The effect of global e-commerce on taxation legislation and the permanent establishment concept in South Africa
- Authors: Young, Nikita Jade
- Date: 2013
- Subjects: Electronic commerce , Electronic commerce -- Taxation , Electronic commerce -- South Africa , Taxation -- Law and legislation -- South Africa , South African taxation , E-commerce , Permanent establishment , Foreign business entity
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:876 , http://hdl.handle.net/10962/d1001608 , Electronic commerce , Electronic commerce -- Taxation , Electronic commerce -- South Africa , Taxation -- Law and legislation -- South Africa
- Description: The objective of this thesis was to analyse the effect of the increasing popularity of global e-commerce on the South African legislative framework in respect of the taxation of non-resident enterprises, and to propose a possible solution for the taxation of e-commerce, taking into account previous theories. The methodology utilised comprised of a critical analysis of the legal rules relating to the taxation of a foreign entity's business profits by virtue of the application of the permanent establishment principle, its definition and evolution as a conceptual basis for taxation. Furthermore, an in depth evaluation of the various solutions that have already been proposed and, in some cases, implemented was undertaken. It was concluded that the application of the permanent establishment principle is wholly ineffective as a means to levy tax on the e-commerce business profits of a foreign entity as the principle relies too heavily upon a physical intermediary in the source state, whereas e-commerce transactions are conducted on the intangible trading platform of the Internet. In light of the numerous policy proposals advanced over the years, it was concluded that the most feasible and practical solution for the taxation of foreign e-commerce would be the imposition on a foreign entity in South Africa of a low withholding tax on the active business profits in excess of a pre-determined threshold. Key words: South African taxation; e-commerce; foreign business entity; permanent establishment; withholding tax
- Full Text:
- Date Issued: 2013
- Authors: Young, Nikita Jade
- Date: 2013
- Subjects: Electronic commerce , Electronic commerce -- Taxation , Electronic commerce -- South Africa , Taxation -- Law and legislation -- South Africa , South African taxation , E-commerce , Permanent establishment , Foreign business entity
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:876 , http://hdl.handle.net/10962/d1001608 , Electronic commerce , Electronic commerce -- Taxation , Electronic commerce -- South Africa , Taxation -- Law and legislation -- South Africa
- Description: The objective of this thesis was to analyse the effect of the increasing popularity of global e-commerce on the South African legislative framework in respect of the taxation of non-resident enterprises, and to propose a possible solution for the taxation of e-commerce, taking into account previous theories. The methodology utilised comprised of a critical analysis of the legal rules relating to the taxation of a foreign entity's business profits by virtue of the application of the permanent establishment principle, its definition and evolution as a conceptual basis for taxation. Furthermore, an in depth evaluation of the various solutions that have already been proposed and, in some cases, implemented was undertaken. It was concluded that the application of the permanent establishment principle is wholly ineffective as a means to levy tax on the e-commerce business profits of a foreign entity as the principle relies too heavily upon a physical intermediary in the source state, whereas e-commerce transactions are conducted on the intangible trading platform of the Internet. In light of the numerous policy proposals advanced over the years, it was concluded that the most feasible and practical solution for the taxation of foreign e-commerce would be the imposition on a foreign entity in South Africa of a low withholding tax on the active business profits in excess of a pre-determined threshold. Key words: South African taxation; e-commerce; foreign business entity; permanent establishment; withholding tax
- Full Text:
- Date Issued: 2013
An analysis of ways in which the South African tax system could be simplified
- Authors: Young, Gail Jeni
- Date: 2021-04
- Subjects: Taxation -- Law and legislation -- South Africa , Income tax -- Law and legislation -- South Africa , South African Revenue Service , Tax administration and procedure -- South Africa , Tax accounting -- South Africa
- Language: English
- Type: thesis , text , Masters , MCom
- Identifier: http://hdl.handle.net/10962/178235 , vital:42923
- Description: It has been said that the fundamental paradox of tax simplification is that, despite consensus, almost every year tax rules become more complex. This thesis considers tax simplification measures which have been implemented internationally, in order to provide a basis for an analysis of ways in which the South African tax system could be simplified. A doctrinal methodology is applied, and an analysis is carried out of possible tax simplification measures, based on the commentary of experts in the field of tax law. Simplification measures adopted in the United Kingdom, Australia, the United States of America, Egypt, and certain European countries are discussed, together with their possible adoption in South Africa. Tax simplification has a broad scope. This research identifies four areas in which the South African tax system could simplified: the simplification of tax legislation, addressing the role of accounting in the simplification process, reducing the number of taxes currently levied, and finally addressing the complexities evident in the SARS e-filing system. This thesis illustrates several measures which could be used to address the current areas of complexity. Re-writing tax legislation to assist the understanding of taxpayers is suggested. An increase in the inclusion rate for individuals of capital gains in taxable income from 40% to 60% is suggested, to compensate for the loss of revenue due to the recommended repeal of donations tax and estate duty. Aligning tax legislation with accounting standards is identified as a possible area for simplification, as there are many similarities between the two systems. To address the usability of SARS’ e-filing platform, suggestions are made regarding the further pre-population of returns, introducing e-invoicing and providing a “sandbox” function that taxpayers could use to familiarise themselves with how e-filing works. This research highlights tax simplification as a process that needs to be prioritized in order to achieve the associated benefits. , Thesis (MCom) -- Faculty of Commerce, Accounting, 2021
- Full Text:
- Date Issued: 2021-04
- Authors: Young, Gail Jeni
- Date: 2021-04
- Subjects: Taxation -- Law and legislation -- South Africa , Income tax -- Law and legislation -- South Africa , South African Revenue Service , Tax administration and procedure -- South Africa , Tax accounting -- South Africa
- Language: English
- Type: thesis , text , Masters , MCom
- Identifier: http://hdl.handle.net/10962/178235 , vital:42923
- Description: It has been said that the fundamental paradox of tax simplification is that, despite consensus, almost every year tax rules become more complex. This thesis considers tax simplification measures which have been implemented internationally, in order to provide a basis for an analysis of ways in which the South African tax system could be simplified. A doctrinal methodology is applied, and an analysis is carried out of possible tax simplification measures, based on the commentary of experts in the field of tax law. Simplification measures adopted in the United Kingdom, Australia, the United States of America, Egypt, and certain European countries are discussed, together with their possible adoption in South Africa. Tax simplification has a broad scope. This research identifies four areas in which the South African tax system could simplified: the simplification of tax legislation, addressing the role of accounting in the simplification process, reducing the number of taxes currently levied, and finally addressing the complexities evident in the SARS e-filing system. This thesis illustrates several measures which could be used to address the current areas of complexity. Re-writing tax legislation to assist the understanding of taxpayers is suggested. An increase in the inclusion rate for individuals of capital gains in taxable income from 40% to 60% is suggested, to compensate for the loss of revenue due to the recommended repeal of donations tax and estate duty. Aligning tax legislation with accounting standards is identified as a possible area for simplification, as there are many similarities between the two systems. To address the usability of SARS’ e-filing platform, suggestions are made regarding the further pre-population of returns, introducing e-invoicing and providing a “sandbox” function that taxpayers could use to familiarise themselves with how e-filing works. This research highlights tax simplification as a process that needs to be prioritized in order to achieve the associated benefits. , Thesis (MCom) -- Faculty of Commerce, Accounting, 2021
- Full Text:
- Date Issued: 2021-04
The regulation of tax practitioners in South Africa: a proposed model
- Authors: Woodbridge, Taryn
- Date: 2006
- Subjects: Income tax -- Law and legislation -- South Africa , Taxation -- Law and legislation -- South Africa , South African Revenue Service
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:891 , http://hdl.handle.net/10962/d1003128 , Income tax -- Law and legislation -- South Africa , Taxation -- Law and legislation -- South Africa , South African Revenue Service
- Description: Tax practitioners in South Africa have been operating in an unregulated tax industry. This has allowed certain tax practitioners to fail in their duties to their clients, as many do not have to abide by any code of conduct or ethical principles, to the detriment of the public. Other than the provisions in the Income Tax Act, 58 of 1962, there has been no regulation. As a result of losses suffered by taxpayers either through the incompetence, ignorance or negligence of a tax practitioner, as substantiated by case law, and increased costs borne by the South African Revenue Services due to unnecessary queries and tax disputes, the Minister of Finance, Trevor Manuel, introduced the concept of tax industry regulation in his Budget Speech in 2002. This resulted in the introduction of section 67 A into the Income Tax Act, providing for a registration process for tax practitioners. All practising tax practitioners were required to register with the Commissioner for the South African Revenue Services by 30 June 2005. In addition, a discussion paper was issued in 2002 setting out the proposal of the Revenue Services to regulate the tax industry through the formation of an Association of Tax Practitioners. This proposal includes various contentious issues and casts significant doubt on whether the proposed model is the most suitable. The goal of the research was therefore to evaluate the current status of tax advisory services in order to demonstrate the need for regulation and to compare the proposed SARS model with two established regulatory authorities: the Estate Agency Affairs Board and the Australian Tax Agents Board. A conceptual model for regulation was developed in order to test all the models against a simple regulatory framework to determine whether each was aligned to certain best practices proposed in this framework. The research methodology was qualitative in nature, involving the critical interpretation of documentary data and data generated during a public discussion forum of tax practitioners. It was concluded that the SARS proposal is too prescriptive and, at the same time, too broad in its scope. In order to address the key objective, identified as protection of the taxpaying public, a simplified regulation procedure was recommended, which would adhere to the proposed regulatory framework. , KMBT_363
- Full Text:
- Date Issued: 2006
- Authors: Woodbridge, Taryn
- Date: 2006
- Subjects: Income tax -- Law and legislation -- South Africa , Taxation -- Law and legislation -- South Africa , South African Revenue Service
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:891 , http://hdl.handle.net/10962/d1003128 , Income tax -- Law and legislation -- South Africa , Taxation -- Law and legislation -- South Africa , South African Revenue Service
