Estate duty in South Africa is levied in terms of the Estate Duty Act since 1955. Estate duty is currently calculated at a flat rate of 20% on the amount of which the net worth of an estate exceeds a primary rebate of R3,5 million. Statistics show that only a small percentage of estates in South Africa is taxable. Furthermore, many estate owners – particularly those whose estates are liable for estate duty – have the financial means to afford estate planning services to reduce estate duty. This reality has the effect that estate duty is paid by a very insignificant number of estates. Similar to estate duty, capital gains tax has the tax incentive of constituting vertical equity – creating the outcome that taxpayers with greater capability to pay taxes should be taxed more severely. Capital gains tax is also a tax payable (among other instances) at the death of an estate owner. This gives rise to double taxation. Further matters that need to be considered are constitutional justification of estate duty and the question whether the categories of current taxable estates correlate with the taxable estates envisaged by the legislator in 1955. In amending fiscal policy, it is useful to consider international trends. In countries such as Australia, New Zealand and Canada estate duty has been abolished. This phenomenon demonstrates that estate duty is not an essential element of a tax system. The aim of this study is to investigate the contribution of the abolishment of estate duty to South African tax law. / Thesis (LL.M.)--North-West University, Potchefstroom Campus, 2011.

M.Com. (SA & International Taxation ) / Players’ contracts in sports are assets for the professional clubs. Like any other assets, these contracts could be sold to other clubs, locally or internationally, at a fee. The South African Revenue Service has issued a “Draft guide on the taxation of professional sports clubs and players” (hereafter the Guide). This Guide was issued as a draft in 2010 and had not been finalised at the time of the completion of this dissertation. Using a doctrinal research methodology, which includes a systematic exposition of the Guide by using the Income Tax Act 58 of 1962 (hereafter the Act), case law and the other appropriate literature, this study is aimed at interpretatively reviewing the contents of this Guide, specifically the section of the Guide that deals with the income tax implications arising from the transfer of players. The review of the Guide revealed that the Guide is technically incorrect in certain aspects. For instance, the definition of “asset” per the Eighth Schedule of the Act was incorrectly cited to specifically exclude trading stock. In addition, the Guide has excluded from its scope transactions between residents and non-resident clubs and players. Furthermore, the Guide did not deal with all aspects relating to player transfers, such as player swops and third party ownership of player rights. In some instances, the Guide was found to be ambiguous, especially in dealing with free transfers. The study has found that the transfer fees could either be included in gross income or be subject to capital gains tax for the transferor club, depending on whether their nature was revenue or capital. The deciding factor was determined to be the intention of the transferor club at the time of transfer of the player rights. Where the intention of a transferor club is to enter into a profit-making scheme, the transfer fees would be revenue in nature and included in gross income in terms of s 1 of the Act (Elandsheuwel Farming (Edms) Bpk v SBI, 39 SATC 163). Where the intention of a transferor club is to use the player as income-producing asset, then the transfer fees would be capital in nature, and be subject to capital gains tax. For the transferee club, it was determined that the player is usually acquired to bring to the club an advantage of the enduring benefit (British Insulated and Helsby Cables v Atherton 1926 A.C. 205). This therefore implies that the transferee club would not be able to claim the deduction under s 11(a) of the Act. The study will be useful to the sports clubs as it provides a comprehensive guide on the income tax treatment of player transfers.

M.Comm. (International Taxation) / Under the South African income tax system, para 12 of the Eighth Schedule states that, when a person ceases to be a resident, he/she is deemed to have disposed of his/her worldwide assets (subject to certain exclusions) at market value the day before he/she terminates his/her residency. Such deemed disposal triggers a capital gains tax charge. Commonly referred to as the ‘exit tax’, it has been in place since the introduction of capital gains tax on 1 October 2001. A recent ruling in the Supreme Court of Appeals found that according to article 13 of a double tax agreement (hereafter “DTA”) based on the Organisation for Economic Co-operation and Development Model Tax Convention, a deemed disposal is regarded as an alienation of property, and (provided the exclusions do not apply) exclusive taxing rights are given to the Resident State. This has the effect to include the deemed disposal rules relating to exit taxes under this article and potentially override the application of an exit tax under domestic legislation. The override of exit taxes based on a DTA can deprive a country of its fair share of taxes and there is no protection for a country’s tax base. It is important to understand the exit tax and the interaction with DTAs to ensure that there is fairness and equity in the South African income tax system.

