A comparative analysis of the new behaviours and terms introduced in the understatement penalty table in section 223 of the Tax Administration Act
- Authors: Doolan, Kim
- Date: 2017
- Subjects: South Africa. Tax Administration Act, 2011 , Taxation -- South Africa , Taxation -- Law and legislation -- South Africa , Tax administration and procedure -- Law and legislation -- South Africa , Tax penalties -- Law and legislation -- South Africa , Taxpayer compliance -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/5802 , vital:20977
- Description: The Tax Administration Act became effective on the 1 October 2012 and in Chapter 16 introduced the understatement penalty regime which replaced section 76 of the Income Tax Act. The understatement penalty is calculated by applying a percentage in terms of the table included in section 223 of the Tax Administration Act to the shortfall in tax giving rise to the imposition of the penalty. There are five behaviours reflected in the understatement penalty table in section 223, namely, “substantial understatement”, “reasonable care not taken in completing return”, “no reasonable grounds for tax position taken”, “gross negligence” and “intentional tax evasion”. “Substantial understatement” is the only behaviour defined in the Tax Administration Act. Section 222(1) of the Tax Administration Act requires SARS to impose the penalty reflected in the table in the event of an “understatement”, unless the “understatement” results from a “bona fide inadvertent error”. The term “bona fide inadvertent error” is not defined in the Tax Administration Act; neither is the term “obstructive”. The Memorandum on the Objects of the Tax Administration Laws Amendment Bill confirmed that guidance would be developed in this regard for the use of taxpayers and SARS officials. This guidance has not yet been released. Media reports express the view that the lack of definition of the behaviours is problematic for both SARS and taxpayers as the table is new and there is still room for interpretation and understanding of the meaning of each of the behaviours. The primary goal of this study was is to obtain a better understanding of the meaning of the new behaviours and terms introduced in the understatement penalty table. In addressing this main goal, the penalty tables and behaviours in legislation in New Zealand were compared to South Africa’s understatement penalty. The similarities and differences between the understatement penalty imposed in terms of Chapter 16 of the Tax Administration Act and the additional tax previously imposed in terms of section 76 of the Income Tax Act were also discussed to determine whether this would be of assistance in enabling a better understanding of the meaning of the behaviours and terms in section 223. Guidance on the interpretation of the various behaviours and terms was developed and a definition was proposed for the meaning of “bona fide inadvertent error” and “obstructive” to assist in the objective and consistent application of the understatement penalty table in relation to each shortfall identified. The proposed definition for “bona fide inadvertent error” is as follows: “An honest mistake made or simple oversight, which the taxpayer was not aware of, despite taking reasonable care and displaying a prudent attitude while making a genuine attempt to comply with all applicable tax obligations.” The definition for “obstructive” is proposed as: “Deliberately interfering with, causing difficulties (impeding) or delays in, or preventing the progress of a SARS audit or review.”
- Full Text:
- Date Issued: 2017
- Authors: Doolan, Kim
- Date: 2017
- Subjects: South Africa. Tax Administration Act, 2011 , Taxation -- South Africa , Taxation -- Law and legislation -- South Africa , Tax administration and procedure -- Law and legislation -- South Africa , Tax penalties -- Law and legislation -- South Africa , Taxpayer compliance -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/5802 , vital:20977
- Description: The Tax Administration Act became effective on the 1 October 2012 and in Chapter 16 introduced the understatement penalty regime which replaced section 76 of the Income Tax Act. The understatement penalty is calculated by applying a percentage in terms of the table included in section 223 of the Tax Administration Act to the shortfall in tax giving rise to the imposition of the penalty. There are five behaviours reflected in the understatement penalty table in section 223, namely, “substantial understatement”, “reasonable care not taken in completing return”, “no reasonable grounds for tax position taken”, “gross negligence” and “intentional tax evasion”. “Substantial understatement” is the only behaviour defined in the Tax Administration Act. Section 222(1) of the Tax Administration Act requires SARS to impose the penalty reflected in the table in the event of an “understatement”, unless the “understatement” results from a “bona fide inadvertent error”. The term “bona fide inadvertent error” is not defined in the Tax Administration Act; neither is the term “obstructive”. The Memorandum on the Objects of the Tax Administration Laws Amendment Bill confirmed that guidance would be developed in this regard for the use of taxpayers and SARS officials. This guidance has not yet been released. Media reports express the view that the lack of definition of the behaviours is problematic for both SARS and taxpayers as the table is new and there is still room for interpretation and understanding of the meaning of each of the behaviours. The primary goal of this study was is to obtain a better understanding of the meaning of the new behaviours and terms introduced in the understatement penalty table. In addressing this main goal, the penalty tables and behaviours in legislation in New Zealand were compared to South Africa’s understatement penalty. The similarities and differences between the understatement penalty imposed in terms of Chapter 16 of the Tax Administration Act and the additional tax previously imposed in terms of section 76 of the Income Tax Act were also discussed to determine whether this would be of assistance in enabling a better understanding of the meaning of the behaviours and terms in section 223. Guidance on the interpretation of the various behaviours and terms was developed and a definition was proposed for the meaning of “bona fide inadvertent error” and “obstructive” to assist in the objective and consistent application of the understatement penalty table in relation to each shortfall identified. The proposed definition for “bona fide inadvertent error” is as follows: “An honest mistake made or simple oversight, which the taxpayer was not aware of, despite taking reasonable care and displaying a prudent attitude while making a genuine attempt to comply with all applicable tax obligations.” The definition for “obstructive” is proposed as: “Deliberately interfering with, causing difficulties (impeding) or delays in, or preventing the progress of a SARS audit or review.”
- Full Text:
- Date Issued: 2017
A critical evaluation of inter-jurisdictional rules in the South African value-added tax system
- Authors: Schneider, Ferdinand Dirk
- Date: 2017
- Language: English
- Type: Thesis , Doctoral , PhD
- Identifier: http://hdl.handle.net/10962/7971 , vital:21329
- Description: This study analysed the current inter-jurisdictional rules in the South African Value-Added Tax (VAT) system, identified shortcomings, and proposed legislative amendments or additions to address these shortcomings. The research was conducted within an interpretative post positivism paradigm, applied a qualitative research methodology, and a doctrinal research method. A detailed review of the literature was conducted to establish the theoretical basis of a good tax system and the theory underpinning indirect and consumption taxation. The literature review also included an in-depth analysis of the South African VAT system and its treatment of resident and non-resident businesses with a South African physical or economic reach, and its treatment of local and cross-border transactions, including imported services. The literature review also considered the international VAT treatment of these transactions. To obtain a wider range of expert opinions regarding shortcomings in inter-jurisdictional rules in the South African VAT system, data was collected through structured interviews with South African and global VAT and indirect tax experts, using a questionnaire that was specifically designed for this purpose. This study proposed amendments and additions to the VAT Act, dealing with the VAT registration of non-resident suppliers; addressing various issues relating to the interjurisdictional VAT rate; proposing measures in connection with imported services; and legislating the intention of the legislator to tax final utilisation or consumption. The study finally recommended the introduction of a general place of supply rule linked to residency; specific place of supply rules for electronic, broadcasting, and telecommunication services; and zero rating provisions for electronic, broadcasting, and telecommunication services provided to non-resident suppliers by resident suppliers for services initiated outside South Africa.
