In a world of economic uncertainty and manifold social problems, South Africa has its own unique challenges of low economic growth, persistent budget deficits that produce increasing government debt and the highest level of economic inequality in the world. The history of injustice and economic marginalisation and the failure of the economy to provide inclusive growth drives an urgent need to address economic inequality through tax policy, placing ever more focus on wealth taxes as a possible solution. There is a hope is that taxing the wealthy may provide the opportunity to redistribute desperately-needed resources to those denied the opportunity to build wealth and who are trapped in the cycle of poverty. Yet, as appealing as a new wealth tax may seem, the introduction of such a tax carries with it a range of risks, not all of which are known. Of great concern is the possible effect on the economy, which, in its vulnerable state, cannot afford any loss of capital and investment. Very little research has been done on wealth tax in the South African context and there is a dearth of literature focusing on the views and perceptions of the wealthy individuals themselves. This qualitative study investigates the merits and disadvantages of a new wealth tax and seeks to identify any unintended consequences that could result from the implementation of a new wealth tax in South Africa, drawing from historical and international experience and primary data obtained from interviews with individuals likely to be affected by such a tax. Having explored the literature and international experiences with wealth tax and having probed the thinking of wealthy individuals who would be the payers of a wealth tax, the study finds that a new wealth tax may contribute towards the progressivity of the tax system, but it is doubtful whether such a tax would provide a sustainable revenue stream that would be sufficient to address economic inequality and there is a risk of causing harm to the economy. Recognising that the motivation for wealth taxes is often driven more by political argument and public perception than by rational quantitative analysis, the study also anticipates the introduction of a new wealth tax and suggests guidelines for the design of such a tax within the framework for evaluating a good tax system. This study informs the debate on wealth taxes in South Africa and contributes to the design of such a tax, should it be implemented.

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.

Tax avoidance has been the subject of intense scrutiny lately by both the South African Revenue Service ("the SARS") and the media. This attention stems largely from the recent withdrawal of section 103(1) together with the introduction of section 80A to 80L of the South African Income Tax Act. However, this attention is not limited to South Africa. Revenue authorities worldwide have focused on the task of challenging tax avoidance. The approach of the SARS to tackling tax avoidance has been multi-faceted. In the Discussion Paper on Tax Avoidance and Section 103 (1) of the South African Income Tax Act they begin with a review of the distinction between tax evasion, tax avoidance and tax planning. Following a call for comment the SARS issued an Interim Response followed by the Revised Proposals which culminated in the withdrawal of the longstanding general anti-avoidance rules housed in section 103(1) and the introduction of new and more comprehensive anti-avoidance rules. In addition, the SARS has adopted an ongoing media campaign stressing the importance of paying tax in a country with a large development agenda like that of South Africa, the need for taxpayers to adopt a responsible attitude to the management of tax and the inclusion of responsible tax management as the greatest measure of a taxpayer's corporate and social investment. In tandem with this message the SARS have sought to vilify those taxpayers who engage in tax avoidance. The message is clear: tax avoidance carries reputational risks; those who engage in tax avoidance are unpatriotic or immoral and their actions simply result in an unfair shifting of the tax burden. The SARS is not alone in the above approach. Around the world tax authorities have been echoing the same message. The message appears to be working. Accounting firms speak of a "creeping conservatism" that has pervaded company boardrooms. What is not clear, however, is whether taxpayers, in becoming more conservative, are simply more fully aware of tax risks and are making informed decisions or whether they are simply responding to external events, such as the worldwide focus by revenue authorities and the media on tax avoidance. Whatever the reason, it is now critical, particularly in the case of corporate taxpayers, that their policies for tax and its attendant risks need to be as sophisticated, coherent and transparent as its policies in all other areas involving multiple stakeholders, such as suppliers, customers, staff and investors. How does a company begin to set its tax philosophy and strategic direction or to determine its appetite for risk? A starting point, it is submitted would be a review of the distinction between tax evasion, avoidance and planning with a heightened sensitivity to the unfamiliar ethical, moral and social risks. The goal of this thesis was to clearly define the distinction between tax evasion, tax avoidance and tax planning from a legal interpretive, ethical and historical perspective in order to develop a rudimentary framework for the responsible management of strategic tax decisions, in the light of the new South African general anti-avoidance legislation. The research methodology entails a qualitative research orientation consisting of a critical conceptual analysis of tax evasion and tax avoidance, with a view to establishing a basic framework to be used by taxpayers to make informed decisions on tax matters. The analysis of the distinction in this work culminated in a diagrammatic representation of the distinction between tax evasion, tax avoidance and tax planning emphasising the different types of tax avoidance from least aggressive to the most abusive and from the least objectionable to most objectionable. It is anticipated that a visual representation of the distinction, however flawed, would result in a far more pragmatic tool to taxpayers than a lengthy document. From a glance taxpayers can determine the following: That tax avoidance is legal; that different forms of tax avoidance exist, some forms being more aggressive than others; that aggressive forms of tax avoidance carry reputational risks; and that in certain circumstances aggressive tax avoidance schemes may border on tax evasion. This, it is envisaged, may prompt taxpayers to ask the right questions when faced with an external or in-house tax avoidance arrangement rather than simply blindly accepting or rejecting the arrangement.

