Dissertations / Theses on the topic 'South african income tax act no. 58 of 1962'

Thesis (MAcc)--University of Stellenbosch, 2009.
ENGLISH ABSTRACT: In November 2006 section 103(1) of the Act was abolished and replaced by a new Part IIA, containing sections 80A to 80L, which targets impermissible tax avoidance arrangements. Section 80A(c)(ii) introduced a new concept to the South African tax law: a misuse or abuse of the provisions of the Act, including Part IIA thereof. The objective of this study was to establish the origin, meaning, application and effect of section 80A(c)(ii) of the Act. The evolution of section 80A(c)(ii) was therefore examined where after the enacted version was analyzed. It was essential to determine the origin of section 80A(c)(ii) in order to establish some point of reference from which inferences could be drawn as to the possible application and effect thereof. Case law, practice statements and articles relating to its proposed root was then examined. A ‘misuse or abuse’ of a provision, it was found, implies, frustrating or exploiting the purpose of the provision. This contention was confirmed by existing Canadian precedent. Such an interpretation, however, has a strong resemblance to the words in which the draft version of section 80A(c)(ii) was couched. It is therefore in contrast to the presumption that different words (in the enacted version) imply a different meaning. The precise meaning of the words ‘misuse or abuse’ is thus still elusive. It was established that section 80A(c)(ii) has its roots in section 245 of the Canadian Act. Section 245(4) was regarded as an effective comparative to section 80A(c)(ii) as it also contained a so-called misuse or abuse rule. The application of this rule in the Canadian tax environment required the following process: - Interpret (contextually and purposively) the provisions relied on by the taxpayer, to determine their object, spirit and purpose. - Determine whether the transaction frustrates or defeats the object, spirit or purpose of the provisions. Section 245(4) had the effect of reviving the modern approach (a contextual and/or purposive theory) to the interpretation of statutes in Canada. Reference to the ‘spirit’ of a provision (above) was found not to extend the modern approach to statutory interpretation: it does not require of the court to look for some inner and spiritual meaning within the legislation. As section 245(4) was regarded as an effective comparative to section 80A(c)(ii) it was contented that it would have a similar effect, than that of its Canadian counterpart, on the approach to statutory interpretation in South Africa. However, it was established that a modern approach to statutory interpretation was already authoritative in South Africa. This finding led the author to the conclusion that section 80A(c)(ii) could at best only reinforce the case for applying such an approach. Such a purpose for section 80A(c)(ii) was however found to be void in the light of the Constitution of the Republic of South Africa, which was enacted in 1996, and provides a sovereign authority for the application of the modern approach. It was also found that the practical burden of showing that there was a ‘misuse or abuse of the provisions of this Act (including the provisions of this Part)’ will rest on the shoulders of the Commissioner, notwithstanding section 82 of the Act.
AFRIKAANSE OPSOMMING: Artikel 103(1) van die Inkomstebelastingwet is herroep in November 2006 en vervang deur Deel IIA, bestaande uit artikels 80A tot 80L, wat daarop gemik is om ontoelaatbare belastingvermydingsreëlings te teiken. Artikel 80A(c)(ii) het ‘n nuwe konsep in die Suid-Afrikaanse Inkomstebelastingreg ingebring: ‘n misbruik of ‘n wangebruik van die bepalings van die Wet, insluitende Deel IIA. Die doel van hierdie studie was om die oorsprong, betekenis, toepassing en uitwerking van artikel 80A(c)(ii) vas te stel. Die ontwikkeling van artikel 80A(c)(ii) is daarom ondersoek waarna die verordende weergawe daarvan geanaliseer is. ‘n Sleutelaspek van die analise was om die oorsprong van artikel 80A(c)(ii) vas te stel. Hierdie oefening het ‘n verwysbare bron daargestel waarvan afleidings rondom die moontlike toepassing en uitwerking van artikel 80A(c)(ii) gemaak kon word. Hofsake, praktyknotas en artikels rakende die voorgestelde oorsprong is vervolgens ondersoek. Daar is vasgestel dat ‘n ‘misbruik of wangebruik’ van ‘n bepaling neerkom op die frustering of uitbuiting van die doel van ‘n bepaling. Hierdie bewering is bevestig deur bestaande Kanadese presedent. So ‘n interpretasie is egter soortgelyk aan die woorde waarin die konsepweergawe van artikel 80A(c)(ii) uitgedruk is. Dit is daarom in teenstelling met die vermoede dat ‘n wysiging van die woorde (in die verordende weergawe) ‘n gewysigde betekenis impliseer. Die presiese betekenis van die woorde ‘misbruik of wangebruik’ is dus steeds ontwykend. Daar is bevind dat artikel 80A(c)(ii) waarskynlik sy ontstaan in artikel 245 van die Kanadese Inkomstebelastingwet gehad het. Artikel 245(4) van die Kanadese Inkomstebelastingwet is beskou as ‘n effektiewe vergelykende artikel vir artikel 80A(c)(ii), aangesien dit ook oor ‘n sogenaamde misbruik of wangebruik reël beskik. Die toepassing van hierdie reël in die Kanadese belastingmilieu vereis die volgende werkswyse: - Interpreteer (kontekstueel en doeldienend) die bepalings waarop die belastingpligtige steun, ten einde die oogmerk, gees en doel daarvan vas te stel. - Bepaal of die transaksie, deur die belastingpligtige aangegaan, die oogmerk, gees of doel van die bepalings frustreer. Artikel 245(4) het aanleiding gegee tot die herstel van die moderne benadering (‘n kontekstuele en/of doeldienende teorie) tot die interpretasie van wetgewing in Kanada. Daar is bevind dat die verwysing na die ‘gees’ van ‘n bepaling (hierbo) nie aanleiding gee tot die uitbreiding van die moderne benadering tot wetsuitleg nie: dit vereis nie dat die hof moet soek na die innerlike of geestelike betekenis van die wetgewing nie. Aangesien artikel 245(4) as ‘n effektiewe vergelykende artikel vir artikel 80A(c)(ii) beskou is, is daar aangeneem dat dit ‘n soortgelyke uitwerking, as sy Kanadese eweknie, op wetsuitleg in Suid Afrika sal hê. By nadere ondersoek is daar egter bevind dat ‘n moderne benadering tot wetsuitleg alreeds gesaghebbend in Suid Afrika is. Hierdie bevinding het die skrywer tot die gevolgtrekking gebring dat artikel 80A(c)(ii), in beginsel, slegs die saak vir die moderne benadering tot wetsuitleg in Suid Afrika sal versterk. Indien hierdie die doel is wat die wetgewer gehad het met die verordening van artikel 80A(c)(ii), sal dit egter niksseggend wees in die lig van die Grondwet van die Republiek van Suid Afrika, wat verorden is in 1996, en ‘n oppermagtige gesag bied vir die moderne benadering tot wetsuitleg. Daar is ook vasgestel dat die onus op die Kommissaris rus om te bewys dat daar ‘n ‘misbruik of wangebruik van die bepalings van hierdie Wet (waarby ingesluit die bepalings van hierdie Deel)’ was, ondanks artikel 82 van die Wet.

Includes bibliographical references.
I welcome you in reading this research dissertation looking at the South African General Anti Avoidance Rule. I hope that this paper will shed some light on the complex requirements of the GAAR as contained in section 80A, read together with relevant sections.