- Full Text:
- Date Issued: 2017
- Authors: Schneider, Ferdinand Dirk
- Date: 2017
- Language: English
- Type: Thesis , Doctoral , PhD
- Identifier: http://hdl.handle.net/10962/7971 , vital:21329
- Description: This study analysed the current inter-jurisdictional rules in the South African Value-Added Tax (VAT) system, identified shortcomings, and proposed legislative amendments or additions to address these shortcomings. The research was conducted within an interpretative post positivism paradigm, applied a qualitative research methodology, and a doctrinal research method. A detailed review of the literature was conducted to establish the theoretical basis of a good tax system and the theory underpinning indirect and consumption taxation. The literature review also included an in-depth analysis of the South African VAT system and its treatment of resident and non-resident businesses with a South African physical or economic reach, and its treatment of local and cross-border transactions, including imported services. The literature review also considered the international VAT treatment of these transactions. To obtain a wider range of expert opinions regarding shortcomings in inter-jurisdictional rules in the South African VAT system, data was collected through structured interviews with South African and global VAT and indirect tax experts, using a questionnaire that was specifically designed for this purpose. This study proposed amendments and additions to the VAT Act, dealing with the VAT registration of non-resident suppliers; addressing various issues relating to the interjurisdictional VAT rate; proposing measures in connection with imported services; and legislating the intention of the legislator to tax final utilisation or consumption. The study finally recommended the introduction of a general place of supply rule linked to residency; specific place of supply rules for electronic, broadcasting, and telecommunication services; and zero rating provisions for electronic, broadcasting, and telecommunication services provided to non-resident suppliers by resident suppliers for services initiated outside South Africa.
- Full Text:
- Date Issued: 2017
An analysis on role of judges in interpreting tax legislation
- Authors: Chanhuwa, Mildred Kudzanai
- Date: 2017
- Subjects: Taxation -- Law and legislation -- South Africa , Law -- South Africa , Judicial discretion -- South Africa , Judicial opinion -- South Africa , Judges -- Attitudes -- South Africa , South Africa. Constitution of the Republic of South Africa, 1996
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/4289 , vital:20644
- Description: This thesis focusses on the role of judges as interpreters of tax legislation. It examines the role of judges by analysing how the perceptions of judges can impact on how they interpret legislation. It also analyses various other factors that play a role when judges interpret legislation, in an effort to answer the question to what extent do philosophical theories and interpretative approaches explain the role of judges as interpreters? Jurisprudential theories such as the natural law theory, positivist theories, and American realist theories are used to analyse how judges interpret and how theorists think judges should play their interpretational role. It is noted that in pre-constitutional South Africa the courts followed a positivist paradigm; as a result, the judges used a strict literal approach to interpretation. The new Constitution brought a change in the jurisprudential paradigm accepted in South Africa and has transformed how judges perceive and carry out their role as interpreters of legislation. Judges have now adopted the purposive value-laden approach as authoritative. As custodians of the Constitution, judges should interpret provisions against the values imposed by it. The purposive value-laden interpretational approach allows judges to take into account more considerations and to weigh a provision against the constitutional values. Other issues discussed pertain to how institutional guidelines such as the doctrine of precedent and separation of powers, to a lesser extent, play a role in how judges interpret the law. It is demonstrated that the doctrine of precedent does not limit the role of judges but rather contributes to maintaining certainty, predictability and coherence in the legal system. It is also noted that judicial discretion is the mechanism by which judges use extra-legal factors such as public policy and moral considerations to assist in interpreting legislation.
- Full Text:
- Date Issued: 2017
- Authors: Chanhuwa, Mildred Kudzanai
- Date: 2017
- Subjects: Taxation -- Law and legislation -- South Africa , Law -- South Africa , Judicial discretion -- South Africa , Judicial opinion -- South Africa , Judges -- Attitudes -- South Africa , South Africa. Constitution of the Republic of South Africa, 1996
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/4289 , vital:20644
- Description: This thesis focusses on the role of judges as interpreters of tax legislation. It examines the role of judges by analysing how the perceptions of judges can impact on how they interpret legislation. It also analyses various other factors that play a role when judges interpret legislation, in an effort to answer the question to what extent do philosophical theories and interpretative approaches explain the role of judges as interpreters? Jurisprudential theories such as the natural law theory, positivist theories, and American realist theories are used to analyse how judges interpret and how theorists think judges should play their interpretational role. It is noted that in pre-constitutional South Africa the courts followed a positivist paradigm; as a result, the judges used a strict literal approach to interpretation. The new Constitution brought a change in the jurisprudential paradigm accepted in South Africa and has transformed how judges perceive and carry out their role as interpreters of legislation. Judges have now adopted the purposive value-laden approach as authoritative. As custodians of the Constitution, judges should interpret provisions against the values imposed by it. The purposive value-laden interpretational approach allows judges to take into account more considerations and to weigh a provision against the constitutional values. Other issues discussed pertain to how institutional guidelines such as the doctrine of precedent and separation of powers, to a lesser extent, play a role in how judges interpret the law. It is demonstrated that the doctrine of precedent does not limit the role of judges but rather contributes to maintaining certainty, predictability and coherence in the legal system. It is also noted that judicial discretion is the mechanism by which judges use extra-legal factors such as public policy and moral considerations to assist in interpreting legislation.
- Full Text:
- Date Issued: 2017
An historical perspective on the evolution of the United States internal revenue code from 1981-2001
- Authors: Johnson, Ryan A
- Date: 2017
- Subjects: United States -- Economic conditions -- 1981-2001 , Income tax -- Law and legislation -- United States , Internal revenue law -- United States , Taxtion -- Law and legislation -- United States , United States. Economic Recovery Tax Act of 1981 , United States. Tax Reform Act of 1986 , United States. Omnibus Budget Reconciliation Act of 1993 , United States. Economic Growth and Tax Relief Reconciliation Act of 2001
- Language: English
- Type: Thesis , Doctoral , PhD
- Identifier: http://hdl.handle.net/10962/7384 , vital:21251
- Description: The purpose of this study was to identify and analyse in an historical context the major changes to the United States’ Internal Revenue Code during the period 1981-2001. This qualitative study relied on historical and legal interpretative approaches to better understand the political forces, personalities, and interactions that helped shape the legislative changes during this time period. The study focused on deep analysis of primary sources that best illuminated the latent narrative of four major tax actions: The Economic Recovery Tax Act of 1981, the Tax Reform Act of 1986, The Omnibus Budget Reconciliation Act of 1993, and The Economic Growth and Tax Relief Reconciliation Act of 2001. Archives, periodicals, and political rhetoric were examined in order to help shape the historical narrative. In addition, this study sought to identify major trends and paradigm shifts in the way United States tax policy was formed during the time period examined. The study identified several key trends that emerged in United States’ tax policy during this period: the use of budget deficits as political tools; factors associated with accomplishing tax reform; gaps between political rhetoric of individual politicians and their political action; and the virtual disappearance of a political middle ground in United States budget politics. The study concluded by noting the economic and political significance of budget deficits and stressing the need for fundamental changes in voter responsibility in helping achieve lasting, broad-based tax reform and budgetary responsibility in the United States.
- Full Text:
- Date Issued: 2017
An historical perspective on the evolution of the United States internal revenue code from 1981-2001
- Authors: Johnson, Ryan A
- Date: 2017
- Subjects: United States -- Economic conditions -- 1981-2001 , Income tax -- Law and legislation -- United States , Internal revenue law -- United States , Taxtion -- Law and legislation -- United States , United States. Economic Recovery Tax Act of 1981 , United States. Tax Reform Act of 1986 , United States. Omnibus Budget Reconciliation Act of 1993 , United States. Economic Growth and Tax Relief Reconciliation Act of 2001
- Language: English
- Type: Thesis , Doctoral , PhD
- Identifier: http://hdl.handle.net/10962/7384 , vital:21251
- Description: The purpose of this study was to identify and analyse in an historical context the major changes to the United States’ Internal Revenue Code during the period 1981-2001. This qualitative study relied on historical and legal interpretative approaches to better understand the political forces, personalities, and interactions that helped shape the legislative changes during this time period. The study focused on deep analysis of primary sources that best illuminated the latent narrative of four major tax actions: The Economic Recovery Tax Act of 1981, the Tax Reform Act of 1986, The Omnibus Budget Reconciliation Act of 1993, and The Economic Growth and Tax Relief Reconciliation Act of 2001. Archives, periodicals, and political rhetoric were examined in order to help shape the historical narrative. In addition, this study sought to identify major trends and paradigm shifts in the way United States tax policy was formed during the time period examined. The study identified several key trends that emerged in United States’ tax policy during this period: the use of budget deficits as political tools; factors associated with accomplishing tax reform; gaps between political rhetoric of individual politicians and their political action; and the virtual disappearance of a political middle ground in United States budget politics. The study concluded by noting the economic and political significance of budget deficits and stressing the need for fundamental changes in voter responsibility in helping achieve lasting, broad-based tax reform and budgetary responsibility in the United States.