- Description: Tax practitioners in South Africa have been operating in an unregulated tax industry. This has allowed certain tax practitioners to fail in their duties to their clients, as many do not have to abide by any code of conduct or ethical principles, to the detriment of the public. Other than the provisions in the Income Tax Act, 58 of 1962, there has been no regulation. As a result of losses suffered by taxpayers either through the incompetence, ignorance or negligence of a tax practitioner, as substantiated by case law, and increased costs borne by the South African Revenue Services due to unnecessary queries and tax disputes, the Minister of Finance, Trevor Manuel, introduced the concept of tax industry regulation in his Budget Speech in 2002. This resulted in the introduction of section 67 A into the Income Tax Act, providing for a registration process for tax practitioners. All practising tax practitioners were required to register with the Commissioner for the South African Revenue Services by 30 June 2005. In addition, a discussion paper was issued in 2002 setting out the proposal of the Revenue Services to regulate the tax industry through the formation of an Association of Tax Practitioners. This proposal includes various contentious issues and casts significant doubt on whether the proposed model is the most suitable. The goal of the research was therefore to evaluate the current status of tax advisory services in order to demonstrate the need for regulation and to compare the proposed SARS model with two established regulatory authorities: the Estate Agency Affairs Board and the Australian Tax Agents Board. A conceptual model for regulation was developed in order to test all the models against a simple regulatory framework to determine whether each was aligned to certain best practices proposed in this framework. The research methodology was qualitative in nature, involving the critical interpretation of documentary data and data generated during a public discussion forum of tax practitioners. It was concluded that the SARS proposal is too prescriptive and, at the same time, too broad in its scope. In order to address the key objective, identified as protection of the taxpaying public, a simplified regulation procedure was recommended, which would adhere to the proposed regulatory framework. , KMBT_363
- Full Text:
- Date Issued: 2006
Corporate taxes and the taxation of dividends
- Authors: Williams, John Mark
- Date: 1997
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:890 , http://hdl.handle.net/10962/d1001644
- Description: The classical system of taxation, whereby companies are taxed without a deduction for dividends paid and shareholders are taxed on their dividend receipts, results in double taxation of dividends. Split rate and imputation systems have been developed in an attempt to mitigate the effects of double taxation of dividends. Double taxation of dividends and differences between corporate and maximum individual marginal tax rates result in corporate tax systems lacking neutrality. Distortions arise between organisational forms, between debt and equity financing and between the retention and distribution of profits. Various methods of integrating corporate and individual taxes have been advocated to overcome the lack of neutrality caused by corporate taxes. Following the introduction of the South African Income Tax Act in 1914, a number of taxes relating to dividends have existed. These have included a Dividend Tax, Non-resident Shareholder's Tax, Undistributed Profits Tax and Secondary Tax on Companies, hereafter referred to as STC. STC is a tax on net dividends declared and results in distributed income being taxed at higher rates than retained income. Despite the implementation of group relief provisions, STC results in an inhibition on the reinvestment of profits within the context of a group of companies. It is also a major cause of the lack of neutrality of the South African corporate tax system. As a result of the lack of neutrality and inhibition of group reinvestment caused by STC, a full imputation system is suggested as an alternative to replace STC.
- Full Text:
- Date Issued: 1997
- Authors: Williams, John Mark
- Date: 1997
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:890 , http://hdl.handle.net/10962/d1001644
- Description: The classical system of taxation, whereby companies are taxed without a deduction for dividends paid and shareholders are taxed on their dividend receipts, results in double taxation of dividends. Split rate and imputation systems have been developed in an attempt to mitigate the effects of double taxation of dividends. Double taxation of dividends and differences between corporate and maximum individual marginal tax rates result in corporate tax systems lacking neutrality. Distortions arise between organisational forms, between debt and equity financing and between the retention and distribution of profits. Various methods of integrating corporate and individual taxes have been advocated to overcome the lack of neutrality caused by corporate taxes. Following the introduction of the South African Income Tax Act in 1914, a number of taxes relating to dividends have existed. These have included a Dividend Tax, Non-resident Shareholder's Tax, Undistributed Profits Tax and Secondary Tax on Companies, hereafter referred to as STC. STC is a tax on net dividends declared and results in distributed income being taxed at higher rates than retained income. Despite the implementation of group relief provisions, STC results in an inhibition on the reinvestment of profits within the context of a group of companies. It is also a major cause of the lack of neutrality of the South African corporate tax system. As a result of the lack of neutrality and inhibition of group reinvestment caused by STC, a full imputation system is suggested as an alternative to replace STC.
- Full Text:
- Date Issued: 1997
A comparison of the effectiveness of the judicial doctrine of "substance over form" with legislated measures in combatting tax avoidance
- Authors: Weston, Tracey Lee
- Date: 2004
- Subjects: Income tax -- South Africa Income tax -- Law and legislation -- South Africa Income tax -- Law and legislation -- Great Britain Tax evasion -- Great Britain Tax evasion -- South Africa Tax administration and procedure -- South Africa Tax administration and procedure -- Great Britain Tax planning -- South Africa Tax planning -- Great Britain Taxation -- Law and legislation -- South Africa Taxation -- Law and legislation -- Great Britain
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:892 , http://hdl.handle.net/10962/100
- Description: Taxation statutes often provide opportunities for tax avoidance by taxpayers who exploit the provisions of the taxing statute to reduce the tax that they are legally required to pay. It is, however, important to distinguish between the concepts of tax avoidance and tax evasion. The central issue, especially where the contract has no business purpose, is whether it is possible for the substance and legal form of the transaction to differ to such an extent that a court of law will favour the substance rather than the legal format. The debate is whether the courts should be encouraged to continue with their "judge-made" law or whether the tax jurisdictions should be supporting a legislative route as opposed to a judicial one, in their efforts not only to combat tax avoidance but also to preserve taxpayer certainty. The question is whether the Doctrine of "Substance over Form" as applied by the judiciary is effective in combating tax avoidance, or whether a legislated general anti-avoidance provision is required. An intensive literature survey examines the changes which have occurred in the application of judicial tests from the 1930's to date and investigates the different approaches tax jurisdictions follow in order to combat tax avoidance. The effect of the introduction of anti-avoidance provisions in combating tax avoidance is evaluated by making a comparison between the United Kingdom and South Africa. [n the United Kingdom, the courts are relied on to create anti-tax avoidance rules, one of which is the Doctrine of "Substance over Form". The doctrine is very broad and identifies various applications of the doctrine, which have been developed by the courts. In South Africa, the Doctrine of "Substance over Form" has been applied in certain tax cases; however the South African Income Tax Act does include anti-tax avoidance sections aimed at specific tax avoidance schemes, as well as a general anti-tax avoidance measure enacted as section 103. The judicial tests have progressed and changed over time and the introduction of anti-avoidance legislation in the Income Tax Act has had an effect on tax planning opportunities. A distinction needs to be made between fraudulent and bona fide transactions while recognising the taxpayer's right to arrange his or her affairs in a manner which is beneficial to him or her from a tax perspective. Judicial activism and judicial legislation in the United Kingdom has created much uncertainty amongst taxpayers and as a result strongly supports the retention of a general anti-avoidance section within an Income Tax Act. A general anti-avoidance provision, following a legislative route, appears to be more consistent and effective in combating tax avoidance.
- Full Text:
- Date Issued: 2004
- Authors: Weston, Tracey Lee
- Date: 2004
- Subjects: Income tax -- South Africa Income tax -- Law and legislation -- South Africa Income tax -- Law and legislation -- Great Britain Tax evasion -- Great Britain Tax evasion -- South Africa Tax administration and procedure -- South Africa Tax administration and procedure -- Great Britain Tax planning -- South Africa Tax planning -- Great Britain Taxation -- Law and legislation -- South Africa Taxation -- Law and legislation -- Great Britain
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:892 , http://hdl.handle.net/10962/100
- Description: Taxation statutes often provide opportunities for tax avoidance by taxpayers who exploit the provisions of the taxing statute to reduce the tax that they are legally required to pay. It is, however, important to distinguish between the concepts of tax avoidance and tax evasion. The central issue, especially where the contract has no business purpose, is whether it is possible for the substance and legal form of the transaction to differ to such an extent that a court of law will favour the substance rather than the legal format. The debate is whether the courts should be encouraged to continue with their "judge-made" law or whether the tax jurisdictions should be supporting a legislative route as opposed to a judicial one, in their efforts not only to combat tax avoidance but also to preserve taxpayer certainty. The question is whether the Doctrine of "Substance over Form" as applied by the judiciary is effective in combating tax avoidance, or whether a legislated general anti-avoidance provision is required. An intensive literature survey examines the changes which have occurred in the application of judicial tests from the 1930's to date and investigates the different approaches tax jurisdictions follow in order to combat tax avoidance. The effect of the introduction of anti-avoidance provisions in combating tax avoidance is evaluated by making a comparison between the United Kingdom and South Africa. [n the United Kingdom, the courts are relied on to create anti-tax avoidance rules, one of which is the Doctrine of "Substance over Form". The doctrine is very broad and identifies various applications of the doctrine, which have been developed by the courts. In South Africa, the Doctrine of "Substance over Form" has been applied in certain tax cases; however the South African Income Tax Act does include anti-tax avoidance sections aimed at specific tax avoidance schemes, as well as a general anti-tax avoidance measure enacted as section 103. The judicial tests have progressed and changed over time and the introduction of anti-avoidance legislation in the Income Tax Act has had an effect on tax planning opportunities. A distinction needs to be made between fraudulent and bona fide transactions while recognising the taxpayer's right to arrange his or her affairs in a manner which is beneficial to him or her from a tax perspective. Judicial activism and judicial legislation in the United Kingdom has created much uncertainty amongst taxpayers and as a result strongly supports the retention of a general anti-avoidance section within an Income Tax Act. A general anti-avoidance provision, following a legislative route, appears to be more consistent and effective in combating tax avoidance.
