Section 164 of the Tax Administration Act 28 of 2011 (the TAA), previously contained in section 88 of the Income Tax Act 58 of 1962 (the Income Tax Act) and section 36 of the Value-Added Tax (VAT) Act 89 of 1991 (the VAT Act), provides that the payment of tax will not be automatically suspended until the resolution of a dispute regarding the liability for the said tax debt. This is known as the 'pay now argue later' principle. The objectives of this research were to analyse the development of the 'pay now argue later' principle in South African tax law, to provide an overview of the content and operation of section 164 of the TAA, to compare the principle and its purpose with civil debt enforcement procedures and, lastly, to test the principle against the Constitution of the Republic of South Africa, 1996 (the Constitution), specifically the right of access to courts. The underlying theme of this research is the recognition of taxpayers' rights in South Africa, specifically the interplay between the powers of the fiscus and the rights of taxpayers. In order to achieve the abovementioned objectives, this research examined the development of the 'pay now argue later' principle from its first appearance in section 88 of the Income Tax Act and section 36 of the VAT Act to its subsequent incorporation into the Tax Administration Bill 11 of 2011 and, ultimately, into section 164 of the TAA. It was concluded that the development of the 'pay now argue later' principle, from its first appearance in the Income Tax Act in 1962 and the VAT Act in 1993 until their repeal in 2011, was relatively minor save for in 2009, during which year there was a marked change in the structure of this principle with the inclusion of the so-called 'suspension rule'. This research provided a practical overview and understanding of the operation of the 'pay now argue later' principle in terms of section 164 of the TAA, specifically focusing on the suspension rule. This research further compared the 'pay now argue later' principle with civil debt enforcement procedures, specifically provisional sentence and summary judgment. It was concluded that the 'pay now argue later' principle is an exception to the ordinary rules governing civil debt enforcement proceedings. Lastly, this research placed the 'pay now argue later' principle under constitutional scrutiny, specifically whether its application infringes on the right of access to courts of taxpayers. It was found that the 'pay now argue later' principle infringes a taxpayer's right of access to courts, but this limitation is justified in terms of section 36 of the Constitution.

This dissertation analyses the nature (capital or revenue) of the proceeds arising from the use of short positions in South African hedge fund fundamental paired trades. Hedge funds, which typically avail themselves of an array of alternative investment strategies such as short selling in addition to the traditional asset classes, were recently brought into the South African investment regulatory net. This was achieved by classifying regulated hedge funds as a separate category of collective investment scheme in terms of the CISCA. This categorisation brought regulated hedge funds into the ambit of section 25BA of the Income Tax Act which carries an important distinction between amounts of a capital nature and amounts of a revenue nature. Given that hedge funds may use short positions for both profit-seeking and risk-mitigation purposes, the resulting proceeds from short sales could be capital or revenue in nature from a tax perspective based on the surrounding facts of the trade. The onus of discharging the proof that the proceeds resulting from a short sale are capital in nature is significant. The South African case law emphasises the importance of applying the various principles to the specific facts of the case. The importance of the dominant intention of the trade is highlighted, given the potentially competing purposes of profit-seeking and risk-mitigation present. Factors that should be analysed in such a scenario include the overall portfolio positioning, the size of the long and short positions relative to each other, the degree of specificity of the risk that the short position purports to hedge against, the manner of re-investment of the short sale proceeds, the level of trading activity in the hedge fund, the level of short positions in the hedge fund, the absolute sizes of the long and short positions in the context of the overall portfolio, the exposure of the hedge fund to the long position after the close out of the short position, the manner of close out of the short position and the holding period of the short position. While the analysis reveals factors that may be indicative of capital treatment, the classification of short sale proceeds as capital or revenue in nature remains a challenging task to undertake due to the potentially wide variety of facts and circumstances and the potential for undesirable consequences should an incorrect classification be made. Consequently, improved clarity through the provision of de jure guidance as to the nature of short sale proceeds would be welcome.