Income tax is levied upon a taxpayer’s taxable income. Various steps are taken in order to arrive at the taxpayer’s taxable income. The starting point when calculating taxable income is determining the taxpayer’s ‘gross income’. ‘Gross income’ is defined in terms of section 1 of the Act. Various terms within the gross income definition are not clearly defined, except in the case of a ‘resident’. Even in the case of the definition of a ‘resident’, the aspect of ‘ordinarily resident’ is not defined and nor is the ‘place of effective management’. The following components fall within the definition of ‘gross income’: • The total amount in cash or otherwise; • received by or accrued to, or in favour of, a person; • from anywhere, in the case of a person who is a resident; • from a South African source (or deemed source), in the case of a non-resident; • other than receipts or accruals of a capital nature. The ‘total amount’ in ‘cash or otherwise’ is the first step when determining the taxable income of a taxpayer for a particular year of assessment. Gross income only arises if an amount is received or has accrued; this amount need not be in the form of money but must have a money value. The next component, ‘received by or accrued to’, is related to time and implies that a taxpayer should include amounts that have been ‘received by’, as well as amounts that have ‘accrued to’ him during the year of assessment. ‘Resident’ and ‘non-resident’ unlike the other components, are defined in terms of section 1 of the Income Tax Act. There are two rules used to determine whether natural persons are residents, these are: • To determine whether natural persons are ‘ordinarily resident’; or • where the natural person is not an ‘ordinarily resident’, the ‘physical presence test’ will be applied. ‘Source’ means origin and not place; it is therefore the ‘originating cause of the receipt of the money’. There is no single definition for the word ‘source’ as circumstances may differ in various cases. The facts of each case must be analysed in order to determine the actual source of income for that particular case. The last component of the definition of ‘gross income’ is the exclusion of ‘receipts and accruals of a capital nature’. The Act does not define the meaning of ‘capital nature’ but does indicate that receipts or accruals of a capital nature are, with certain exceptions, not included in ‘gross income’. Receipts or accruals that are not of a capital nature is known as ‘revenue’ and subjected to tax. This study is primarily aimed at an examination of court cases related to the various components falling within the definition of ‘gross income’.

Estate massing is one of the estate planning instruments used by estate planners, especially with regards to marriages in community of property; nonetheless any two people (or more) may mass their whole estates or a part thereof. Section 37 of the Administration of Estates Act describes massed estates and therefore it also supplies the requirements for estate massing and will be explored in this study. Estate massing gives rise to tax consequences that would not have arised normally. Due to estate massing there will be tax consequences for the predeceased testator and the surviving testator(s) and even in some cases there will be tax consequences for the heirs. In this study, attention is paid to the tax consequences of estate duty, donations tax, transfer duty, VAT and CGT. The purpose of this study is to determine the difference between the consequences of estate massing should it happen in accordance with the requirements of the Administration of Estates Act and should it not happen in accordance with the requirements of the Administration of Estates Act. / LLM (Estate Law), North-West University, Potchefstroom Campus, 2013

Estate massing is one of the estate planning instruments used by estate planners, especially with regards to marriages in community of property; nonetheless any two people (or more) may mass their whole estates or a part thereof. Section 37 of the Administration of Estates Act describes massed estates and therefore it also supplies the requirements for estate massing and will be explored in this study. Estate massing gives rise to tax consequences that would not have arised normally. Due to estate massing there will be tax consequences for the predeceased testator and the surviving testator(s) and even in some cases there will be tax consequences for the heirs. In this study, attention is paid to the tax consequences of estate duty, donations tax, transfer duty, VAT and CGT. The purpose of this study is to determine the difference between the consequences of estate massing should it happen in accordance with the requirements of the Administration of Estates Act and should it not happen in accordance with the requirements of the Administration of Estates Act. / LLM (Estate Law), North-West University, Potchefstroom Campus, 2013