- Full Text:
- Date Issued: 2017
Garnishee orders as a tax collection tool: a critical review of the South African and Zimbabwean models
- Authors: Nzombe, Kudzanayi
- Date: 2017
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/8082 , vital:21352
- Description: Taxation statues of most jurisdictions contain provisions that deal with defaulting taxpayers. The taxation statutes of Zimbabwe and South Africa have employed the concept of garnishee orders as a method of recovering tax. This method is codified in the respective taxation statutes under the guise of “third party appointments”, or simply “appointment of an agent”. This method is very convenient and expeditious for the tax collection authorities, namely, the Zimbabwe Revenue Authority (ZIMRA) and the South Africa Revenue Service (SARS). Other jurisdictions have also employed this method, with varying degrees of invasiveness into the taxpayers’ constitutional rights. The concept of garnishee orders can have negative constitutional implications for the taxpayers in both Zimbabwe and South Africa. In Zimbabwe, compared to South Africa, the tax collection field is not as developed in terms of jurisprudence and the legislation. There are lessons that Zimbabwe could learn from South Africa, considering that the latter has experienced more than two decades of constitutional democracy. Therefore, in order to identify areas for development, the two jurisdictions are critically reviewed, with particular attention to the legislative provisions and case law dealing with garnishee orders in the tax collection context. Approaches employed by other countries in relation to similar concepts and provisions are also analysed. The lessons learned from this analysis could suggest a less invasive method of recovering tax from defaulting taxpayers and an approach to be followed by the tax authorities, ZIMRA and SARS that would allow them to fulfil their responsibilities and mandate with taxpayer-friendly measures.
- Full Text:
- Date Issued: 2017
- Authors: Nzombe, Kudzanayi
- Date: 2017
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/8082 , vital:21352
- Description: Taxation statues of most jurisdictions contain provisions that deal with defaulting taxpayers. The taxation statutes of Zimbabwe and South Africa have employed the concept of garnishee orders as a method of recovering tax. This method is codified in the respective taxation statutes under the guise of “third party appointments”, or simply “appointment of an agent”. This method is very convenient and expeditious for the tax collection authorities, namely, the Zimbabwe Revenue Authority (ZIMRA) and the South Africa Revenue Service (SARS). Other jurisdictions have also employed this method, with varying degrees of invasiveness into the taxpayers’ constitutional rights. The concept of garnishee orders can have negative constitutional implications for the taxpayers in both Zimbabwe and South Africa. In Zimbabwe, compared to South Africa, the tax collection field is not as developed in terms of jurisprudence and the legislation. There are lessons that Zimbabwe could learn from South Africa, considering that the latter has experienced more than two decades of constitutional democracy. Therefore, in order to identify areas for development, the two jurisdictions are critically reviewed, with particular attention to the legislative provisions and case law dealing with garnishee orders in the tax collection context. Approaches employed by other countries in relation to similar concepts and provisions are also analysed. The lessons learned from this analysis could suggest a less invasive method of recovering tax from defaulting taxpayers and an approach to be followed by the tax authorities, ZIMRA and SARS that would allow them to fulfil their responsibilities and mandate with taxpayer-friendly measures.
- Full Text:
- Date Issued: 2017
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
The taxation of illegal income in South Africa: the basis on which proceeds from a unilateral taking should be taxed
- Authors: Nyakanyanga, Kudzai Talent
- Date: 2017
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/5960 , vital:21002
- Description: In South Africa, income tax is levied in terms of the Income Tax Act, 58 of 1962, and the calculation of a taxpayer’s taxable income and ultimately the tax liability commences with considering what constitutes the taxpayer’s gross income. In terms of the definition of “gross income” a person can be taxed either on receipts or accruals. The definition makes no reference, however, to the legality of receipts or accruals. The main issue addressed in this thesis is the interpretation of the term “receipt” in relation to the proceeds from a unilateral taking (theft) and whether the concept of a receipt in relation to theft should be interpreted using the subjective approach used in MP Finance Group CC (In Liquidation) v C:SARS, or the objective approach. An interpretative research approach was used to provide clarity on the matter. The documentary data used for the research consists of South African tax legislation, case law, textbooks and journal articles. The thesis also analysed SARS’ view in Interpretation Note 80 that MP Finance Group CC (In Liquidation) v C:SARS is authority for a unilateral taking being a receipt, and the correctness of this viewpoint. A brief comparative analysis was done of the basis on which illegal income flowing from a unilateral taking is taxed in Australia, New Zealand and America. These countries have legislative provisions that specifically deal with how the proceeds from theft in the hands of a thief should be treated for tax purposes. The thesis concludes that, although the court in MP Finance Group CC (In Liquidation) v C:SARS shed some light on the issue of the taxability of income from illegal activities, the basis on which proceeds from theft may be taxed, as opposed to the basis on which proceeds from other illegal activities like fraud are taxed, remains a grey area in our law. The thesis recommends the introduction of a legislative provision in order to provide a more unified, consistent and effective approach when taxing all illegal income.
- Full Text:
- Date Issued: 2017
- Authors: Nyakanyanga, Kudzai Talent
- Date: 2017
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/5960 , vital:21002
- Description: In South Africa, income tax is levied in terms of the Income Tax Act, 58 of 1962, and the calculation of a taxpayer’s taxable income and ultimately the tax liability commences with considering what constitutes the taxpayer’s gross income. In terms of the definition of “gross income” a person can be taxed either on receipts or accruals. The definition makes no reference, however, to the legality of receipts or accruals. The main issue addressed in this thesis is the interpretation of the term “receipt” in relation to the proceeds from a unilateral taking (theft) and whether the concept of a receipt in relation to theft should be interpreted using the subjective approach used in MP Finance Group CC (In Liquidation) v C:SARS, or the objective approach. An interpretative research approach was used to provide clarity on the matter. The documentary data used for the research consists of South African tax legislation, case law, textbooks and journal articles. The thesis also analysed SARS’ view in Interpretation Note 80 that MP Finance Group CC (In Liquidation) v C:SARS is authority for a unilateral taking being a receipt, and the correctness of this viewpoint. A brief comparative analysis was done of the basis on which illegal income flowing from a unilateral taking is taxed in Australia, New Zealand and America. These countries have legislative provisions that specifically deal with how the proceeds from theft in the hands of a thief should be treated for tax purposes. The thesis concludes that, although the court in MP Finance Group CC (In Liquidation) v C:SARS shed some light on the issue of the taxability of income from illegal activities, the basis on which proceeds from theft may be taxed, as opposed to the basis on which proceeds from other illegal activities like fraud are taxed, remains a grey area in our law. The thesis recommends the introduction of a legislative provision in order to provide a more unified, consistent and effective approach when taxing all illegal income.
