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.
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Extending legal professional privilege to non-legal tax practitioners in South Africa: a comparative and constitutional perspective
- Authors: Jani, Pride
- Date: 2011
- Language: English
- Type: text , Thesis , Masters , MCom
- Identifier: vital:882 , http://hdl.handle.net/10962/d1001636
- Description: This study explains the differing rights of taxpayers, based on the nature of the profession of the tax adviser they consult. Those who utilize the services of tax attorneys can rely on the protection afforded by legal professional privilege whereas those who obtain their advice from non-legal advisers, such as accountants and other tax advisers, cannot claim the same protection. Legal professional privilege is a substantive right which should be extended to cover clients of non-legal tax advisers. The continued denial of the privilege to clients of nonlegal tax practitioners while it is availed to those who approach legal practitioners infringes the rights to privacy and equality contained in the South African Constitution. The object of this research is to show that the common law concept of legal professional privilege is amenable to extension so as to cover the clients of non-legal tax advisers. A qualitative approach was adopted which involved an in-depth analysis of the origins, rationale as well as the requirements for the operation of the doctrine. This also involved a constitutional as well as a comparative dimension. The constitutional dimension sought to show that the current distinction is untenable under the South African Constitution by virtue of the infringement of the rights to privacy and equality. The comparative dimension presented an analysis of the various jurisdictions that have extended the doctrine as well as those that are still to do so or have adamantly rejected the idea. The differential treatment of taxpayers based on the professional they engage contravenes the privacy and equality provisions and is thus unconstitutional. The study demonstrates that legal professional privilege is amenable to extension and there is need for legislative intervention as the courts are limited in the extent to which they may intervene in light of the separation of powers and judicial deference. Legal professional privilege should therefore be extended to protect the clients of non-legal tax advisers as opposed to partial protection which subsists at the moment.
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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.
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Gains derived from illegal activities :an analysis of the taxation consequences
- Authors: Mtshawulana, Lungiswa Bukeka
- Date: 2009
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:886 , http://hdl.handle.net/10962/d1001640
- Description: Income Tax in South Africa is levied in terms of the Income Tax Act 58 of 1962 on taxable income, which, by definition, is arrived at by deducting from "gross income" receipts and accruals that are exempt from tax as well as deductions and allowances provided for in the Act. The Income Tax Act provides no guidance with regard to the taxation of illegal activities, except to prohibit the deduction of expenditure incurred in paying fines or in relation to corrupt activities, as defined. An analysis of the taxation of income derived from theft, fraud and prostitution and the deductibility of expenses relating to that income, is the question addressed in this thesis. In this thesis, an analysis was made of relevant case law in relation to the provisions of the Income Tax Act in an attempt to provide clarity. A brief comparison was also macie of American, United Kingdom and South African tax law. Similarities were found between the American, United Kingdom and South African tax regimes in relation to the taxation of income, but there appeared to be more certainty in America and the United Kingdom in relation to the deduction of expenses. The thesis concludes that recent case decisions have provided certainty in relation to income from illegal activities, but the tax status of the deduction of expenses remains uncertain.
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The relationship between accounting choices and share prices : a study of South African listed companies
- Authors: Bunting, Mark Bevan
- Date: 2009
- Subjects: Financial statements -- South Africa , Accounting -- South Africa , Managerial accounting -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:989 , http://hdl.handle.net/10962/d1002724 , Financial statements -- South Africa , Accounting -- South Africa , Managerial accounting -- South Africa
- Description: It is widely assumed that the managers of companies behave in a self-interested and opportunistic manner when making the discretionary accounting choices that are applied in the preparation of published financial reports. Empirical research has found evidence for this in the United States, Britain, Spain, France and Australia, amongst other countries. There has, however, been no prior work of a similar nature in a South African context. The purpose of this study is to extend this body of work by examining the relationship between a number of potentially opportunistic (profit-increasing, income-smoothing and solvencyimproving) accounting choices made by the managers of South African listed companies, and growth rates in the share prices of those companies. Data in respect of thirty-nine medium-sized South African listed companies are analysed for evidence of the expected positive relationship between opportunistic accounting choices and share price growth. No evidence is found for this relationship. This may be due to limitations in the research design, inadequacies in the interpretation of the agency theory from which the hypotheses are developed, or a combination of both. Refinements in the research design or a re-interpretation of the theory may be successful in addressing these matters as part of future research efforts.
