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Possible tax treatments of the transfer of accounting provisions during the sale of a business and subsequent tax considerationsKroukamp, Susan 12 1900 (has links)
Thesis (MAcc (Accountancy))--University of Stellenbosch, 2006. / The potential buyer of a business evaluates the attractiveness of the transaction by
considering the financial status of the business being sold. In determining the
financial status of a business it is more important to determine the nature of the assets
and liabilities recorded on the balance sheet rather than the mere existence thereof.
Included in the liabilities are accounting provisions recorded in terms of the Generally
Accepted Accounting Practice (GAAP) to reflect a fair representation of the financial
status. Although these provisions are made for accounting purposes, they cannot
necessarily be deducted under the terms of the Income Tax Act, no 58 of 1962. The
tax deductibility of accounting provisions has long been a potential contention when a
business is sold.
The Income Tax Act has specific sections that must be applied in determining the
deductibility of accounting provisions, for example, section 11(a), which is the general
deduction formula; section 23(g), which prohibits expenses not laid out for the
purposes of trade; and section 23(e), which does not allow a deduction when a
reserve fund is created (for example a leave pay provision).
In conducting this study, seven types of accounting provision generally recorded by
businesses were identified: the bonus provision, leave pay provision, warranty
provision, settlement discount and incentive-rebate provision, post employment
provision, retrenchment cost provision and other provisions. These provisions are
discussed in view of their possible income tax deductibility, and relevant case studies
were identified to confirm the possible deductibility of these accounting provisions.
In this study, the transfer of accounting provisions during the sale of a business is
considered for the purposes of both the buyer and seller. The tax implications for the
buyer and seller are then evaluated, as well as the subsequent treatment of the accounting provisions for the purposes of the buyer. Because the wording of the
purchase contract is extremely important when a business is acquired, three examples
of the wording of a purchase contract are discussed as well as the income tax
implications thereof.
The extent of the advice given by a tax practitioner will depend on the allegiance of the
practitioner (either for the buyer or seller) and will determine how the contract will be
concluded. In conclusion a tax practitioner would want to assist his client to obtain the
most effective tax position for the transaction and therefore each purchase contract
must be reviewed on its own set of facts.
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AgentskapsteorieDu Toit, C. E. (Catherina Elizabeth) 12 1900 (has links)
Study project (MAcc)--Stellenbosch University, 2001. / ENGLISH ABSTRACT: The most basic principle of agency theory is that an individual will always serve his own
interest best. According to Eisenhardt (1989) agency theory describes individuals as rational,
risk averse en motivated by egotism. Agency theory also deals with the conflict that exists
between different parties in an organization due to people's egoism. This self-interest can lead
to goal incongruence if a person is placed in an environment where he has to serve somebody
else's interest.
Ownership and management vested in the same party until about 130 years ago. These roles
were however separated with the development of the modem organization. The principal or
owner is now represented by the shareholder and management serves as the agent. The
principal thus appoints the agent to serve and manage his interest in the organization
optimally.
The principal's goal is the maximising of his shareholders' wealth. The agent's goal to carry
out his task with the minimum effort and or to obtain maximum benefit for himself. It is thus
clear that the goals of the principal and agent might often differ and this will give rise to goal
Incongruence.
This goal incongruence may give rise to some managerial actions which will be detrimental to
optimal value of the company. The agency conflict, which is caused by man's self interest,
manifests in the modem organization in a number of ways. These are referred to agency
problems in this assignment. Agency problems are found both on a micro- and macroeconomical
level.
Agency cost is the sum of the difference between the real and optimal value of the company,
the monitoring costs of the principal and the bonding costs of the agent. This cost is to the
disadvantage of the principal and might even be to the disadvantage of the agent. It is thus
essential that agency conflict and agency costs are reduced to a minimum.
A number of measures are taken to address the agency problems and to reduce their negative
effect on the organization. None of these measures will be efficient enough ifused in isolation.
An optimal combination of solutions will depend on the company's specific circumstances. An empirical study was conducted to determine to what extent the agency problems manifest
during the demutualisation of a big insurance business. The measures taken to address these
problems were also investigated as well as the extent to which these were successful. / AFRIKAANSE OPSOMMING: Die basiese aanname van agentskapsteorie is dat die individu sy selfbelang altyd eerste sal
stel. Volgens Eisenhardt (1989) beskryf agentskapsteorie individue as rasioneel, risikoongeneigd
en gemotiveer deur selfbelang. Agentskapsteorie handel verder oor die konflik
wat tussen die verskillende belanghebbende partye binne 'n organisasie as gevolg van
persone se selfbelang ontstaan. Hierdie selfbelang van die mens kan lei tot
doelwitinkongruensie, indien die persoon in 'n omgewing geplaas word waar daar van hom
verwag word om 'n ander se belange te dien.