As a general guiding principle, the Commissioner of the South African Revenue Service (SARS) is mandated to collect all tax that is legally payable. This should be done in the most efficient and effective manner, which creates certainty for the taxpayer, reduces the likelihood of tax leakages as far as possible, and should not envisage inhibition of trade. Value-Added Tax (VAT) is a consumption tax aimed at taxing the consumption of goods and services in South Africa. The mechanism where services supplied by non-residents are taxed within a taxing jurisdiction, is more commonly referred to as the imported services/reverse charge mechanism. As consumers seldom use these provisions to accurately account for VAT on purchases made, the legislature decided to introduce new rules governing the supply of electronic services by a foreign supplier to South Africa to level the playing field between foreign and local service providers. The 2013 amendments to the VAT Act, which introduced the treatment of the supply of electronic services, provides focus on a tax specific element of imported services as a local supply. This inherently places certain compliance requirements on foreign suppliers to account for and pay tax to the South African Revenue Service (SARS) where certain electronic services are supplied to consumers in South Africa. These legislative amendments took the initial step to ensure that revenue to the fisc was not being lost by implementing provisions that could keep pace with the rapid growth and development of technology globally. About six months after the introduction of the South African model, the European Union sought to address the same concerns by introducing its own version of these provisions to tax certain electronically supplied services. Both efforts have been successful to date and while the implementation of the South African model is just under three years old, the provisions already seem too narrow and dated when applied to current technological trends. This dissertation has considered the electronic services provisions for both jurisdictions with a view of understanding how the models work, and to identify potential amendments and recommendations which could be applied in the South African context in future (i.e. "Version 2.0"). Based on the research concluded, the opportunity to increase the tax base by broadening the electronic services provisions in South Africa cannot be missed by SARS and National Treasury and while the South African electronic services model may not be perfect, it has significantly changed the space of digital taxation and is one of the pioneers in this field of taxation. While there is still much change that needs to be brought to the current legislative provisions, the initial attempt by SARS and National Treasury is laudable as they have managed, in most instances, to address key concepts with simplified rules and relaxed provisions in order to make the provisions work within the current framework. It is submitted that this bodes well, as an indication to a more vibrant future for the taxation of electronic services in South Africa.

No abstract available Copyright / Dissertation (LLM)--University of Pretoria, 2012. / Mercantile Law / unrestricted

The South African tax system currently provides for wealth transfer taxation by virtue of estate duty in terms of the Estate Duty Act and donations tax in terms of Part V of the Income Tax Act, which are primarily levied on the transferor. At the outset, this study investigates the conceptual justification for this type of taxation in the South African context, especially in view of the fact that some countries have recently abolished their wealth transfer taxes. It is concluded that the arguments against wealth transfer taxation are not compelling enough to justify its abolition from the South African tax system. It is also submitted that the levying of capital gains tax on the death of a wealth holder cannot act as a substitute measure to tax wealth transfers in the South African system. It is, however, explained that the levying of both taxes reflects a scenario of double taxation on a deceased estate and that the equity criterion supports the taxation of wealth transfers in the hands of the recipient. The possibility of merely including inheritances and gifts in the “gross income” of a beneficiary is explored, but is submitted that such a move would be politically and administratively unlikely. After having come to the conclusion that wealth transfer taxation is indeed justifiable for the South African tax system, two key issues are explored in the study. The first issue relates to the lack of integration that exists between the taxation of inter vivos transfers (under the donations tax regime) and the taxation of transfers on death (under the estate duty regime). After having compared the systems in the United Kingdom, the Netherlands and Ireland, it is concluded that it is conducive to equity, neutrality and tax administration that the rules relating to the jurisdictional basis, double taxation relief, tax rates and valuation rules apply (in general) equally to inter vivos transfers and transfers on death. It is evident, however, that it remains necessary to distinguish between the two types of transfers, because this creates a flexible platform to accommodate special circumstances and differences. A number of measures to improve integration under the current regimes are recommended, but it is suggested that, ideally, the Estate Duty Act and Part V of the income Tax Act should be replaced by a single integrated statute. The second issue deals with the question whether or not the well-established estate duty and donations tax regimes should be replaced by a recipient-based system, especially in view of its theoretical appeal. After having shown that a recipient-based wealth transfer tax offers more appropriate solutions to some of the problem areas common to wealth transfer taxation in general (such as the accommodation of third-party life insurance benefits, limited interests and a special regime for discretionary trusts), it is concluded that the current regimes should be replace by a recipient-based wealth transfer tax, which may even be accommodated as a separate schedule to the existing income Tax Act in much the same way as capital gains tax. / Thesis (LLD)--University of Pretoria, 2010. / Mercantile Law / unrestricted