Thesis (MAcc)--Stellenbosch University, 2011.
ENGLISH ABSTRACT: In February 2007 section 11D was inserted into the Income Tax Act 58 of 1962 as amended. The aim of the section was to encourage private-sector investment in scientific or technological research and development (R&D). This was an indirect approach by National Treasury to increase national scientific and technological R&D expenditure in order to complement government expenditure on the subject matter. Although section 11D provides generous income tax incentives, the interpretation thereof was found to be a hindrance in attaining the goal sought by National Treasury. This is due to the fact that this section demands a firm grasp of intellectual property (IP) law, principles of tax, and technology in general. This is clearly shown by the lapse in time (i.e. three years) between the passing of section 11D into law and the release of the South African Revenue Services’ (SARS) final interpretation of section 11D, i.e. Interpretation Note 50. The release of Interpretation Note 50 in August 2009 sparked wide-spread controversy among many a patent attorneys and tax consultants. The interpretation of the section by SARS was found by many to be so draconian that it destroyed the incentive entirely. The objective of this study is to provide greater clarity on the areas of section 11D which have been found to be onerous to taxpayers. Hence the meaning of “new” and “non-obvious” in the context of a discovery of information as eligible R&D activity1 was examined. Hereafter the ambit of the exclusion of expenditure on “management or internal business process”2 from eligibility for the incentive in the context of computer program development was examined. It was established that the meaning of “novel” and “non-obvious” as construed by IP jurisprudence could mutatis mutandis be adopted for purposes of interpreting section 11D(1) of the Income Tax Act. Therefore, information would be regarded as “new” if it did not form part of the state of the art immediately prior to the date of its discovery. The state of the art was found to comprise all matter which had been made available to the public (both in the Republic and elsewhere) by written or oral description, by use or in any other way. Information would also be regarded as non-obvious if an ordinary person, skilled in the art, faced with the same problem, would not have easily solved the problem presented to him by having sole reliance on his intelligence and what was regarded as common knowledge in the art at the time of the discovery. It was submitted that in construing the meaning of the “management or internal business process” exclusion, the intention of the lawgiver should be sought and given effect to. The Explanatory Memorandum issued on the introduction of section 11D states that the lawgiver’s intention with the section was to ensure that South Africa is not at a global disadvantage concerning R&D. The R&D tax legislation of Australia, the United Kingdom and Canada was therefore examined to establish the international bar set in this regard. SARS is of the view that the “management or internal business process” exclusion applies to the development of any computer program (with the said application) irrespective of whether the program is developed for the purpose of in-house use, sale or licensing. However, it was found that such a restrictive interpretation would place homebound computer development at a severe disadvantage when compared with the legislation of the above mentioned countries. In order to give effect to the intention of legislature, it was submitted that the exclusion provision should be construed to only include the development of computer programs for in-house management or internal business process use. Computer programs developed for the said application, but for the purpose of being sold or licensed to an unrelated third party, should still be eligible for the R&D tax incentive.
AFRIKAANSE OPSOMMING: Artikel 11D is gevoeg tot die Inkomstebelastingwet 58 van 1962 gedurende Februarie 2007. Die wetgewing het ten doel om privaatsektor investering in tegniese en wetenskaplike navorsing en ontwikkeling (N&O) aan te moedig. Nasionale Tesourie dra dus op ‘n indirekte wyse by tot die hulpbronne wat die regering op nasionale vlak aan tegniese en wetenskaplike N&O bestee in ‘n gesamentlike poging om N&O in Suid-Afrika te stimuleer. Artikel 11D hou op die oog af baie gunstige inkomstebelasting aansporings in. Dit wil egter voorkom asof die interpretasie daarvan as ernstige struikelblok dien in die bereiking van die doel wat Nasionale Tesourie voor oë gehad het. Dit kan toegeskryf word aan die feit dat die artikel ‘n wesenlike begrip van intellektuele eiendom (IE) wetgewing, belasting beginsels en tegnologie in die algemeen vereis. Die feit dat dit die Suid-Afrikaanse Inkomstebelastingdiens (SAID) ongeveer drie jaar geneem het om hul interpretasie (i.e. Interpretasienota 50) van die artikel te finaliseer dien as bewys hiervan. Die SAID het gedurende Augustus 2009, Interpretasienota 50 vrygestel. Die nota het wye kritiek ontlok by menigte IE prokureurs en belastingkonsultante. Daar is algemene konsensus dat die SAID se interpretasie so drakonies van aard is, dat dit enige aansporing wat die artikel bied, geheel en al uitwis. Die doel van hierdie studie is om die problematiese bepalings van die aansporingsartikel te verlig en groter sekerheid daaroor te verskaf. Gevolglik is die betekenis van “nuut” en “nie-ooglopend” soos van toepassing op ‘n ontdekking van inligting as kwalifiserende N&O aktiwiteit, bestudeer. Verder is die omvang van die bepaling wat besteding op “bestuur of interne besigheidsprosesse” uitsluit van kwalifikasie vir die aansporingsinsentief, bestudeer in die konteks van rekenaar programmatuur ontwikkeling. By nadere ondersoek is daar bevind dat die betekenis van “nuut” en “nie-ooglopend” soos uitgelê vir doeleindes van IE wetgewing mutatis mutandis aangeneem kan word vir die uitleg van artikel 11D(1)(a) van die Inkomstebelastingwet. Vervolgens word inligting as “nuut” beskou indien dit nie deel uitmaak van die stand van die tegniek onmiddellik voor die datum waarop dit ontdek is nie. Die stand van die tegniek vir die bepaling van nuutheid behels alle stof wat reeds aan die publiek beskikbaar gestel is (hetsy binne die Republiek of elders) by wyse van skriftelike of mondelinge beskrywing, deur gebruik of op enige ander wyse. Inligting word as nie-ooglopend beskou indien ‘n gewone werker wat bedrewe is in die tegniek en gekonfronteer is met dieselfde probleem, nie geredelik die antwoord tot die probleem sou vind deur bloot staat te maak op sy intelligensie en die algemene kennis in die bedryf op die tydstip van die ontdekking nie. Daar is aan die hand gedoen dat die doel van die wetgewer nagestreef moet word met die uitleg van die “bestuur of interne besigheidsprosesse” uitsluiting. Die Verklarende Memorandum wat uitgereik is met die bekendstelling van artikel 11D het gemeld dat die wetgewer ten doel gehad het om Suid Afrika op ‘n gelyke speelveld met die res van die wêreld te plaas wat betref N&O. Die N&O belastingbepalings van Australië, die Verenigde Koninkryk (VK) en Kanada is dus bestudeer om die internasionale standaard in die opsig vas te stel. Die SAID is van mening dat die strekwydte van die uitsluiting so omvangryk is dat dit alle rekenaar programmatuur wat ontwikkel is vir ‘n bestuur- of interne besigheidsproses toepassing tref, ten spyte daarvan dat die bedoeling van die belastingpligtige was om die programmatuur te verkoop of te lisensieër aan ‘n onverbonde derde party. Dit was egter bevind dat so ‘n beperkende uitleg die aansporing van rekenaar programmatuur ontwikkeling in Suid Afrika geweldig benadeel in vergelyking met die regime wat geld in lande soos Australië, die VK en Kanada. Ten einde gevolg te gee aan die bedoeling van die wetgewer, is daar aan die hand gedoen dat die uitsluiting slegs so ver moet strek as om rekenaar programme vir eie gebruik te diskwalifiseer. Rekenaar programme wat dus ontwikkel word met die doel om dit te verkoop of te lisensieër aan onverbonde derde partye moet steeds vir die aansporingsinsentief kwalifiseer.

[This] dissertation is dedicated to this attempt of making South Africa a more environmentally sustainable economy through the development of new CDM projects. This dissertation examines the introduction of section 12K in the Income Tax Act 58 of 1962 and how this novel incentive interacts with our current income tax legislation. This dissertation highlights some issues surrounding the section 12K exemption which may detract from its true potential and proposes ways to resolve these issues in order to make this incentive more attractive to the CDM project developers.

The study will be based on a comparative analysis of the general antiavoidance section of the South African Income Tax Act no. 58 of 1962 and the Tanzanian Income Tax Act no. 11 of 2004. The focus is on how the two provisions are interpreted by showing the similarities and differences. The approach will be analytical and comparative, starting by showing the concept of tax avoidance and historical backgrounds of the two provisions.