- Full Text:
- Date Issued: 2004
The tax implications of non-resident sportspersons performing and earning an income in South Africa
- Authors: Wessels, Jacques
- Date: 2008
- Subjects: South African Revenue Service , Sports -- Taxation -- Law and legislation -- South Africa , Taxation -- Law and legislation -- South Africa , Income tax -- Law and legislation -- South Africa , Income tax -- Foreign income , Income tax -- South Africa -- Foreign income , Withholding tax -- Law and legislation -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:893 , http://hdl.handle.net/10962/d1003719 , South African Revenue Service , Sports -- Taxation -- Law and legislation -- South Africa , Taxation -- Law and legislation -- South Africa , Income tax -- Law and legislation -- South Africa , Income tax -- Foreign income , Income tax -- South Africa -- Foreign income , Withholding tax -- Law and legislation -- South Africa
- Description: As the number of non-resident sports persons competing in South Africa increases so does the need to tax them more effectively. It was for this reason that the South African legislature decided to insert Part IlIA into the Income Tax Act which regulates the taxation of non-resident sports persons in South Africa. The new tax on foreign sports persons, which came into effect during August 2006, is a withholding tax placing the onus upon the organizer of the event to withhold the tax portion of the payment to the non-resident sportsperson and pay it over to the revenue services. The rate of taxation has been set at 15 percent on all amounts received by or accruing to a foreign sportsperson. The question which the research addressed is whether this new tax will prove to be an effective tax, both from the point of view of its equity and the administration of the tax. In order to determine the impact of the new tax, it was compared to similar taxes implemented in the United Kingdom and Australia and also to other withholding taxes levied in South Africa. The new tax was also measured against a theoretical model for effectiveness, compared to the pre-August 2006 situation and to the taxation of resident sportsmen and women, using hypothetical examples. The major shortcomings of the new withholding tax are the uncertainty with regard to the intention of the legislature on matters such as the taxation of capital income versus revenue income, the question whether payments to support staff are included in the ambit of the new tax, the taxation of the award of assets in lieu of cash payments and the definition of a resident. A further area of concern is that the rate of taxation of 15 percent appears to be too low and creates horizontal inequity between the taxation of resident and non-resident sports persons. The new tax on non-resident sports persons may have its shortcomings but, depending upon the administrative and support structures put in place to deal with it, will be an effective tax. The rate at which the tax is levied could result in a less tax being collected than before but, with the reduced administrative cost of tax collection, the effective/statutory ratio of the tax could well be much higher than it was. This is a new tax in South Africa and certain initial problems are inevitable and will undoubtedly be solved as the administrators gain experience and as the case law governing this tax develops. , KMBT_363
- Full Text:
- Date Issued: 2008
- Authors: Wessels, Jacques
- Date: 2008
- Subjects: South African Revenue Service , Sports -- Taxation -- Law and legislation -- South Africa , Taxation -- Law and legislation -- South Africa , Income tax -- Law and legislation -- South Africa , Income tax -- Foreign income , Income tax -- South Africa -- Foreign income , Withholding tax -- Law and legislation -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:893 , http://hdl.handle.net/10962/d1003719 , South African Revenue Service , Sports -- Taxation -- Law and legislation -- South Africa , Taxation -- Law and legislation -- South Africa , Income tax -- Law and legislation -- South Africa , Income tax -- Foreign income , Income tax -- South Africa -- Foreign income , Withholding tax -- Law and legislation -- South Africa
- Description: As the number of non-resident sports persons competing in South Africa increases so does the need to tax them more effectively. It was for this reason that the South African legislature decided to insert Part IlIA into the Income Tax Act which regulates the taxation of non-resident sports persons in South Africa. The new tax on foreign sports persons, which came into effect during August 2006, is a withholding tax placing the onus upon the organizer of the event to withhold the tax portion of the payment to the non-resident sportsperson and pay it over to the revenue services. The rate of taxation has been set at 15 percent on all amounts received by or accruing to a foreign sportsperson. The question which the research addressed is whether this new tax will prove to be an effective tax, both from the point of view of its equity and the administration of the tax. In order to determine the impact of the new tax, it was compared to similar taxes implemented in the United Kingdom and Australia and also to other withholding taxes levied in South Africa. The new tax was also measured against a theoretical model for effectiveness, compared to the pre-August 2006 situation and to the taxation of resident sportsmen and women, using hypothetical examples. The major shortcomings of the new withholding tax are the uncertainty with regard to the intention of the legislature on matters such as the taxation of capital income versus revenue income, the question whether payments to support staff are included in the ambit of the new tax, the taxation of the award of assets in lieu of cash payments and the definition of a resident. A further area of concern is that the rate of taxation of 15 percent appears to be too low and creates horizontal inequity between the taxation of resident and non-resident sports persons. The new tax on non-resident sports persons may have its shortcomings but, depending upon the administrative and support structures put in place to deal with it, will be an effective tax. The rate at which the tax is levied could result in a less tax being collected than before but, with the reduced administrative cost of tax collection, the effective/statutory ratio of the tax could well be much higher than it was. This is a new tax in South Africa and certain initial problems are inevitable and will undoubtedly be solved as the administrators gain experience and as the case law governing this tax develops. , KMBT_363
- Full Text:
- Date Issued: 2008
The South African tax implications of ceasing to be resident
- Authors: Walker, Anthony Howard
- Date: 2017
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/5555 , vital:20941
- Description: In the context of rapid globalisation, skilled South African employees and professionals are often attracted overseas to take up new work opportunities in foreign countries. This may cause these individuals no longer to be “ordinarily resident” in South Africa. At the same time, changes in modes of travel, information and communication channels could result in companies and trusts no longer being considered to be tax resident in South Africa, if the place of effective management for these entities is moved to a foreign country and a double taxation agreement between South Africa and that foreign country deems these entities to be exclusively resident in the foreign country. The objective of this thesis was to analyse the tax implications that could arise when a resident natural person, trust or company ceases to be a resident or when a Controlled Foreign Company (CFC) ceases to be a CFC. A detailed analysis of the “exit charge” in section 9H of the Income Tax Act was undertaken to understand its normal tax implications when a natural person, trust or company ceases to be a resident or a CFC ceases to be a CFC. This included an analysis of how a natural person, trust or company ceases to be resident or how a CFC ceases to be a CFC. It was found that certain normal tax principles consistently apply to when a natural person, trust or company ceases to be resident or a CFC ceases to be a CFC. At the same time, certain unique normal tax implications arise for trusts and CFCs since they are impacted by the special tax rules that apply to these entities. Furthermore in the case of a trust, a judicial precedent has established that the “exit charge” remains and is taxable in the trust. For CFCs, there is uncertainty as to whether the “exit charge” could arise when a shareholder ceases to be resident, which results in residents no longer holding more than 50% of the total participation or voting rights in that foreign company.
- Full Text:
- Date Issued: 2017
- Authors: Walker, Anthony Howard
- Date: 2017
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/5555 , vital:20941
- Description: In the context of rapid globalisation, skilled South African employees and professionals are often attracted overseas to take up new work opportunities in foreign countries. This may cause these individuals no longer to be “ordinarily resident” in South Africa. At the same time, changes in modes of travel, information and communication channels could result in companies and trusts no longer being considered to be tax resident in South Africa, if the place of effective management for these entities is moved to a foreign country and a double taxation agreement between South Africa and that foreign country deems these entities to be exclusively resident in the foreign country. The objective of this thesis was to analyse the tax implications that could arise when a resident natural person, trust or company ceases to be a resident or when a Controlled Foreign Company (CFC) ceases to be a CFC. A detailed analysis of the “exit charge” in section 9H of the Income Tax Act was undertaken to understand its normal tax implications when a natural person, trust or company ceases to be a resident or a CFC ceases to be a CFC. This included an analysis of how a natural person, trust or company ceases to be resident or how a CFC ceases to be a CFC. It was found that certain normal tax principles consistently apply to when a natural person, trust or company ceases to be resident or a CFC ceases to be a CFC. At the same time, certain unique normal tax implications arise for trusts and CFCs since they are impacted by the special tax rules that apply to these entities. Furthermore in the case of a trust, a judicial precedent has established that the “exit charge” remains and is taxable in the trust. For CFCs, there is uncertainty as to whether the “exit charge” could arise when a shareholder ceases to be resident, which results in residents no longer holding more than 50% of the total participation or voting rights in that foreign company.