Eienaarskap en bestuur was tot ongeveer 130 jaar gelede gevestig in dieselfde party. Met die
totstandkoming van die moderne onderneming, is hierdie rolle egter geskei. Die prinsipaal of
eienaar word nou verteenwoordig deur die aandeelhouer en die bestuur dien as die agent. Die
prinsipaal stel dus die agent aan om na sy belang in die onderneming om te sien en dit
optimaal te bestuur.
Die prinsipaal se doel is die maksimering van sy aandeelhouerswelvaart. Die agent poog om
sy taak met minimale inspanning te voltooi en of uitsonderlike voordeel vir homself te behaal.
Dit is duidelik dat die prinsipaal en agent se doelwitte meermale sal verskil en
doelwitinkongruensie ontstaan dus.
Hierdie doelwitinkongruensie word vergestalt in sekere aksies wat bestuur soms neem en wat
daartoe lei dat die optimale waarde van die firma nie bereik word nie. Die agentskapskonflik
wat as gevolg van die partye se selfbelang ontstaan manifesteer in die moderne onderneming
op 'n verskeidenheid van wyses, wat in hierdie werkstuk as agenskapsprobleme gedefinieer
word. Agentskapsprobleme kom op 'n mikro- sowel as op 'n makro-ekonomiese vlak voor.
Die verskil tussen die werklike en optimale waarde van die organisasie, plus die prinsipaal se
moniteringskoste en die agent se gebondenheidskoste, verteenwoordig agentskapskoste.
Hierdie koste strek tot die nadeel van die eienaars en meermale ook tot die nadeel van die
bestuur. Dit is dus noodsaaklik dat agentskapskonflik en die gepaardgaande agentskapskoste
tot 'n minimum beperk word.
Daar word van 'n verskeidenheid van maatreëls gebruik gemaak ten einde die
agenskapsprobleme aan te spreek en hul negatiewe impak op die onderneming te versag. Nie een van hierdie oplossings kan in isolasie gebruik gemaak word nie en afhangend van die
onderneming se spesifieke omstandighede, sal daar hoogstens 'n optimale kombinasie van
oplossings ontwikkel kan word.
Daar is vervolgens in hierdie werkstuk 'n empiriese ondersoek uitgevoer ten einde te bepaal in
hoe 'n mate die agenskapsprobleme tydens die demutualisering van 'n groot
versekeringsonderneming manifesteer. Die neem van regstellende stappe om hierdie
probleem aan te spreek is ondersoek, sowel as die mate waartoe hierdie maatreëls suksesvol
was al dan nie.
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A critical analysis of the meaning of beneficial owner of dividend income received by a discretionary trustEngelbrecht, Waldette Anne 12 1900 (has links)
Thesis (MAccounting)--Stellenbosch University, 2013. / ENGLISH ABSTRACT: The term beneficial owner is most commonly found in the dividend, interest and the royalty
articles of tax treaties (Baker, 2007:15), yet there is still uncertainty surrounding the actual
meaning of the term (Du Toit, 2010: 500).
Since Dividends Tax became effective in South Africa as from 1 April 2012, it has become
necessary to clarify what the term beneficial owner means to correctly apply section 64E of
the Income Tax Act No 58 of 1962 (‘Act’).
Section 64EA(a) of the Act determines that the Dividends Tax liability falls on the
“beneficial owner of a dividend” [Emphasis added]. Section 64D of the Act does define the
beneficial owner as “the person entitled to the benefit of the dividend attaching to the
share”, the application of this definition to a discretionary trust may be challenging since
legal ownership must be distinguished from economic ownership (PWC Synopsis, 2012:6).
In the absence of guidance by the South African Revenue Service (‘SARS’), the first
problem arises as to the interpretation of this term within the context of dividend income
received by a discretionary trust (Louw, 2012:1). This leads to a second problem relating
to the correct application of section 64G(3)(a)(i) of the Act, which makes provision for a
reduced rate of dividends tax.
The purpose of this study is to set parameters for determining who the beneficial owner of
dividend income within the context of a discretionary trust is, where the dividend is paid in
respect of shares held in a resident company, and to the extent that the dividend does not consist of a distribution of an asset in specie. The instances when the reduced rate is
applicable in terms of section 64G(3) of the Act will also be clarified.
In order to achieve these objectives, an analysis of factors that should be taken into
account to define and determine beneficial ownership, was undertaken. Common- and civil
law definitions were investigated. The Organisation for Economic Co-operation and
Development’s (‘OECD’) Model Tax Conventions (MTCs’) and its Commentaries provided
possible factors to assist in identifying the beneficial owner. In the absence of a decision
by a South African court, the judgements in the five international court cases were
consulted. Four steps were formulated to reach a conclusion.
In terms of the these steps, the trust beneficiary remains the beneficial owner of dividend
income received by a trust in the case of the income having been distributed by the
trustees in having exercised their discretion in terms of the trust deed. In the case of
contingent beneficiaries it is suggested that the trust, with the trustees, acting in their
official capacity on behalf of the trust, would be seen as the beneficial owner of the
dividend income.
