The impact of the new dividend withholding tax on regulated investment intermediaries
- Authors: Schafer, Carolyn
- Date: 2011
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:880 , http://hdl.handle.net/10962/d1001634
- Description: The introduction of the proposed new Dividends Tax will have a significant impact on financial institutions such as Collective Investment Schemes, Linked Investment Service Providers and Long-term Insurers. The reason for this is that South African listed companies declaring local dividends will not necessarily have all the details of and know the identity of their shareholders. These financial institutions may be regarded as regulated intermediaries in terms of the new Dividends Tax legislation and therefore may have the responsibility of withholding the Dividends Tax from dividends received on behalf of their clients, who may in most cases be the beneficial owners of the underlying equity shares. The motivating factor for the research is the fact that there does not appear to be any guidance on the impact of the new Dividends Tax on financial institutions, since the Dividends Tax is new legislation. The research problem addressed in this thesis is how the systems and processes of a financial institution will be affected by the implementation of the new Dividends Tax. The research took the form of a case study designed to investigate the impact of the Dividends Tax on the financial institution at which the researcher is employed. The data required for the research was collected by means of a study of the relevant legislation enacted in connection with the topic, journal articles in financial/tax journals, as well as articles published in the media. The systems and processes presently in place, as well as the changes to these systems that will be needed to accommodate the new dividend tax were ascertained by means of in-depth interviews with relevant staff at the financial institution. In addition, the researcher also applied her personal knowledge of the business of the financial institution at which she works to the problem. As a result of the research it was determined that a Collective Investment Scheme, Linked Investment Service Provider and Long-Term Insurer will all be regarded as regulated intermediaries for the purposes of the new dividend withholding tax. This means that these financial institutions will be required to withhold Dividends Tax from dividends paid to their clients and pay this Dividends Tax so withheld to SARS. Furthermore, the findings of the research confirmed that the new Dividends Tax will have a significant impact on the client services department in areas such as notifying clients, training of client service staff, handling of declaration of exemption forms received from clients, amending client statements and tax certificates (to cater for the new Dividends Tax). In addition to this, it was ascertained that significant systems development will be required by these financial institutions in order to comply with the new Dividends Tax legislation. This would include the development of data input fields to enable users to capture the relevant information required and development of the system to enable it to flag local dividends received to which the Dividends Tax applies. The system would also need to cater for Secondary Tax on Companies credits as well as foreign tax rebates. The system should also be able to calculate the amount of Dividends Tax to withhold per dividend received by a client, as well as be able to handle the payment of the Dividends Tax to SARS and the refund to clients of Dividends Tax over deducted. It is essential that systems are able to flag the correct date of payment of the dividend so that the Dividends Tax can be paid over timeously to SARS in order to avoid interest and penalties being levied. To summarise, the new Dividends Tax has a significant impact on these financial institutions in areas such as client services, administration and system development.
- Full Text:
- Date Issued: 2011
- Authors: Schafer, Carolyn
- Date: 2011
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:880 , http://hdl.handle.net/10962/d1001634
- Description: The introduction of the proposed new Dividends Tax will have a significant impact on financial institutions such as Collective Investment Schemes, Linked Investment Service Providers and Long-term Insurers. The reason for this is that South African listed companies declaring local dividends will not necessarily have all the details of and know the identity of their shareholders. These financial institutions may be regarded as regulated intermediaries in terms of the new Dividends Tax legislation and therefore may have the responsibility of withholding the Dividends Tax from dividends received on behalf of their clients, who may in most cases be the beneficial owners of the underlying equity shares. The motivating factor for the research is the fact that there does not appear to be any guidance on the impact of the new Dividends Tax on financial institutions, since the Dividends Tax is new legislation. The research problem addressed in this thesis is how the systems and processes of a financial institution will be