Thesis (MAcc)--University of Stellenbosch, 2009. / AFRIKAANSE OPSOMMING: Met die bekendstelling van kapitaalwinsbelasting in 2000 was belastingpligtiges en belastingadviseurs bekommerd oor die invloed daarvan op belasting- en boedelbeplanning. Om die volle impak daarvan te verstaan moet die werking van kapitaalwinsbelasting ondersoek word. Paragraaf 10 van die Agste Bylae definieer die belasbare kapitaalwinste vir die jaar van aanslag. Hiervolgens word kapitale winste in die hande van verskillende belastingpligtiges teen verskillende “koerse” belas. In die algemeen word daar na Paragraaf 10 verwys as die insluitingsartikel wat op kapitaalwinste van toepassing is. Aangesien slegs ‘n “gedeelte” van kapitaalwinste onderhewig is aan normale belasting is een van die grootste faktore in die huidige belastingomgewing steeds om te onderskei tussen inkomste van ‘n kapitale of nie-kapitale aard. Deur die toepassing van Paragraaf 10 word kapitaalwinste gerealiseer deur Trusts en Maatskappye teen hoër koerse belas, as in die geval van individue. Dit het tot gevolg dat belastingpligtiges en belastingadviseurs die gebruik van trusts as ‘n effektiewe hulpmiddel vir boedelbeplanning begin bevraagteken het. Die effektiewe belastingkoers van toepassing op kapitaalwinste gerealiseer deur individue is egter die laagste van al die verskillende belastingpligtiges. Wanneer ‘n individue te sterwe kom is sy boedel onderhewig aan boedelbelasting, wat ‘n verdere belasting las tot gevolg het. Indien ‘n trust effektief toegepas word tydens die opstel van ‘n boedelplan vir ‘n individu sal die bates van die trust nie onderhewig wees aan boedelbelasting nie. Deur die verskeie opsies wat beskikbaar is vir ‘n belastingpligtige, wanneer hy ‘n besluit moet neem watter beleggingsvoertuig hy moet gebruik vir die belegging, kan die effektiewe belastingkoerse vergelyk word. Deur die uitkomste van die verskeie opsies teenoor mekaar te vergelyk bewys dit dat indien ‘n trust korrek aangewend word, dit steeds as ‘n effektiewe hulpmiddel in ‘n boedelplan kan aangewend word. Tydens die uitvoer van die vergelyking van die verskillende opsies wat vir die belastingpligtige beskikbaar is, is die tydwaarde van geld buite rekening gelaat. Indien die lewensverwagting van ‘n individu in berekening gebring word kan die uitkoms van die vergelyking moontlik anders wees. Deur dit alles in ag te neem bevestig dit weereens dat elke individue se boedelplan uniek sal wees indien sy persoonlike finansiële omstandighede in ag geneem word. / ENGLISH ABSTRACT: With the introduction of capital gains taxation in 2000, taxpayers and their advisors feared the impact thereof on tax planning and estate planning. To determine the impact thereof the taxation of capital gains must be understood. Paragraph 10 of the Eight Schedule define the taxable portion of capital gains for the year of assesment. Paragraph 10 is also commonly known as the inclusion clause applicaple on capital gains. This application of paragraph 10 has the effect that capital gains realised by different types of taxpayers are taxed at different rates. Due to the application of paragraph 10 only a portion of the capital gain realised by the taxpayer is subject to normal taxation. Therefor one of the biggest concerns for taxpayers still is to determine if income are of a capital nature or not. The inclusion rate, according to paragraph 10, applicable on capital gains realised by trusts and companies is higher than that of a individual and gives rise to a bigger tax burden relating to capital profits for trusts and companies. Therefor taxpayers and their advisors doubt wether a trust could still be used as an effective tool for estate planning. The effective tax rate on caiptal gains for individuals is the lowest for all types of taxpayers. But when an individual dies his estate is subject to estate duty, which leaves an additional burden for an individual to take into account. When a trust is effectively utilised in preparing an estate plan for an individual, the assets of the trust should not be subject to estate duty. By evaluating the effective tax rates applicable to the different options available to a taxpayer when he needs to determine which investment vehicle to use when making an investment, a comparision can be made. By comparing the effective tax rates a conclusion can be drawn that a trust can still be used as an effective tool for estate planning when utilised properly. When the comparison was made the time value of money was ignored. If the life expectancy of a individual are taken into account the outcome could be different. When everything is taken into consideration the conclusion is that the estate plan for every individual is unique and determined by his or her personal financial circumstances.