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The continued viability of the discretionary Inter vivos trust as an instrument for estate planning
- Authors: Lötter, Therésilda Sieglinde
- Date: 2007
- Subjects: Taxation -- Law and legislation -- South Africa , Trusts and trustees -- South Africa , Trusts and trustees -- Taxation -- South Africa , Estate planning -- South Africa , Estates (Law) -- South Africa
- Language: Afrikaans
- Type: Thesis , Masters , MCom
- Identifier: vital:900 , http://hdl.handle.net/10962/d1006148 , Taxation -- Law and legislation -- South Africa , Trusts and trustees -- South Africa , Trusts and trustees -- Taxation -- South Africa , Estate planning -- South Africa , Estates (Law) -- South Africa
- Description: The purpose of this study is to determine whether a discretionary inter vivos trust is still an effective instrument for estate planning. The process of estate planning, the role the trust plays in it and the background to the trust are described. The taxability and tax saving opportunities when the trust are utilised are discussed in the light of the Estate Duty Act, 45 of 1955, the Income Tax Act, 58 of 1962 (including the Eighth Schedule thereof) and the Transfer Duty Act, 40 of 1949. The opinions of tax and legal authorities in articles and relevant case law are also discussed. The impact of the "letter of wishes" on the stipulations of the trust deed is examined. Amendments to the Income Tax Act have placed a limit on the use of a trust for estate planning through a number of anti-avoidance measures, the introduction of a capital gains tax (in the Eighth Schedule) and the imposition of a high tax rate. The increase in the deduction granted in arriving at the dutiable amount of an estate, in terms of section 4A of the Estate Duty Act, from R1 500 000 to R2 500 000 has imposed a further limit on the use of the trust as an instrument in estate planning. The research demonstrates that, notwithstanding the amendments to the Income Tax Act, the trust still is a viable instrument, mainly because the trust operates as a conduit and because of its potential use in dividing taxable income amongst a number of beneficiaries. The stipulations included in the trust deed and the "letter of wishes" (if one exists), must be thought through carefully when estate planning is done, as it can give rise to the application of the general and specific anti-avoidance provisions as included in sections 7 and 103 of this Act. The research also concludes that, in assessing the effectiveness of the trust as an instrument in tax planning, the disadvantage of paying the higher transfer duty when the immovable asset is transferred to the trust should be weighed up against the possible saving in income tax and estate duty at a later stage. It is also clear that most assets owned by the trust are tax neutral, whilst many of the amendments under discussion deal with the taxability of trust income. The quantitative considerations underlying the use of the trust as part of the estate plan, remain unchanged. The research concludes by providing a framework of quantitative and qualitative criteria that can be used by an estate planner to determine whether it will be advantageous to transfer an asset to the trust to achieve the objectives of the estate plan.
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An analysis of the compliance approach used by revenue authorities with specific reference to case selection and risk profiling
- Authors: Nel, M J
- Date: 2005
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:878 , http://hdl.handle.net/10962/d1001632
- Description: The vision of probably all revenue authorities is to promote compliance with the provisions of the taxation laws and to ensure responsible enforcement by the revenue authorities, thereby contributing to the economic well being of the country. As with virtually all revenue authorities the South African Revenue Services has to a large extent implemented the self-assessment approach to tax assessments. Because this system depends on this process of selfassessment, an effective risk-based audit approach is required to ensure that tax compliance and responsible enforcement is adhered to. An effective case selection methodology is required for revenue authorities to make informed choices on how best to direct their activities in order to address areas of greatest risk. Given these imperatives, the purpose of this study is to examine the case selection methodologies used by certain revenue authorities, including the South African Revenue Services, and to focus on the key elements of case selection: the use of computerised database systems, industry profiles, third party data and the role of the risk profiler. The results of the study indicate that the case selection methodology of the South African Revenue Services is lacking in some areas. Computerised risk analysis is limited to a certain classes of taxpayers and other aspects of concern are also highlighted in this study.
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Valuation of intellectual capital in South African companies: a comparative study of three valuation methods
- Authors: Maree, Kevin W
- Date: 2002
- Subjects: Accounting
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:877 , http://hdl.handle.net/10962/d1001631
- Description: This study discusses three valuation methods for intellectual capital and considers two of these (Tobin’s “q” and CIV) as suitable valuation methods.
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