SARS has issued a draft interpretation note dealing with the deductibility of expenditure and losses arising from embezzlement and theft by employees noting that it is not prepared to accept, as a general proposition, that embezzlement and theft by senior managers have become a risk which is inseparable from business. There is however another view that is in direct contradiction with SARS. An analysis of global fraud surveys reveal that senior employee fraud is on the increase. In South Africa, criminal cases against senior employees in the private and public sector indicate that their behaviour can lead to an expectation of theft, fraud or embezzlement at that level of employees. The tests developed by the courts for the deduction of expenditure or losses in terms of the general deduction formula require that such expenditure or loss be attached to the performance of a business operation bona fide performed for the purpose of earning income and will be deductible whether such expenditure or losses are necessary for its performance or attached to it by chance. It is submitted that the increase in fraud and behaviour of senior employees noted in the criminal courts have resulted in a change in the economic environment supporting the contention that theft, fraud or embezzlement are an inherent risk to business in South Africa. In addition, global precedence supports the view that senior employee defalcations are deductible but only to the extent that the perpetrator is not in a proprietor or shareholder role. SARS therefore appears to be turning a blind eye to the risk of theft, fraud or embezzlement by senior employees but there is sufficient evidence to support a taxpayer wishing to claim a deduction for such loss. In light of international precedence, National Treasury should enact legislation allowing a deduction or alternatively, SARS should align its view with such precedence.

The South African mining industry has not been shielded from the criminal threat the country faces. In this case study, the nature and extent of asset theft at one of the largest mining companies in South Africa is analysed. The crime prevention strategy adopted by the mine to curb asset theft was studied over a period of five years. This involved a survey of the views of the security managers on the effectiveness of the strategy implemented by the mine. Against the background of the South African Government’s broad description of the crime prevention approach adopted by the country, the researcher explored whether it would be practicable to implement an integrated crime prevention strategy – encompassing situational, social and law enforcement crime prevention approaches on primary, secondary and tertiary level – at the participating mine in order to curb asset theft. / Police Practice / M. Tech. (Policing)