Thesis (MAccounting)--Stellenbosch University, 2013. / ENGLISH ABSTRACT: The interaction between the income tax provisions contained in sections 9B, 9C, 11(a) and 22 of the Income Tax Act No. 58 of 1962 (the Act), and the capital gains tax (CGT) provisions of the Eighth Schedule of the Act, are complex and share dealers should approach the tax consequences of share dealing profits with caution. The objective of the assignment was to ensure that the share dealing profits of share dealers (who transact on revenue account) are taxed correctly, with specific reference to the interaction between the aforementioned provisions. This was achieved by considering tax cases, the interpretation notes of the South African Revenue Services (SARS) and commentary of tax writers. Examples of share disposals were incorporated to illustrate that consistency is required between the calculation of profits for income tax and CGT purposes. The guidelines laid down by case law to determine the revenue nature of share disposals were investigated. It was concluded that share dealing profits which are designedly sought for and worked for, either as part of a business operation or not, are of a revenue nature and taxable as such. The method of identification of shares sold as trading stock is important when calculating the income tax profit, since it is used in order to determine both which shares are sold as well as the cost of the shares sold. It was concluded that the method of identification applied in terms of generally accepted accounting practice (GAAP) is generally also acceptable from an income tax perspective. Section 9C of the Act provides a share dealer income tax relief when a ‘qualifying share’ is disposed of. Any amount received or accrued as a result of the disposal of a qualifying share is deemed to be of a capital nature, regardless of the revenue intention of the share dealer. Prior to 1 October 2007, section 9B of the Act provided similar relief to the disposal of an ‘affected share’. It was concluded that section 9C of the Act has a wider scope of application compared to section 9B of the Act. Because the proceeds received on the disposal of affected or qualifying shares are excluded from gross income, the acquisition costs previously incurred and deducted in respect of such shares must be included in taxable income. It was determined that the amount to be included in income is the actual cost of such shares and not the opening trading stock value determined in terms of GAAP and claimed in terms of section 22(2) of the Act. It was concluded that the first-in-first-out (FIFO) method of identification should be applied to determine which affected or qualifying shares have been disposed of. From a CGT perspective, it was illustrated that a share dealer loses the opportunity to choose which identification method to apply and is obliged to also apply the FIFO method in calculating the CGT base cost of the shares. It is concluded that the Eighth Schedule of the Act should be amended to clarify that the FIFO method should be applied for CGT purposes where sections 9B or 9C of the Act find application. Only then will the tax profits of a share dealer be in sync with his or her cash benefit. / AFRIKAANSE OPSOMMING: Die interaksie tussen die inkomstebelastingbepalings vervat in artikels 9B, 9C, 11(a) en 22 van die Inkomstebelastingwet No. 58 van 1962 (die Wet), en die kapitaalwinsbelastingbepalings (KWB bepalings) van die Agtste Bylae tot die Wet is kompleks en aandelehandelaars moet die belastinggevolge van aandelewinste met omsigtigheid benader. Die doelwit van die werkstuk was om te verseker dat die winste van aandelehandelaars (wat aandele verkoop op inkomsterekening) korrek belas word, met spesifieke verwysing na die interaksie tussen die voorgenoemde bepalings. Dit is bereik deur die oorweging van hofsake, uitlegnotas van die Suid-Afrikaanse Inkomstediens en kommentaar deur belastingskrywers. Voorbeelde van aandeleverkope is gebruik om te illustreer dat konsekwentheid tussen die berekening van winste vir inkomstebelasting en KWB-doeleindes ‘n vereiste is. Die riglyne wat deur regspraak daargestel is om die inkomste-aard van aandeleverkope vas te stel, is ondersoek. Daar is bevind dat aandelewinste wat opsetlik nagejaag word en voor gewerk word, ongeag of dit deel van die bedryf van 'n besigheid is al dan nie, van ‘n inkomste-aard is en aldus belasbaar is. Die metode van identifikasie van aandele wat as handelsvoorraad verkoop word is belangrik by die berekening die inkomstebelastingwins aangesien dit gebruik word om vas te stel watter aandele verkoop is en wat die koste van die verkoopte aandele is. Daar is bevind dat die metode wat ingevolge algemeen aanvaarde rekeningkundige praktyk (AARP) toegepas is, gewoonlik ook vir inkomstebelastingdoeleindes toelaatbaar is. Artikel 9C van die Wet verskaf aan ‘n aandelehandelaar inkomstebelastingverligting met die verkoop van 'n 'kwalifiserende aandeel' deurdat die bedrag ontvang of toegeval geag word van 'n kapitale aard te wees, ongeag die inkomstebedoeling van die aandelehandelaar. Voor 1 Oktober 2007 het artikel 9B van die Wet soortgelyke verligting verskaf met die verkoop van n 'geaffekteerde aandeel’. Daar is vasgestel dat artikel 9C van die Wet 'n wyer toepassing het in vergelyking met artikel 9B van die Wet. Omrede die opbrengs ontvang met die verkoop van geaffekteerde of kwalifiserende aandele uitgesluit word van bruto inkomste, moet die vorige aankoopskostes wat voorheen ten opsigte van die aandele aangegaan en afgetrek is, by belasbare inkomste ingesluit word. Daar is bepaal dat die bedrag wat by belasbare inkomste ingesluit word, die werklike koste van die aandele is en nie die AARP openingswaarde van handelsvoorraad wat ingevolge artikel 22(2) van die Wet geëis nie. Daar is bevind dat die eerste-in-eerste-uit (EIEU) metode van identifikasie gebruik moet word om te bepaal watter geaffekteerde of kwalifiserende aandele verkoop is. Vir KWB doeleindes verloor 'n aandelehandelaar ook die geleentheid om te kan kies watter identifikasiemetode toegepas moet word. Hy of sy is verplig om die EIEU metode toe te pas in die berekening van die KWB basiskoste van die aandele. Daar word tot die gevolgtrekking gekom dat die Agtste Bylae van die Wet gewysig moet word om te bevestig dat die EIEU metode toegepas moet word vir KWB doeleindes waar artikels 9B of 9C van die Wet van toepassing is. Slegs dan is die belasbare wins van 'n aandelehandelaar in lyn is met sy of haar kontantvoordeel.