- Full Text:
- Date Issued: 2017
An analysis of carbon tax and other environmental levies: a South African and international perspective
- Authors: Vuzane, Rolihlahla
- Date: 2020
- Subjects: Carbon taxes , Carbon taxes -- South Africa , Environmental impact charges , Environmental impact charges -- South Africa , Taxation -- Environmental aspects , Taxation -- Environmental aspects -- South Africa
- Language: English
- Type: text , Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/167676 , vital:41502
- Description: As a “Non-Annex 1” country, there was no obligation for South Africa to reduce its carbon emissions. South Africa undertook, of its own volition, to take measures to reduce 34% of the carbon monoxide emissions by 2020 and 42% by 2025 respectively. In response, South Africa promulgated the Carbon Tax Act, No. 15 of 2019. This study seeks to answer the question: After analysing the range of environmental taxes levied in the Scandinavian countries (Denmark, Finland, Norway and Sweden) and in South Africa, are there lessons that can be learnt for South Africa? In answering this question, the carbon tax structure in South Africa and in selected Scandinavian countries is analysed, together with existing environmental taxes and the related policies, using a literature study. What is evident from the Scandinavian countries studied, is that environmental taxes have distributional effects and are effective in reducing carbon emissions. The major result of the study was that the real weakness of the newly introduced Carbon Tax Act is that in both in the first and second phase of its implementation, the carbon tax rate is too low to send an appropriate signal to the market and would not have the desired outcome. In addition, there are currently no guidelines that inform the revenue recycling technique to ensure transparency of revenue usage, improved energy management, or how the Carbon Tax Act will promote environmental quality. A major concern is that carbon tax revenue will not be ring-fenced. Given that South Africa is a developing country and depends mainly on non-renewable energy, it is inevitable that most of its sectors will be subject to the carbon tax. A plausible approach is the one that promotes the idea of taxing those more heavily that contribute most to environmental degradation and are highly energy concentrated, to promote parity between the harm to the environment and the taxes levied to redress the harm.
- Full Text:
- Date Issued: 2020
- Authors: Vuzane, Rolihlahla
- Date: 2020
- Subjects: Carbon taxes , Carbon taxes -- South Africa , Environmental impact charges , Environmental impact charges -- South Africa , Taxation -- Environmental aspects , Taxation -- Environmental aspects -- South Africa
- Language: English
- Type: text , Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/167676 , vital:41502
- Description: As a “Non-Annex 1” country, there was no obligation for South Africa to reduce its carbon emissions. South Africa undertook, of its own volition, to take measures to reduce 34% of the carbon monoxide emissions by 2020 and 42% by 2025 respectively. In response, South Africa promulgated the Carbon Tax Act, No. 15 of 2019. This study seeks to answer the question: After analysing the range of environmental taxes levied in the Scandinavian countries (Denmark, Finland, Norway and Sweden) and in South Africa, are there lessons that can be learnt for South Africa? In answering this question, the carbon tax structure in South Africa and in selected Scandinavian countries is analysed, together with existing environmental taxes and the related policies, using a literature study. What is evident from the Scandinavian countries studied, is that environmental taxes have distributional effects and are effective in reducing carbon emissions. The major result of the study was that the real weakness of the newly introduced Carbon Tax Act is that in both in the first and second phase of its implementation, the carbon tax rate is too low to send an appropriate signal to the market and would not have the desired outcome. In addition, there are currently no guidelines that inform the revenue recycling technique to ensure transparency of revenue usage, improved energy management, or how the Carbon Tax Act will promote environmental quality. A major concern is that carbon tax revenue will not be ring-fenced. Given that South Africa is a developing country and depends mainly on non-renewable energy, it is inevitable that most of its sectors will be subject to the carbon tax. A plausible approach is the one that promotes the idea of taxing those more heavily that contribute most to environmental degradation and are highly energy concentrated, to promote parity between the harm to the environment and the taxes levied to redress the harm.
- Full Text:
- Date Issued: 2020
Taxing the Minerals Sector in South Africa: a comparative analysis of the proposed tax model for South Africa and the models adopted in selected African countries
- Authors: Van den Berg, Jana
- Date: 2015
- Subjects: Industrial minerals -- Taxation -- South Africa , Industrial minerals -- Taxation -- Developing countries , Industrial minerals -- Law and legislation -- South Africa , Industrial minerals -- Law and legislation -- Developing countries
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:919 , http://hdl.handle.net/10962/d1017545
- Description: The State Intervention in the Minerals Sector Report emerged as a resolution during the 3rd National General Council Resolution on Economic Transformation held in 2012, during which the Council stated that: “The ANC’s approach to economic transformation of the South African economy should always be holistic and comprehensive, covering all sectors of the economy. In this regard, the ANC should ensure greater state involvement and control of strategic sectors of the economy, such as mining, energy, the financial sector and others.” It was for this reason that the National General Council mandated the National Executive Committee to ensure that further work be done on ways in which the African National Congress can implement economic transformation in sectors such as the mining industry. It was suggested that methods including research, study tours and discussions be conducted to gather the required information. As a result of the research, The State Intervention in the Minerals Sector Report emerged. In The State Intervention in the Minerals Sector Report, the mineral sectors of developed as well as developing countries are compared with each other. The developing countries compared included Botswana, Zambia, Ghana, Liberia and Sierra Leone, and these countries have also been selected for the purpose of comparison in the present research. The goal of this study is to analyse the recommendations made in The State Intervention in the Minerals Sector Report regarding State involvement in the minerals sector. To determine whether the economic situation in South Africa is comparable to the five other African countries, an analysis based on demographic indicators, the history of the minerals sector in the various countries, its contribution to the fiscal regime of that country, its economic contribution, as well as the extent of involvement from Government and the model implemented for its involvement, is conducted. According to a work paper published by the World Bank on the world development indicators for 2014, control over metal supply to the economy has been considered vital for political and economic reasons in most societies. It further states that most State-owned mining companies have over the years and, in particular, in developing countries, not been able to operate successfully, leading to privatisation. Poor performance is, however, not necessarily the reason for State ownership. Areas not addressed by this thesis include the Gold Mining industry in South Africa and the Diamond mining industry in Botswana.
- Full Text:
- Date Issued: 2015
- Authors: Van den Berg, Jana
- Date: 2015
- Subjects: Industrial minerals -- Taxation -- South Africa , Industrial minerals -- Taxation -- Developing countries , Industrial minerals -- Law and legislation -- South Africa , Industrial minerals -- Law and legislation -- Developing countries
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:919 , http://hdl.handle.net/10962/d1017545
- Description: The State Intervention in the Minerals Sector Report emerged as a resolution during the 3rd National General Council Resolution on Economic Transformation held in 2012, during which the Council stated that: “The ANC’s approach to economic transformation of the South African economy should always be holistic and comprehensive, covering all sectors of the economy. In this regard, the ANC should ensure greater state involvement and control of strategic sectors of the economy, such as mining, energy, the financial sector and others.” It was for this reason that the National General Council mandated the National Executive Committee to ensure that further work be done on ways in which the African National Congress can implement economic transformation in sectors such as the mining industry. It was suggested that methods including research, study tours and discussions be conducted to gather the required information. As a result of the research, The State Intervention in the Minerals Sector Report emerged. In The State Intervention in the Minerals Sector Report, the mineral sectors of developed as well as developing countries are compared with each other. The developing countries compared included Botswana, Zambia, Ghana, Liberia and Sierra Leone, and these countries have also been selected for the purpose of comparison in the present research. The goal of this study is to analyse the recommendations made in The State Intervention in the Minerals Sector Report regarding State involvement in the minerals sector. To determine whether the economic situation in South Africa is comparable to the five other African countries, an analysis based on demographic indicators, the history of the minerals sector in the various countries, its contribution to the fiscal regime of that country, its economic contribution, as well as the extent of involvement from Government and the model implemented for its involvement, is conducted. According to a work paper published by the World Bank on the world development indicators for 2014, control over metal supply to the economy has been considered vital for political and economic reasons in most societies. It further states that most State-owned mining companies have over the years and, in particular, in developing countries, not been able to operate successfully, leading to privatisation. Poor performance is, however, not necessarily the reason for State ownership. Areas not addressed by this thesis include the Gold Mining industry in South Africa and the Diamond mining industry in Botswana.
- Full Text:
- Date Issued: 2015
Tax revolts: an international perspective
- Authors: Tinotenda, Tariro Chizanga
- Date: 2020
- Subjects: Taxation -- Public opinion , Taxation -- Law and legislation -- South Africa , Income tax -- South Africa , South Africa -- Economic conditions , Fiscal policy -- South Africa
- Language: English
- Type: text , Thesis , Masters , MComm
- Identifier: http://hdl.handle.net/10962/166116 , vital:41330
- Description: The main goal of this study is to investigate whether tax revolts currently taking place and apparently threatening to take place in South Africa follow patterns shown in past international tax revolts or follow a unique pattern of their own. Tax revolts or tax rebellions are not a new phenomenon; they can be traced back to the beginning of time. Renowned tax revolts of the past include the Magna Carta and the Peasants’ Revolt in England, the Boston Tea Party, the Whiskey Rebellion, the Zimbabwean poll tax revolt, the Bambatha rebellion, the Tigre Rebellion, Proposition 13 and Margaret Thatcher’s poll tax revolt. These tax revolts were usually caused by the high burden of taxation, excessive government expenditure, corruption of government officials, declining tax morale of taxpayers and taxpayers’ perceptions of unfairness. In South Africa, elements of tax revolts have been on the rise. There has been a tax revolt against the e-tolling system in Gauteng since 2013. Non-payment of municipal rates is another form of tax revolt that has been and is happening in South Africa. Trade unions have also threatened strikes and mass action against various tax changes, including the value-added tax increase. Taxpayers, through media reporting, have been witnessing an increase in the use of taxpayers’ money for non-governmental agendas or overstated budgets. An increasing number of South Africans have been emigrating financially from South Africa to avoid a high taxation burden. The study falls within a post-positivist paradigm and an interpretive methodology is applied in the present research. The methodology is based on the fact that the social reality of tax revolts is not singular or objective, instead it is influenced by human experiences and social contexts. The study finds that tax revolts are currently occurring and threatening to occur in South Africa. The patterns of South African tax revolts are to a great extent similar to the patterns of international tax revolts, indicating the universalism of tax revolts. The study also confirms that South African tax revolts are, to a certain extent, unique.
