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.

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.

M. Comm. / The purpose of this study is to determine the desirability of implementing of a system of capital transfer tax in South Africa. The implementation of a capital transfer tax system in South Africa should generate additional income without placing a further administrative or financial burden on the South African Revenue Services. A system of capital transfer tax will replace the current system of donation tax and estate duty in South Africa. Any new system will be based on the principles established by these two forms of taxation, but should simultaneously address many of the loopholes in these two systems. Since the Margo Commission's recommendation in 1986 that South Africa should implement a system of capital transfer tax, much has been written about this form of capital tax but the government has never implemented the recommendations. However, it is certain that a system of capital transfer tax will be implemented in South Africa in the future. The current system of donation tax and estate duty is not effective in levying the taxes and earning the income for the government for which it was originally designed. Over the years numerous ways have been developed to legally avoid these taxes, which is why they are referred to as voluntary taxes (Anon, 1988:17). This dissertation consists of three parts: The first part is a literature study in which capital taxes are discussed. The distinction between income and capital is reviewed. The various forms of capital taxes are identified and the arguments for and against introducing one of them are discussed. This part concludes with arguments for and against a system of capital transfer tax for South Africa. The second part is an analysis of donation tax and estate duty as currently levied in South Africa. The shortcomings of the current legislation are discussed and legal ways to avoid estate duty are identified. The inheritance tax system in the UK and the donation tax and estate duty system in the USA are also briefly discussed. The anti-avoidance measures implemented in these countries are discussed in some detail in view of recommendations to implement similar measures in South Africa. In the third part a capital transfer tax system for South Africa is proposed. Precautions to minimise the avoidance of these taxes through interest-free loans and generation-skipping devises are discussed. Finally a conclusion is reached regarding the matters analysed in this dissertation.

M. Comm. / The objective of the study is to critically evaluate the process of implementation of the residence—based system of taxation in South Africa and to evaluate whether the South African Revenue Service achieved their goals mentioned above through the implementation of this complex, sophisticated system of taxation. A well known cross border preference share structure will be utilised to illustrate the effect of the changes from a source to a residence taxation system. In order for a residence-based taxation system to be effective, it is essential that it draws into the tax net income earned by South Africanowned foreign entities (principally South African-owned foreign subsidiaries). If such income is not taxed, it is easy for South African residents to avoid tax by shifting their income to foreign entities in tax havens and preferential regimes, in which event the income earned by the foreign entity will be subjected to South African taxation only when repatriated as a dividend (Jooste, 2001:473-502). An efficient residence-based system spurns such a delay or deferral of taxation because taxpayers often delay repatriation for years, or never repatriate funds at all. This was exactly what the South African Revenue Service wanted to achieve through the introduction of the full-blown residence-based taxation system. The South African taxation system was based on a pure source system. Gradual changes in the economic environment necessitated certain amendments to the South African Income Tax Act to ensure that South Africa protects its tax base. Even though the residence based system of taxation was implemented over a number of years since 1997, numerous problems are still being encountered with the practical application of this complex system of taxation. South Africa's participation as a global player is examined from a tax perspective and practical application issues are examined. The taxation of foreign dividends introduced with effect 22 February 2002 serves as an example of the major impact that these changes had on cross-border structuring. Although this only serves as an example of the extent of the impact, various other cross-border structuring have been drastically impacted by these changes.