- Full Text:
- Date Issued: 2017
A critical analysis of the concept and extent of base erosion and profit shifting, and its impact on South Africa versus Australia
- Authors: Basnett, Robyn
- Date: 2016
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/4037 , vital:20592
- Description: Tax avoidance by multinational enterprises is the focus of much media and political scrutiny. It is also the subject of a major Organisation for Economic Co-operation and Development (OECD) project called Base Erosion and Profit Shifting (BEPS). The objective of this thesis was to gain a greater understanding of BEPS, particularly in a South African and Australian context, and to determine whether BEPS is as great a problem as the OECD portrays. A detailed analysis of the OECD BEPS Report and Action Plan was undertaken to understand what the term BEPS means. A review of current BEPS literature was then performed toassess the extent of BEPS. This was followed by a comparative analysis of South Africa and Australia, including a comparison of their tax systems and various economic indicators. It was found that there is no simple definition of BEPS. It encompasses the spectrum of international tax planning strategies used by multinational enterprises. Furthermore, these tax strategies are usually legal, which makes measuring the extent of BEPS conceptually difficult. Despite being legal, many observers believe that BEPS behaviour by multinational enterprises is ethically unacceptable. This thesis also discussed the ethics of tax avoidance, and argued that countries should assess BEPS with reference to the many benefits which multinationals bring to a country. The benefits of multinational enterprise activity are especially important to developing countries like South Africa. Despite similar tax systems, South Africa and Australia vary greatly in terms of their economic and social position. This thesis concluded that South Africa, as a developing country, is more likely than Australia to tolerate BEPS behaviour in order to maintain or even attract foreign investment. The OECD Action Plan calls for urgent internationally coordinated actions against BEPS. It appears, however, that much more research is needed on the nature and extent of BEPS before countries formulate their response. This thesis acknowledges that aggressive tax planning by multinational enterprises does exist, but suggests that countries approach BEPS, and any estimates of its extent, with a degree of caution.
- Full Text:
- Date Issued: 2016
- Authors: Basnett, Robyn
- Date: 2016
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/4037 , vital:20592
- Description: Tax avoidance by multinational enterprises is the focus of much media and political scrutiny. It is also the subject of a major Organisation for Economic Co-operation and Development (OECD) project called Base Erosion and Profit Shifting (BEPS). The objective of this thesis was to gain a greater understanding of BEPS, particularly in a South African and Australian context, and to determine whether BEPS is as great a problem as the OECD portrays. A detailed analysis of the OECD BEPS Report and Action Plan was undertaken to understand what the term BEPS means. A review of current BEPS literature was then performed toassess the extent of BEPS. This was followed by a comparative analysis of South Africa and Australia, including a comparison of their tax systems and various economic indicators. It was found that there is no simple definition of BEPS. It encompasses the spectrum of international tax planning strategies used by multinational enterprises. Furthermore, these tax strategies are usually legal, which makes measuring the extent of BEPS conceptually difficult. Despite being legal, many observers believe that BEPS behaviour by multinational enterprises is ethically unacceptable. This thesis also discussed the ethics of tax avoidance, and argued that countries should assess BEPS with reference to the many benefits which multinationals bring to a country. The benefits of multinational enterprise activity are especially important to developing countries like South Africa. Despite similar tax systems, South Africa and Australia vary greatly in terms of their economic and social position. This thesis concluded that South Africa, as a developing country, is more likely than Australia to tolerate BEPS behaviour in order to maintain or even attract foreign investment. The OECD Action Plan calls for urgent internationally coordinated actions against BEPS. It appears, however, that much more research is needed on the nature and extent of BEPS before countries formulate their response. This thesis acknowledges that aggressive tax planning by multinational enterprises does exist, but suggests that countries approach BEPS, and any estimates of its extent, with a degree of caution.
- Full Text:
- Date Issued: 2016
Financial characteristics of the nonprofit organisation: theory and evidence for the assessment of the financial condition of South African public universities
- Authors: Bunting, Mark Bevan
- Date: 2016
- Language: English
- Type: Thesis , Doctoral , PhD
- Identifier: vital:923 , http://hdl.handle.net/10962/d1021298 , http://orcid.org/0000-0002-3392-554X
- Description: In this thesis, an analytical framework is developed for the assessment of the financial condition of South African public universities. Foundational constructs of nonprofit economics are applied in the consideration of financial theories of nonprofit organisations in general, and public universities in particular. From this review, a number of hypotheses are developed. Each of these specifies a positive or negative association between a university's financial condition and a particular dimension of its assets, liabilities, equity, revenues, expenses and surplus. From the nonprofit financial analysis literature, ratios and indicators relevant to these hypotheses are selected. Audited data from the annual financial statements of the universities for the seven year period 2007 to 2013 are substantially transformed in mitigation of failures in accounting, auditing and accountability. The adjusted accounting numbers are used to calculate the financial indicators applicable to each university. Exploratory factor analysis is implemented to categorise and organise this large indicator set on the basis of identified associations with a smaller number of factors. It is found that the financial condition of South African public universities is defined by two broad financial characteristics, capital and revenue. Assessment of the capital dimension is informed by a focus on institutional equity, with particular emphasis on expendable equity and its proportionate relationships with surplus, total capital, and total expenses. The revenue dimension is appropriately evaluated in the context of a comparative and interactive consideration of the three main components of South African public university revenue, as well as the proportionate relationship between non-staff operating expenses and total expenses. The framework displays considerable levels of stability and consistency over the seven year review period, and its constructs are, in addition, robust to the application of multiple alternative confirmatory tests involving financial data that are independent of the factor solutions. The financial condition assessment framework developed in this thesis offers a contribution to a broader discourse in nonprofit finance and accounting, with a focus on public university finances.
- Full Text:
- Date Issued: 2016
- Authors: Bunting, Mark Bevan
- Date: 2016
- Language: English
- Type: Thesis , Doctoral , PhD
- Identifier: vital:923 , http://hdl.handle.net/10962/d1021298 , http://orcid.org/0000-0002-3392-554X
- Description: In this thesis, an analytical framework is developed for the assessment of the financial condition of South African public universities. Foundational constructs of nonprofit economics are applied in the consideration of financial theories of nonprofit organisations in general, and public universities in particular. From this review, a number of hypotheses are developed. Each of these specifies a positive or negative association between a university's financial condition and a particular dimension of its assets, liabilities, equity, revenues, expenses and surplus. From the nonprofit financial analysis literature, ratios and indicators relevant to these hypotheses are selected. Audited data from the annual financial statements of the universities for the seven year period 2007 to 2013 are substantially transformed in mitigation of failures in accounting, auditing and accountability. The adjusted accounting numbers are used to calculate the financial indicators applicable to each university. Exploratory factor analysis is implemented to categorise and organise this large indicator set on the basis of identified associations with a smaller number of factors. It is found that the financial condition of South African public universities is defined by two broad financial characteristics, capital and revenue. Assessment of the capital dimension is informed by a focus on institutional equity, with particular emphasis on expendable equity and its proportionate relationships with surplus, total capital, and total expenses. The revenue dimension is appropriately evaluated in the context of a comparative and interactive consideration of the three main components of South African public university revenue, as well as the proportionate relationship between non-staff operating expenses and total expenses. The framework displays considerable levels of stability and consistency over the seven year review period, and its constructs are, in addition, robust to the application of multiple alternative confirmatory tests involving financial data that are independent of the factor solutions. The financial condition assessment framework developed in this thesis offers a contribution to a broader discourse in nonprofit finance and accounting, with a focus on public university finances.
- Full Text:
- Date Issued: 2016
An analysis of the income tax consequences resulting from implementing the Income Tax Bill (2012) in Zimbabwe
- Authors: Kanyenze, Rumbidzai
- Date: 2015
- Subjects: Income tax deductions -- Zimbabwe , Income tax -- Law and legislation -- Zimbabwe
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:914 , http://hdl.handle.net/10962/d1017536
- Description: The Income Tax Bill (2012) proposes certain changes to the existing Income Tax Act that will impact on the method used to determine the taxable income of a taxpayer in Zimbabwe. Therefore, it is important to understand the tax consequences the Income Tax Bill creates for the taxpayer. The research aimed to elaborate on and explain the tax consequences that will arise as a result of applying the Income Tax Bill in Zimbabwe. The research was based on a qualitative method which involved the analysis and the interpretation of extracts from legislation and articles written on the proposed changes. The current “gross income” of a taxpayer consists of amounts earned from a source within or deemed to be from within Zimbabwe The proposed changes to the Act will change the tax system to a residence-based system, where resident taxpayers are taxed on amounts earned from all sources. Therefore, the driving factor which determines the taxability of an amount will become the taxpayer’s residency. Clause 2 of the proposed Act provides that income earned by a taxpayer should be separated into employment income, business income, property income and other specified income. This will make it unnecessary to determine the nature of an amount because capital amounts will be subject to income tax. The current Act provides for the deduction of expenditure incurred for the purpose of trade or in the production of income. Section 31(1)(a) of the proposed Act will restrict permissible deductions to expenditure incurred in the production of income. Consequently, expenditure not incurred for the purpose of earning income will no longer be deductible when the Income Tax Bill is implemented. The proposed Income Tax Act will increase the taxable income of a taxpayer as it makes amounts that are not currently subject to tax taxable, whilst restricting the deductions claimable.