- Full Text:
- Date Issued: 2020
- Authors: Tinotenda, Tariro Chizanga
- Date: 2020
- Subjects: Taxation -- Public opinion , Taxation -- Law and legislation -- South Africa , Income tax -- South Africa , South Africa -- Economic conditions , Fiscal policy -- South Africa
- Language: English
- Type: text , Thesis , Masters , MComm
- Identifier: http://hdl.handle.net/10962/166116 , vital:41330
- Description: The main goal of this study is to investigate whether tax revolts currently taking place and apparently threatening to take place in South Africa follow patterns shown in past international tax revolts or follow a unique pattern of their own. Tax revolts or tax rebellions are not a new phenomenon; they can be traced back to the beginning of time. Renowned tax revolts of the past include the Magna Carta and the Peasants’ Revolt in England, the Boston Tea Party, the Whiskey Rebellion, the Zimbabwean poll tax revolt, the Bambatha rebellion, the Tigre Rebellion, Proposition 13 and Margaret Thatcher’s poll tax revolt. These tax revolts were usually caused by the high burden of taxation, excessive government expenditure, corruption of government officials, declining tax morale of taxpayers and taxpayers’ perceptions of unfairness. In South Africa, elements of tax revolts have been on the rise. There has been a tax revolt against the e-tolling system in Gauteng since 2013. Non-payment of municipal rates is another form of tax revolt that has been and is happening in South Africa. Trade unions have also threatened strikes and mass action against various tax changes, including the value-added tax increase. Taxpayers, through media reporting, have been witnessing an increase in the use of taxpayers’ money for non-governmental agendas or overstated budgets. An increasing number of South Africans have been emigrating financially from South Africa to avoid a high taxation burden. The study falls within a post-positivist paradigm and an interpretive methodology is applied in the present research. The methodology is based on the fact that the social reality of tax revolts is not singular or objective, instead it is influenced by human experiences and social contexts. The study finds that tax revolts are currently occurring and threatening to occur in South Africa. The patterns of South African tax revolts are to a great extent similar to the patterns of international tax revolts, indicating the universalism of tax revolts. The study also confirms that South African tax revolts are, to a certain extent, unique.
- Full Text:
- Date Issued: 2020
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
The application of the “reasonable suspicion of bias” test in relation to the appointment of a tax Ombud in South Africa
- Authors: Tendayi, Tatenda Lovemore
- Date: 2016
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/4190 , vital:20631
- Description: The South African Parliament established a tax Ombud to act as an oversight body which reviews administrative complaints against SARS. Concerns have, however, been raised by academics and experts that the tax Ombud is not adequately independent of SARS so as to be able to investigate the complaints effectively and without bias. The manner in which the appointment, funding and staffing of the tax Ombud have been provided for, have been cited as the major sources of the perception of impartiality. According to decisions of the highest courts in South Africa, the “reasonable suspicion of bias” test must be applied in cases where institutional bias is alleged. The test investigates whether or not the reasonable person would suspect that the particular decision maker will be biased, due to institutional factors. After applying the “reasonable suspicion of bias” test to the model of the South African tax Ombud, the conclusion reached is that the model of the tax Ombud gives rise to a reasonable suspicion of bias. Notwithstanding the fact that the model gives rise to a suspicion of bias, it is concluded that the model, in its current form, remains fair as safeguards have been put in place by the legislature to ensure that fairness prevails. There is, however, international precedent which suggests that the sources of institutional bias can be eliminated completely from the model of the tax Ombud. Specifically, if the funding and staffing of the tax Ombud’s office is removed from SARS, the model of the tax Ombud would move closer to the ideal standards of fairness.
- Full Text:
- Date Issued: 2016
- Authors: Tendayi, Tatenda Lovemore
- Date: 2016
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/4190 , vital:20631
- Description: The South African Parliament established a tax Ombud to act as an oversight body which reviews administrative complaints against SARS. Concerns have, however, been raised by academics and experts that the tax Ombud is not adequately independent of SARS so as to be able to investigate the complaints effectively and without bias. The manner in which the appointment, funding and staffing of the tax Ombud have been provided for, have been cited as the major sources of the perception of impartiality. According to decisions of the highest courts in South Africa, the “reasonable suspicion of bias” test must be applied in cases where institutional bias is alleged. The test investigates whether or not the reasonable person would suspect that the particular decision maker will be biased, due to institutional factors. After applying the “reasonable suspicion of bias” test to the model of the South African tax Ombud, the conclusion reached is that the model of the tax Ombud gives rise to a reasonable suspicion of bias. Notwithstanding the fact that the model gives rise to a suspicion of bias, it is concluded that the model, in its current form, remains fair as safeguards have been put in place by the legislature to ensure that fairness prevails. There is, however, international precedent which suggests that the sources of institutional bias can be eliminated completely from the model of the tax Ombud. Specifically, if the funding and staffing of the tax Ombud’s office is removed from SARS, the model of the tax Ombud would move closer to the ideal standards of fairness.
- Full Text:
- Date Issued: 2016
The distinction between tax evasion, tax avoidance and tax planning
- Authors: Tarrant, Greg
- Date: 2008
- Subjects: South African Revenue Service , Tax evasion -- South Africa , Tax planning -- South Africa , Income tax -- South Africa , Income tax -- Law and legislation -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:897 , http://hdl.handle.net/10962/d1004549
- Description: Tax avoidance has been the subject of intense scrutiny lately by both the South African Revenue Service ("the SARS") and the media. This attention stems largely from the recent withdrawal of section 103(1) together with the introduction of section 80A to 80L of the South African Income Tax Act. However, this attention is not limited to South Africa. Revenue authorities worldwide have focused on the task of challenging tax avoidance. The approach of the SARS to tackling tax avoidance has been multi-faceted. In the Discussion Paper on Tax Avoidance and Section 103 (1) of the South African Income Tax Act they begin with a review of the distinction between tax evasion, tax avoidance and tax planning. Following a call for comment the SARS issued an Interim Response followed by the Revised Proposals which culminated in the withdrawal of the longstanding general anti-avoidance rules housed in section 103(1) and the introduction of new and more comprehensive anti-avoidance rules. In addition, the SARS has adopted an ongoing media campaign stressing the importance of paying tax in a country with a large development agenda like that of South Africa, the need for taxpayers to adopt a responsible attitude to the management of tax and the inclusion of responsible tax management as the greatest measure of a taxpayer's corporate and social investment. In tandem with this message the SARS have sought to vilify those taxpayers who engage in tax avoidance. The message is clear: tax avoidance carries reputational risks; those who engage in tax avoidance are unpatriotic or immoral and their actions simply result in an unfair shifting of the tax burden. The SARS is not alone in the above approach. Around the world tax authorities have been echoing the same message. The message appears to be working. Accounting firms speak of a "creeping conservatism" that has pervaded company boardrooms. What is not clear, however, is whether taxpayers, in becoming more conservative, are simply more fully aware of tax risks and are making informed decisions or whether they are simply responding to external events, such as the worldwide focus by revenue authorities and the media on tax avoidance. Whatever the reason, it is now critical, particularly in the case of corporate taxpayers, that their policies for tax and its attendant risks need to be as sophisticated, coherent and transparent as its policies in all other areas involving multiple stakeholders, such as suppliers, customers, staff and investors. How does a company begin to set its tax philosophy and strategic direction or to determine its appetite for risk? A starting point, it is submitted would be a review of the distinction between tax evasion, avoidance and planning with a heightened sensitivity to the unfamiliar ethical, moral and social risks. The goal of this thesis was to clearly define the distinction between tax evasion, tax avoidance and tax planning from a legal interpretive, ethical and historical perspective in order to develop a rudimentary framework for the responsible management of strategic tax decisions, in the light of the new South African general anti-avoidance legislation. The research methodology entails a qualitative research orientation consisting of a critical conceptual analysis of tax evasion and tax avoidance, with a view to establishing a basic framework to be used by taxpayers to make informed decisions on tax matters. The analysis of the distinction in this work culminated in a diagrammatic representation of the distinction between tax evasion, tax avoidance and tax planning emphasising the different types of tax avoidance from least aggressive to the most abusive and from the least objectionable to most objectionable. It is anticipated that a visual representation of the distinction, however flawed, would result in a far more pragmatic tool to taxpayers than a lengthy document. From a glance taxpayers can determine the following: That tax avoidance is legal; that different forms of tax avoidance exist, some forms being more aggressive than others; that aggressive forms of tax avoidance carry reputational risks; and that in certain circumstances aggressive tax avoidance schemes may border on tax evasion. This, it is envisaged, may prompt taxpayers to ask the right questions when faced with an external or in-house tax avoidance arrangement rather than simply blindly accepting or rejecting the arrangement.