As a result of the different tax systems adopted by countries, foreign-sourced income earned by taxpayers may be subject to double taxation. This may therefore impede cross-border trade and investment. Double taxation relief is provided unilaterally, in terms of a country’s domestic laws or bilaterally in terms of Double Taxation Agreements. South African residents earning income from the Democratic Republic of Congo may be subject to tax in both countries. To eliminate such double taxation the South African Income Tax Act, No 58 of 1962, provides for unilateral relief from double taxation in the form of exemptions, rebates and deductions. The double tax agreement between South Africa and the Democratic Republic of the Congo came into effect recently and double taxation relief for South African residents is now also available in terms of tax treaty law. The objective of the research was to determine whether the combination of the unilateral measures and the double tax agreement provide relief in respect of all types of income earned by South African residents in the Democratic Republic of the Congo. It was concluded that the double tax agreement, together with the unilateral relief provided for in the Income Tax Act will grant relief for all types of income earned by South African residents in the Democratic Republic of the Congo.

In his 2012 Budget Review, the Minister of Finance, Pravin Gordhan acknowledged that the introduction of the "new" Companies Act had given rise to certain anomalies in relation to tax and subsequently announced that the South African government would undertake to review the nature of company mergers, acquisitions and other restructurings with the view of possibly amending the Income Tax Act and/or the "new" Companies Act, to bring the two legislations in line with one another. These anomalies give rise to the present research. The literature reviewed in the present research revealed and identified the inconsistencies that exist between the "new" Companies Act, 71 of 2008 and the Income Tax Act, 58 of 1962, specifically the inconsistencies that exist in respect of the newly introduced amalgamation or merger provisions as set out in the "new" Companies Act. Moreover, this research was undertaken to identify the potential tax implications insofar as they relate to amalgamation transactions and, in particular, the potential tax implications where such transactions, because of the anomalies, fall outside the ambit section 44 of the Income Tax Act, which would in normal circumstances provide for tax "rollover relief". In this regard, the present research identified the possible income tax, capital gains tax, value-added tax, transfer duty tax and securities transfer tax affected by an amalgamation transaction, on the assumption that the "rollover relief" in section 44 of the Income Tax Act does not apply.