Thesis (MAcc)--Stellenbosch University, 2015.
ENGLISH ABSTRACT: Section 24C of the Income Tax Act No. 58 of 1962 (‘the Act’) provides for a deduction of future expenditure that will be incurred by the taxpayer in the performance of his obligations under a contract from which the taxpayer derived income. Due to uncertainties regarding the meaning of certain words and phrases used in section 24C, the first aim of this assignment was to determine the meaning of the word ‘expenditure’ and the phrase ‘will be incurred’ as used in section 24C. The second aim was to establish how a taxpayer will prove with certainty that he will incur future expenditure in the performance of his obligations under a contract. This was done by discussing the effect of contractual terms and other circumstances and by taking into account certain additional guidelines regarding the interpretation of section 24C provided for in Interpretation Note: No. 78 (‘IN 78’). It was established that the word ‘expenditure’ means the amount of money spent, including the disbursement of other assets with a monetary value. The word ‘expenditure’ also specifically includes the voluntary payments and disbursements of assets. The word ‘expenditure’ can also include a loss if the word ‘loss’ can be equated to the word ‘expenditure’. The phrase ‘will be incurred’ implies that the taxpayer will, in a subsequent year of assessment, have an unconditional obligation to pay for expenditure, which must arise from the taxpayer’s obligations to perform under the contract. Contractual terms and other circumstances can indicate whether there is certainty that future expenditure will be incurred as aforementioned. Conditions and warranties are contractual terms that indicate that there is uncertainty regarding the taxpayer’s obligations to perform under the contract. A time clause in a contract can indicate that there is certainty regarding the taxpayer’s obligations to perform under the contract. Similar contracts with similar conditional obligations to perform cannot be grouped together in order to determine the probability, and thus the certainty, that future expenditure will be incurred in the performance of the taxpayer’s obligations under a contract. The probability that a taxpayer will perform his unconditional obligation under the contract must, however, be proved in order to demonstrate that there is certainty regarding the incurral of the future expenditure. IN 78 does not specify whether a loss which can, in certain circumstances, be equated to the word ‘expenditure’, is deductible under section 24C. This should be clarified. The new undefined phrases (a high degree of probability, inevitability, certainty and potentially contractually obligatory), as used in IN 78, might cause confusion when interpreting section 24C. These phrases should be defined and it should be explained how the high degree will be measured. Lastly, is was shown that an anomaly occurs regarding trading stock at hand at the end of a year of assessment, which will be utilised in a subsequent year of assessment in the performance of the taxpayer’s obligations under a contract. Such trading stock does not represent ‘future expenditure’ and must be excluded from the section 24C allowance. However, due to the interplay between section 24C and section 22(1), the taxpayer does not receive any tax relief for the expenditure actually incurred to acquire the closing trading stock in the year in which such trading stock is acquired. It is, therefore, questioned whether the established interpretation of section 24C is in agreement with the Legislator’s original intention with section 24C namely, to match income received under a contract with the related deductible expenditure.
AFRIKAANSE OPSOMMING: Artikel 24C van die Inkomstebelastingwet No. 58 van 1962 (‘die Wet’) voorsien ʼn aftrekking vir toekomstige onkoste wat deur die belastingpligtige aangegaan sal word in die nakoming van sy verpligtinge ingevolge ʼn kontrak waaruit hy inkomste verkry het. As gevolg van onsekerhede ten opsigte van die betekenis van sekere woorde en frases wat in artikel 24C gebruik word, was die eerste doelstelling van hierdie navorsingswerkstuk om die betekenis van die woord ‘onkoste’ en die frase ‘aangegaan sal word’, soos wat dit in artikel 24C gebruik word, te bepaal. Die tweede doelstelling was om vas te stel hoe 'n belastingpligtige met sekerheid sal bewys dat hy toekomstige onkoste sal aangaan in die nakoming van sy verpligtinge ingevolge ʼn kontrak. Dit is gedoen deur die effek van kontraksbedinge en ander omstandighede te bespreek en deur sekere bykomende riglyne ten opsigte van die interpretasie van artikel 24C, soos vervat in Interpretasienota No. 78 (‘IN 78’), in ag te neem. Daar is vasgestel dat die woord ‘onkoste’ die bedrag van geld wat bestee word, insluitend die uitbetaling van ander bates met 'n geldwaarde, beteken. Die woord ‘onkoste’ sluit ook spesifiek vrywillige betalings en uitbetalings van bates in. Die woord ‘onkoste’ kan ook 'n verlies insluit, indien die woord ‘verlies’ gelyk gestel kan word aan die woord ‘onkoste’. Die frase ‘aangegaan sal word’ impliseer dat die belastingpligtige, in 'n daaropvolgende jaar van aanslag, 'n onvoorwaardelike verpligting sal hê om vir onkostes te betaal. Hierdie onkostes moet ontstaan weens die belastingpligtige se verpligtinge ingevolge die kontrak. Kontraksbedinge en ander omstandighede kan aandui of daar sekerheid is dat die toekomstige onkoste, soos hierbo genoem, aangegaan sal word. Voorwaardes en waarborge is kontraksbedinge wat daarop dui dat daar onsekerheid is rakende die belastingpligtige se verpligtinge om ingevolge die kontrak op te tree. ʼn Tydsklousule in 'n kontrak kan aandui dat daar sekerheid is rakende die belastingpligtige se nakoming van sy verpligtinge ingevolge die kontrak. Soortgelyke kontrakte, met soortgelyke voorwaardelike verpligtinge kan nie saam gegroepeer word ten einde te bepaal of dit waarskynlik, en gevolglik seker is dat toekomstige onkoste in die nakoming van ʼn belastingpligtige se verpligtinge ingevolge die kontrak aangaan sal word nie. Die waarskynlikheid dat 'n belastingpligtige sy onvoorwaardelike verpligting ingevolge die kontrak sal nakom moet egter bewys word ten einde aan te dui dat daar sekerheid is dat toekomstige onkoste aangegaan sal word. IN 78 spesifiseer nie of 'n verlies wat, in sekere omstandighede, gelyk gestel kan word aan die woord ‘onkoste’, ingevolge artikel 24C aftrekbaar is nie. Duidelikheid hieromtrent moet verskaf word. Die nuwe, ongedefinieerde frases ('n hoë graad van waarskynlikheid, onafwendbaarheid, sekerheid en potensieel kontraktueel verpligtend (vry vertaal)), soos in IN 78 gebruik, kan moontlik verwarring veroorsaak wanneer artikel 24C geïnterpreteer word. Hierdie frases moet gedefinieer word en daar moet verduidelik word hoe ʼn hoë graad gemeet gaan word. Laastens blyk dit dat 'n teenstrydigheid ontstaan ten opsigte van handelsvoorraad op hande aan die einde van 'n jaar van aanslag, wat in 'n daaropvolgende jaar van aanslag deur die belastingpligtige in die nakoming van sy verpligtinge ingevolge 'n kontrak gebruik sal word. Sodanige handelsvoorraad verteenwoordig nie ‘toekomstige onkoste’ nie en moet by die artikel 24C toelaag uitgesluit word. Die belastingpligte ontvang egter, weens die wisselwerking tussen artikel 24C en artikel 22(1), nie ʼn belastingverligting vir die onkoste werklik aangegaan in die jaar waarin sodanige handelsvoorraad verkry is nie. Dit word dus bevraagteken of die bewese interpretasie van artikel 24C in ooreenstemming is met die Wetgewer se oorspronklike bedoeling met artikel 24C, naamlik, om inkomste ontvang ingevolge ʼn kontrak met die verwante aftrekbare uitgawes te paar.