- Full Text:
- Date Issued: 2008
- Authors: Tarrant, Greg
- Date: 2008
- Subjects: South African Revenue Service , Tax evasion -- South Africa , Tax planning -- South Africa , Income tax -- South Africa , Income tax -- Law and legislation -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:897 , http://hdl.handle.net/10962/d1004549
- Description: Tax avoidance has been the subject of intense scrutiny lately by both the South African Revenue Service ("the SARS") and the media. This attention stems largely from the recent withdrawal of section 103(1) together with the introduction of section 80A to 80L of the South African Income Tax Act. However, this attention is not limited to South Africa. Revenue authorities worldwide have focused on the task of challenging tax avoidance. The approach of the SARS to tackling tax avoidance has been multi-faceted. In the Discussion Paper on Tax Avoidance and Section 103 (1) of the South African Income Tax Act they begin with a review of the distinction between tax evasion, tax avoidance and tax planning. Following a call for comment the SARS issued an Interim Response followed by the Revised Proposals which culminated in the withdrawal of the longstanding general anti-avoidance rules housed in section 103(1) and the introduction of new and more comprehensive anti-avoidance rules. In addition, the SARS has adopted an ongoing media campaign stressing the importance of paying tax in a country with a large development agenda like that of South Africa, the need for taxpayers to adopt a responsible attitude to the management of tax and the inclusion of responsible tax management as the greatest measure of a taxpayer's corporate and social investment. In tandem with this message the SARS have sought to vilify those taxpayers who engage in tax avoidance. The message is clear: tax avoidance carries reputational risks; those who engage in tax avoidance are unpatriotic or immoral and their actions simply result in an unfair shifting of the tax burden. The SARS is not alone in the above approach. Around the world tax authorities have been echoing the same message. The message appears to be working. Accounting firms speak of a "creeping conservatism" that has pervaded company boardrooms. What is not clear, however, is whether taxpayers, in becoming more conservative, are simply more fully aware of tax risks and are making informed decisions or whether they are simply responding to external events, such as the worldwide focus by revenue authorities and the media on tax avoidance. Whatever the reason, it is now critical, particularly in the case of corporate taxpayers, that their policies for tax and its attendant risks need to be as sophisticated, coherent and transparent as its policies in all other areas involving multiple stakeholders, such as suppliers, customers, staff and investors. How does a company begin to set its tax philosophy and strategic direction or to determine its appetite for risk? A starting point, it is submitted would be a review of the distinction between tax evasion, avoidance and planning with a heightened sensitivity to the unfamiliar ethical, moral and social risks. The goal of this thesis was to clearly define the distinction between tax evasion, tax avoidance and tax planning from a legal interpretive, ethical and historical perspective in order to develop a rudimentary framework for the responsible management of strategic tax decisions, in the light of the new South African general anti-avoidance legislation. The research methodology entails a qualitative research orientation consisting of a critical conceptual analysis of tax evasion and tax avoidance, with a view to establishing a basic framework to be used by taxpayers to make informed decisions on tax matters. The analysis of the distinction in this work culminated in a diagrammatic representation of the distinction between tax evasion, tax avoidance and tax planning emphasising the different types of tax avoidance from least aggressive to the most abusive and from the least objectionable to most objectionable. It is anticipated that a visual representation of the distinction, however flawed, would result in a far more pragmatic tool to taxpayers than a lengthy document. From a glance taxpayers can determine the following: That tax avoidance is legal; that different forms of tax avoidance exist, some forms being more aggressive than others; that aggressive forms of tax avoidance carry reputational risks; and that in certain circumstances aggressive tax avoidance schemes may border on tax evasion. This, it is envisaged, may prompt taxpayers to ask the right questions when faced with an external or in-house tax avoidance arrangement rather than simply blindly accepting or rejecting the arrangement.
- Full Text:
- Date Issued: 2008
Mores, fault and fides: are these acceptable criteria when income tax deductions are claimed
- Authors: Swanepoel, Marius G
- Date: 2007
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:889 , http://hdl.handle.net/10962/d1001643
- Description: The two “pillars” on which taxable income is based are the definition of “gross income” in section 1 of the Income Tax Act, 58 of 1962, and the “general deduction formula” comprising the preamble to section 11, section 11(a) and section 23(g) of the Act. Many of the terms used in these sections are not defined in the Income Tax Act. Case law in relation to these sections reveals that morality issues, the negligence of taxpayers and the good faith of taxpayers have from time to time been treated as relevant considerations by the courts, both abroad and in South Africa, in allowing or disallowing deductions from the gross income of taxpayers. In some instances this occurred apparently unwittingly. In other instances, earlier decisions were followed without a thorough consideration of the correctness of the underlying reasoning or of the criteria which were applied in the earlier decisions. In relation to the definition of “gross income”, however, fides, mores and fault have not been a consideration. In CIR v Delagoa Bay Cigarette Co Ltd 1918 TPD 391 Bristowe, J stated: “I do not think it is material for the purpose of this case whether the business carried on by the company is legal or illegal.” There were a number of cases heard in relation to income from illegal activities (for example, COT v G, 1981 (4) SA 167 (ZA), 43 SATC 159, and ITC 291, 7 SATC 335, which related to the misappropriation of funds, ITC 1545, 54 SATC 464, which dealt with the proceeds of the sale of stolen diamonds and ITC 1624, 59 SATC 373, which dealt with overcharging customers). In these cases, the question turned on whether or not the amounts were received by the taxpayers for their own benefit and therefore to be included in gross income, or whether the taxpayers incurred a concomitant liability to repay the amounts, and did not involve the question of fides, mores or fault. The research concludes that, providing an even-handed approach is applied to both income and expense considerations, fides and mores may continue to play a role as a useful yardstick in this context. However, that fault, particularly the causal negligence of taxpayers in the process of sustaining a loss or incurring expenditure whilst conducting their income generating operations, has effectively been jettisoned as an irrelevant consideration, is a salutary development which has contributed to legal certainty.
- Full Text:
- Date Issued: 2007
- Authors: Swanepoel, Marius G
- Date: 2007
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:889 , http://hdl.handle.net/10962/d1001643
- Description: The two “pillars” on which taxable income is based are the definition of “gross income” in section 1 of the Income Tax Act, 58 of 1962, and the “general deduction formula” comprising the preamble to section 11, section 11(a) and section 23(g) of the Act. Many of the terms used in these sections are not defined in the Income Tax Act. Case law in relation to these sections reveals that morality issues, the negligence of taxpayers and the good faith of taxpayers have from time to time been treated as relevant considerations by the courts, both abroad and in South Africa, in allowing or disallowing deductions from the gross income of taxpayers. In some instances this occurred apparently unwittingly. In other instances, earlier decisions were followed without a thorough consideration of the correctness of the underlying reasoning or of the criteria which were applied in the earlier decisions. In relation to the definition of “gross income”, however, fides, mores and fault have not been a consideration. In CIR v Delagoa Bay Cigarette Co Ltd 1918 TPD 391 Bristowe, J stated: “I do not think it is material for the purpose of this case whether the business carried on by the company is legal or illegal.” There were a number of cases heard in relation to income from illegal activities (for example, COT v G, 1981 (4) SA 167 (ZA), 43 SATC 159, and ITC 291, 7 SATC 335, which related to the misappropriation of funds, ITC 1545, 54 SATC 464, which dealt with the proceeds of the sale of stolen diamonds and ITC 1624, 59 SATC 373, which dealt with overcharging customers). In these cases, the question turned on whether or not the amounts were received by the taxpayers for their own benefit and therefore to be included in gross income, or whether the taxpayers incurred a concomitant liability to repay the amounts, and did not involve the question of fides, mores or fault. The research concludes that, providing an even-handed approach is applied to both income and expense considerations, fides and mores may continue to play a role as a useful yardstick in this context. However, that fault, particularly the causal negligence of taxpayers in the process of sustaining a loss or incurring expenditure whilst conducting their income generating operations, has effectively been jettisoned as an irrelevant consideration, is a salutary development which has contributed to legal certainty.