無 / This study establishes a model of the stock market involving the rational speculators to investigate whether the imposition of tax on capital gains can reduce the market volatility. The finding is that the effect of tax on the stock price volatility varies according to the types of shocks hitting the market. In the cases of the issuing shock and the dividend shock, raising the tax rate could be a way to stabilize the stock market. On the contrary, when the margin-rate shock occurs, it tends to magnify the effect of the shock and therefore increases the market volatility. Thus, it could be concluded that an increase in the tax rate may increase or decrease the stock price volatility depending on the type of unexpected shocks.

A research report submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, in partial fulfilment of the requirements for the degree of Master of Commerce (specialising in Taxation) Johannesburg, 2016 / The Davis Tax Committee released their First Interim Report on Estate Duty on 13 July 2015 which contained certain recommendations concerning the way trusts should be taxed which were to act as a deterrent against aggressive estate planning. This report also contained suggested changes to current estate duty legislation. Changes to these recommendations, yet to be published in a second report, were discussed in a webinar by Judge Dennis Davis in December 2015 and the 2016 Budget Review contained additional suggestions with regard to the taxation of trusts. This study constructs case studies to compare the effect of the various recommendations on total taxation and capital preservation in a scenario where assets are held in a South African trust over a period of time, with a scenario where such assets are kept in a South African tax resident’s personal estate. The case studies focus only on high-net-worth trusts and personal estates. The possible double taxation which may occur as a result of levying both estate duty and capital gains tax on death is also briefly considered. The case study results show the punitive effects of the proposed repeal of the s 4(q) estate duty deduction for inter-spousal bequests on the personal estate scenarios and show how several of the new proposals could result in effective capital tax rates in excess of the deemed maximum capital tax benchmark of 15%. This may result in more aggressive estate planning strategies being employed should such proposals be enacted. The report also concludes that the double taxation effect of both estate duty and capital gains tax levied on death is likely to be small on average, although individual high-net-worth estates may be subject to such double taxation in certain cases. Key words: Davis Tax Committee’s First Interim Report on Estate Duty, taxation of South African trusts, South African trusts, South African estate duty, estate planning, double taxation on death, estimate for total capital gains tax collected on death, high-net-worth individuals, inequality in South Africa, wealth tax in South Africa, total taxation in South African trusts, income-splitting in South African trusts, capital preservation in South African trusts, South African trust case study, South African estate duty case study, South African estate planning case study / MT2017