Over the last 10 years the South African fiscus has introduced numerous changes to the Income Tax Act (ITA) which affect the income tax implications of persons ceasing to be a resident of South Africa. The two main changes were: - The introduction of a world-wide basis of taxation for residents - The introduction of capital gains tax (CGT) as part of the ITA The aim of this treatise was to identify the income tax implications of persons ceasing to be a resident of South Africa. Resulting from this research, several issues in the ITA have been identified, and the two major ones are summarised below. Firstly, upon the emigration of the taxpayer, there is a deemed disposal of a taxpayer’s assets in terms of paragraph 12 of the Eighth Schedule. It is submitted that the resulting exit tax may be unconstitutional for individuals. It is recommended that South Africa should adopt the deferral method within its domestic legislation for individuals who are emigrating. The deferral method postpones the liability until the disposal of the asset. Secondly, on the subsequent disposal of assets by former residents where there was no exit charge in terms of the exemption under paragraph 12(2)(a)(i) of the Eighth Schedule. Depending on the specific double tax agreement (DTA) that has been entered into with the foreign country, taxpayers have been given vii the opportunity to minimise or eliminate the tax liability with regard to certain assets. This should be of concern from the point of view of the South African government. Further issues noted in this treatise were the following: - It is submitted that the term ‘place of effective management’ has been incorrectly interpreted by SARS in Interpretation Note 6. - It is further submitted that the interpretation by SARS of paragraph 2(2) of the Eighth Schedule is technically incorrect. The above issues that have been identified present opportunities to emigrants to take advantage of the current tax legislation. It is further recommended that taxpayers who are emigrating need to consider the South African domestic tax law implications, respective DTA’s, as well as the domestic tax laws of the other jurisdiction, not only on the date of emigration but also on the subsequent disposal of the respective assets.

The purpose of this research was to determine whether horizontal equity in the taxation of individuals in South Africa improved after the legislative changes from 1984 to 1995 and the Katz Commission recommendations. After an extensive literature study, horizontal equity in the taxation of individuals in South Africa was defined as the equivalent tax treatment in equivalent economic circumstances for the same economic units. The household as the economic unit, is the unit to be considered when evaluating horizontal equity. The study also reviewed the solutions found in other countries for the dilemma of the one-breadwinner versus the two-breadwinner married couple. It was found that the tax systems of most countries provide relief to the one-breadwinner couple while the working wife was taxed separately from her husband or had the option to be taxed separately. An important part of this study compared the tax of the unmarried taxpayer and the married couple as the units for horizontal equity. It was found that, although two-breadwinner married couples were discriminated against until the separate taxation of married couples was introduced, the one-breadwinner couple and single taxpayers with dependants now suffer more horizontal inequity than was previously the case. The research indicated that to attain greater horizontal equity provision should also be made for families and households with only one breadwinner (breadwinner being defined as the provider in a one-breadwinner couple or a ·taxpayer with dependents). Recommendations made to alleviate this inequity are transferable allowances for spouses, or, without ~ontravening the Constitution's demands for equality, a separate rate schedule for breadwinners, a fixed allowance or rebate for breadwinners, or a proportional allo~ance depending on the breadwinner's income. The study also addressed the financial and administrative implications and political acceptability of these recommendations and concluded that the proportional allowance, although expensive, would come the closest to providing the greatest horizontal equity. The research into the international tax measures to promote equity revealed that horizontal equity could be further promoted by providing tax relief for child-care and day-care facilities. This would benefit both the two-breadwinner married couple and the single parent with dependent children. / Financail accounting / D.Com. (Applied Accountancy)

