"Mining operations" and "mining" are defined in s 1 of the Income Tax Act (ITA). A concept that is of great significance to this definition is the matter of when a mineral is won and the related question of when does the mining process end and the process of manufacture commences. Case law has not established a definitive point that can be used by the mining taxpayer to determine where the mining process ends for income tax purposes. The Supreme Court of Appeal was presented with the perfect opportunity in the Foskor1 case to clearly define the boundaries between these processes. Unfortunately, the court did not seize this opportunity to provide legal certainty. The significance of the distinction lies in the fact that a mining taxpayer is allowed to claim accelerated capital allowances. The objective of these allowances is to provide tax relief to the mining taxpayer taking the immense risk of investing billions of rands in capital expenditure. The capital expenditure incurred will also result in direct foreign investment. This in turn will result in economic growth and job creation. Currently, there is no legal certainty as to which processes will qualify as mining operations for income tax purposes. This may result in mining taxpayers being hesitant to incur capital expenditure as the risk relating to a project would have increased. The accelerated capital allowances may therefore not serve their intended purpose. The gross domestic product (GDP) contribution from gold mining has been decreasing in the last number of years, but this decrease has to a large extent been offset by an increase in the downstream or beneficiated minerals industry. This industry has also been identified by Government as a growth sector. The downstream or beneficiated mineral industry may not be catered for in the current definition of "mining operations" and "mining" and may therefore not qualify for beneficial tax allowances. It is therefore proposed that the term "won" as used in the definition of "mining operations" and "mining" should be defined in s 1 of the ITA as follows: A mineral is "won" when all the requisite and necessary processes, including, amongst other things, refinement, beneficiation, smelting, separation, have been undertaken to the mineral to render it saleable in an open and general market. This extension will provide legal certainty to a mining taxpayer and will ensure that South Africa obtains direct foreign investment and maximum value for its minerals. This will contribute to economic growth for South Africa's developing economy and result in job creation.

This treatise was undertaken to critically analyse the new general anti avoidance rules (new GAAR) as set out in sections 80A to 80L of the Income Tax Act1. A discussion on the difference between tax evasion and tax avoidance was performed in the first chapter. The goals of this treatise were then set out. An analysis of the requirements for the application of the new GAAR was performed in the second chapter. The courts have historically reviewed the circumstances surrounding an arrangement when determining whether tax avoidance has occurred. The new GAAR requires the individual steps of an arrangement to be reviewed in isolation. Secondly, the courts have historically held that the purpose test, when determining the taxpayer‘s purpose, was subjective. The wording of the new GAAR indicates that this test is now objective. Thirdly, the courts have historically viewed the abnormality of an arrangement based of the surrounding circumstances. The wording of the new GAAR requires an objective view of the arrangement. An analysis of the secondary provisions contained in sections 80I, 80B and 80J of the new GAAR was performed in the third chapter. With regards to section 80B, it was submitted that the Commissioner should issue an Interpretation Note detailing all the methods ―he deems appropriate.

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’.

M.Com. / Please refer to full text to view abstract

This research explores the impact of complexity in federal income tax laws on taxpayer compliance. The primary research question is: Is complexity in the tax law associated with noncompliance? The research is unique in that previous work has not yet demonstrated an a priori circumstance in which taxpayers do not comply with the law when compliance would be in their economic self-interest. "Economic self-interest" is narrowly construed in this study, being defined as an individual's utility for saving tax dollars. "Complexity" is operationalized by the system of nonresident taxation. A situation is investigated wherein a set of taxpayers do not comply, when there is complexity in the tax law, even though compliance would reduce their tax liability. Examining compliance in this setting renders it unlikely that the confound opportunity to evade is related to observed noncompliance. The results indicate complexity is the key explanatory variable for noncompliance found in this study. / Ph. D.

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.

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.