affected by the implementation of the new Dividends Tax. The research took the form of a case study designed to investigate the impact of the Dividends Tax on the financial institution at which the researcher is employed. The data required for the research was collected by means of a study of the relevant legislation enacted in connection with the topic, journal articles in financial/tax journals, as well as articles published in the media. The systems and processes presently in place, as well as the changes to these systems that will be needed to accommodate the new dividend tax were ascertained by means of in-depth interviews with relevant staff at the financial institution. In addition, the researcher also applied her personal knowledge of the business of the financial institution at which she works to the problem. As a result of the research it was determined that a Collective Investment Scheme, Linked Investment Service Provider and Long-Term Insurer will all be regarded as regulated intermediaries for the purposes of the new dividend withholding tax. This means that these financial institutions will be required to withhold Dividends Tax from dividends paid to their clients and pay this Dividends Tax so withheld to SARS. Furthermore, the findings of the research confirmed that the new Dividends Tax will have a significant impact on the client services department in areas such as notifying clients, training of client service staff, handling of declaration of exemption forms received from clients, amending client statements and tax certificates (to cater for the new Dividends Tax). In addition to this, it was ascertained that significant systems development will be required by these financial institutions in order to comply with the new Dividends Tax legislation. This would include the development of data input fields to enable users to capture the relevant information required and development of the system to enable it to flag local dividends received to which the Dividends Tax applies. The system would also need to cater for Secondary Tax on Companies credits as well as foreign tax rebates. The system should also be able to calculate the amount of Dividends Tax to withhold per dividend received by a client, as well as be able to handle the payment of the Dividends Tax to SARS and the refund to clients of Dividends Tax over deducted. It is essential that systems are able to flag the correct date of payment of the dividend so that the Dividends Tax can be paid over timeously to SARS in order to avoid interest and penalties being levied. To summarise, the new Dividends Tax has a significant impact on these financial institutions in areas such as client services, administration and system development.
- Full Text:
- Date Issued: 2011
An investigation into international transfer pricing guidelines and the anomalies arising from business restructurings by multi-national enterprises
- Authors: Stelloh, Marcus Matthias
- Date: 2011
- Language: English
- Type: text , Thesis , Masters , MCom
- Identifier: vital:879 , http://hdl.handle.net/10962/d1001633
- Description: The number of multinational enterprises has increased substantially. In part due to the integration of national economies (the European Union), improvements in communication and technology and the opportunity to reduce costs as a result of globalisation. Transfer pricing and especially business restructuring within multinationals is a fairly new concept.Professional legal and audit firms have different views on how to approach business restructurings. This research analyses important transfer pricing aspects and the anomalies that arise through business restructurings. The research method used in this research paper is primarily qualitative, comprising the analysis of various documentary sources of data. Relevant South African and international case law, tax legislation, the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, the Transfer Pricing Aspects of Business Restructurings Discussion Draft and other reports were consulted and analysed. Further the views of recognised legal and tax experts that have been published in technical journals and text books were also considered and examined. A hypothetical example of a business restructuring transaction was constructed in order to illustrate practical issues and different approaches to solving them. The research has argued that the arm’s length principle, which forms the bases of transfer pricing regulation, is not an exact science but theoretically it is the most suitable measure.It may not be able to incorporate all variables, such as the cost savings through synergies of multinational enterprises, but it promotes international trade and investment by ensuring that transactions are based on fair prices. Business restructurings create anomalies in applying the arm’s length principle but these anomalies can be dealt with within the regulatory structure. The business restructuring approach recommended is realistic and pragmatic, but more clarity may be needed in certain circumstances. The research has also discussed the avoidance of transfer pricing audits, including having appropriate transfer pricing policies and documentation.