For an effective, fair, just and equitable tax system to be established, certain fundamental principles have to be enforced to ultimately achieve a balance between government interests and taxpayers’ interests. The government is conferred with the power to tax which is derived from the Constitution. At first glance the government’s power to tax seems wide, but upon an analysis of the Constitution, one can note that the government’s power to tax is limited by certain structural, procedural and substantive limitations. By way of the Bill of Rights, the Constitution confers taxpayers with numerous rights which serve as the substantive limitations to the government’s power to tax. One of these fundamental taxpayers’ rights is the right of just administrative action, which is the sole focus of this dissertation. A right without a remedy to enforce same is of no consequence, and therefore the available remedy analysed is the remedy of judicial review which is regulated by the Constitution read together with PAJA and the Constitutional common law principles. The executive authority to tax vests in SARS, being an organ of state, which is headed by CSARS. Empowering legislation confers SARS, CSARS and other delegated SARS officials with the power to take decisions/exercise discretions. There are three types of empowering provisions which are differentiated, based on whether the remedy of objection and appeal is available to the taxpayer. Despite the availability of the remedy of objection and appeal, most decisions taken/discretions exercised by SARS and its delegated officials may amount to administrative action. The question which arises is whether taxpayers are equipped with a right and remedy to protect their interests from unlawful, unreasonable, and procedurally unfair exercise of such administrative action. S33 of the Constitution confers taxpayers with the fundamental right of just administrative action, and to enforce this right, taxpayers would have to implement the remedy of judicial review. The mere availability of a right and remedy does not provide taxpayers with protection; thus in order for the right and remedy to provide taxpayers with protection against the administrative action taken by SARS and its delegated officials, taxpayers would have to prove that the right and remedy is applicable and enforceable in the circumstances. The aim of this dissertation is to determine whether the right of just administrative action and the remedy of judicial review is applicable and enforceable in the tax arena. For the right and remedy to be applicable and enforceable, certain substantive and procedural requirements must be satisfied, and therefore those requirements are analysed in the tax arena in this dissertation. The substantive requirements which need be complied with are: (a) the administrator must be subject to the provisions of PAJA; (b) the conduct of the administrator must constitute “administrative action” as defined in PAJA; (c) the “administrative action” must materially and adversely affect taxpayer’s rights or legitimate expectations and have a “direct, external legal effect”; and (d), the “administrative action” must be found not be “lawful, reasonable and procedurally fair”, and if so, a ground as contemplated in s6 of PAJA must be applicable. The procedural requirements which needs be complied with are: (a) locus standi to institute judicial review proceedings; (b) time limitations in which judicial review proceedings must commence; (c) the exhaustion of all available internal remedies prior to the commencement of judicial review proceedings (unless there are exceptional circumstances); (d) that Rules regulating proceedings in terms of PAJA be established and determination of such Rules which will regulate judicial review proceedings until new Rules are promulgated. If, in the circumstances, the taxpayer can prove that he or she complies with all substantive and procedural requirements, then the right of just administrative action and remedy of judicial review is applicable and enforceable. It then needs to be established which forum would have the necessary jurisdiction to adjudicate upon the remedy of judicial review in the tax arena. There are two relevant Courts, namely the Tax Court and the High Court. The Tax Court has been established to adjudicate upon tax-related matters, whereas the High Court has inherent jurisdiction. It has been determined that in terms of the Constitution read together with PAJA, only a High Court or court with similar status may adjudicate upon judicial review. The Tax Court is a creature of statute and it has been held that the Tax Court does not have a similar status as the High Court. Case law has, however, previously held that the Tax Court has jurisdiction to review administrative action by SARS and its delegated officials. The leading case in this regard was, however, adjudicated upon in 1985, prior to the Constitution and PAJA having been promulgated. It therefore seems that the case law should be re-evaluated in light of the current Constitutional dispensation in which the Constitution is the supreme law. Finally, this dissertation provides a concise analysis of the powers which the forum having jurisdiction to adjudicate upon judicial review has to make orders. It is prudent to emphasise that this dissertation focuses on the position prior to 1 October 2012. On 1 October 2012 the Tax Administration Act 28 of 2011 (the TAA) came into force and effect. The TAA is relevant to some of the issues discussed in this dissertation. Where the TAA influences the issues, mention is made of the provisions of the TAA, but these are not discussed. Therefore a recommendation for further research is that this dissertation be re-evaluated in light of the provisions of the TAA. The most relevant provisions which the TAA caters for, which may influence the topic of this dissertation, is the establishment of the Tax Ombud and the conferring of a limited remedy of review upon SARS and its delegated officials, in addition to the remedy of objection and appeal. / Dissertation (LLM)--University of Pretoria, 2013. / Mercantile Law / unrestricted