Human migration and the search for something better has been part of humankind’s existence for centuries. In today's world, migration is triggered by a variety of factors. One such factor is the influence of tax on the income of skilled employees. Although prior research has been performed to determine the influence of tax on employee migration, this research made use of complex formulae and did not focus on a South African point of view. This study aims to determine whether tax plays a role when a South African skilled worker decides to migrate to the United Kingdom (UK) or Australia with the intention of working there. The study compares the different income tax consequences of a South African resident working in South Africa versus the same South African resident working abroad. The comparison is done by analysing the income tax acts of the three different countries. The study attempts to establish the difference in tax consequences for a South African skilled employee migrating to the United Kingdom or Australia on a temporary versus a permanent basis. Examples are used to illustrate the different effects. Together with known statistics and the results of the illustrative examples, the study concluded that individuals in the United Kingdom and Australia, in most cases, pay less tax compared to individuals in South Africa. AFRIKAANS : Die migrasie van mense en die soeke na iets beters is reeds eeue lank deel van menswees. In die hedendaagse wêreld word menslike migrasie deur ʼn aantal faktore aangespoor. Een van hierdie faktore kan moontlik die impak van belasting op geskoolde werknemers wees. Alhoewel daar voorheen studies gedoen is oor die impak van belasting op werknemermigrasie, is sodanige studies deur middel van komplekse formules uitgevoer en het die fokuspunt nooit Suid-Afrikaanse werknemers ingesluit nie. Hierdie studie beoog om te bepaal of inkomstebelasting ʼn rol speel in die besluitnemingsproses van ʼn Suid-Afrikaanse werknemer wat verhuis na die Verenigde Koningryk of Australië. Om die doelwit te behaal sal die studie die verskillende belastinggevolge vergelyk van ʼn Suid-Afrikaanse inwoner wat in Suid-Afrika werksaam is versus dieselfde Suid-Afrikaanse inwoner werksaam in die buiteland. Die vergelyking word gedoen deur die verskillende inkomstebelastingwette van die drie lande te ontleed. Die studie gaan verder deur die verskillende belastingberekeninge vir ʼn Suid-Afrikaanse inwoner wat na die Verenigde Koningryk of Australië verhuis het op ʼn tydelike basis versus ʼn permanente basis uit te voer. Voorbeelde word gebruik om die verskillende gevolge te illustreer. Copyright 2011, University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria. Please cite as follows: Reyneke, D 2011, An international taxation comparison of South African employees working abroad, MCom dissertation, University of Pretoria, Pretoria, viewed yymmdd < http://upetd.up.ac.za/thesis/available/etd-03072012-165447 / > F12/4/155/gm / Dissertation (MCom)--University of Pretoria, 2012. / Taxation / unrestricted

Section 20 of the Income Tax Act, No 58 of 1962 allows a taxpayer that incurs an assessed loss to carry forward the balance of assessed loss incurred, to be set off against taxable income earned in or added to losses incurred in future years. The issues regarding the carry forward of assessed losses in terms of section 20 is complex and in terms of the said section, a company is only entitled to set off its assessed loss from the previous year against its taxable income in the current year, if the taxpayer has carried on a trade during the current year and has derived income from that trade. Under the provisions of section 20(2A), a taxpayer other than a company can utilise an assessed loss even if no trading has been conducted. Assessed losses of natural persons, may however be ring-fenced. The aim of this treatise was twofold. Firstly it was to gain clarity on the „trade‟ and „income from trade‟ issues and secondly to compare South African legislation with that of Australia, with a view to recommending a change in our rules regarding the treatment of assessed losses in the context of companies. The critical lessons to be learned from the cases presented, is that liquidators, creditors and others must ensure that the company continues trading in order to x keep the assessed losses valid. Realisation of assets (including stock), and the collection of outstanding debts during liquidation does not constitute the carrying on of a trade in terms of s 20(1). The continuity of trade is an important element in regard to the carry forward of assessed losses to be utilised in the current and future years. Therefore it is important that a company carries on some activity that falls within the definition of trade. In the landmark case of SA Bazaars, it was held that a company did not have to trade continuously throughout the year to qualify for the set-off of the assessed loss or carry forward of the assessed loss, that is, to trade for say part of the year. The court however left open the issue of whether it was necessary to derive income from that trade. In order to clarify the issues regarding assessed losses, SARS issued Interpretation Note 33 granting taxpayers a concession in certain cases where a company has traded, but not derived income from that trade. But in ITC 1830, the court ruled that a company must trade and must derive income from that trade in order to carry forward its assessed loss, which effectively means that SARS cannot apply Interpretation Note 33. SARS does not have the authority to make concession which is contrary to the wording of the Act. xi In Australia, operating losses can be carried forward indefinitely to be set-off against future income, provided a company meets the more than 50% continuity of ownership test. Where the continuity test fails, losses can be deducted if the same business is carried on in the income year (the same business test). From the research conducted and in order to solve the issues surrounding the carry forward of assessed losses it was suggested that one of the following be adopted :- The method used in Australia for the carry forward of assessed losses., or A decision of the Supreme Court of Appeal is needed for a departure from the literal meaning of the words pertaining to the requirements regarding the carry forward of assessed losses. Furthermore, to clarify the definition of „income‟, as used in the context of s20, is it gross income less exempt income or taxable income?. If section 20 relates to taxable income, then an assessed loss will never be increased, which it is submitted, is not what the legislature intended. Section 20 ought to be revisited to eliminate any uncertainty about the income requirement and in the context in which the word „income‟ is used in that section.