The purpose of this research was to determine whether horizontal equity in the taxation of individuals in South Africa improved after the legislative changes from 1984 to 1995 and the Katz Commission recommendations. After an extensive literature study, horizontal equity in the taxation of individuals in South Africa was defined as the equivalent tax treatment in equivalent economic circumstances for the same economic units. The household as the economic unit, is the unit to be considered when evaluating horizontal equity. The study also reviewed the solutions found in other countries for the dilemma of the one-breadwinner versus the two-breadwinner married couple. It was found that the tax systems of most countries provide relief to the one-breadwinner couple while the working wife was taxed separately from her husband or had the option to be taxed separately. An important part of this study compared the tax of the unmarried taxpayer and the married couple as the units for horizontal equity. It was found that, although two-breadwinner married couples were discriminated against until the separate taxation of married couples was introduced, the one-breadwinner couple and single taxpayers with dependants now suffer more horizontal inequity than was previously the case. The research indicated that to attain greater horizontal equity provision should also be made for families and households with only one breadwinner (breadwinner being defined as the provider in a one-breadwinner couple or a ·taxpayer with dependents). Recommendations made to alleviate this inequity are transferable allowances for spouses, or, without ~ontravening the Constitution's demands for equality, a separate rate schedule for breadwinners, a fixed allowance or rebate for breadwinners, or a proportional allo~ance depending on the breadwinner's income. The study also addressed the financial and administrative implications and political acceptability of these recommendations and concluded that the proportional allowance, although expensive, would come the closest to providing the greatest horizontal equity. The research into the international tax measures to promote equity revealed that horizontal equity could be further promoted by providing tax relief for child-care and day-care facilities. This would benefit both the two-breadwinner married couple and the single parent with dependent children. / Financail accounting / D.Com. (Applied Accountancy)

Income tax in South Africa is levied in terms of the Income Tax Act, 58 of 1962 (the South African Income Tax Act) on taxable income, which by definition, is arrived at by deducting from ''gross income" receipts and accruals that are exempt from tax as well as deductions and allowances provided for in the Act. The South African Income Tax Act provides no guidance with regard to the taxation of income and expenditure from illegal activities. In this mini thesis, case law and legislation is reviewed in an attempt to provide clarity on the tax consequences of income and expenses arising from illegal activities. An overview is provided of the taxation of income and expenditure in respect of illegal activities in the United States of America, Australia and New Zealand. Similarities are found between the American, Australian, New Zealand and South African tax regimes in relation to the taxation of income earned from illegal activities, but there appears to be more certainty in America, Australia and New Zealand with regard to the deduction of expenses arising from illegal activities. In South Africa, taxpayers earning income from ongoing illegal activities will, in principle, comply with the definition of “trade” as defined in section 1 of the South African Income Tax Act. However, this is contrary to the view of the South African Revenue Service that illegal activities do not meet the definition of “trade”, a viewpoint that may not hold if challenged in court. Recommendations are made for the amendment of the South African Income Tax Act to specifically provide for the inclusion in “gross income” of income from illegal activities and to prohibit the deduction of expenditure arising from illegal activities.

This research studies the practical person principle as it was introduced in the case of Commissioner for Inland Revenue v Lever Brothers and Unilever Ltd 1946 AD 441. In its time the Lever Brothers case was a seminal judgment in South Africa’s tax jurisprudence and the practical person principle was a decisive criterion for the determination of source of income. The primary goal of this research was a critical analysis the practical man principle. This involved an analysis of the extent to which this principle requires judges to adopt a criterion that is too flexible for legitimate judicial decision-making. The extent to which the practical person principle creates a clash between a philosophical approach to law and an approach that is based on common sense or practicality was also debated. Finally, it was considered whether adopting a philosophical approach to determining the source of income could overcome the problems associated with the practical approach. A doctrinal methodology was applied to the documentary data consisting of the South African and Australian Income Tax Acts, South African and other case law, historical records and the writings of scholars. From the critical analysis of the practical person principle it was concluded that the anthropomorphised form of the principle gives rise to several problems that may be overcome by looking to the underlying operation of the principle. Further analysis of this operation, however, revealed deeper problems in that the principle undermines the doctrine of judicial precedent, legal certainty and the rule of law. Accordingly a practical approach to determining the source of income is undesirable and unconstitutional. Further research was conducted into the relative merits of a philosophical approach to determining source of income and it was argued that such an approach could provide a more desirable solution to determining source of income as well as approaching legal problems more generally.