- Full Text:
- Date Issued: 2007
An historical perspective of income tax legislation in South Africa, 1910 to 1925
- Authors: Surtees, Peter Geoffrey
- Date: 1986
- Subjects: Income tax -- South Africa , Income tax -- Law and legislation -- South Africa , Income tax -- South Africa -- History
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:898 , http://hdl.handle.net/10962/d1004578 , Income tax -- South Africa , Income tax -- Law and legislation -- South Africa , Income tax -- South Africa -- History
- Description: From Introduction: This work considers the period from Union, 31 May 1910 until promulgation of the Income Tax Act No. 40 of 1925.(1) It will describe the means, both financial and otherwise, by which the fledgling Government of the Union of South Africa contrived to balance its budget, and will consider the various sources of revenue available up to 1914, when the Government of Gen. Louis Botha first decided that a tax on income was necessary in order to maintain the solvency of the new State. Similarly the political pressures which shaped the nature of the Income Tax Acts up to 1925 will be discussed, and the political principles (or expediencies, depending on the degree of cynicism of the reader) which led the parties in power from time to time to make the decisions they did regarding the provisions of the various Acts. The effect of external political situations such as the Great War of 1914 - 1918 will be examined, as will the consequences of the rebellion of 1914 and the strikes of 1913 and 1922. The legislation predictably spawned a considerable body of litigation as taxpayers hastened to find and exploit loopholes in it; the resultant Income Tax Cases, in the Income Tax Special Court, Supreme Court and Appeal Court, formed the embryo of a body of judicial precedent which today encompasses some two thousand case reports. A few of the cases decided in the period up to 1925 are still quoted today; for example, CIR v Lunnon 1924 AD 1 SATC 7. The relevant cases from the period will enjoy consideration, with descriptions of how their verdicts affected either subsequent income tax principles or later legislation. Also considered will be the inception during this period of the way in which income tax legislation largely develops: the legislature promulgates an Act, the taxpayers discover legitimate ways to reduce their tax burden and the Minister of Finance consequently causes the Act to be changed in order to protect the tax base. Thereupon the resolute taxpayers seek loopholes anew. The effect of economic conditions on income tax legislation will engage attention; several such conditions cast their shadows into the House of Assembly during that 15 year period, notably the post-war recession and the drought of 1919. The selection of this period is apposite for several reasons: it covers the period during which income tax legislation came into being; - it includes several notable political occurrences. thus making possible a consideration of their effect on income tax legislation; it includes a natural cataclysm. namely a major drought. which also had an effect on subsequent Income Tax Acts; - a sufficient number of income tax cases was heard during the period to afford a fair indication both of how the body of case law would develop and how it would perpetually interplay with the legislation; it clearly illustrates the differences between the two great political parties of the time, differences largely caused by the vested interests of each; the dominant South African Party, with its need to retain the support of the commercial and particularly the mining sectors, and the smaller but even then growing National Party with its face set firmly towards the rural constituencies and the embattled farmers; - the period culminates in the Income Tax Act of 1925, a significant change from its predecessors, and the second Income Tax Act of the Pact Government. The imposition of taxes by the respective provinces does not form part of this work, as the scope of the discussion is limited to the various Income Tax Acts, and their development has been overseen by the central government.
- Full Text:
- Date Issued: 1986
- Authors: Surtees, Peter Geoffrey
- Date: 1986
- Subjects: Income tax -- South Africa , Income tax -- Law and legislation -- South Africa , Income tax -- South Africa -- History
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:898 , http://hdl.handle.net/10962/d1004578 , Income tax -- South Africa , Income tax -- Law and legislation -- South Africa , Income tax -- South Africa -- History
- Description: From Introduction: This work considers the period from Union, 31 May 1910 until promulgation of the Income Tax Act No. 40 of 1925.(1) It will describe the means, both financial and otherwise, by which the fledgling Government of the Union of South Africa contrived to balance its budget, and will consider the various sources of revenue available up to 1914, when the Government of Gen. Louis Botha first decided that a tax on income was necessary in order to maintain the solvency of the new State. Similarly the political pressures which shaped the nature of the Income Tax Acts up to 1925 will be discussed, and the political principles (or expediencies, depending on the degree of cynicism of the reader) which led the parties in power from time to time to make the decisions they did regarding the provisions of the various Acts. The effect of external political situations such as the Great War of 1914 - 1918 will be examined, as will the consequences of the rebellion of 1914 and the strikes of 1913 and 1922. The legislation predictably spawned a considerable body of litigation as taxpayers hastened to find and exploit loopholes in it; the resultant Income Tax Cases, in the Income Tax Special Court, Supreme Court and Appeal Court, formed the embryo of a body of judicial precedent which today encompasses some two thousand case reports. A few of the cases decided in the period up to 1925 are still quoted today; for example, CIR v Lunnon 1924 AD 1 SATC 7. The relevant cases from the period will enjoy consideration, with descriptions of how their verdicts affected either subsequent income tax principles or later legislation. Also considered will be the inception during this period of the way in which income tax legislation largely develops: the legislature promulgates an Act, the taxpayers discover legitimate ways to reduce their tax burden and the Minister of Finance consequently causes the Act to be changed in order to protect the tax base. Thereupon the resolute taxpayers seek loopholes anew. The effect of economic conditions on income tax legislation will engage attention; several such conditions cast their shadows into the House of Assembly during that 15 year period, notably the post-war recession and the drought of 1919. The selection of this period is apposite for several reasons: it covers the period during which income tax legislation came into being; - it includes several notable political occurrences. thus making possible a consideration of their effect on income tax legislation; it includes a natural cataclysm. namely a major drought. which also had an effect on subsequent Income Tax Acts; - a sufficient number of income tax cases was heard during the period to afford a fair indication both of how the body of case law would develop and how it would perpetually interplay with the legislation; it clearly illustrates the differences between the two great political parties of the time, differences largely caused by the vested interests of each; the dominant South African Party, with its need to retain the support of the commercial and particularly the mining sectors, and the smaller but even then growing National Party with its face set firmly towards the rural constituencies and the embattled farmers; - the period culminates in the Income Tax Act of 1925, a significant change from its predecessors, and the second Income Tax Act of the Pact Government. The imposition of taxes by the respective provinces does not form part of this work, as the scope of the discussion is limited to the various Income Tax Acts, and their development has been overseen by the central government.
- Full Text:
- Date Issued: 1986
An analysis of the financing mechanisms proposed for funding national health insurance in South Africa
- Authors: Stevens, Nicol Susan
- Date: 2012
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:888 , http://hdl.handle.net/10962/d1001642
- Description: In the 2011 Budget Speech, the Minister of Finance announced that South Africa would be introducing National Health Insurance. The Minister described the financing mechanisms under consideration for funding National Health Insurance. The Minister also referred to eight countries, namely Japan, South Korea, Taiwan, Chile, Colombia, Mexico, Thailand and Vietnam as examples of countries which had successfully implemented universal health coverage. These countries were selected for the purpose of the present research. The goal of this study was to analyse the health care financing mechanisms under consideration in South Africa to determine if they were in line with international trends and "best practice" in relation to South Africa's economic profile. To determine whether the economic situation in South Africa is comparable to the eight countries selected for the research, a high-level comparison was made of the economic profile of South Africa and the eight countries, based on certain demographic, macro-economic, health expenditure and health status indicators. The health care financing mechanisms used in the eight countries was also analysed. International trends suggested that health care should be financed primarily through pre-payment systems, that financing mechanisms should preferably be progressive in nature and that a large share of funding should be from government sources (albeit shared between general tax revenue and specific health care contributions). The financing mechanisms under consideration in South Africa reflect these norms. The health systems in the eight countries analysed all exhibited elements of "good performance" and also complied, to a large extent, with international trends, but the frnancing models used for funding health care in the eight countries were country-specific and could therefore not be compared directly or used to recommend a system for South Africa. Areas not addressed by this thesis include the implications of a centralised healthcare system, the implications of a single-payer system, the benefit package to be offered and its cost implications, the role of private healthcare providers and how the significant human resource scarcity and infrastructure backlogs will be addressed.
- Full Text:
- Date Issued: 2012
- Authors: Stevens, Nicol Susan
- Date: 2012
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:888 , http://hdl.handle.net/10962/d1001642
- Description: In the 2011 Budget Speech, the Minister of Finance announced that South Africa would be introducing National Health Insurance. The Minister described the financing mechanisms under consideration for funding National Health Insurance. The Minister also referred to eight countries, namely Japan, South Korea, Taiwan, Chile, Colombia, Mexico, Thailand and Vietnam as examples of countries which had successfully implemented universal health coverage. These countries were selected for the purpose of the present research. The goal of this study was to analyse the health care financing mechanisms under consideration in South Africa to determine if they were in line with international trends and "best practice" in relation to South Africa's economic profile. To determine whether the economic situation in South Africa is comparable to the eight countries selected for the research, a high-level comparison was made of the economic profile of South Africa and the eight countries, based on certain demographic, macro-economic, health expenditure and health status indicators. The health care financing mechanisms used in the eight countries was also analysed. International trends suggested that health care should be financed primarily through pre-payment systems, that financing mechanisms should preferably be progressive in nature and that a large share of funding should be from government sources (albeit shared between general tax revenue and specific health care contributions). The financing mechanisms under consideration in South Africa reflect these norms. The health systems in the eight countries analysed all exhibited elements of "good performance" and also complied, to a large extent, with international trends, but the frnancing models used for funding health care in the eight countries were country-specific and could therefore not be compared directly or used to recommend a system for South Africa. Areas not addressed by this thesis include the implications of a centralised healthcare system, the implications of a single-payer system, the benefit package to be offered and its cost implications, the role of private healthcare providers and how the significant human resource scarcity and infrastructure backlogs will be addressed.
- Full Text:
- Date Issued: 2012
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
The tax consequences of a contingent liability disposed of as part of the sale of a business as a going concern
- Authors: Staude, Daylan
- Date: 2015
- Subjects: Sale of business enterprises -- Taxation -- South Africa , Sale of business enterprises -- Law and legislation -- South Africa , Tax deductions -- South Africa , Contingent liabilities (Accounting) -- Taxation -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:918 , http://hdl.handle.net/10962/d1017544
- Description: The sale of an entity as a going concern has a number of tax consequences for both the purchaser and the seller. The tax deductibility of a contingent liability upon its transfer from the seller to the purchaser, where the selling price has been reduced by the value of the contingent liabilities transferred, remains uncertain following the decision in Ackermans Ltd v Commissioner for the South African Revenue Service. An expense is either deductible under a specific section of the Income Tax Act, 58 of 1962, or under the general expense provisions in terms of sections 11(a) and 23(g). The Act does not contain a specific section relating to contingent liabilities and therefore a contingent liability will need to be considered for deduction under these sections. The Act further disallows an expense as a deduction under section 23(e), where a reserve is created (for example a leave pay provision). This study analyses the tax deductibility of a contingent liability, where the contingent liability has been transferred from the seller to the purchaser in a sale of an entity as a going concern and the purchase price has been reduced to compensate for the transfer of the contingent liability. The deductibility of the contingent liability was first assessed in terms of the provisions of the Act (sections 11(a), 23(g) and 23(e)) and associated case law. The decision in the Ackermans case and its preceding Income Tax Case 1839 was then analysed in order to establish the principles arising from the decisions. Finally the proposals in the Draft Taxation Laws Amendment Bill, 2011, and the subsequent Discussion Document issued by the South African Revenue Service were discussed. The analysis revealed the continuing confusion surrounding the status quo, thus demonstrating the importance of legislative intervention to provide guidelines for taxpayers.