Thesis (MComm)--Stellenbosch University, 1998. / ENGLISH ABSTRACT: In the Fifth Interim Report of the Katz Commission recommendations were made on a number of fundamental tax issues, including the distinction between the source and residence principle. The Commission decided that the source principle should remain but that a distinction between "active" and "passive" income should be made. "Active" income should then be taxed on the source principle and "passive" income on the residence principle. With effect from 1 July 1997 exchange controls for South African residents were softened, which meant that South Africans could thereafter invest in foreign countries to a limited extent. To protect the South African tax base, sections 9C and 90 were incorporated in the Income Tax Act with effect from 1 July 1997. Section 9C regulates the taxation of investment income earned in foreign countries. The main purpose of this study was to investigate the taxation of foreign investment income in South Africa. For this purpose a critical analysis of section 9C was done within the context of the recommendations made by the Katz Commission in their Fifth Report. The focus of the study was aimed at the requirements for the exclusion of so-called active investment income according to section 9C(3)(a). In the analysis of section 9C it was necessary to determine where the terms used in the section were derived from. The terms which are not new in the South African tax context were analysed based on the opinions of tax specialists and national case law. The terms which are new in the South African tax context were mostly derived from international models of tax conventions and foreign tax codes. These were analysed according to the use thereof mainly in the Model Tax Convention on Income and on capital of the Organisation for Economic Co-operation and Development and the Commentaries thereon. The critical analysis of section 9C also included the applicability of the section on other sections in the Income Tax Act, a brief commentary on section 90 and the relief provided to taxpayers where the section leads to double taxation. The ability of the South African Revenue Service to collect the tax, the effect of the tax on immigrants and the effect of the electronic future on the tax were also investigated. The conclusion arrived at in this study is that most of the terms in section 9C are based on internationally used terms and could be analysed according to international tax conventions and case law. The South African Revenue Service will have to provide guidelines for the uncertainties and provide measures to rectify the irregularities and inconsistencies found in the section. In the light of further examinations to be done by the South African Revenue Service, based on the recommendations of the Katz Commission in their Fifth Report, section 9C provides a set of internationally accepted principles as a solid base for future regulation. / AFRIKAANSE OPSOMMING: Die Katz-kommissie het in die Vyfde Interim Verslag aanbevelings aangaande 'n aantal fundamentele belastingkwessies, insluitend die onderskeid tussen die bron- en verblyf-grondslag, gemaak. Die Kommissie het tot die gevolgtrekking gekom dat die bron-grondslag behou moet word, maar dat daar 'n onderskeid tussen "aktiewe" en "passiewe" inkomste gemaak moet word. "Aktiewe" inkomste moet dan op die bron-grondslag belas word en "passiewe" inkomste op die verblyf-grondslag. Met ingang 1 Julie 1997 is die valutabeheermaatreels vir Suid-Afrikaanse inwoners verslap wat beteken het dat Suid-Afrikaners voortaan tot 'n beperkte mate in die buiteland beleggings kan maak. Om die Suid-Afrikaanse belastingbasis in die tussentyd te beskerm is artikels 9C en 9D met ingang 1 Julie 1997 tot die Wet gevoeg. Artikel 9C reguleer die belasting van beleggingsinkomste uit buitelandse bronne. Die hoofdoel van hierdie studie was om die belasting van beleggingsinkomste uit buitelandse bronne in Suid-Afrika te ondersoek. 'n Kritiese analise van artikel 9C is gedoen binne die konteks van die voorstelle gemaak deur die Katz-kommissie in die Vyfde Verslag. Die klem van die studie het op die vereistes vir die uitsluiting van sogenaamde aktiewe beleggingsinkomste in artikel 9C(3)(a) geval. Tydens die ontleding van artikel 9C was dit noodsaaklik om vas te stel waar die terme wat in die artikel gebruik is, ontstaan het. Die terme wat nie vir die eerste maal in die Suid-Afrikaanse belastingkonteks gebruik is nie, is ontleed na aanleiding van die menings van Suid-Afrikaanse belastingspesialiste en nasionale regspraak. Die nuwe terme kom meesal in internasionale modelle van belastingkonvensies en buitelandse belastingkodes voor. Die terme is hoofsaaklik ontleed na aanleiding van die gebruik daarvan in die Model Tax Convention on Income and on capital of the Organisation for Economic Cooperation and Development. Die kritiese ontleding van artikel 9C het die toepaslikheid van die artikel op ander afdelings in die lnkomstebelstingwet, 'n kortlikse verwysing na artikel 9D en die verligting beskikbaar aan belastingpligtiges ten opsigte van dubbele belasting, ingesluit. Die invorderbaarheid van die belasting, die effek van die belasting op immigrante en die effek van die elektroniese toekoms op die belasting is ook ondersoek. Die slotsom waartoe die skrywer in hierdie studie gekom het, is dat meeste van die begrippe in artikel 9C internasionaal verstaanbaar is en ontleed kon word, wat die Wet wereldwyd meer aanvaarbaar en verstaanbaar behoort te maak. Die Suid-Afrikaanse lnkomstediens sal egter riglyne ten opsigte van die onduidelike begrippe moet verskaf en die nodige ongelykhede en inkonsekwenthede in die Wet moet regstel. In die lig van verdere ondersoeke deur die Suid-Afrikaanse lnkomstediens, na aanleiding van die voorstelle deur die Katz-kommissie in die Vyfde Verslag, verskaf artikel 9C 'n stel internasionaal aanvaarde beginsels waarop toekomstige regulasies gebaseer sal kan word.

The federal income tax system in the United States depends upon a high degree of voluntary compliance. The IRS estimates that the voluntary compliance level is declining and that this tax compliance gap cost the government an estimated $90.5 billion in 1981. Between 1979 and 1982, Congress made several changes in the tax laws designed to improve tax compliance. Extensive data was collected by the IRS for 1979 and 1982 through the random sample audits of approximately 50,000 taxpayers on the Taxpayer Compliance Measurement Program (TCMP), which is conducted every three years. During the period 1979 through 1982, Congress lowered the marginal tax rates, added some fairly severe penalties, for both taxpayers and paid return preparers, and increased information reporting requirements for certain types of income. In this research, it was hypothesized that voluntary compliance should increase in response to lower marginal rates, a higher risk of detection due to additional reporting requirements, and increased penalties. Multiple regression analysis was employed to test these hypotheses, using 1979 and 1982 TCMP data. Because of the requirements for taxpayer confidentiality, it was necessary for the IRS to run the data and provide the aggregate data results for the research. The results provided insight into the effectiveness of tax compliance legislation. While the overall voluntary compliance level (VCL) increased from 1979 to 1982 by 1.53 per cent, the VCL increase for taxpayers in high marginal rates was much smaller (.42 percent) than the overall increase. This is very inconsistent with the notion that high marginal rates are driving noncompliance, and suggests that marginal rates may not be strong determinants of compliance. Probably other factors, such as opportunity for evasion, may be more important. There was little change from 1979 to 1982 of the compliance of returns done by paid return preparers. Because of the timing of many TEFRA provisions (effective in 1983), further research for years after 1982 is needed.

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