This master's thesis presents a comparison of the tax burden in the Czech Republic and in Germany. The first two chapters cover the major types of taxes and differences in the tax systems of both countries. In the third part of the thesis is about key features of the Czech and the German Income Tax Act and it is primarily focused on taxation of employment. The practical part is compared to taxation of certain types of taxpayers at different levels of the average wage.

L.LM. (Corporate Law) / Please refer to full text to view abstract

This thesis deals with employee benefits. The first part is focused generally on employee compensation, division of benefits and their legal regulations. The main part of thesis describes employee benefits from the point of view of accounting and taxes -- contribution for meals, non-alcoholic beverages, private use of company cars, contributions to the pension and life insurance, extra holidays, education of employees and gifts for employees. In conclusion, benefits are analysed in a selected company.

Estate planning is the arrangement and management of an estate owner’s estate to the effect that the estate owner and his beneficiaries can enjoy maximum benefit from his worldly possessions during his lifetime and after his death. Unfortunately, for estate owners and their beneficiaries, a deceased estate has to pay an executor’s fee, estate duty and capital gains tax on the demise of the estate owner, which means the amount the estate owner intended his heirs to receive, might be substantially decreased. For decades trusts have been used for estate planning purposes. The decision of the estate owner to utilise a trust for estate planning purposes involves the disposal of growth assets from the estate owner’s estate to the trust. This ensures that the value of a growth asset is pegged in the estate owner’s estate and the asset continues to grow in the trust. The asset is disposed of by way of a loan account in favour of the estate owner and the parties agree that the outstanding amount is payable on demand. In his will, the estate owner then bequeaths the outstanding amount back to the trust. However, Paragraph 12(5) of the Eighth Schedule to the Income Tax Act 58 of 1962 stated that capital gains tax will be levied in cases where a debt is reduced or discharged by a creditor for no consideration or for an amount which is less than the outstanding amount. In ABC Family Trust ITC 1793 the estate owner transfer assets to the trust on a loan account and in her will, bequeathed the exact outstanding amount back to the trust. It was argued on behalf of the trust that the bequest constituted a set-off and not a discharge of the debt. However, the court stated that the set-off took place because of the “operation of law” which is specifically included in the definition of a “disposal” for capital gains tax purposes. The court applied Paragraph 12(5) and found that the trust is liable to pay capital gains tax on the full outstanding amount. In XXX Trust ITC 1835 the estate owner also transferred asset to a trust, but in her will she bequeathed the residue of her estate, and not the exact outstanding amount, to the trust. In this case the court placed emphasise on the intention of the estate owner and not on the possible application of Paragraph 12(5). The court found that it was not the intention of the estate owner to discharge or reduce the debt for no consideration. Subsequently, it was found that the trust is not liable for capital gains tax. Since these two cases Paragraph 12(5) has been deleted and Paragraph 12A inserted in the Eight Schedule to the Income Tax Act 58 of 1962. The focus of this mini-dissertation is to determine which estate planning tools were available to estate owners to prevent a capital gains liability under Paragraph 12(5). The capital gains tax effect that Paragraph 12A might have on estate planning is also discussed. / LLM (Estate Law), North-West University, Potchefstroom Campus, 2014