In terms of section 64G(3) of the Act, where a foreign trustee or a foreign trust beneficiary
has been identified as the beneficial owner(s) of a dividend, the rate at which Dividends
Tax is withheld could be reduced as a result of the application of a double tax agreement. / AFRIKAANSE OPSOMMING: Die begrip uiteindelik geregtigde kom mees algemeen voor in die dividende, rente en die
tantième artikels van dubbel belasting ooreenkomste (Baker, 2007:15), tog is daar steeds
onsekerheid oor die werklike betekenis van hierdie begrip (Du Toit, 2010: 500).
Nadat Dividendbelasting op 1 April 2012 in Suid-Afrika in werking getree het, het dit
noodsaaklik geword om die betekenis van die begrip uiteindelik geregtigde vas te stel ten
einde artikel 64E van die Inkomstebelastingwet Nr. 58 van 1962 (‘die Wet’) korrek toe te
pas.
Artikel 64EA(a) van die Wet bepaal dat die aanspreeklikheid vir Dividendbelasting op die
“uiteindelik geregtigde van ‘n dividend namate die dividend nie ‘n uitkering van ‘n bate in
specie uitmaak nie” [klem bygevoeg] val. Artikel 64D van die Wet as "die persoon geregtig
op die voordeel van die dividend verbonde aan ‘n aandeel", nogtans kan die toepassing
hiervan in 'n diskresionêre trust uitdagend wees, aangesien wettige eienaarskap onderskei
moet word van ekonomiese eienaarskap (PWC Synopsis, 2012:6). In die afwesigheid van
leiding deur die Suid-Afrikaanse Inkomstediens ('die SAID'), ontstaan die eerste probleem
weens die interpretasie van die begrip binne die konteks van dividend inkomste ontvang
deur 'n diskresionêre trust (Louw, 2012:1). Dit lei tot 'n tweede probleem wat verband hou
met die korrekte toepassing van artikel 64G(3)(a)(i) van die Wet, wat voorsiening maak vir
'n verminderde koers Dividendbelasting. Die doel van hierdie studie is om grense af te baken vir die bepaling van die uiteindelik
geregtigde van dividend inkomste binne die konteks van 'n diskresionêre trust, waar die
dividend betaal word ten opsigte van aandele gehou in 'n maatskappy wat ‘n inwoner is,
tot die mate dat die dividend nie bestaan uit 'n uitkering van 'n bate inspecie nie. Die
gevalle waar die verminderde tarief van toepassing is ingevolge artikel 64G(3) van die
Wet, sal vasgestel word.
Ten einde hierdie doelwitte te bereik, is 'n ontleding van die faktore wat in ag geneem
moet word om die uiteindelik geregtigde te definieer en te bepaal, onderneem. Gemeenen
siviele regs-definisies is ondersoek. Die ‘Organisation for Economic Co-operation and
Development’s (‘OECD’) Model Tax Conventions (MTCs’) en sy kommentare verskaf
moontlike faktore om te help in die identifisering van die uiteindelik geregtigde. In die
afwesigheid van 'n besluit deur 'n Suid-Afrikaanse hof, word die besluite in die vyf
internasionale hofsake geraadpleeg. Vier stappe is geformuleer om ʼn slotsom te bereik.
In terme van die stappe, bly die trustbegunstigde die uiteindelik geregtigde van die
dividendinkomste ontvang deur die trust, in die geval waar die inkomste uitgekeer word
deur die trustees nadat hul diskresie uitgeoefen is in terme van die trustakte. In die geval
van voorwaardelike begunstigdes, word dit gestel dat die trust, met die trustees wat in hul
amptelike hoedanigheid namens die trust optree, gesien word as die uiteindelik geregtigde
van die dividend inkomste.
In terme van artikel 64G(3), waar 'n buitelandse trustee of 'n buitelandse trustbegunstigde
as die uiteindelik geregtigde(s) van 'n dividend geïdentifiseer is, kan die koers waarteen Dividendbelasting weerhou word, verminder word as gevolg van die toepassing van 'n
dubbelbelastingooreenkoms.
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Addressing the incremental risks associated with adopting a Bring Your Own Device program by using the COBIT 5 framework to identify keycontrolsWeber, Lyle 04 1900 (has links)
Thesis (MComm)--Stellenbosch University, 2014. / ENGLISH ABSTRACT: Bring Your Own Device (BYOD) is a technological trend which individuals of all ages are embracing. BYOD involves an employee of an organisation using their own mobile devices to access their organisations network. Several incremental risks will arise as a result of adoption of a BYOD program by an organisation. The research aims to assist organisations to identify what incremental risks they could potentially encounter if they adopt a BYOD program and how they can use a framework like COBIT 5 in order to reduce the incremental risks to an acceptable level. By means of an extensive literature review the study revealed 50 incremental risks which arise as a result of the adoption of a BYOD program. COBIT 5 was identified as the most appropriate framework which could be used to map the incremental risks against. Possible safeguards were identified from the mapping process which would reduce the incremental risks to an acceptable level. It was identified that 13 of the 37 COBIT 5 processes were applicable for the study.
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