The South African income tax implications of transactions entered into to earn points for a Broad- Based Black Economic Empowerment scorecard, with reference to a selection of structures
- Authors: Jaga, Praksha
- Date: 2021-04
- Subjects: Black Economic Empowerment (Program : South Africa) , South Africa. Income Tax Act, 1962 , Income tax -- Law and legislation -- South Africa , Spendings tax -- South Africa , Tax deductions -- South Africa
- Language: English
- Type: thesis , text , Masters , MCom
- Identifier: http://hdl.handle.net/10962/177306 , vital:42808
- Description: This thesis discussed the South African income tax implications, in terms of the Income Tax Act, No. 58 of 1962, arising from complying with Broad-Based Black Economic Empowerment requirements, and related principles established in case law. Various structures and transactions entered into for the purposes of earning points for the B-BBEE scorecard were identified. In the assessment of the deductibility of B-BBEE expenditure in terms of the preamble to section 11, section 11(a) and section 23(g) of the Act, it was highlighted that, in the South African economic environment, B-BBEE compliance represents a competitive advantage for entities. In addition, many South African organisations are required to comply with B-BBEE requirements for legal and regulatory purposes. The analysis of the deductibility of B-BBEE expenditure revealed that taxpayers that incur this expenditure would be carrying on a trade or commencing to do so. It was also concluded that B-BBEE expenditure is incurred in the production of income and would generally not be capital in nature, except in certain circumstances, in which case the Act provides certain allowances. Any deduction will only be allowed in the year of assessment in which the expenditure is actually incurred, or when the taxpayer incurs an unconditional legal obligation. This thesis explored several alternatives to achieve the requirements of the ownership element of B-BBEE and highlighted the income tax implications that arise because of these structures. It was also observed that there are a number of incentives in the Act that could be beneficial to taxpayers seeking to earn points for the remaining elements of the B-BBEE scorecard. A legal interpretive approach, in particular a doctrinal research methodology, was adopted in carrying out this research. This research concluded that the Act facilitates most of the B-BBEE transactions and structures, but due to the complex and sometimes uncertain nature of the tax consequences of B-BBEE transactions and structures, there is a need for further guidance in this area of tax law. , Thesis (MCom) -- Faculty of Commerce, Accounting, 2021
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A critical analysis of the deductibility of bad debts for income tax purposes
- Authors: Naidu, Aveshni
- Date: 2018
- Subjects: Collecting of accounts -- South Africa , Tax deductions -- South Africa , South Africa. Income Tax Act, 1962
- Language: English
- Type: text , Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/61712 , vital:28051
- Description: The objective of this thesis was to critically analyse the deductibility of bad debts for income tax purposes. This was achieved by applying a doctrinal research methodology to the data, which consisted of local and international legislation and case law, as well as other relevant writings. In setting out to achieve this primary objective, this thesis addressed certain subsidiary goals. The requirements of section 11 (i) of the South African Income Tax Act that provides for the deduction of bad debts were examined with reference to local case law, together with case law from selected international jurisdictions. To clarify the requirement of section 11 (i) that a debt must have become bad, this thesis set out to ascribe a meaning to the term “bad debt” which is currently not defined in the South African Income Tax Act and to ascertain the principles applicable in determining when a debt will be regarded as having become bad. The research also addressed the timing in relation to the identification of a debt as bad, as well as other commercial considerations. This research concluded that there is a need for further guidance in this area and provided brief recommendations that could provide more certainty in relation to the deductibility of bad debts.
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An analysis, from a South African case law perspective, of the deductibility of losses due to embezzlement, fraud, theft, damages and compensation
- Authors: Jachi, Adelaide Gamuchirai
- Date: 2018
- Subjects: South Africa. Income Tax Act, 1962 , Tax deductions -- South Africa , Taxation -- Law and legislation -- South Africa , Tax courts -- South Africa , Tax administration and procedure -- South Africa , Tax accounting -- South Africa , Income tax deductions for losses -- South Africa
- Language: English
- Type: text , Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/60855 , vital:27846
- Description: When calculating the income tax payable for a year of assessment, a taxpayer deducts from his or her or its income, allowable deductions in terms of the preamble to section 11 and section 11(a) as read with section 23(g) of the Income Tax Act, 58 of 1962. Amongst the expenditure and losses incurred by a taxpayer during a year of assessment, a claim may be sought for the deduction of losses incurred due to embezzlement, fraud and theft as well as damages and compensation. The requirements of the preamble and section 11(a) include the requirement that expenditure and losses must be incurred “in the production of the income”. Losses incurred due to defalcations, as well as expenditure on damages and compensation must satisfy this requirement to be allowed as deductions. The objective of the research was to analyse the judicial decisions dealing with “in the production of the income” in granting a deduction for income tax purposes in cases dealing with embezzlement, fraud and theft, and damages and compensation, to establish why the courts grant or disallow the deduction of expenditure and losses. A doctrinal research methodology was applied to the research. The provisions of the Income Tax Act, relevant case law relating to embezzlement, fraud and theft, and damages and compensation, and the contributions of the revenue authority and tax experts in articles of accredited journals, textbooks and other writings were analysed. The major conclusions drawn from the research were that losses due to defalcations are regarded as having been incurred “in the production of the income” if the taxpayer discharges the onus of proof that the risk of the act leading to misappropriation is an incidental risk of the business. Expenditure on damages and compensation is deductible provided the expense is attached to the performance of a business operation bona fide performed for the purpose of earning income and the expense is so closely connected with the business operation as to be regarded as part of the cost of performing it. Where negligence is attached to an expense or loss, the South African courts have held that negligence does not increase the likelihood of disallowing an expense or loss as not having been incurred “in the production of the income”.