- Full Text:
- Date Issued: 2011
- Authors: Stelloh, Marcus Matthias
- Date: 2011
- Language: English
- Type: text , Thesis , Masters , MCom
- Identifier: vital:879 , http://hdl.handle.net/10962/d1001633
- Description: The number of multinational enterprises has increased substantially. In part due to the integration of national economies (the European Union), improvements in communication and technology and the opportunity to reduce costs as a result of globalisation. Transfer pricing and especially business restructuring within multinationals is a fairly new concept.Professional legal and audit firms have different views on how to approach business restructurings. This research analyses important transfer pricing aspects and the anomalies that arise through business restructurings. The research method used in this research paper is primarily qualitative, comprising the analysis of various documentary sources of data. Relevant South African and international case law, tax legislation, the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, the Transfer Pricing Aspects of Business Restructurings Discussion Draft and other reports were consulted and analysed. Further the views of recognised legal and tax experts that have been published in technical journals and text books were also considered and examined. A hypothetical example of a business restructuring transaction was constructed in order to illustrate practical issues and different approaches to solving them. The research has argued that the arm’s length principle, which forms the bases of transfer pricing regulation, is not an exact science but theoretically it is the most suitable measure.It may not be able to incorporate all variables, such as the cost savings through synergies of multinational enterprises, but it promotes international trade and investment by ensuring that transactions are based on fair prices. Business restructurings create anomalies in applying the arm’s length principle but these anomalies can be dealt with within the regulatory structure. The business restructuring approach recommended is realistic and pragmatic, but more clarity may be needed in certain circumstances. The research has also discussed the avoidance of transfer pricing audits, including having appropriate transfer pricing policies and documentation.
- Full Text:
- Date Issued: 2011
Extending legal professional privilege to non-legal tax practitioners in South Africa: a comparative and constitutional perspective
- Authors: Jani, Pride
- Date: 2011
- Language: English
- Type: text , Thesis , Masters , MCom
- Identifier: vital:882 , http://hdl.handle.net/10962/d1001636
- Description: This study explains the differing rights of taxpayers, based on the nature of the profession of the tax adviser they consult. Those who utilize the services of tax attorneys can rely on the protection afforded by legal professional privilege whereas those who obtain their advice from non-legal advisers, such as accountants and other tax advisers, cannot claim the same protection. Legal professional privilege is a substantive right which should be extended to cover clients of non-legal tax advisers. The continued denial of the privilege to clients of nonlegal tax practitioners while it is availed to those who approach legal practitioners infringes the rights to privacy and equality contained in the South African Constitution. The object of this research is to show that the common law concept of legal professional privilege is amenable to extension so as to cover the clients of non-legal tax advisers. A qualitative approach was adopted which involved an in-depth analysis of the origins, rationale as well as the requirements for the operation of the doctrine. This also involved a constitutional as well as a comparative dimension. The constitutional dimension sought to show that the current distinction is untenable under the South African Constitution by virtue of the infringement of the rights to privacy and equality. The comparative dimension presented an analysis of the various jurisdictions that have extended the doctrine as well as those that are still to do so or have adamantly rejected the idea. The differential treatment of taxpayers based on the professional they engage contravenes the privacy and equality provisions and is thus unconstitutional. The study demonstrates that legal professional privilege is amenable to extension and there is need for legislative intervention as the courts are limited in the extent to which they may intervene in light of the separation of powers and judicial deference. Legal professional privilege should therefore be extended to protect the clients of non-legal tax advisers as opposed to partial protection which subsists at the moment.
- Full Text:
- Date Issued: 2011
- Authors: Jani, Pride
- Date: 2011
- Language: English
- Type: text , Thesis , Masters , MCom
- Identifier: vital:882 , http://hdl.handle.net/10962/d1001636
- Description: This study explains the differing rights of taxpayers, based on the nature of the profession of the tax adviser they consult. Those who utilize the services of tax attorneys can rely on the protection afforded by legal professional privilege whereas those who obtain their advice from non-legal advisers, such as accountants and other tax advisers, cannot claim the same protection. Legal professional privilege is a substantive right which should be extended to cover clients of non-legal tax advisers. The continued denial of the privilege to clients of nonlegal tax practitioners while it is availed to those who approach legal practitioners infringes the rights to privacy and equality contained in the South African Constitution. The object of this research is to show that the common law concept of legal professional privilege is amenable to extension so as to cover the clients of non-legal tax advisers. A qualitative approach was adopted which involved an in-depth analysis of the origins, rationale as well as the requirements for the operation of the doctrine. This also involved a constitutional as well as a comparative dimension. The constitutional dimension sought to show that the current distinction is untenable under the South African Constitution by virtue of the infringement of the rights to privacy and equality. The comparative dimension presented an analysis of the various jurisdictions that have extended the doctrine as well as those that are still to do so or have adamantly rejected the idea. The differential treatment of taxpayers based on the professional they engage contravenes the privacy and equality provisions and is thus unconstitutional. The study demonstrates that legal professional privilege is amenable to extension and there is need for legislative intervention as the courts are limited in the extent to which they may intervene in light of the separation of powers and judicial deference. Legal professional privilege should therefore be extended to protect the clients of non-legal tax advisers as opposed to partial protection which subsists at the moment.