- Full Text:
- Date Issued: 2015
- Authors: Kanyenze, Rumbidzai
- Date: 2015
- Subjects: Income tax deductions -- Zimbabwe , Income tax -- Law and legislation -- Zimbabwe
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:914 , http://hdl.handle.net/10962/d1017536
- Description: The Income Tax Bill (2012) proposes certain changes to the existing Income Tax Act that will impact on the method used to determine the taxable income of a taxpayer in Zimbabwe. Therefore, it is important to understand the tax consequences the Income Tax Bill creates for the taxpayer. The research aimed to elaborate on and explain the tax consequences that will arise as a result of applying the Income Tax Bill in Zimbabwe. The research was based on a qualitative method which involved the analysis and the interpretation of extracts from legislation and articles written on the proposed changes. The current “gross income” of a taxpayer consists of amounts earned from a source within or deemed to be from within Zimbabwe The proposed changes to the Act will change the tax system to a residence-based system, where resident taxpayers are taxed on amounts earned from all sources. Therefore, the driving factor which determines the taxability of an amount will become the taxpayer’s residency. Clause 2 of the proposed Act provides that income earned by a taxpayer should be separated into employment income, business income, property income and other specified income. This will make it unnecessary to determine the nature of an amount because capital amounts will be subject to income tax. The current Act provides for the deduction of expenditure incurred for the purpose of trade or in the production of income. Section 31(1)(a) of the proposed Act will restrict permissible deductions to expenditure incurred in the production of income. Consequently, expenditure not incurred for the purpose of earning income will no longer be deductible when the Income Tax Bill is implemented. The proposed Income Tax Act will increase the taxable income of a taxpayer as it makes amounts that are not currently subject to tax taxable, whilst restricting the deductions claimable.
- Full Text:
- Date Issued: 2015
An analysis of the tax consequences of the double tax agreement between South Africa and the Democratic Republic of Congo
- Authors: Mkabile, Nwabisa
- Date: 2015
- Subjects: Double taxation -- South Africa , Double taxation -- Congo (Democratic Republic) , Income tax -- South Africa -- Foreign income , Income tax -- Congo (Democratic Republic) -- Foreign income
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:916 , http://hdl.handle.net/10962/d1017539
- Description: As a result of the different tax systems adopted by countries, foreign-sourced income earned by taxpayers may be subject to double taxation. This may therefore impede cross-border trade and investment. Double taxation relief is provided unilaterally, in terms of a country’s domestic laws or bilaterally in terms of Double Taxation Agreements. South African residents earning income from the Democratic Republic of Congo may be subject to tax in both countries. To eliminate such double taxation the South African Income Tax Act, No 58 of 1962, provides for unilateral relief from double taxation in the form of exemptions, rebates and deductions. The double tax agreement between South Africa and the Democratic Republic of the Congo came into effect recently and double taxation relief for South African residents is now also available in terms of tax treaty law. The objective of the research was to determine whether the combination of the unilateral measures and the double tax agreement provide relief in respect of all types of income earned by South African residents in the Democratic Republic of the Congo. It was concluded that the double tax agreement, together with the unilateral relief provided for in the Income Tax Act will grant relief for all types of income earned by South African residents in the Democratic Republic of the Congo.
- Full Text:
- Date Issued: 2015
- Authors: Mkabile, Nwabisa
- Date: 2015
- Subjects: Double taxation -- South Africa , Double taxation -- Congo (Democratic Republic) , Income tax -- South Africa -- Foreign income , Income tax -- Congo (Democratic Republic) -- Foreign income
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:916 , http://hdl.handle.net/10962/d1017539
- Description: As a result of the different tax systems adopted by countries, foreign-sourced income earned by taxpayers may be subject to double taxation. This may therefore impede cross-border trade and investment. Double taxation relief is provided unilaterally, in terms of a country’s domestic laws or bilaterally in terms of Double Taxation Agreements. South African residents earning income from the Democratic Republic of Congo may be subject to tax in both countries. To eliminate such double taxation the South African Income Tax Act, No 58 of 1962, provides for unilateral relief from double taxation in the form of exemptions, rebates and deductions. The double tax agreement between South Africa and the Democratic Republic of the Congo came into effect recently and double taxation relief for South African residents is now also available in terms of tax treaty law. The objective of the research was to determine whether the combination of the unilateral measures and the double tax agreement provide relief in respect of all types of income earned by South African residents in the Democratic Republic of the Congo. It was concluded that the double tax agreement, together with the unilateral relief provided for in the Income Tax Act will grant relief for all types of income earned by South African residents in the Democratic Republic of the Congo.
- Full Text:
- Date Issued: 2015
Base erosion and profit shifting by multinational corporations and weaknesses revealed in South African income tax legislation
- Authors: Peerbhai, Aneesa
- Date: 2015
- Subjects: International business enterprises -- Law and legislation -- South Africa , Corporations -- Taxation -- Law and legislation -- South Africa , Tax planning -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:917 , http://hdl.handle.net/10962/d1017540
- Description: This research examined the concept of base erosion and profit shifting in the context of tax schemes employed by multinational corporations. The objective of this thesis was to identify weaknesses within South Africa’s income tax legislation, based on these schemes, and further to propose recommendations to counter the occurrence of base erosion and profit shifting by multinational companies. The research also comprised of a limited review of current global and South African initiatives to address the problem of base erosion and profit shifting. It was concluded that there are a number of weaknesses in the definitions and provisions of the South African income tax legislation that need to be addressed in order to reduce base erosion and profit shifting. Brief recommendations were proposed in relation to each of the weaknesses, in order to address them.
- Full Text:
- Date Issued: 2015
- Authors: Peerbhai, Aneesa
- Date: 2015
- Subjects: International business enterprises -- Law and legislation -- South Africa , Corporations -- Taxation -- Law and legislation -- South Africa , Tax planning -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:917 , http://hdl.handle.net/10962/d1017540
- Description: This research examined the concept of base erosion and profit shifting in the context of tax schemes employed by multinational corporations. The objective of this thesis was to identify weaknesses within South Africa’s income tax legislation, based on these schemes, and further to propose recommendations to counter the occurrence of base erosion and profit shifting by multinational companies. The research also comprised of a limited review of current global and South African initiatives to address the problem of base erosion and profit shifting. It was concluded that there are a number of weaknesses in the definitions and provisions of the South African income tax legislation that need to be addressed in order to reduce base erosion and profit shifting. Brief recommendations were proposed in relation to each of the weaknesses, in order to address them.