The promotion of science & technology and the creation of an enabling environment for countries innovation systems has been a growing worldwide trend in developed countries, with 21 out of 30 member countries of the Organisation for Economic Co-operation and Development (OECD) currently utilising some form of tax incentive program aimed at encouraging investment in research and development (R&D) by private industry. 1 Encouraging R&D and associated innovation is generally seen as an effective tool in advancing science and technology, which in turn leads to the creation of new products and services, an increase in international competitiveness of local business, direct foreign investment and social spin-offs in the form of increased employment and economic growth? R&D is, however, expensive and involves high levels of technical risk, with the costs and risk involved often outweighing the potential profit. Consequently, many businesses choose not to perform R&D, which has resulted in governments of most developed countries having implemented various incentives to encourage private business to undertake R&D. These incentives can take the form of either direct incentives (grants, soft loans, subsidies etc) or indirect incentives (such as tax incentives). Tax incentives effectively subsidise the costs of R&D, making it a more attractive and profitable alternative for business. Developed countries, including: the United States of America (US), the United Kingdom (UK), Japan, China, Canada and Australia have all adopted a combination of both direct and indirect incentives, with various tax incentive measures receiving much attention in the last 2 decades. In South Africa the legislation providing for R&D tax incentives has been substantially amended in recent years through a number of Taxation Amendment Acts,] culminating in the enactment of s lID of the Income Tax Act 58 of 1962 (the Act). The aim of this dissertation is to critically examine the current South Afi'ican tax incentive scheme as contained in sliD, focusing on the eligibility requirements of that incentive. In addition, the dissertation will highlight design features and characteristics of the incentive, particularly in respect of its generosity, predictability, simplicity, administration and targeting. 4 The design and characteristics of the South African incentive is then compared to those of three different countries: the UK, Australia and Canada.s Based on the analysis and comparison, certain lessons are identified for South Africa6 and various opinions are advanced on the effectiveness of the current structure and whether particular aspects of it could be improved going forward. / Thesis (LL.M.)-Unversity of KwaZulu-Natal, Durban, 2010.

The high levels of crime in South Africa are a popular topic of conversation amongst South Africans. As a result of the high levels of crime in South Africa, many South Africans employ private security companies in order to protect themselves and their property. The opinion exists that these private security costs should be allowed as a deduction against their taxable income. The study investigates certain factors that may influence crime, the private security industry and these companies’ perception on the duties of the South African Police Service. In order to determine private security companies’ perception on the duties of the South African Police Service, a questionnaire was conducted. The results reflected not only that private security companies are more effective and proactive in the prevention of crime, but also that they have a faster reaction time to emergency calls than the South African Police Service. This can lead one to argue that it has become a necessity to incur private security costs in South Africa. It also discusses current South African tax legislation in comparison with international trends. The study concludes whether the deduction of private security costs for the individual against taxable income is allowed in South Africa. AFRIKAANS : Die hoë vlakke van misdaad in Suid-Afrika is ‘n gewilde onderwerp van bespreking onder Suid-Afrikaners. As gevolg van die hoë vlakke van misdaad in Suid-Afrika stel baie Suid- Afrikaners privaat sekuriteitsmaatskappye aan om hulself en hul eiendom te beskerm. Menige Suid-Afrikaners is van mening dat hierdie privaat sekuriteitsuitgawes as ‘n aftrekking teen hul belasbare inkomste toegelaat moet word. Die studie ondersoek sekere faktore wat misdaad kan beinvloed, die privaat sekuriteitsmaatskappy industrie en hierdie maatskappye se opinie van die Suid-Afrikaanse Polisiediens se verantwoordelikhede. ‘n Vraelys is gebruik om privaat sekuriteitsmaatskappye se opinie rakende die verantwoordelikhede van die Suid-Afrikaansie Polisiediens te bepaal. Die resultate dui daarop dat privaat sekuriteitsmaatskappye nie net meer effektief en proaktief is in die voorkoming van misdaad as die Suid-Afrikaanse Polisiediens nie, maar ook dat hulle ‘n vinniger reaksietyd het na ‘n noodoproep ontvang is. Dit kan tot aannames lei dat dit ‘n noodsaaklikheid geword het om privaat sekuriteitsonkostes in Suid-Afrika aan te gaan. Die studie stel ook ondersoek in na huidige Suid-Afrikaanse belastingwetgewing in vergelyking met die internasionale werkswyse en sluit af met die antwoord op die vraag of privaat sekuriteitsuitgawes belastingaftrekbaar is vir Suid-Afrikaanse individue. / Dissertation (MCom)--University of Pretoria, 2013. / Taxation / unrestricted