- Full Text:
- Date Issued: 2011
The contribution made by Mr Justice EF Watermeyer to South African tax jurisprudence
- Authors: Thackwell, Robert Colin
- Date: 2011
- Language: English
- Type: text , Thesis , Masters , MCom
- Identifier: vital:881 , http://hdl.handle.net/10962/d1001635
- Description: The objective of this thesis is to highlight the colossal contributions made by the late Justice Watermeyer to South African tax jurisprudence. His contributions are viewed from a practical application point of view as well as from a statutory interpretative perspective. The style and technique with which he delivered his judgments are also considered to be a contribution in their own right. The core of this thesis is the analysis of seven of Justice Watermeyer‟s most influential judgments. The development and application of the principle or principles developed in each of these seven judgments is then traced chronologically through case law up until recent judgments. It is most notable that each and every phrase contained in section 11(a) of the Income Tax Act has been interpreted by Justice Watermeyer. These interpretations are still viewed as correct statements of the applicable law and will continue to be referred to on a regular basis given the fact that section 11(a) is one of the most widely contested provisions in the Income Tax Act. Several references to his approach to statutory interpretation are made through the course of the case analyses. Whilst significant evidence of a purposive oriented approach to interpretation appears in some judgments, such evidence is lacking in others. An absolute or conclusive submission in terms of his approach to statutory interpretation is not sufficiently supported. His style of judgment is also referred to and commented on, with particular focus placed on his use of illustrative examples. The contribution to South African tax law by Justice Watermeyer is found to be nothing short of enormous. He was and continues to be influential with respect to section 11(a),the definition of gross income in section 1, common law principles of tax avoidance as well as the interpretation of statutory laws of tax avoidance. It is anticipated that some of his interpretations with respect to statutory rules of tax avoidance will be referred to when the relatively new anti-avoidance provisions become the subject of litigation.
- Full Text:
- Date Issued: 2011
- Authors: Thackwell, Robert Colin
- Date: 2011
- Language: English
- Type: text , Thesis , Masters , MCom
- Identifier: vital:881 , http://hdl.handle.net/10962/d1001635
- Description: The objective of this thesis is to highlight the colossal contributions made by the late Justice Watermeyer to South African tax jurisprudence. His contributions are viewed from a practical application point of view as well as from a statutory interpretative perspective. The style and technique with which he delivered his judgments are also considered to be a contribution in their own right. The core of this thesis is the analysis of seven of Justice Watermeyer‟s most influential judgments. The development and application of the principle or principles developed in each of these seven judgments is then traced chronologically through case law up until recent judgments. It is most notable that each and every phrase contained in section 11(a) of the Income Tax Act has been interpreted by Justice Watermeyer. These interpretations are still viewed as correct statements of the applicable law and will continue to be referred to on a regular basis given the fact that section 11(a) is one of the most widely contested provisions in the Income Tax Act. Several references to his approach to statutory interpretation are made through the course of the case analyses. Whilst significant evidence of a purposive oriented approach to interpretation appears in some judgments, such evidence is lacking in others. An absolute or conclusive submission in terms of his approach to statutory interpretation is not sufficiently supported. His style of judgment is also referred to and commented on, with particular focus placed on his use of illustrative examples. The contribution to South African tax law by Justice Watermeyer is found to be nothing short of enormous. He was and continues to be influential with respect to section 11(a),the definition of gross income in section 1, common law principles of tax avoidance as well as the interpretation of statutory laws of tax avoidance. It is anticipated that some of his interpretations with respect to statutory rules of tax avoidance will be referred to when the relatively new anti-avoidance provisions become the subject of litigation.
- Full Text:
- Date Issued: 2011
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