Thesis (MComm)--University of Stellenbosch, 2004.
ENGLISH ABSTRACT: Despite the fact that transfer pricing legislation (i.e. section 31 of the Income Tax Act, 58 of 1962 (“the Act”) has been in force in South Africa since 1995, it has only been in the last three years that the South African Revenue Service (“SARS”) has embarked on a number of assessments of taxpayers’ cross border transactions with foreign group companies. In particular, the SARS targets taxpayers that have rendered cross border services (including financial assistance) to a foreign group company for no consideration and has assessed these taxpayers on the adjusted interest/ fee amounts. Since the burden of proof lies with the taxpayer to demonstrate that its cross border transactions with foreign group companies do not infringe the provisions of section 31(2) of the Act, this study provides taxpayers with guidance as to when its transactions would fall within the scope of application of section 31(2) of the Act and when the SARS would be excluded from applying the provision of section 31(2) of the Act. Following upon a critical analysis of the essential components of section 31(2) of the Act the following conclusions are drawn by the author: • If the taxpayer proves that it did not transact with a connected party (as defined in section 1 of the Act), or it did not supply goods or services in terms of an international agreement (as defined in section 31(1) of the Act), or its transfer price would be regarded as arm’s length, the Commissioner would be excluded from applying the provision of section 31(2) of the Act since all of the components to apply section 31(2) of the Act are not present. • The current view held by the South African Revenue Service and tax practitioners that transactions between a South African company and an offshore company, which are both directly or indirectly held more than fifty percent by an offshore parent company, are transactions between connected persons (as defined in 5 section 1 of the Act) is incorrect in law. Section 31 of the Act is not applicable to such transactions. • The Commissioner will be excluded from making a transfer pricing adjustment to a service provider’s taxable income where the following circumstances are present: o Where the cross border transaction with a connected party does not give rise to gross income, which is the starting point in the determination of taxable income, since the service provider agreed to render services for no consideration and was therefore not entitled to receive income (i.e. no receipt or accrual) and o Where the service provider can provide evidence that demonstrates that there was no practice of price manipulation as regards the transaction under review.
AFRIKAANSE OPSOMMING: Alhoewel oordragprysbeleid wetgewing (artikel 31 van die Inkomstebelastingwet 58 van 1962 (“die Wet”)) al sedert 1995 in Suid Afrika van krag is, het die Suid Afrikaanse Inkomstediens (“SAID”) eers werklik gedurende die laaste drie jaar begin om aanslae ten opsigte van belastingpligtiges se internasionale transaksies met buitelandse groepmaatskappye uit te reik. In die besonder teiken die SAID belastingpligtes wat dienste (insluitend lenings) aan buitelandse groepmaatskappye vir geen vergoeding lewer. Aangesien die bewyslas op die belastingpligtige rus om te bewys dat sy internasionale transaksies met buitelandse groepmaatskappye nie die bepalings van artikel 31(2) van die Wet oortree nie, word belastingpligtiges in hierdie studie van riglyne, wat aandui wanneer transaksies met buitelandse groepmaatskappye binne die omvang van artikel 31(2) van die Wet val asook onder welke omstandighede die SAID verhoed sal word om artikel 31(2) van die Wet toe te pas, voorsien. Na aanleiding van ‘n kritiese analise van die deurslaggewende komponente van artikel 31(2) van die Wet kom die skrywer tot die volgende gevolgtrekkings: • As die belastingpligte kan bewys dat hy nie met ‘n verbonde persoon (soos omskryf in artikel 1 van die Wet) handelgedryf het nie, of dat hy nie goedere of dienste in terme van ‘n internasionale ooreenkoms (soos omskryf in artikel 31(1) van die Wet) gelewer het nie, of dat sy oordragprys as arm lengte beskou kan word, sal die Kommissaris verhoed word om die bepaling van artikel 31(2) van die Wet toe te pas, aangesien al die komponente van artikel 31(2) van die Wet nie teenwoordig is nie. • Die huidige sienswyse van die SAID en belastingpraktisyns dat transaksies wat tussen ‘n Suid Afrikaanse maatskappy en ‘n buitelandse maatskappy plaasvind, waar ‘n buitelandse moedermaatskappy meer as vyftig persent van albei maatskappye se aandeelhouding (direk of indirek) hou, beskou kan word as 7 transaksies tussen verbonde persone (soos omskryf in artikel 1 van die Wet) is regstegnies nie korrek nie. Artikel 31(2) van die Wet is nie van toepassing op sulke transaksies nie. • Die Kommisaris sal onder die volgende omstandighede verhoed word om enige oordragprysaanpassing aan ‘n diensleweraar se belasbare inkomste te maak: o Waar die internasionale transaksie met ‘n verbonde persoon nie bruto inkomste (die beginpunt van ‘n belasbare inkomste berekening) voortbring nie, aangesien die diensleweraar ingestem het om dienste teen geen vergoeding te lewer, wat tot die gevolg het dat die diensleweraar nie geregtig is om inkomste te ontvang nie (dus geen ontvangste of toevalling) en o Waar die diensleweraar kan bewys dat die transaksie nie onderhewig aan prys manipulasie was nie.

Thesis (MAcc)--Stellenbosch University, 2014.
ENGLISH ABSTRACT: The requirements of section 11(a) and section 24J(2) were considered in this research assignment, from both a money-lender’s and an investment holding company’s perspective, to determine whether interest, losses on irrecoverable loans and raising fees were tax deductible. It was determined, that if the trade requirement is satisfied by the money-lender, then the above-mentioned expenses are fully tax deductible. However, if the trade requirement is satisfied by the investment holding company then only the interest is fully tax deductible. It is further submitted however in this research assignment that it cannot be said that the money-lender alternative is better than the investment holding company alternative – both alternatives are of equal value in the current tax system. What is important though is that taxpayers who will fit the mould of an investment holding company will now be able to use the principles set out in this research assignment to prove that it is in fact carrying on a trade for tax purposes, something that taxpayers are generally reluctant to pursue. If this is pursued, taxpayers may have the added tax benefit of tax deductible interest expenditure (in full) in cases where this was not previously the norm (and an investment holding company will not have to satisfy any of the guidelines of the “money-lender test” when it seeks to deduct its interest expense in full). However, if an investment holding company seeks to deduct losses on irrecoverable loans and raising fees for tax purposes, it will not have to satisfy all the guidelines of the “money-lender test”, but it will have to satisfy one guideline, that being the “system or plan” and “frequent turnover of capital” guideline. It will be very difficult for an investment holding company to prove this on the facts of the case – it will arguably take a special set of facts to accomplish this mean feat.
AFRIKAANSE OPSOMMING: Die vereistes van artikel 11(a) en artikel 24J (2) is in hierdie navorsingsopdrag vanuit ʼn geldskieter en 'n beleggingshouermaatskappy se perspektief oorweeg, om die belastingaftrekbaarheid van rente, verliese op oninvorderbare lenings en diensfooie te bepaal. Daar is vasgestel dat indien die bedryfsvereiste deur ʼn geldskieter nagekom word, bogenoemde uitgawes ten volle vir belastingdoeleindes aftrekbaar is. Indien die bedryfsvereiste egter nagekom word deur ʼn beleggingshouermaatskappy sal slegs die rente ten volle aftrekbaar wees vir belastingdoeleindes. Verder word dit in die navorsingsopdrag aan die hand gedoen dat daar nie gesê kan word dat die geldskieter-alternatief beter is as die beleggingshouermaatskappy-alternatief nie – beide alternatiewe is van gelyke waarde in die huidige belastingbestel. Die onderskeid is egter belangrik, aangesien die belastingbetalers wat aan die vereistes van ʼn beleggingshouermaatskappy voldoen, nou in staat sal wees om die beginsels wat in hierdie navorsingsopdrag uiteengesit word, te gebruik om te bewys dat die beleggingshouermaatskappy in werklikheid ʼn bedryf vir belastingdoeleindes beoefen. Belastingbetalers is oor die algemeen huiwerig om dit te poog. Indien wel, kan belastingbetalers ʼn belastingaftrekking ten opsigte van rente uitgawes kry, wat voorheen nie die norm was nie (ʼn beleggingshouermaatskappy sal nie enige van die “geldskietertoets” riglyne hoef na te kom wanneer dit poog om ʼn belastingafrekking vir die rente uitgawe te kry nie). Indien ʼn beleggingshouermaatskappy verliese op oninvorderbare lenings en diensfooie vir belastingdoeleindes wil aftrek, sal die belastingbetaler nie al die “geldskietertoets” riglyne hoef na te kom nie, maar sal egter moet voldoen aan die “stelsel of plan” en “gereelde omset van kapitaal” riglyne. Dit sal baie moeilik wees vir 'n beleggingshouermaatskappy om dit te bewys op grond van die feite van die saak – dit sal waarskynlik ʼn spesiale stel feite verg om dit te bereik.