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Funding higher education and training in South Africa: a comparative study of tax incentive measures, in conjunction with a dedicated tax
- Authors: Holm, Darryn
- Date: 2018
- Subjects: Education, Higher -- Finance , Education, Higher -- South Africa , Tax incentives -- Law and legislation -- South Africa , Student aid -- South Africa , Universities and Colleges -- Taxation -- Law and legislation -- South Africa , South Africa. Income Tax Act, 1962
- Language: English
- Type: text , Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/59445 , vital:27606
- Description: Higher education and training in South Africa in the post-Apartheid era has never been more volatile than it is currently, some two decades into democracy. Despite the many advances and achievements of higher education, the student protests of 2015 and 2016 have given expression to underlying fault-lines, including increasing student expectations and frustrations with regard to access and funding. This research was undertaken to document the underlying historical issues and models pertaining to funding within the higher education and training sector as well as the existing higher education and training taxation policies and incentives enacted in South Africa and selected international jurisdictions. This was done with a view to providing a framework for higher education and training tax policy formation in South Africa to assist in meeting its higher education and training “access and affordability” targets as set out in the National Plan on Higher Education and the Higher Education White Paper, while at the same time not hindering economic growth. A doctrinal research methodology was adopted in this study as it mainly analysed and interpreted legislation and policy documents and therefore the approach was qualitative in nature. An extensive literature survey was done in order to document the various internationally selected legislated higher education and training tax policies and incentives. The literature indicated that there are widespread funding perspectives and initiates, and that international tax policies enacted with the aim of ensuring that higher education and training is more accessible and affordable to the public, is stable and effective in certain jurisdictions. It is submitted that while a higher education dedicated tax may not be sufficiently effective in South Africa, a combination of broad-based tax incentives will help to promote the change to a more affordable and stable higher education funding system, whilst not preventing growth through sustainable development.
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The deductibility of damages and associated legal expenses for the purposes of determining taxable income in South Africa
- Authors: Madovi, Ezekiel
- Date: 2017
- Subjects: Income tax -- Law and legislation -- South Africa , Damages -- Taxation -- South Africa , South Africa. Income Tax Act, 1962
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/4344 , vital:20650
- Description: The deduction of damages and the associated legal costs must satisfy the requirements of the preamble to section 11 and section 11(a) of the Income Tax Act 58 of 1962, read with section 23(g) (referred to as the general deduction formula). This research examined under what circumstances a payer of damages and the associated legal costs would be able to claim a deduction from taxable income. This research also considered whether or not the issue of fault is a relevant consideration in determining whether a deduction should be allowed. In some cases the courts appear to have disallowed a deduction if the expenditure or loss was incurred as a result of a negligent or unlawful act. In other instances the courts have allowed the deduction of damages despite the expenditure or loss having been incurred as a result of a negligent or unlawful act. The research concludes that negligence is not a relevant consideration in the deduction of damages and the associated legal costs. In order to secure a claim for damages the taxpayer must prove that the expenditure was incurred in the production of income and it was expended for the purposes of trade. Associated legal costs are only deductible if the damages satisfy the requirements of section 11(c).
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The illegal diamond trade in South Africa and its tax consequences
- Authors: Kumm-Schmidt, Megan
- Date: 2017
- Subjects: Diamond industry and trade -- South Africa , Diamond industry and trade -- Corrupt practices -- South Africa , Diamond industry and trade -- South Africa -- Taxation , Conflict diamonds -- South Africa , Income tax -- Law and legislation -- South Africa , Tax evasion -- South Africa , South Africa. Income Tax Act, 1962 , South Africa. Prevention and Combating of Corrupt Activities Act, 2004 , South Africa. Tax Administration Act, 2011 , South Africa. ǂt Value-Added Tax Act, 1991 , Kimberley Process Certification Scheme
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/4389 , vital:20656
- Description: The object of the research was to discuss the taxability of the illegal diamond trade in South Africa and to identify the consequences of not declaring income obtained from the illegal diamond trade to the South African Revenue Services. The research was conducted by means of a critical analysis of documentary data with specific reference to the Income Tax Act, the Value-Added Tax (VAT) Act, the Tax Administration Act and relevant case law. The Income Tax Act and the Value-Added Tax Act were referred to in relation to the tax consequences of the illegal diamond trade and the Tax Administration Act was used to determine the consequences of not declaring income to the South African Revenue Services. It was established that amounts received from the sale of illegal diamonds are to be included in the taxpayer's gross income, whilst in relation to income received from diamond theft it was not as clear. The MP Finance Group case held that the nature of the receipt and the way in which the transaction occurred in each individual situation will be the deciding factor as to whether or not the stolen diamonds will be taxable in the hands of the thief. The buying and selling of "blood" or stolen diamonds can amount to a trade. As there have been no definitive case decisions in South Africa, it remains unclear whether expenses relating to an illegal trade are deductible. Assuming that expenses relating to an illegal trade are deductible, the provisions of section 11(a) will apply to expenses incurred as a result of dealing in illegal diamonds and it was concluded that qualifying expenses will be deductible. A taxpayer buying and selling "blood" or stolen diamonds is required to register for VAT if sales exceed the threshold and would be required to account for VAT on these transactions. If the taxpayer does not declare the income for income tax purposes or register for and pay VAT to the South African Revenue Services from either the sale of illegal diamonds or the theft of diamonds, this will amount to tax evasion and the dealer will be subject to penalties and even imprisonment
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