M.Comm. / The purpose of this study is to determine the meaning of 'arm's length transactions' as stated in the Income Tax Act, Act 58 of 1962. Although the meaning of arm's length transactions have been properly interpreted by our courts, no guidelines or policy documents pertaining to this concept, have been issued by the South African Revenue Services in as far as it relates to transfer pricing. Several of the developed countries have adopted the guidelines of the Organisation of Economic Co-ordination and Development regarding transfer prices and the arm's length principle in respect of international transactions. The substance of arm's length transactions : The concept of arm's length is not easy to state: it is not unlike the proverbial elephant which could easily be recognised, but could not be defined. It can be defined by reference to the terms of the transaction in question, or by reference to the relationship between the parties to it, or by reference to both of these factors. Normally, parties enter into an arm's length transaction when each party: • Is independent of the other; and • Strives to get the utmost possible advantage from the transaction for himself. The effects of an arm's length transaction are: • The rights and obligations created by the transaction are more likely to be regarded as normal than abnormal; and • The means and manner employed in entering into the transaction are more likely to be normal than abnormal. It is clear that the meaning of arm's length is defined, but that the effect of such transactions will depend on the facts of each case. What may be normal in one case can be abnormal in another depending on the underlying facts. Although South African transfer pricing legislation includes the arm's length principle in respect of international transactions, legislation on transfer pricing should be more clear as to what is normal or abnormal in respect of international transactions.

Thesis (MAcc)--University of Stellenbosch, 2009. / ENGLISH ABSTRACT: In November 2006 section 103(1) of the Act was abolished and replaced by a new Part IIA, containing sections 80A to 80L, which targets impermissible tax avoidance arrangements. Section 80A(c)(ii) introduced a new concept to the South African tax law: a misuse or abuse of the provisions of the Act, including Part IIA thereof. The objective of this study was to establish the origin, meaning, application and effect of section 80A(c)(ii) of the Act. The evolution of section 80A(c)(ii) was therefore examined where after the enacted version was analyzed. It was essential to determine the origin of section 80A(c)(ii) in order to establish some point of reference from which inferences could be drawn as to the possible application and effect thereof. Case law, practice statements and articles relating to its proposed root was then examined. A ‘misuse or abuse’ of a provision, it was found, implies, frustrating or exploiting the purpose of the provision. This contention was confirmed by existing Canadian precedent. Such an interpretation, however, has a strong resemblance to the words in which the draft version of section 80A(c)(ii) was couched. It is therefore in contrast to the presumption that different words (in the enacted version) imply a different meaning. The precise meaning of the words ‘misuse or abuse’ is thus still elusive. It was established that section 80A(c)(ii) has its roots in section 245 of the Canadian Act. Section 245(4) was regarded as an effective comparative to section 80A(c)(ii) as it also contained a so-called misuse or abuse rule. The application of this rule in the Canadian tax environment required the following process: - Interpret (contextually and purposively) the provisions relied on by the taxpayer, to determine their object, spirit and purpose. - Determine whether the transaction frustrates or defeats the object, spirit or purpose of the provisions. Section 245(4) had the effect of reviving the modern approach (a contextual and/or purposive theory) to the interpretation of statutes in Canada. Reference to the ‘spirit’ of a provision (above) was found not to extend the modern approach to statutory interpretation: it does not require of the court to look for some inner and spiritual meaning within the legislation. As section 245(4) was regarded as an effective comparative to section 80A(c)(ii) it was contented that it would have a similar effect, than that of its Canadian counterpart, on the approach