A critical analysis of the implementation of the 'pay now, argue later' principle by SARS as provided by section 164 of the Tax Administration Act 28 of 2011: Abstract: The 'Pay Now, Argue Later' principle applies in income tax or value-added tax collection procedure after the South African Revenue Services has concluded an assessment in terms of the Tax Administration Act 28 of 2011 and found that an amount of tax is due and payable by the taxpayer. In terms of the 'pay now, argue later' principle, the taxpayer has to pay the assessed amount before being accorded an opportunity to raise any objections. The purpose of this paper is, to do an in-depth evaluation of the implications of the implementation of the 'pay now, argue later' principle by SARS. The implementation of the principle will be evaluated to determine if it is unjust, inequitable or unreasonable. In addition to the latter evaluation, the principle's shortfalls will be highlighted with the inclusion of a brief legal position in other countries. The paper acknowledges the existence of the principle, although the implementation thereof by SARS remains questionable and a source of controversy. The paper ultimately concludes that the 'pay now, argue later' principle, though constitutionally validated to a certain extent need to be revised. A balance has to be struck between the taxpayer's rights, public interest and SARS' powers in implementing the principle. A recommendation is therefore made to place the implementation thereof in the Tax Ombud in view of UK's Taxes Management Act where Commissioners resolve such disputes between taxpayers and the Inland Revenue Authority. ******************************************* Limitation of interest deduction in South Africa: a suggested approach to the application of sections 31 and 23M of the Income Tax Act 58 of 1962 to debt and equity business financing methods. Abstract: The South African income tax system acknowledges the financing of resident companies by a related non-resident company through the use of debt and equity. However, the use of debt financing method is a cause for concern to the South African Revenue Services as it results in the base erosion and profit shifting of taxable profits through mispricing and excessive interest deductions. Section 31 and 23M were inserted into the South African Income Tax Act 58 of 1962 to address excessive debt levels and interest deductions. The objective of this paper is to analyse the rationale behind the use of debt and equity financing methods. This paper will also discuss the application of both s 31 and s 23M. Due to the close connection of s 31 and s 23M to debt transactions, an approach on how the two sections can be applied is suggested. This paper finds that the provisions of both s 31 and s 23M are applicable to the same set of facts. The paper also finds that s 31 provisions are applied to determine if a company has excessive debts taking into account the arm's length principle while s 23M provisions are applied to limit interest deductions. The paper suggests that the legislature should provide guidance on the interplay of the two provisions and in the absence of any guidance, the provisions of s 31 should be applied first followed by the provisions of s 23M.

Thesis (MComm)--Stellenbosch University, 2011.
ENGLISH ABSTRACT: Section 74D of the Income Tax Act No 58 of 1962 (the Act) grants the power of search and seizure to the South African Revenue Service, the basic underlying principle being that the Commissioner has to obtain a warrant from a judge prior to a search and seizure operation. The previous section 74(3) of the Act provided that the Commissioner was allowed himself to authorise and conduct a search and seizure operation without the requirement of a warrant. Section 74D of the Act was recently reviewed and the Tax Administration Bill (the TAB) contains the new provisions on search and seizure that will replace section 74D of the Act. In this assignment, the concept of search and seizure was examined by considering the cases, academic writing and other material on the topic. The objectives were to analyse the development of search and seizure in South African income tax law, to provide a basic understanding of the warranted and warrantless search and seizure provisions of the Act and the TAB, to determine their constitutionality and to determine the remedies available to a taxpayer who has been subject to a search and seizure. It was found that search and seizure has developed from warrantless under the previous section 74(3) of the Act into the requirement of a warrant under section 74D of the Act into a combination of both under the TAB. The concept of an ex parte application was analysed, which was shown to be permissible in certain circumstances under section 74D of the Act, while it is now compulsory in terms of the TAB. It was shown that the TAB closed the lacuna in the Act relating to the validity period of a warrant before it has been executed. It was, however, concluded, regarding whether a warrant expires when exercised or whether the same warrant can be used again to conduct a second search and seizure, that the position is not quite certain in terms of the Act and the TAB. It was found that there is no defined meaning of the reasonable grounds criterion, which is often required to be met in terms of the Act and the TAB, but that anyone that has to comply with the criterion must be satisfied that the grounds in fact exist objectively. The new warrantless search and seizure provisions of the TAB were analysed. It was established that warrantless search and seizure provisions are not uncommon in other statutes, but that the content thereof often differs. The new warrantless provisions were compared to the warrantless search and seizure provisions of, inter alia, the Competition Act No 89 of 1998 (the Competition Act), and it was found that the warrantless TAB provisions are not in all respects as circumscribed as those of the Competition Act and recommendations for counterbalances were made. It was concluded that the warranted search and seizure provisions of the Act and the TAB should be constitutionally valid but that the constitutionality of the new warrantless provisions of the TAB is not beyond doubt. It was furthermore found that the remedies at the disposal of a taxpayer who has been subject to a search and seizure should indeed be sufficient, but that there are no remedies available to a taxpayer to prevent injustice or harm.
AFRIKAANSE OPSOMMING: Artikel 74D van die Inkomstebelastingwet No 58 van 1962, (die Wet) verleen aan die Suid-Afrikaanse Inkomstediens die mag van deursoeking en beslaglegging, die grondliggende beginsel synde dat die Kommissaris ’n lasbrief van ’n regter moet verkry voor die deursoeking en beslaglegging kan plaasvind. Die vorige artikel 74(3) van die Wet het bepaal dat die Kommissaris self ’n deursoeking en beslaglegging kon magtig en uitvoer sonder die vereiste van ’n lasbrief. Artikel 74D van die Wet is onlangs hersien en die nuwe Belastingadministrasie-wetsontwerp (BAW) bevat die nuwe bepalings oor deursoeking en beslaglegging wat artikel 74D van die Wet sal vervang. In hierdie werkstuk is die konsep van deursoeking en beslaglegging ondersoek deur oorweging van die hofsake, akademiese skrywe en ander materiaal oor die onderwerp. Die doelstellings was om die ontwikkeling van deursoeking en beslaglegging in die Suid-Afrikaanse inkomstebelastingreg te ontleed, om ’n basiese begrip van die bepalings in die Wet en die BAW oor deursoeking en beslaglegging met en sonder ’n lasbrief te verskaf, om die grondwetlikheid daarvan te bepaal en om die remedies te bepaal wat beskikbaar is vir ’n belastingpligtige wat onderworpe was aan deursoeking en beslaglegging. Daar is bevind dat deursoeking en beslaglegging ontwikkel het vanaf sonder ’n lasbrief ingevolge die vorige artikel 74(3) van die Wet tot die vereiste van ’n lasbrief ingevolge artikel 74D van die Wet tot die kombinasie van albei ingevolge die BAW. Die konsep van ’n ex parte-aansoek is ontleed, en dit blyk in sekere omstandighede ingevolge artikel 74D van die Wet toelaatbaar te wees, terwyl dit nou ingevolge die BAW verpligtend is. Daar is aangedui dat die BAW die lacuna in die Wet oor die geldigheidsperiode van ’n lasbrief voordat dit uitgevoer is, verwyder het. Daar is egter bevind, rakende die vraag of ’n lasbrief verval wanneer dit uitgevoer word en of dieselfde lasbrief weer gebruik kan word om ’n tweede deursoeking en beslaglegging uit te voer, dat daar nie sekerheid ingevolge die Wet of die BAW bestaan nie. Daar is bevind dat daar geen gedefinieerde betekenis vir die kriterium van redelike gronde is nie, waaraan dikwels ingevolge die Wet en die BAW voldoen moet word, maar dat enigiemand wat aan die kriterium moet voldoen tevrede moet wees dat die gronde inderwaarheid objektief bestaan. Die nuwe bepalings van die BAW oor deursoeking en beslaglegging sonder ’n lasbrief is ondersoek. Daar is vasgestel dat bepalings oor deursoeking en beslaglegging sonder ’n lasbrief nie ongewoon is in ander wette nie, maar dat die inhoud daarvan dikwels verskil. Die nuwe bepalings oor deursoeking en beslaglegging sonder ’n lasbrief is vergelyk met die bepalings oor deursoeking en beslaglegging sonder ’n lasbrief van, inter alia, die Mededingingswet No 89 van 1998 (die Mededingingswet), en daar is bevind dat die BAW-bepalings oor deursoeking en beslaglegging sonder ’n lasbrief nie in alle opsigte so afgebaken is soos dié van die Mededingingswet nie en voorstelle vir teenwigte is gemaak. Die gevolgtrekking is gemaak dat die bepalings oor deursoeking en beslaglegging met ’n lasbrief van die Wet en die BAW grondwetlik geldig behoort te wees, maar dat die grondwetlikheid van die nuwe bepalings van die BAW oor deursoeking en beslaglegging sonder ’n lasbrief nie onweerlegbaar is nie. Daar is verder bevind dat die remedies tot die beskikking van ’n belastingpligtige wat onderworpe was aan deursoeking en beslaglegging inderdaad genoegsaam behoort te wees, maar dat daar geen remedies aan ’n belastingpligtige beskikbaar is om ongeregtigheid of skade te voorkom nie.