- Full Text:
- Date Issued: 2015
E-commerce: the challenge of virtual permanent establishments
- Adlkofer, Michelle Leigh, Venter, Michelle
- Authors: Adlkofer, Michelle Leigh , Venter, Michelle
- Date: 2015
- Subjects: Organisation for Economic Co-operation and Development , Electronic commerce , Electronic commerce -- Taxation , Double taxation -- Treaties , Globalization
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:921 , http://hdl.handle.net/10962/d1020057
- Description: The continued growth of world commerce has led to the advance of the permanent establishment principles. These principles are, however, constantly challenged by the developments of e-commerce. This thesis considers the taxing of a permanent establishment and the influence of e-commerce on the concept of a permanent establishment. In 2000, the Organisation for Economic Co-operation and Development (“OECD”) developed and introduced guidelines on how to deal with e-commerce in the context of a permanent establishment. Since the OECD guidelines on e-commerce were issued, the permanent establishment principles have come under further scrutiny. The latest development came about in 2013 with the release of the Base Erosion and Profit Shifting (“BEPS”) Action Plan. This Action Plan addresses the intention of the OECD to deal with the taxing of the digital economy. With the development of e-commerce and the result of e-commerce creating intangible boundaries between countries, the concept of a virtual permanent establishment has emerged. This has resulted in the need to tax a presence of an enterprise in a jurisdiction where no actual physical connection can be established. Various authors have made suggestions on how to ensure that an economy in which business is being carried on is correctly compensated for in the form of taxes. The source of income is the driving force for the imposition of taxation today. The main goal of this thesis was to explore the alignment of the concepts of a permanent establishment and e-commerce in the digital economy. This study therefore examined the concepts of both permanent establishments and e-commerce, and explored authors’ views and suggestions on how to deal with the inter-related effects of these two concepts. The relevant Action Points in the OECD Action Plan were also considered. , Maiden name: Venter, Michelle
- Full Text:
- Date Issued: 2015
- Authors: Adlkofer, Michelle Leigh , Venter, Michelle
- Date: 2015
- Subjects: Organisation for Economic Co-operation and Development , Electronic commerce , Electronic commerce -- Taxation , Double taxation -- Treaties , Globalization
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:921 , http://hdl.handle.net/10962/d1020057
- Description: The continued growth of world commerce has led to the advance of the permanent establishment principles. These principles are, however, constantly challenged by the developments of e-commerce. This thesis considers the taxing of a permanent establishment and the influence of e-commerce on the concept of a permanent establishment. In 2000, the Organisation for Economic Co-operation and Development (“OECD”) developed and introduced guidelines on how to deal with e-commerce in the context of a permanent establishment. Since the OECD guidelines on e-commerce were issued, the permanent establishment principles have come under further scrutiny. The latest development came about in 2013 with the release of the Base Erosion and Profit Shifting (“BEPS”) Action Plan. This Action Plan addresses the intention of the OECD to deal with the taxing of the digital economy. With the development of e-commerce and the result of e-commerce creating intangible boundaries between countries, the concept of a virtual permanent establishment has emerged. This has resulted in the need to tax a presence of an enterprise in a jurisdiction where no actual physical connection can be established. Various authors have made suggestions on how to ensure that an economy in which business is being carried on is correctly compensated for in the form of taxes. The source of income is the driving force for the imposition of taxation today. The main goal of this thesis was to explore the alignment of the concepts of a permanent establishment and e-commerce in the digital economy. This study therefore examined the concepts of both permanent establishments and e-commerce, and explored authors’ views and suggestions on how to deal with the inter-related effects of these two concepts. The relevant Action Points in the OECD Action Plan were also considered. , Maiden name: Venter, Michelle
- Full Text:
- Date Issued: 2015
Encouraging individual retirement savings in South Africa
- Authors: Hirschbeck, Lisa
- Date: 2015
- Subjects: Retirement income -- Planning-- South Africa , Retirement income -- Government policy -- South Africa , Pension trusts -- South Africa -- Management , Pension trusts -- Termination -- Law and legislation -- South Africa , Income tax deductions for retirement contributions -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:913 , http://hdl.handle.net/10962/d1017535
- Description: Many South Africans may not have adequate retirement savings when they retire and this has the effect of a low income replacement ratio on retirement that may lead to a decrease in the standard of living of the retiree and in extreme cases the retiree becoming dependent on their family and the government. Owing to this trend of no or inadequate retirement savings, South Africa embarked on a retirement reform journey in 2004. The goal of this research is to determine whether the retirement reform mechanisms outlined by National Treasury would encourage individual retirement savings that should assist South Africans to achieve stability of income in their retirement. This research analysed the current retirement savings options and vehicles available for South Africans, the current tax incentives and disincentives and reviewed the proposed changes to tax incentives and disincentives during the accumulation phase of retirement savings and explained how these proposed tax incentives are harmonised for the accumulation phase of retirement. The research explained how National Treasury aims to limit pre-retirement withdrawals and how it intends to encourage the annuitisation of post-retirement benefits. The penultimate chapter of this research measured the effect (by making certain assumptions) of the changes proposed by National Treasury on the income replacement ratio of the retiree. Throughout the research comparisons were made between The OECD Roadmap for the good design of defined contribution pension plans and National Treasury’s proposals. This research did not directly address the effect of increased life expectancies on retirement savings or increases in youth unemployment and the effect that this may have on retirement savings. The effect of financial charges levied on retirement savings on the income replacement ratio of a retiree was also not explored. Furthermore, not all pension funds are regulated by the Pension Funds Act and how these pension funds can be brought within the purview of the Pension Funds Act was not investigated. Automatic enrolment of retirement savings for all employees in South Africa in retirement vehicles is a further research area that could be addressed.
- Full Text:
- Date Issued: 2015
- Authors: Hirschbeck, Lisa
- Date: 2015
- Subjects: Retirement income -- Planning-- South Africa , Retirement income -- Government policy -- South Africa , Pension trusts -- South Africa -- Management , Pension trusts -- Termination -- Law and legislation -- South Africa , Income tax deductions for retirement contributions -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:913 , http://hdl.handle.net/10962/d1017535
- Description: Many South Africans may not have adequate retirement savings when they retire and this has the effect of a low income replacement ratio on retirement that may lead to a decrease in the standard of living of the retiree and in extreme cases the retiree becoming dependent on their family and the government. Owing to this trend of no or inadequate retirement savings, South Africa embarked on a retirement reform journey in 2004. The goal of this research is to determine whether the retirement reform mechanisms outlined by National Treasury would encourage individual retirement savings that should assist South Africans to achieve stability of income in their retirement. This research analysed the current retirement savings options and vehicles available for South Africans, the current tax incentives and disincentives and reviewed the proposed changes to tax incentives and disincentives during the accumulation phase of retirement savings and explained how these proposed tax incentives are harmonised for the accumulation phase of retirement. The research explained how National Treasury aims to limit pre-retirement withdrawals and how it intends to encourage the annuitisation of post-retirement benefits. The penultimate chapter of this research measured the effect (by making certain assumptions) of the changes proposed by National Treasury on the income replacement ratio of the retiree. Throughout the research comparisons were made between The OECD Roadmap for the good design of defined contribution pension plans and National Treasury’s proposals. This research did not directly address the effect of increased life expectancies on retirement savings or increases in youth unemployment and the effect that this may have on retirement savings. The effect of financial charges levied on retirement savings on the income replacement ratio of a retiree was also not explored. Furthermore, not all pension funds are regulated by the Pension Funds Act and how these pension funds can be brought within the purview of the Pension Funds Act was not investigated. Automatic enrolment of retirement savings for all employees in South Africa in retirement vehicles is a further research area that could be addressed.
- Full Text:
- Date Issued: 2015
The meaning of expenditure actually incurred in the context of share-based payments for trading stock or services rendered
- Authors: Nguta, Mbulelo
- Date: 2015
- Subjects: South African Revenue Service , Labat Africa , Stocks -- Taxation -- Law and legislation -- South Africa , Income tax deductions for expenses , Income tax -- Accounting -- Law and legislation -- South Africa , Actions and defenses
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:920 , http://hdl.handle.net/10962/d1018661
- Description: Section 11(a) of the Income Tax Act 58 of 1962 entitles taxpayers to a deduction in respect of expenditure actually incurred, provided that all the other requirements of section 11 and section 23 of the Act have been met. A company may issue its own shares, credited as fully paid up, as a payment for trading stock or services rendered, as was the case in C:SARS v Labat Africa (2011) 74 SATC 1. The question that was raised by this decision is whether the issue of shares constitutes “expenditure” as contemplated in section 11(a) of the Act. It is trite that a share in a company is a bundle of rights which entitle the holder to dividends when declared and to a vote in shareholders’ meetings and that a share does not come into the hands of a shareholder by way of transfer from the company, but is rather created as a bundle of rights for him in the company. In C: SARS v Labat Africa, the Supreme Court of Appeal decided that to issue shares as a payment for goods is not expenditure as contemplated in section 11(a) of the Act. The Act does not define “expenditure”. It has been interpreted in certain cases as a payment of money or disbursement, while it has been interpreted as the undertaking of a legal obligation in other cases. The Labat Africa case has been criticised for its interpretation of expenditure on the grounds that it is contrary to the principle that “actually incurred” does not mean “actually paid”. This research has argued that, in the context of the Labat Africa case, which related to an issue of shares in payment for goods, Harms AP’s judgment was concerned with showing why a share issue is not expenditure. He could not have intended to deny a deduction to transactions such as credit purchases.
