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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An historical analysis of the development of a company as a single enterprise and the impact on group company taxation
- Authors: Els, Tania
- Date: 2020
- Subjects: Taxation -- South Africa , Taxation -- History , Taxation -- Law and legislation -- South Africa , Business enterprises -- South Africa , Business enterprises -- Taxation -- Law and legislation -- South Africa , Corporation law -- South Africa , South Africa. Income Tax Act, 1962 , South Africa. Companies Act, 2008 , Separate legal personality , Group taxation
- Language: English
- Type: text , Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/154241 , vital:39628
- Description: The company is considered a separate legal entity in both legislation and jurisprudence. The “veil” separating the company and its shareholders is a doctrine entrenched in company law that originated centuries ago. The doctrine is based on conditions that existed during a period that commenced with trading forms less complicated than the corporate groups found today. Trading forms known as guilds could be traced back to 1087, which gradually developed into regulated companies and, in the last century, into the joint-stock company form. The modern era has seen the development of groups of companies carrying on business as economic units. Company law, in regulating business forms, has failed to acknowledge the corporate group as a new business entity. The main purpose of this research was to analyse the origins of the separate legal personality of a company and its relevance for the present corporate group structures. The research aimed to understand company law and jurisprudence in South Africa in relation to the legal personality of a company and a corporate group. The final objective of this reform-orientated doctrinal research thesis was to provide clarity on the need to consider granting separate legal identity to corporate groups in recognition of their economic unity. A historically contextualised analysis was carried out on the development of trading through unregulated forms of businesses to the creation of the company as a regulated entity. The development of the legal persona of a company in legislation as well as jurisprudence was critically analysed in on the context of companies within a corporate group. A case study of a South African corporate group was used to highlight the different characteristics of the companies doing business in the form of a corporate group. The thesis concluded by recommending that legal personality should be extended to include a corporate group in order to facilitate the introduction of a group taxation regime.
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An investigation into the tax consequences for individuals performing work abroad
- Authors: De Ponte, Celeste Lidia
- Date: 2020
- Subjects: South Africa. Income Tax Act, 1962 , Income tax -- Law and legislation -- South Africa , Double taxation -- South Africa , International business enterprises -- Taxation -- Law and legislation -- South Africa
- Language: English
- Type: text , Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/141235 , vital:37955
- Description: This thesis considered the income tax implications for South African tax resident individuals who render services abroad. The research included an analysis of the impact that the amendment to the section 10(1)(o)(ii) exemption has on individuals rendering services abroad and companies who send their employees abroad. In doing so, this thesis sought to highlight the key factors for consideration, for both employers and individuals. A doctrinal methodology was applied, and an analysis was carried out of relevant tax legislation, commentary of experts in the field of tax law and the relevant case law of South Africa, the United Kingdom (UK), Australia and the United States of America (US), where relevant. It was established that residency is key to determining the tax liability of a person and has an impact on the relief mechanisms that are available where double taxation arises. In addition, the amendment to section 10(1)(o)(ii) was considered. It was concluded that when rendering services abroad, both the employer and employee need to consider the tax consequences that may arise and highlights the factors which may be relevant. The thesis illustrates that, whilst the R1 million exemption alleviates the double tax consequences to a certain extent, further guidance is needed as to how the R1 million threshold will be calculated.
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Statutory mergers as contemplated in the Companies Act, 2008: the applicability of the corporate rules contained in section 44 of the Income Tax Act, 1962
- Authors: Shama, Natalie Anne
- Date: 2020
- Subjects: South Africa. Companies Act, 2008 , South Africa. Income Tax Act, 1962 , Consolidation and merger of corporations -- South Africa , Corporation law -- South Africa
- Language: English
- Type: text , Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/144767 , vital:38377
- Description: The purpose of this research is to determine the extent to which a statutory merger in terms of the Companies Act, 2008, may be accommodated by the provisions of an amalgamation transaction in terms of section 44 of the Income Tax Act, 1962. The research method adopted is a legal interpretative research approach. South African company law underwent significant reform with the introduction of the Companies Act, 2008. One of the fundamental areas for reform was the need for a mechanism to appropriately accommodate a corporate merger, and thus, what is referred to as a statutory merger was introduced into South African company law. What is notable is that the statutory merger has been crafted to apply across a variety of circumstances that may arise in commerce, thus offering wide versatility. On the other hand, the tax relief afforded in terms of the corporate roll-over provisions in the Income Tax Act is designed to facilitate corporate transactions on a tax neutral basis, whilst balancing the concessions these measures introduce and the potential for tax avoidance. Consequently, the tax relief applicable to an amalgamation transaction will only apply within strictly prescribed parameters. The research shows an ongoing effort by National Treasury to amend the provisions of the amalgamation transaction to better accommodate a statutory merger, but highlights that there are nevertheless certain conflicting purposes (policy) for each piece of legislation. For these reasons, the focus and parameters of a statutory merger and amalgamation transaction do not align perfectly. The key areas of inconsistency identified in this research are threefold, namely (i) the creation of a new company as a consequence of a statutory merger is not accommodated in an amalgamation transaction; (ii) the process of compensating the shareholders of the amalgamated company in an amalgamation transaction is not clearly contemplated in the statutory merger provisions; and (iii) mergers between a company and its shareholder currently present numerous complexities from both a company law and taxation perspective. The research concludes that the flexibility afforded under the statutory merger is largely minimised for parties who wish to simultaneously enjoy the tax relief afforded under an amalgamation transaction.
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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 tax consequences of income and expenses arising from illegal activities
- Authors: Singh, Shalona
- Date: 2018
- Subjects: South Africa. Income Tax Act, 1962 , Income tax South Africa , Tax evasion South Africa , Taxation Law and legislation South Africa Criminal provisions , Crime Economic aspects South Africa
- Language: English
- Type: text , Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/59456 , vital:27609
- Description: Income tax in South Africa is levied in terms of the Income Tax Act, 58 of 1962 (the South African Income Tax Act) 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 South African Income Tax Act provides no guidance with regard to the taxation of income and expenditure from illegal activities. In this mini thesis, case law and legislation is reviewed in an attempt to provide clarity on the tax consequences of income and expenses arising from illegal activities. An overview is provided of the taxation of income and expenditure in respect of illegal activities in the United States of America, Australia and New Zealand. Similarities are found between the American, Australian, New Zealand and South African tax regimes in relation to the taxation of income earned from illegal activities, but there appears to be more certainty in America, Australia and New Zealand with regard to the deduction of expenses arising from illegal activities. In South Africa, taxpayers earning income from ongoing illegal activities will, in principle, comply with the definition of “trade” as defined in section 1 of the South African Income Tax Act. However, this is contrary to the view of the South African Revenue Service that illegal activities do not meet the definition of “trade”, a viewpoint that may not hold if challenged in court. Recommendations are made for the amendment of the South African Income Tax Act to specifically provide for the inclusion in “gross income” of income from illegal activities and to prohibit the deduction of expenditure arising from illegal activities.
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