M.Comm.
Herstelwerk vorm 'n belangrike gedeelte van die koste-struktuur van ondernemers. Natuurlike verwering en agteruitgang het tot gevolg dat herstelwerk aan sekere bates gedoen word. Meeste persone het 'n persepsie wat herstelwerk verteenwoordig. Die persepsie van wat ondernemers beskou as herstelwerk is nie noodwendig in ooreenstemming met artikel 11(d) van die Wet nie asook toetste wat deur die howe neergele is nie. Ten einde 'n sinvolle uiteensetting te verskaf was dit nodig om die onderwerp in sinvolle komponente te verdeel. Die inleidende paragraaf tot artikel 11 is eers ontleed aangesien dit ook die inleidende paragraaf tot artikel 11(d) – wat handel oor herstelwerk -verteenwoordig. Vervolgens is artikel 11(d) van die Wet ontleed ten einde die studie in konteks te plaas. Die begrip van herstelkoste is daarna ontleed en 'n onderskeid is gemaak met faktore wat kan dui op 'n verbetering. Die invloed van koste op beslissings is ook ondersoek. Met betrekking tot die inleidende paragraaf van artikel 11 is gevind dat "belasbare inkomste" bereken word deur van "bruto inkomste" vrystellings (soos in artikel 10 van die Wet uiteengesit) of te trek en daarna die ander aftrekkings soos in die Wet uiteengesit. Een van hierdie aftrekkings is herstelwerk wat in artikel 11(d) van die Wet uiteengesit word en die onderwerp van hierdie studie is. Aangesien hierdie "belasbare inkomste" deur 'n "persoon" verdien moet word is hierdie begrip ontleed. Daar is gevind dat die begrip "persoon" 'n afdelingsraad, munisipale raad, dorpsbestuur of derglike gesag; 'n maatskappy (of beslote korporasie); enige liggaam van persone, 'n natuurlike persoon; 'n vereniging van persone; die boedel van 'n oorlede persoon; 'n insolvente boedel en 'n trust insluit. Voordat 'n aftrekking toegestaan kan word om "belasbare inkomste" te bereken moet 'n "persoon" 'n bedryf "beoefen". Daar is vasgestel dat beoefen `n daadwerklike optrede moet wees en dat die "persoon" homself daarop moet toele. In die studie is gevind dat die begrip "bedryf' baie wyd is en nie uitputtend is nie. Daar is wel 'n omskrywing in artikel 1 tot die Wet maar die vraag of 'n bedryf beoefen word moet op grond van die feite beslis word. Met betrekking tot artikel 11(d) is eerstens gevind dat "onkoste" en "uitgawes" dieselfde betekenis het. Daar is vervolgens bevind dat daar 'n onvoorwaardelike regsaanspreeklikheid in die jaar van aanslag moet wees voordat die onkoste as 'n aftrekking toegelaat sal word. Alhoewel daar nie hofsake is wat handel oor die betekenis van "eiendom" ingevolge die spesifieke bepalings van artikel 11(d) nie word die afleiding gemaak dat dit verwys na geboue. Dit is 'n vereiste dat die eiendom of vir bedryfsdoeleindes geokkupeer moet word Of die eiendom moet in staat wees om inkomste voor te bring.

The purpose of this study was to examine whether the general expenditure incurred by developers constructing residential units, whereby life rights are exchanged for interest free loans, are deductible in terms of the provisions of the Income Tax Act (58/1962). Furthermore to determine whether the judgement in CSARS v Brummeria Renaissance (Pty) Ltd and others, 2007 (4) All SA 1338 (SCA) 69 SATC 205, and its findings in law and of fact affects the deductibility of expenses incurred by developers, especially in relation to the “amount” and nature of the “amount” in the hands of the taxpayer. The research also sought to determine whether the accounting of amounts in life right exchange agreements, especially as relates to the quantification of such amount, assist in quantifying the amount for tax purposes. The research object was determined by critically analysing the relevant provisions of the ITA (58/1962) with reference to case law and commentators and a critical evaluation of Brummerria Renaissance case supra (2007:205) to determine its affect on the deductibility of the expenses relating to the quantum and nature of the benefit amount received under the life right. Furthermore, an evaluation was done of the relevant accounting standards in relation to the transactional facts to determine whether an alternative valuation model of the benefit is available. It was determined that firstly permissible and then prohibited deductions must be addressed in accordance with the ITA (58/1962). It was further evaluated whether the provision of the right of use, through the life right, can constitute an expense for the developer. It was concluded that incurring general expenses meet the requirements of section 11(a), subject to a single qualification, would be deductible. It was also submitted that the provision of the life right as expenditure should be permissible as deduction against income. However, in both these cases the deductibility in question was held to be subject to the amount received as envisaged in Brummeria Renaissance case supra (2007:205) being revenue in nature. The deductibility of the repair or preparation costs was also examined in terms of section 11(d). The distinction between repair and improvement was discussed and established. It was determined that the determination of when the “income is receivable” was critical in determining the deductibility. It was concluded that this requirement was met if the property was in a condition to receive such income irrespective of whether legal rights to such income had been established at such time that the expenses were incurred. The application of this section is also subject to the amount received, as envisaged in Brummeria Renaissance case supra (2007:205), being revenue in nature. The requirement of “income” is critical in the application of section 11(a) and section 11(d) of the ITA (58/1962), because if the amount is found to be capital in nature no deduction is permissible. The nature of the rights, timing of the accrual and the valuation method of the amount were not decided in the judgement in Brummeria Renaissance case supra (2007:205), and as a result, formed part of the research. The nature of the amount was analysed and it was concluded that the amount was income in nature. The various case law and commentators, including SARS’ IN 58, was also analysed to determine which valuation method of the benefit amount would be the most appropriate in the application of the provisions of the ITA (58/1962). To this extent it was submitted that three possible valuation methods could apply, namely the valuation of the benefit as arms length interest on the loan, the valuation of the benefit as the sale of a usufructuary interest or that the benefit amount could be represented as market related rentals in an arm’s length transaction. It was concluded that in order to determine the value and the timing of the benefit the most suitable valuation method would be to calculate interest on the face value of the loan using a market related interest rate. The benefit would be recognised over the term of the loan by calculating the interest on an annual basis on value of the loan. The various applicable accounting standards were evaluated to determine which best represents the measurement of the benefit as envisaged in Brummeria Renaissance case supra (2007:205). It was concluded that the most appropriate of the various possible accounting standards was IAS 32 which prescribed that the benefit should be determined and valued on a yearly basis in relation to the loan as a financial instrument. It was concluded that the basis for valuing and recognising the benefit for accounting purposes interrelates with the suggested accrual and timing thereof for tax purposes. AFRIKAANS : Die doel van die navorsing was om ondersoek in te stel of die algemene uitgawes aangegaan deur ontwikkelaars in die konstruksie van residensiële eenhede waar lewensregte geruil word vir rentevrye lenings, aftrekbaar sal wees in terme van die bepalings van die Inkomstebelastingwet (58/1962). Daar is verder ook ondersoek ingestel om vas te stel of die uitspraak in Kommisaris van die Suid Afrikaanse Inkomstediens v Brummeria Renaissance (Edms) Bpk en andere, 2007 (4) All SA 1338 (SCA) 69 SATC 205, die aftrekbaarheid van die uitgawes aangegaan deur die ontwikkelaars affekteer, veral in verband met die “bedrag” en aard van die “bedrag” in die hande van die belastingbetaler. Met die navorsing word daar bepaal of die rekeningkundige hantering van bedrae in lewensreg ruilooreenkomste, veral ten opsigte van die kwantifisering daarvan, kan bydrae tot die kwantifisering daarvan vir belastingdoeleindes. Die navorsingsdoelstelling is vasgestel deur die relevante bepalings van die Inkomstebelastingwet (58/1962) met verwysing na hofsake en kommentaar, ‘n kritiese evaluasie van Brummerria Renaissance saak supra (2007:205), om vas te stel wat die uitwerking daarvan is op die aftrekbaarheid van die uitgawes wat verband hou met die hoeveelheid en die aard van die voordeel bedrag ontvang in terme van die lewensreg, asook die evaluering van die relevante rekeningkundige standaarde ten opsigte van die feite van die transaksie om te bepaal of ‘n alternatiewe waardasie model van die voordeel beskikbaar is. Daar is besluit dat die aftrekkings wat eerstens toegelaat en dan verbied word aangespreek moet word in ooreenstemming met die Inkomstebelastingwet (58/1962). Daar is verder bepaal of die voorsiening van die reg om te gebruik deur middel van die lewensreg, ‘n uitgawe in die hande van die ontwikkelaar kan wees. Daar is tot die gevolgtrekking gekom dat die aangaan van algemene uitgawes voldoen aan die vereistes van artikel 11(a) en aftrekbaar is. Dit is ook vasgestel dat die voorsiening van die lewensreg as uitgawe aftrekbaar sal wees teen inkomste. In albei hierdie gevalle is die aftrekbaarheid onderworpe daaraan dat die bedrag ontvang soos vasgestel in Brummeria Renaissance saak supra (2007:205) inkomste van aard is. Die aftrekbaarheid van die herstel- of voorbereidingskostes is ook ondersoek in terme van artikel 11(d). Die onderskeid tussen herstel en verbetering is bespreek en bepaal. Daar is vasgestel dat die bepaling van wanneer die “inkomste ontvangbaar” is, krities is in die bepaling van die aftrekbaarheid daarvan. Daar is tot die gevolgtrekking gekom dat die vereiste nagekom is as die eiendom in ‘n toestand is om inkomste te ontvang ongeag of die reg tot die inkomste bepaal is teen die tyd dat die uitgawes aangegaan is. Die toepassing van hierdie artikel is ook onderworpe daaraan dat die bedrag ontvang soos bepaal in Brummeria Renaissance saak supra (2007:205) inkomste van aard is. Die vereiste van “inkomste” is krities in die toepassing van artikel 11(a) en artikel 11(d) van die Inkomstebelastingwet (58/1962) omrede geen aftrekking toegelaat sal word indien die bedrag kapitaal van aard is nie. Geen besluit is geneem oor die aard van die regte, die tydstip van die toevalling en die waardasiemetode van die bedrag in die uitspraak in Brummeria Renaissance saak supra (2007:205), en as gevolg daarvan vorm dit deel van die navorsing. ‘n Analise van die aard van die bedrag is gedoen en daar is tot die gevolgtrekking gekom dat die bedrag inkomste van aard is. Die verskillende hofsake en kommentaar, insluitende SARS se IN 58, is ook analiseer om te bepaal watter waardasiemetode van die voordeel mees gepas sal wees in die toepassing van die Inkomstebelastingwet (58/1962). Tot hierdie mate is dit aanvaar dat daar drie moontlike waardasiemetodes van toepassing kan wees, naamlik die waardasie van die voordeel op die lening in ‘n armslengte transaksie, die waardasie van die voordeel as die verkoop van ‘n vruggebruik of die voordeel van die bedrag kan verteenwoordig word deur die markverwante huurinkomste in ‘n armslengte transaksie. In bepaling van die waarde en die tydstip van die voordeel is die gevolgtrekking gemaak dat die mees gepaste waardasiemetode sal wees om rente op die sigwaarde van die lening te bereken deur ‘n markverwantrentekoers te gebruik. Die voordeel sal dan erken word oor die tydperk van die lening deur die die rente jaarliks te bereken op die waarde van die lening. Die verskillende rekeningkundige moontlikhede is ondersoek om die metode te bepaal wat waardasie van die voordeel soos in Brummeria Renaissance saak supra (2007:205) die beste verteenwoordig. Daar is tot die gevolgtrekking gekom dat die mees gepaste rekeningkundige standpunt IAS 32 is waarvolgens die voordeel op ‘n jaarlikse basis bepaal word in verhouding met die lening as ’n finansiële instrument. Daar is tot die gevolgtrekking gekom dat die metode van die waardasie en erkenning van die voordeel vir rekeningkundige doeleindes regstreeks verband hou met die voorgestelde toevalling en tydstip daarvan vir belastingdoeleindes. Copyright
Dissertation (MCom)--University of Pretoria, 2012.
Taxation
unrestricted