to statutory interpretation in South Africa. However, it was established that a modern approach to statutory interpretation was already authoritative in South Africa. This finding led the author to the conclusion that section 80A(c)(ii) could at best only reinforce the case for applying such an approach. Such a purpose for section 80A(c)(ii) was however found to be void in the light of the Constitution of the Republic of South Africa, which was enacted in 1996, and provides a sovereign authority for the application of the modern approach. It was also found that the practical burden of showing that there was a ‘misuse or abuse of the provisions of this Act (including the provisions of this Part)’ will rest on the shoulders of the Commissioner, notwithstanding section 82 of the Act. / AFRIKAANSE OPSOMMING: Artikel 103(1) van die Inkomstebelastingwet is herroep in November 2006 en vervang deur Deel IIA, bestaande uit artikels 80A tot 80L, wat daarop gemik is om ontoelaatbare belastingvermydingsreëlings te teiken. Artikel 80A(c)(ii) het ‘n nuwe konsep in die Suid-Afrikaanse Inkomstebelastingreg ingebring: ‘n misbruik of ‘n wangebruik van die bepalings van die Wet, insluitende Deel IIA. Die doel van hierdie studie was om die oorsprong, betekenis, toepassing en uitwerking van artikel 80A(c)(ii) vas te stel. Die ontwikkeling van artikel 80A(c)(ii) is daarom ondersoek waarna die verordende weergawe daarvan geanaliseer is. ‘n Sleutelaspek van die analise was om die oorsprong van artikel 80A(c)(ii) vas te stel. Hierdie oefening het ‘n verwysbare bron daargestel waarvan afleidings rondom die moontlike toepassing en uitwerking van artikel 80A(c)(ii) gemaak kon word. Hofsake, praktyknotas en artikels rakende die voorgestelde oorsprong is vervolgens ondersoek. Daar is vasgestel dat ‘n ‘misbruik of wangebruik’ van ‘n bepaling neerkom op die frustering of uitbuiting van die doel van ‘n bepaling. Hierdie bewering is bevestig deur bestaande Kanadese presedent. So ‘n interpretasie is egter soortgelyk aan die woorde waarin die konsepweergawe van artikel 80A(c)(ii) uitgedruk is. Dit is daarom in teenstelling met die vermoede dat ‘n wysiging van die woorde (in die verordende weergawe) ‘n gewysigde betekenis impliseer. Die presiese betekenis van die woorde ‘misbruik of wangebruik’ is dus steeds ontwykend. Daar is bevind dat artikel 80A(c)(ii) waarskynlik sy ontstaan in artikel 245 van die Kanadese Inkomstebelastingwet gehad het. Artikel 245(4) van die Kanadese Inkomstebelastingwet is beskou as ‘n effektiewe vergelykende artikel vir artikel 80A(c)(ii), aangesien dit ook oor ‘n sogenaamde misbruik of wangebruik reël beskik. Die toepassing van hierdie reël in die Kanadese belastingmilieu vereis die volgende werkswyse: - Interpreteer (kontekstueel en doeldienend) die bepalings waarop die belastingpligtige steun, ten einde die oogmerk, gees en doel daarvan vas te stel. - Bepaal of die transaksie, deur die belastingpligtige aangegaan, die oogmerk, gees of doel van die bepalings frustreer. Artikel 245(4) het aanleiding gegee tot die herstel van die moderne benadering (‘n kontekstuele en/of doeldienende teorie) tot die interpretasie van wetgewing in Kanada. Daar is bevind dat die verwysing na die ‘gees’ van ‘n bepaling (hierbo) nie aanleiding gee tot die uitbreiding van die moderne benadering tot wetsuitleg nie: dit vereis nie dat die hof moet soek na die innerlike of geestelike betekenis van die wetgewing nie. Aangesien artikel 245(4) as ‘n effektiewe vergelykende artikel vir artikel 80A(c)(ii) beskou is, is daar aangeneem dat dit ‘n soortgelyke uitwerking, as sy Kanadese eweknie, op wetsuitleg in Suid Afrika sal hê. By nadere ondersoek is daar egter bevind dat ‘n moderne benadering tot wetsuitleg alreeds gesaghebbend in Suid Afrika is. Hierdie bevinding het die skrywer tot die gevolgtrekking gebring dat artikel 80A(c)(ii), in beginsel, slegs die saak vir die moderne benadering tot wetsuitleg in Suid Afrika sal versterk. Indien hierdie die doel is wat die wetgewer gehad het met die verordening van artikel 80A(c)(ii), sal dit egter niksseggend wees in die lig van die Grondwet van die Republiek van Suid Afrika, wat verorden is in 1996, en ‘n oppermagtige gesag bied vir die moderne benadering tot wetsuitleg. Daar is ook vasgestel dat die onus op die Kommissaris rus om te bewys dat daar ‘n ‘misbruik of wangebruik van die bepalings van hierdie Wet (waarby ingesluit die bepalings van hierdie Deel)’ was, ondanks artikel 82 van die Wet.

