation -- South Africa , Law -- South Africa -- Philosophy
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:909 , http://hdl.handle.net/10962/d1013238
- Description: This research studies the practical person principle as it was introduced in the case of Commissioner for Inland Revenue v Lever Brothers and Unilever Ltd 1946 AD 441. In its time the Lever Brothers case was a seminal judgment in South Africa’s tax jurisprudence and the practical person principle was a decisive criterion for the determination of source of income. The primary goal of this research was a critical analysis the practical man principle. This involved an analysis of the extent to which this principle requires judges to adopt a criterion that is too flexible for legitimate judicial decision-making. The extent to which the practical person principle creates a clash between a philosophical approach to law and an approach that is based on common sense or practicality was also debated. Finally, it was considered whether adopting a philosophical approach to determining the source of income could overcome the problems associated with the practical approach. A doctrinal methodology was applied to the documentary data consisting of the South African and Australian Income Tax Acts, South African and other case law, historical records and the writings of scholars. From the critical analysis of the practical person principle it was concluded that the anthropomorphised form of the principle gives rise to several problems that may be overcome by looking to the underlying operation of the principle. Further analysis of this operation, however, revealed deeper problems in that the principle undermines the doctrine of judicial precedent, legal certainty and the rule of law. Accordingly a practical approach to determining the source of income is undesirable and unconstitutional. Further research was conducted into the relative merits of a philosophical approach to determining source of income and it was argued that such an approach could provide a more desirable solution to determining source of income as well as approaching legal problems more generally.
- Full Text:
- Date Issued: 2014
A discussion and comparison of company legislation and tax legislation in South Africa, in relation to amalgamations and mergers
- Authors: Sloane, Justin
- Date: 2014
- Subjects: Corporation law -- South Africa , Taxation -- Law and legislation -- South Africa , Consolidation and merger of corporations -- South Africa , Income tax -- South Africa , Capital gains tax -- South Africa , Value-added tax -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:908 , http://hdl.handle.net/10962/d1013028
- Description: In his 2012 Budget Review, the Minister of Finance, Pravin Gordhan acknowledged that the introduction of the "new" Companies Act had given rise to certain anomalies in relation to tax and subsequently announced that the South African government would undertake to review the nature of company mergers, acquisitions and other restructurings with the view of possibly amending the Income Tax Act and/or the "new" Companies Act, to bring the two legislations in line with one another. These anomalies give rise to the present research. The literature reviewed in the present research revealed and identified the inconsistencies that exist between the "new" Companies Act, 71 of 2008 and the Income Tax Act, 58 of 1962, specifically the inconsistencies that exist in respect of the newly introduced amalgamation or merger provisions as set out in the "new" Companies Act. Moreover, this research was undertaken to identify the potential tax implications insofar as they relate to amalgamation transactions and, in particular, the potential tax implications where such transactions, because of the anomalies, fall outside the ambit section 44 of the Income Tax Act, which would in normal circumstances provide for tax "rollover relief". In this regard, the present research identified the possible income tax, capital gains tax, value-added tax, transfer duty tax and securities transfer tax affected by an amalgamation transaction, on the assumption that the "rollover relief" in section 44 of the Income Tax Act does not apply.
- Full Text:
- Date Issued: 2014
- Authors: Sloane, Justin
- Date: 2014
- Subjects: Corporation law -- South Africa , Taxation -- Law and legislation -- South Africa , Consolidation and merger of corporations -- South Africa , Income tax -- South Africa , Capital gains tax -- South Africa , Value-added tax -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:908 , http://hdl.handle.net/10962/d1013028
- Description: In his 2012 Budget Review, the Minister of Finance, Pravin Gordhan acknowledged that the introduction of the "new" Companies Act had given rise to certain anomalies in relation to tax and subsequently announced that the South African government would undertake to review the nature of company mergers, acquisitions and other restructurings with the view of possibly amending the Income Tax Act and/or the "new" Companies Act, to bring the two legislations in line with one another. These anomalies give rise to the present research. The literature reviewed in the present research revealed and identified the inconsistencies that exist between the "new" Companies Act, 71 of 2008 and the Income Tax Act, 58 of 1962, specifically the inconsistencies that exist in respect of the newly introduced amalgamation or merger provisions as set out in the "new" Companies Act. Moreover, this research was undertaken to identify the potential tax implications insofar as they relate to amalgamation transactions and, in particular, the potential tax implications where such transactions, because of the anomalies, fall outside the ambit section 44 of the Income Tax Act, which would in normal circumstances provide for tax "rollover relief". In this regard, the present research identified the possible income tax, capital gains tax, value-added tax, transfer duty tax and securities transfer tax affected by an amalgamation transaction, on the assumption that the "rollover relief" in section 44 of the Income Tax Act does not apply.