For a taxpayer to be able to carry forward a balance of an assessed loss from a prior year, there are two conditions which have to be fulfilled according to section 20 of the South African Income Tax Act, 58 of 1962 namely:

• The taxpayer has to be carrying on a trade and,
• Income has to be generated from the trade.

The onus to prove that both these requirements have been met rests on the taxpayer in terms of section 82 of the Income Tax Act. This study looks at the second requirement which has been a contentious issue as far as its interpretation is concerned. The first point of departure was to analyse the meaning of “income” in this requirement as there have been conflicting views between the South African Revenue Service’s Interpretation Note No. 33 and various High Court and Supreme Court of Appeal court cases. The area of concern is whether “income” in this context should have its ordinary meaning per the Income Tax Act of “gross income less exempt income” or whether it should be “pre-tax profit” or “taxable income”. The implementation of the “income from trade” requirement often leads to anomalies, unintended results and uncertainty with the application of section 20 of the Income Tax Act. This study takes a look at the “income from trade” requirement and whether the way it is implemented makes good tax policy by analysing the arguments for and against the retention of this requirement. The study also addresses the issue as to whether the use of the purposive interpretation, as opposed to the grammatical interpretation, of section 20 of the Income Tax Act could possibly be followed in cases where the implementation of the “income from trade requirement” leads to anomalies, unintended results and uncertainty with the correct application of section 20.
Dissertation (LLM)--University of Pretoria, 2013.
Mercantile Law
unrestricted

Tax avoidance is a key international tax issue. Combating tax avoidance has been placed high on the agenda by the South African Revenue Service (SARS) and other tax authorities in the world. This research report will examine how the judgments of certain South African cases would have been different if the anti-avoidance provisions in sections 80A to 80L were applied instead of those in section 103(1).

The aim of this technical report is to provide a detailed and critical commentary on and analysis of the general anti-avoidance section in the Income Tax Act 58 of 1962 paying particular attention to the introduction of the so-called business purpose test. The South African Acts that are the subject of this technical report are as follows: • The Income Tax Act 58 of 1962. • The Income Tax Act 21 of 1995. • The Income Tax Act 36 of 1996. • The Revenue Laws Amendment Act 46 of 1996. • The General Law Amendment Act 49 of 1996. • The Income Tax Act 28 of 1997. • The South African Revenue Service Act 34 of 1997. • The Estate Duty Act 45 of 1955. • The Value-Added Tax Act 89 of 1991. • The Transfer Duty Act 40 of 1949. The principal South African taxes dealt with in this technical report are as follows: • Normal Tax. • Donations Tax. • Estate Duty. Also covered is the legislation contained in the abovementioned Acts affecting estate planning schemes, generation skipping devices, income splitting schemes and tax avoidance schemes.
Thesis (M.Com.)-University of Natal, Durban, 1999.

M.Comm. (South African & International Taxation)
The capital allowance mentioned in section 11(e) of Income Tax Act 58 of 1962 (“the Act”) refers to machinery, plant, implements, utensils and articles, the value of which may have diminished by reason of wear and tear or depreciation. The machinery, plant, and articles in question, often accede to other assets of a permanent nature such as immovable buildings. This is a problem in South Africa because the wear and tear allowance is lost when machinery, plant or articles lose their identities upon being absorbed into assets of a permanent nature such as a building. Buildings and other structures of a permanent nature do not qualify for the wear and tear allowance in terms of section 11(e) of the Act. This article investigates the uncertainties with regard to interpreting what constitutes “buildings, or other structures or works of a permanent nature” for the purposes of the prohibition of wear and tear allowances contained in section 11(e)(ii) of the Act.