- Full Text:
- Date Issued: 2015
- Authors: Nguta, Mbulelo
- Date: 2015
- Subjects: South African Revenue Service , Labat Africa , Stocks -- Taxation -- Law and legislation -- South Africa , Income tax deductions for expenses , Income tax -- Accounting -- Law and legislation -- South Africa , Actions and defenses
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:920 , http://hdl.handle.net/10962/d1018661
- Description: Section 11(a) of the Income Tax Act 58 of 1962 entitles taxpayers to a deduction in respect of expenditure actually incurred, provided that all the other requirements of section 11 and section 23 of the Act have been met. A company may issue its own shares, credited as fully paid up, as a payment for trading stock or services rendered, as was the case in C:SARS v Labat Africa (2011) 74 SATC 1. The question that was raised by this decision is whether the issue of shares constitutes “expenditure” as contemplated in section 11(a) of the Act. It is trite that a share in a company is a bundle of rights which entitle the holder to dividends when declared and to a vote in shareholders’ meetings and that a share does not come into the hands of a shareholder by way of transfer from the company, but is rather created as a bundle of rights for him in the company. In C: SARS v Labat Africa, the Supreme Court of Appeal decided that to issue shares as a payment for goods is not expenditure as contemplated in section 11(a) of the Act. The Act does not define “expenditure”. It has been interpreted in certain cases as a payment of money or disbursement, while it has been interpreted as the undertaking of a legal obligation in other cases. The Labat Africa case has been criticised for its interpretation of expenditure on the grounds that it is contrary to the principle that “actually incurred” does not mean “actually paid”. This research has argued that, in the context of the Labat Africa case, which related to an issue of shares in payment for goods, Harms AP’s judgment was concerned with showing why a share issue is not expenditure. He could not have intended to deny a deduction to transactions such as credit purchases.
- Full Text:
- Date Issued: 2015
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
A critical analysis of the practical man principle in Commissioner for Inland Revenue v Lever Brothers and Unilever Ltd
- Authors: Grenville, David Paul
- Date: 2014
- Subjects: Unilever (Firm) , South African Revenue Service , Taxation -- Law and legislation -- South Africa , Income tax -- Law and legislation -- South Africa -- Cases , Income tax -- South Africa -- Cases , Business enterprises -- Taxation -- South Africa , Law -- South Africa -- Philosophy
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:909 , http://hdl.handle.net/10962/d1013238
- Description: This research studies the practical person principle as it was introduced in the case of Commissioner for Inland Revenue v Lever Brothers and Unilever Ltd 1946 AD 441. In its time the Lever Brothers case was a seminal judgment in South Africa’s tax jurisprudence and the practical person principle was a decisive criterion for the determination of source of income. The primary goal of this research was a critical analysis the practical man principle. This involved an analysis of the extent to which this principle requires judges to adopt a criterion that is too flexible for legitimate judicial decision-making. The extent to which the practical person principle creates a clash between a philosophical approach to law and an approach that is based on common sense or practicality was also debated. Finally, it was considered whether adopting a philosophical approach to determining the source of income could overcome the problems associated with the practical approach. A doctrinal methodology was applied to the documentary data consisting of the South African and Australian Income Tax Acts, South African and other case law, historical records and the writings of scholars. From the critical analysis of the practical person principle it was concluded that the anthropomorphised form of the principle gives rise to several problems that may be overcome by looking to the underlying operation of the principle. Further analysis of this operation, however, revealed deeper problems in that the principle undermines the doctrine of judicial precedent, legal certainty and the rule of law. Accordingly a practical approach to determining the source of income is undesirable and unconstitutional. Further research was conducted into the relative merits of a philosophical approach to determining source of income and it was argued that such an approach could provide a more desirable solution to determining source of income as well as approaching legal problems more generally.
- Full Text:
- Date Issued: 2014
- Authors: Grenville, David Paul
- Date: 2014
- Subjects: Unilever (Firm) , South African Revenue Service , Taxation -- Law and legislation -- South Africa , Income tax -- Law and legislation -- South Africa -- Cases , Income tax -- South Africa -- Cases , Business enterprises -- Taxation -- South Africa , Law -- South Africa -- Philosophy
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:909 , http://hdl.handle.net/10962/d1013238
- Description: This research studies the practical person principle as it was introduced in the case of Commissioner for Inland Revenue v Lever Brothers and Unilever Ltd 1946 AD 441. In its time the Lever Brothers case was a seminal judgment in South Africa’s tax jurisprudence and the practical person principle was a decisive criterion for the determination of source of income. The primary goal of this research was a critical analysis the practical man principle. This involved an analysis of the extent to which this principle requires judges to adopt a criterion that is too flexible for legitimate judicial decision-making. The extent to which the practical person principle creates a clash between a philosophical approach to law and an approach that is based on common sense or practicality was also debated. Finally, it was considered whether adopting a philosophical approach to determining the source of income could overcome the problems associated with the practical approach. A doctrinal methodology was applied to the documentary data consisting of the South African and Australian Income Tax Acts, South African and other case law, historical records and the writings of scholars. From the critical analysis of the practical person principle it was concluded that the anthropomorphised form of the principle gives rise to several problems that may be overcome by looking to the underlying operation of the principle. Further analysis of this operation, however, revealed deeper problems in that the principle undermines the doctrine of judicial precedent, legal certainty and the rule of law. Accordingly a practical approach to determining the source of income is undesirable and unconstitutional. Further research was conducted into the relative merits of a philosophical approach to determining source of income and it was argued that such an approach could provide a more desirable solution to determining source of income as well as approaching legal problems more generally.
- Full Text:
- Date Issued: 2014
The income tax consequences of the in-house development of software
- Authors: Hodge, Dominic Shaughn
- Date: 2014
- Subjects: Computer software -- Accounting , Income tax -- Data processing , Research and development projects , Income tax -- Law and legislation -- South Africa , Computer software -- Development -- South Africa , Computer software -- Law and legislation -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:910 , http://hdl.handle.net/10962/d1013550
- Description: The objective of this thesis was to explore the nature of expenditure incurred on the internal development of software and its treatment in terms of the accounting and taxation frameworks to which it is subject. In fulfilling the primary objective the thesis had a number of subsidiary considerations. These included, firstly, a brief analysis of the approach of the software industry in South Africa to the taxation treatment of this type of software. The second consideration was a discussion and analysis of the taxation framework which differentiates between capital and revenue and the extent to which the receipts produced by internally developed software may be informative of the nature of the expenditure. The third was an analysis of the deductibility of expenditure incurred in the production of software with the fourth analysing the tests employed in the determination of whether expenditure is capital or revenue in nature. The fifth objective was to briefly analyse the accounting standards which find application in the determination of whether or not the software created can be considered a capital asset. The final subsidiary objective of the thesis was an analysis of the taxation framework applicable to software in respect of research and development incentives, as well as the position in the United States of America. Throughout the thesis the most apparent commonality is that there exists a significant level of uncertainty as to the taxation treatment of software both in South Africa and in America. The research concludes by stating that such uncertainty is prejudicial to the interests of research and development in relation to software.