- Full Text:
- Date Issued: 2014
Domestic tax law v double tax treaties in the context of controlled foreign companies
- Authors: Froom, Natalie Marie
- Date: 2014
- Subjects: Taxation -- Law and legislation -- South Africa , Fiscal policy -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/3559 , vital:20442
- Description: The South African fiscal legislators have found it necessary to introduce anti-avoidance legislation which governs controlled foreign companies in order to counteract schemes devised by taxpayers where companies are established outside South Africa for the purpose of diverting income from the South African fiscal net. Whilst the enforcement of such legislation does have merit in that the intention behind the introduction of such domestic legislation is to prevent the erosion of the South African tax base, it is submitted that this does pose a problem from an international perspective. The objective of this treatise is to conduct a critical analysis of how compatible the South African fiscal legislation which governs controlled foreign companies is with the provisions of the double taxation agreement as prescribed in terms of the OECD Model Tax Convention (which was published in July 2010). In addition, the aim of this study is to deduce whether the purpose of the double taxation agreement is not only the avoidance of juridical double taxation but also that it addresses the avoidance of economic double taxation. This will assist in determining whether domestic controlled foreign company legislation (as embodied in section 9D of the Income Tax Act 58 of 1962) conflicts with the purpose of the double taxation agreement. By conducting an extensive research study and by depicting a certain scenario which addresses the issue at hand, the following is concluded: The tax treatment of the business profits generated by a controlled foreign company resident in a State outside South Africa and which have been generated from active business operating activities, is held to be in agreement with the provisions of the double taxation agreement. By contrast, the tax treatment of the controlled foreign company’s passive income in the form of interest income, is found not to correlate with the aforesaid agreement. As will be demonstrated in the chapters that follow, the controlled foreign company’s interest income is subjected to economic double taxation in terms of the scenario depicted in this treatise. This means that such income is taxed twice in the hands of two different taxpayers in two different States. As a result of this it is submitted that the following problem arises: Because section 9D of the Income Tax Act causes economic double taxation to occur (as illustrated in the previous paragraphs) and owing to the fact that the purpose of the double taxation agreement is the avoidance of economic double taxation, it can be shown that the section 9D domestic legislation conflicts with the terms of the double taxation agreement. This conflict is considered to be an area of concern because a contravention of the purpose of the double taxation agreement is regarded as a breach of the Contracting States’ international obligations in terms of the aforesaid agreement. It is further submitted that paragraph 23 of the OECD Commentary on article 1 and paragraph 14 of the OECD Commentary on article 7 are incorrect when they express the sentiment that domestic controlled foreign company legislation does not conflict with the provisions of the double taxation agreement. It is proposed that this be corrected to state the contrary.
- Full Text:
- Date Issued: 2014
- Authors: Froom, Natalie Marie
- Date: 2014
- Subjects: Taxation -- Law and legislation -- South Africa , Fiscal policy -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/3559 , vital:20442
- Description: The South African fiscal legislators have found it necessary to introduce anti-avoidance legislation which governs controlled foreign companies in order to counteract schemes devised by taxpayers where companies are established outside South Africa for the purpose of diverting income from the South African fiscal net. Whilst the enforcement of such legislation does have merit in that the intention behind the introduction of such domestic legislation is to prevent the erosion of the South African tax base, it is submitted that this does pose a problem from an international perspective. The objective of this treatise is to conduct a critical analysis of how compatible the South African fiscal legislation which governs controlled foreign companies is with the provisions of the double taxation agreement as prescribed in terms of the OECD Model Tax Convention (which was published in July 2010). In addition, the aim of this study is to deduce whether the purpose of the double taxation agreement is not only the avoidance of juridical double taxation but also that it addresses the avoidance of economic double taxation. This will assist in determining whether domestic controlled foreign company legislation (as embodied in section 9D of the Income Tax Act 58 of 1962) conflicts with the purpose of the double taxation agreement. By conducting an extensive research study and by depicting a certain scenario which addresses the issue at hand, the following is concluded: The tax treatment of the business profits generated by a controlled foreign company resident in a State outside South Africa and which have been generated from active business operating activities, is held to be in agreement with the provisions of the double taxation agreement. By contrast, the tax treatment of the controlled foreign company’s passive income in the form of interest income, is found not to correlate with the aforesaid agreement. As will be demonstrated in the chapters that follow, the controlled foreign company’s interest income is subjected to economic double taxation in terms of the scenario depicted in this treatise. This means that such income is taxed twice in the hands of two different taxpayers in two different States. As a result of this it is submitted that the following problem arises: Because section 9D of the Income Tax Act causes economic double taxation to occur (as illustrated in the previous paragraphs) and owing to the fact that the purpose of the double taxation agreement is the avoidance of economic double taxation, it can be shown that the section 9D domestic legislation conflicts with the terms of the double taxation agreement. This conflict is considered to be an area of concern because a contravention of the purpose of the double taxation agreement is regarded as a breach of the Contracting States’ international obligations in terms of the aforesaid agreement. It is further submitted that paragraph 23 of the OECD Commentary on article 1 and paragraph 14 of the OECD Commentary on article 7 are incorrect when they express the sentiment that domestic controlled foreign company legislation does not conflict with the provisions of the double taxation agreement. It is proposed that this be corrected to state the contrary.
- Full Text:
- Date Issued: 2014
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