For eighty-six years up to the year 2000, the South African income tax system was based primarily on the source principle. This meant that only income which was from a source in the Republic or deemed to be from a source in the Republic was taxable in the hands of residents. The election of a new Government in 1994, and the subsequent relaxation in exchange controls, necessitated a change from the source-based system of taxation to a residence-based system of taxation. The residence-based system of taxation in turn necessitated the introduction of new legislation to ensure that South African residents were taxed on their foreign source income, and appropriate anti-avoidance provisions were in place in order to prevent an erosion of the South African tax base. The residence-based system of taxation was phased into South Africa by the introduction of section 9C to the Act. Section 9C was introduced in 1997 as an interim and partial provision which provided for the taxation of foreign passive income on a residence-basis. A possible loophole that the revenue authorities needed to deal with at the time was the fact that residents could establish controlled foreign companies in low tax jurisdictions and divert and accumulate income in such foreign jurisdictions, thereby escaping the South African tax net by avoiding or at least deferring South African tax on such income. Section 9D was introduced simultaneously with section 9C in 1997 as the specific antiavoidance provision in this regard. With the introduction of a residence-based system of taxation effective from years of assessment commencing on or after 1 January 2001, section 9C was repealed. As a result section 9C and the concepts of 'active, and 'passive' income are of historical significance, and the main focus in terms of a residence-based taxation system now remains a decision regarding whether or not a taxpayer is a 'resident' as defined in the Act. This dissertation critically analyses the structure, application, exemptions and shortcomings of section 9D as an anti-avoidance provision consequential upon the introduction of a residence-based system of taxation, and states the law up to and including the Revenue Laws Amendment Act 74 of 2002, which took effect from the commencement of years of assessment ending on or after 1 January 2003.
Thesis (M.Com.)-University of Natal, Pietermaritzburg, 2003.

LL.M. (Tax Law)
Capital Gains Tax (“CGT”) was introduced with effect from 1 October 2001 by the insertion of section 26A and an Eighth Schedule into the Income Tax Act 58 of 1962, by the Taxation Laws Amendment Act 5 of 2001. Paragraph 40(1) of the Eight Schedule provides that a deceased person must, with certain exceptions, be treated as having disposed of his assets to his estate for proceeds equal to the market value of those assets as at the date of death. Paragraph 40(1A) of the Eight Schedule provides that if an asset of a deceased person is treated as having been disposed of under paragraph 40(1) and is transferred directly to the estate of the deceased person, the estate must be treated as having acquired the asset at a cost equal to its market value as at the date of death for base-cost purposes, and if the asset is transferred directly to an heir or legatee, the heir or legatee must be treated as having acquired the asset at a cost equal to its market value as at the date of death for base-cost purposes. The capital gain will be the difference between the market value of a taxable asset of the deceased on the date of his death and its base cost to him, which is included in his final income tax assessment and which will have to be settled out of the estate‟s assets. There are many arguments in favour of the discontinuance of the levying of CGT at the death of a taxpayer in South Africa, which arguments become evident when comparing the South African CGT provisions regarding the levying of CGT at death with tax jurisdictions such as Australia, the United States, the United Kingdom, Canada, Botswana and Nigeria. Canada for example abolished their inheritance tax in 1972 which in that particular situation justifies the levying of CGT at death. If CGT will continue to be levied at the death of a taxpayer it is suggested that a carry-over approach in terms of which the heir inherits the asset at its acquisition cost and the CGT liability is deferred until the heir actually disposes of the asset should be followed. This approach is currently followed in Australia, Botswana and Nigeria. The holder of an inherited bare dominium will suffer at the hands of a CGT anomaly where the deceased created a limited interest, for example a usufruct over a fixed property bequeathed by him to the bare dominium holder. The anomaly that transpires is that the limited interest created by the deceased will result in an artificial drop in the base cost of the fixed property so bequeathed and there will be no adjustment to the base cost when the bare dominium holder succeeds to full ownership of the fixed property, for example when the usufructuary passes away, meaning that the same capital gain will be taxed twice. It is submitted that legislative amendments are required to provide for an increase in the base cost applicable to the bare dominium holder when the usufructuary eventually passes away. Alternatively the SARS‟s current practice in this respect should be altered to avoid the unbearable situation where a capital gain may be taxed at 2 separate instances. At least two anomalies exist when dealing with capital losses in the deceased‟s final period of assessment and in the winding up of the deceased‟s estate. Firstly a capital loss may not be carried forward from the deceased‟s final assessment to his deceased estate to be set off against capital gains that may be realised in the winding up of the estate. Secondly a capital loss incurred on the sale of a capital asset during the winding up of a deceased estate cannot be carried over from the deceased estate to the heirs of the deceased and will thus remain unutilised. It is suggested that the method followed in Canada in respect of capital losses that occurred in the year of a taxpayer‟s death should be followed in South Africa, ie that such capital loss may be carried back three years in order to reduce any taxable capital gains that occurred in those years or that the capital losses may be utilised to reduce other income of the taxpayer in his final return. It is further suggested that this method should also be followed in respect of unutilised capital losses that occurred in the winding up of the estate, alternatively the capital losses so realised must be carried over to the heirs of the deceased.

This study examines the factors to consider in establishing an effective tax Ombudsman in South Africa. It seeks to establish how the democratic protection institutions such as the South African Public Protector and the South African Human Rights Commission and the Courts created in terms of the 1996 Constitution vis-à-vis the ways the South African Revenue Service‟ (hereinafter referred to as SARS) new court rules and Service Monitoring Offices safeguard and protect taxpayers rights against SARS‟ administrative abuses. The researcher reviews and analyses literature gathered from the following sources: the Australian and Canadian tax Ombudsman, the United Kingdom‟s tax adjudicator, the South African motor industry Ombudsman, the South African banking services Ombudsman, the South African Public Protector, the Tax Administration Act (28 of 2011) (hereinafter referred to as the TAA), the South African Constitution (108 of 1996), and other popular scientific articles and reports on the introduction of the tax Ombudsman in South Africa. The findings reveal the core factors that underscore the establishment of an effective tax Ombud in South Africa to include: independence, neutrality, credible review process and confidentiality. Other auxiliary factors with regard to the appointment of the tax Ombud are: leadership skills, honesty, integrity and courage. Furthermore, the provisions of the TAA, in relation to the appointment of the tax Ombud‟s funding, staffing, location, and powers with particular reference to cost recovery and disclosure of taxpayers‟ confidential information, impede on the tax Ombud‟s independence. It also emerged from this study that the independence of the tax Ombud‟s office is being over-emphasised, leaving other pertinent issues of equal importance, such as education and publicity, unattended to. The recommendations for this study revolve on the tax Ombud‟s appointment, budget and recruitment of its own staff, building a reputation of independence through public education and the power to recover costs.
MCom (South African and International Taxation), North-West University, Potchefstroom Campus, 2014

This study presents an overview of the medical expenditure allowed to taxpayers in the South African Income Tax Act, 58 of 1962 (hereafter the “Income Tax Act”). The study traces the changes made to the allowed expenditure over time. Changes made to the Income Tax Act, illustrating the effect of qualifying medical expenses on the income of persons with disabilities in terms of the Income Tax Act, are described. Certain provisions of the Income Tax Act, as well as other legislation dealing with persons with disabilities, were analysed. Furthermore, the research shows the effect of moderate to severe limitations on a person’s ability to claim qualifying medical expenses. In particular, the change over from the medical tax deduction system (section 18 of the Income Tax Act) to the medical tax rebate system (sections 6A and 6B of the Income Tax Act) to redress the inequality between high income and low income earners, was analysed. Case studies were used to illustrate that the medical tax deduction system (section 18 of the Income Tax Act) favoured high income earners over low income earners. Finally, the change over from the medical tax deductions (section 18 of the Income Tax Act) system to the current system of medical tax rebates (sections 6A and 6B of the Income Tax Act) was analysed. Except for a very small group of taxpayers, the medical tax rebate system (sections 6A and 6B of the Income Tax Act) was found to be financially more favourable to all taxpayers.
Taxation
M. Compt. (Taxation)

In support of a short dissertation entitled - "A critical review of the source and residence principles of taxation of income : A place for both principles in the South African tax system?" Qbjeetives To review and critically examine the application of the source and reside.nce principles regarding the taxption of income in South Africa, and to reveal the extent of the existence and application of a hybrid tax system in respect of the source and residence principles. To examine the legal principles and policy considerations arising from the existence of a hybrid tax system, inter alia, in the context of the Fifth Interim Report of the Katz Commission and consequent legislative developments. with a view to recommending. where appropriate, tax reform. Methodology iDd AQProach A review of relevant authority,liter@ture, principles and legislation. Conclusion To draw conclusions and recommendations regarding the merits of adopting a hybrid system in South Africa and, where appropriate, recommend legislative reforms particularly with regard to business income.
Mercantile Law
LL.M. (Mercantile Law)