- Full Text:
- Date Issued: 2014
- Authors: Hodge, Dominic Shaughn
- Date: 2014
- Subjects: Computer software -- Accounting , Income tax -- Data processing , Research and development projects , Income tax -- Law and legislation -- South Africa , Computer software -- Development -- South Africa , Computer software -- Law and legislation -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:910 , http://hdl.handle.net/10962/d1013550
- Description: The objective of this thesis was to explore the nature of expenditure incurred on the internal development of software and its treatment in terms of the accounting and taxation frameworks to which it is subject. In fulfilling the primary objective the thesis had a number of subsidiary considerations. These included, firstly, a brief analysis of the approach of the software industry in South Africa to the taxation treatment of this type of software. The second consideration was a discussion and analysis of the taxation framework which differentiates between capital and revenue and the extent to which the receipts produced by internally developed software may be informative of the nature of the expenditure. The third was an analysis of the deductibility of expenditure incurred in the production of software with the fourth analysing the tests employed in the determination of whether expenditure is capital or revenue in nature. The fifth objective was to briefly analyse the accounting standards which find application in the determination of whether or not the software created can be considered a capital asset. The final subsidiary objective of the thesis was an analysis of the taxation framework applicable to software in respect of research and development incentives, as well as the position in the United States of America. Throughout the thesis the most apparent commonality is that there exists a significant level of uncertainty as to the taxation treatment of software both in South Africa and in America. The research concludes by stating that such uncertainty is prejudicial to the interests of research and development in relation to software.
- Full Text:
- Date Issued: 2014
The presumption of gult created by Section 235(2) of the Tax Administration Act: a constitutional and comparative perspective
- Authors: Faifi, Farai
- Date: 2014
- Subjects: Guilt (Law) -- South Africa , Presumption of innocence -- South Africa , Income tax -- Law and legislation -- South Africa , Human rights -- Taxation -- South Africa , Taxpayer compliance -- Moral and ethical aspects -- South Africa , Taxation -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:907 , http://hdl.handle.net/10962/d1012979
- Description: This research examined the legal nature of the presumption of guilt created by section 235(2) of the South African Tax Admiration Act and considered whether or not its practical application violates the taxpayer’s fundamental right contained in section 35(3) of the Constitution, which gives every accused taxpayer the right to a fair trial, including the right to be presumed innocent. The research also provided clarity on the constitutionality of this presumption because it has been widely criticised for unjustifiably violating the taxpayer's constitutional right to a fair trial. The conclusion reached is that the presumption created by section 235(2) of the Tax Administration Act constitutes an evidentiary burden rather than a reverse onus. It does not create the possibility of conviction, unlike a reverse onus where conviction is possible, despite the existence of a reasonable doubt. Therefore, it does not violate the accused taxpayer’s the right to a fair trial and the right to be presumed innocent and hence it is constitutional. Accordingly, the chances that the accused taxpayer will succeed in challenging the constitutionality of section 235(2) of the Act are slim.
- Full Text:
- Date Issued: 2014
- Authors: Faifi, Farai
- Date: 2014
- Subjects: Guilt (Law) -- South Africa , Presumption of innocence -- South Africa , Income tax -- Law and legislation -- South Africa , Human rights -- Taxation -- South Africa , Taxpayer compliance -- Moral and ethical aspects -- South Africa , Taxation -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:907 , http://hdl.handle.net/10962/d1012979
- Description: This research examined the legal nature of the presumption of guilt created by section 235(2) of the South African Tax Admiration Act and considered whether or not its practical application violates the taxpayer’s fundamental right contained in section 35(3) of the Constitution, which gives every accused taxpayer the right to a fair trial, including the right to be presumed innocent. The research also provided clarity on the constitutionality of this presumption because it has been widely criticised for unjustifiably violating the taxpayer's constitutional right to a fair trial. The conclusion reached is that the presumption created by section 235(2) of the Tax Administration Act constitutes an evidentiary burden rather than a reverse onus. It does not create the possibility of conviction, unlike a reverse onus where conviction is possible, despite the existence of a reasonable doubt. Therefore, it does not violate the accused taxpayer’s the right to a fair trial and the right to be presumed innocent and hence it is constitutional. Accordingly, the chances that the accused taxpayer will succeed in challenging the constitutionality of section 235(2) of the Act are slim.
- Full Text:
- Date Issued: 2014
Voluntary disclosure programmes and tax amnesties: an international appraisal
- Authors: Jaramba, Toddy
- Date: 2014
- Subjects: Tax amnesty -- South Africa , Tax evasion -- South Africa , Investments, Foreign -- Taxation -- South Africa , Tax collection -- South Africa , Tax administration and procedure -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:911 , http://hdl.handle.net/10962/d1015666
- Description: Tax amnesties are government programs that typically allow a short period of time for tax evaders to voluntarily repay previously evaded taxes without being subject to penalties and prosecution that discovery of such tax evasion normally brings. Tax amnesties differ widely in terms of coverage, tax types, and incentives offered. A state’s Voluntary Disclosure Programme is another avenue available to taxpayers to assist them in resolving their state tax delinquencies. This programme is an on-going programme as compared to a tax amnesty, which is there for a limited time period only. The main goal of the research was to describe the tax amnesty and the voluntary disclosure programmes in South Africa and to assess their advantages and disadvantages. This thesis also discussed another form of voluntary disclosure programme, referred to as an Offshore Voluntary Disclosure Programme, which allows taxpayers with unreported foreign bank accounts, and presumably unreported foreign income, to voluntarily disclose their affairs. The study found that, due to tax amnesties, Government raises more tax revenue not only in the short run from collecting overdue taxes but also by bringing former non-filers back into the tax system for the long run. It was also found that, initially short-run revenue brought in from overdue taxes will be positive for the first amnesty and then decline each time the amnesty is offered repeatedly. The reason for the decline in revenue might be that tax amnesties provide incentives for otherwise honest taxpayers to start evading taxes because they will anticipate the offering of future amnesties, thereby weakening tax compliance. The costs associated with amnesty programmes include negative long run revenue impact and also that amnesty programmes reduce compliance by taxpayers in the long-run. In South Africa tax amnesties, especially the voluntary disclosure programme, are likely to be successful since they will increase the revenue yield and also bring non-filers back on the tax rolls.
- Full Text:
- Date Issued: 2014
- Authors: Jaramba, Toddy
- Date: 2014
- Subjects: Tax amnesty -- South Africa , Tax evasion -- South Africa , Investments, Foreign -- Taxation -- South Africa , Tax collection -- South Africa , Tax administration and procedure -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:911 , http://hdl.handle.net/10962/d1015666
- Description: Tax amnesties are government programs that typically allow a short period of time for tax evaders to voluntarily repay previously evaded taxes without being subject to penalties and prosecution that discovery of such tax evasion normally brings. Tax amnesties differ widely in terms of coverage, tax types, and incentives offered. A state’s Voluntary Disclosure Programme is another avenue available to taxpayers to assist them in resolving their state tax delinquencies. This programme is an on-going programme as compared to a tax amnesty, which is there for a limited time period only. The main goal of the research was to describe the tax amnesty and the voluntary disclosure programmes in South Africa and to assess their advantages and disadvantages. This thesis also discussed another form of voluntary disclosure programme, referred to as an Offshore Voluntary Disclosure Programme, which allows taxpayers with unreported foreign bank accounts, and presumably unreported foreign income, to voluntarily disclose their affairs. The study found that, due to tax amnesties, Government raises more tax revenue not only in the short run from collecting overdue taxes but also by bringing former non-filers back into the tax system for the long run. It was also found that, initially short-run revenue brought in from overdue taxes will be positive for the first amnesty and then decline each time the amnesty is offered repeatedly. The reason for the decline in revenue might be that tax amnesties provide incentives for otherwise honest taxpayers to start evading taxes because they will anticipate the offering of future amnesties, thereby weakening tax compliance. The costs associated with amnesty programmes include negative long run revenue impact and also that amnesty programmes reduce compliance by taxpayers in the long-run. In South Africa tax amnesties, especially the voluntary disclosure programme, are likely to be successful since they will increase the revenue yield and also bring non-filers back on the tax rolls.
- Full Text:
- Date Issued: 2014