- Full Text:
- Date Issued: 2015
- Authors: Staude, Daylan
- Date: 2015
- Subjects: Sale of business enterprises -- Taxation -- South Africa , Sale of business enterprises -- Law and legislation -- South Africa , Tax deductions -- South Africa , Contingent liabilities (Accounting) -- Taxation -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:918 , http://hdl.handle.net/10962/d1017544
- Description: The sale of an entity as a going concern has a number of tax consequences for both the purchaser and the seller. The tax deductibility of a contingent liability upon its transfer from the seller to the purchaser, where the selling price has been reduced by the value of the contingent liabilities transferred, remains uncertain following the decision in Ackermans Ltd v Commissioner for the South African Revenue Service. An expense is either deductible under a specific section of the Income Tax Act, 58 of 1962, or under the general expense provisions in terms of sections 11(a) and 23(g). The Act does not contain a specific section relating to contingent liabilities and therefore a contingent liability will need to be considered for deduction under these sections. The Act further disallows an expense as a deduction under section 23(e), where a reserve is created (for example a leave pay provision). This study analyses the tax deductibility of a contingent liability, where the contingent liability has been transferred from the seller to the purchaser in a sale of an entity as a going concern and the purchase price has been reduced to compensate for the transfer of the contingent liability. The deductibility of the contingent liability was first assessed in terms of the provisions of the Act (sections 11(a), 23(g) and 23(e)) and associated case law. The decision in the Ackermans case and its preceding Income Tax Case 1839 was then analysed in order to establish the principles arising from the decisions. Finally the proposals in the Draft Taxation Laws Amendment Bill, 2011, and the subsequent Discussion Document issued by the South African Revenue Service were discussed. The analysis revealed the continuing confusion surrounding the status quo, thus demonstrating the importance of legislative intervention to provide guidelines for taxpayers.
- Full Text:
- Date Issued: 2015
The valuation of amounts for the purpose of inclusion in gross income
- Authors: Spearman, Tarryn Leigh
- Date: 2012
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:887 , http://hdl.handle.net/10962/d1001641
- Description: The present research investigates the valuation of amounts for the purpose of inclusion in gross income. Because the gross income definition in section 1 of the Income Tax Act includes "amounts in cash or otherwise", valuations are often required in order to establish a value in money terms for amounts received or accrued in a form otherwise than in cash. The basis on which these valuations are made can vary and the courts have frequently been called upon to decide on the correct method of valuation. There has been an ongoing debate in the courts as to whether a strict objective approach or a more flexible subjective approach should be adopted when valuing an amount in a form other than cash, which was finally settled in the decision by the Supreme Court of Appeal in CIR v Brummeria Renaissance (Pty) Ltd, which held that an objective approach must be followed. The present research will demonstrate how the strict rule of interpretation tends to result in purely objective valuations as it requires that the ordinary grammatical meaning of words be applied and does not allow the court to consider the purpose of the legislation or introduce any subjectivity based on the circumstances of each individual taxpayer and the facts of each particular case, which a purposive interpretation approach does. The purposive approach to interpretation is therefore more closely aligned with the subjective approach to valuation. Both the objective and subjective approaches to valuation have advantages and disadvantages, which are addressed in the research. The need for certainty in taxation was articulated as early as 1776 by Adam Smith in his Wealth of Nations. The objective approach appears to create a level of consistency as all income received by a taxpayer is effectively taxed as if received by a third party in an arm’s length transaction. The approach has led to unfair decisions at odds with economic reality and generally accepted accounting principles, which could be challenged on the basis of a lack of equity and fairness as required by the Constitution of the Republic of South Africa. The research demonstrates that an objective method of valuation is neither fully objective nor appropriate in certain circumstances, while a subjective approach may be more appropriate as it ensures that each taxpayer’s individual rights are protected. Although the subjective approach successfully addresses the issue of fairness, it threatens to introduce an unacceptable level of inconsistency and is, in reality, not always administratively feasible. The present research concludes that a trade-off between fairness and consistency is often necessary.
- Full Text:
- Date Issued: 2012
- Authors: Spearman, Tarryn Leigh
- Date: 2012
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:887 , http://hdl.handle.net/10962/d1001641
- Description: The present research investigates the valuation of amounts for the purpose of inclusion in gross income. Because the gross income definition in section 1 of the Income Tax Act includes "amounts in cash or otherwise", valuations are often required in order to establish a value in money terms for amounts received or accrued in a form otherwise than in cash. The basis on which these valuations are made can vary and the courts have frequently been called upon to decide on the correct method of valuation. There has been an ongoing debate in the courts as to whether a strict objective approach or a more flexible subjective approach should be adopted when valuing an amount in a form other than cash, which was finally settled in the decision by the Supreme Court of Appeal in CIR v Brummeria Renaissance (Pty) Ltd, which held that an objective approach must be followed. The present research will demonstrate how the strict rule of interpretation tends to result in purely objective valuations as it requires that the ordinary grammatical meaning of words be applied and does not allow the court to consider the purpose of the legislation or introduce any subjectivity based on the circumstances of each individual taxpayer and the facts of each particular case, which a purposive interpretation approach does. The purposive approach to interpretation is therefore more closely aligned with the subjective approach to valuation. Both the objective and subjective approaches to valuation have advantages and disadvantages, which are addressed in the research. The need for certainty in taxation was articulated as early as 1776 by Adam Smith in his Wealth of Nations. The objective approach appears to create a level of consistency as all income received by a taxpayer is effectively taxed as if received by a third party in an arm’s length transaction. The approach has led to unfair decisions at odds with economic reality and generally accepted accounting principles, which could be challenged on the basis of a lack of equity and fairness as required by the Constitution of the Republic of South Africa. The research demonstrates that an objective method of valuation is neither fully objective nor appropriate in certain circumstances, while a subjective approach may be more appropriate as it ensures that each taxpayer’s individual rights are protected. Although the subjective approach successfully addresses the issue of fairness, it threatens to introduce an unacceptable level of inconsistency and is, in reality, not always administratively feasible. The present research concludes that a trade-off between fairness and consistency is often necessary.
- Full Text:
- Date Issued: 2012
A critical analysis of the taxation of financial assets and financial liabilities in terms of section 24JB of the South African Income Tax Act
- Authors: Snyman, S L
- Date: 2016
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/4178 , vital:20630
- Description: Section 24JB of the Income Tax Act No. 58 of 1962 was introduced with effect from 1 January 2014 in order to govern the taxation of financial instruments of a covered person as defined. Section 24JB represents a significant departure from the standard tax principles for financial instruments and will therefore directly affect the timing of the imposition of tax on gains and losses on these financial instruments, resulting in a significant adverse cash flow effect for the taxpayer. The main purpose of the research is to investigate the meaning of the wording in section 24JB through a critical analysis of the domestic tax legislation in the context of practical examples of specific financial assets and liabilities. The research includes an analysis of the scope of section 24JB by examining the definition of a “covered person” as well as the specific financial instruments to which the section applies, with reference to the International Financial Reporting Standards classifications and terms. The interaction of section 24JB with the rest of the Act is examined and whether this section overrides all the other provisions, specifically with reference to the taxation of dividends and the general and specific anti-avoidance provisions contained elsewhere in the Act. The study aims to highlight anomalies and possible unintended tax consequences arising from the current drafting of section 24JB using practical examples, highlighting the major areas of concern and issues of interpretation of section 24JB. Recommendations are made for amendments to the Act or the provision of guidance in the form of an Explanatory Memorandum or Interpretation Note to be issued by SARS.
- Full Text:
- Date Issued: 2016
- Authors: Snyman, S L
- Date: 2016
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/4178 , vital:20630
- Description: Section 24JB of the Income Tax Act No. 58 of 1962 was introduced with effect from 1 January 2014 in order to govern the taxation of financial instruments of a covered person as defined. Section 24JB represents a significant departure from the standard tax principles for financial instruments and will therefore directly affect the timing of the imposition of tax on gains and losses on these financial instruments, resulting in a significant adverse cash flow effect for the taxpayer. The main purpose of the research is to investigate the meaning of the wording in section 24JB through a critical analysis of the domestic tax legislation in the context of practical examples of specific financial assets and liabilities. The research includes an analysis of the scope of section 24JB by examining the definition of a “covered person” as well as the specific financial instruments to which the section applies, with reference to the International Financial Reporting Standards classifications and terms. The interaction of section 24JB with the rest of the Act is examined and whether this section overrides all the other provisions, specifically with reference to the taxation of dividends and the general and specific anti-avoidance provisions contained elsewhere in the Act. The study aims to highlight anomalies and possible unintended tax consequences arising from the current drafting of section 24JB using practical examples, highlighting the major areas of concern and issues of interpretation of section 24JB. Recommendations are made for amendments to the Act or the provision of guidance in the form of an Explanatory Memorandum or Interpretation Note to be issued by SARS.
- Full Text:
- Date Issued: 2016