Thesis (MAcc)--Stellenbosch University, 2010. / ENGLISH ABSTRACT: The Income Tax Act, Act 58 of 1962 (‘the Act’) currently defines a permanent establishment in section 1. The definition of a permanent establishment in the Act refers to article 5 of the Model Tax Convention on Income and on Capital of the Organisation for Economic Co- Operation and Development. The existence of a permanent establishment in a tax jurisdiction determines the right of the jurisdiction to tax the profits of the permanent establishment. The concept foreign business establishment was inserted into section 9D of the Act by clause 10(1)(a) of the Revenue Laws Amendment Act, Act 59 of 2000. Section 9D is an antiavoidance provision, which determines that certain foreign-sourced income generated by South African controlled foreign companies are subject to tax in South Africa. The concept foreign business establishment is one of the exclusions from the anti-avoidance provisions in section 9D. The Revenue Laws Amendment Act, Act 59 of 2000, replaced all references to the concept permanent establishment with a reference to the newly introduced concept foreign business establishment in section 9D(9)(b) of the Act. The Explanatory Memorandum on the Revenue Laws Amendment Bill, 2000 (SARS 2000:1-12) does not provide a reason for the replacement of the concept permanent establishment. The objective of this study was to analyse and compare the concepts permanent establishment and foreign business establishment in order to make recommendations regarding the required additions and amendments to replace the concept foreign business establishment with the internationally recognised and accepted concept permanent establishment. The proposed replacement of the concept foreign business establishment with an internationally recognised and accepted tax concept will enhance the international compatibility of the Act. The use of an internationally recognised and accepted tax concept will provide clarity and certainty regarding the tax implications of section 9D(9)(b) for those affected by it. It was found that the concepts permanent establishment and foreign business establishment are used in different contexts within the Act. The concepts also apply to different types of taxpayers in different situations. The two concepts have, however, the same objective, being the identification of criteria for the existence of legitimate and substantive business activities in the foreign tax jurisdiction. A comparison between the definitions of the two concepts reveals that there are various components in the definitions with the same wording and meaning. After a detailed comparison between the two definitions it was found that, subject to some suggested additions and amendments, the internationally recognised and accepted concept permanent establishment can replace the concept foreign business establishment in section 9D(9)(b) of the Act without having a material impact on the objective of section 9D(9)(b). This replacement is possible due to the mutual objective of and similar components contained in the definitions of the concepts permanent establishment and foreign business establishments. / AFRIKAANSE OPSOMMING: Die Inkomstebelastingwet, Wet 58 van 1962 (‘die Wet’) definieer ’n permanente saak in artikel 1. Die definisie van ’n permanente saak verwys na artikel 5 van die ‘Model Tax Convention on Income and on Capital of the Organisation for Economic Co-Operation and Development’. Die bestaan van ’n permanente saak in ’n belastingjurisdiksie bepaal die reg van die belastingjurisdiksie om die winste van die permanente saak te belas. Die begrip buitelandse besigheidsaak is deur artikel 10(1)(a) van die Wysigingswet op Inkomstewette, Wet 59 van 2000 in die Wet ingesluit. Artikel 9D is ’n teenvermydingsbepaling wat bepaal dat sekere inkomste vanaf ’n buitelandse bron gegenereer deur ’n Suid-Afrikaans beheerde buitelandse maatskappy in Suid-Afrika belas word. Die begrip buitelandse besigheidsaak is een van die uitsluitings van die teenvermydingsbepaling in artikel 9D. Alle verwysings in artikel 9D(9)(b) na die begrip permanente saak is deur die Wysigingswet op Inkomstewette, Wet 59 van 2000, vervang met ’n verwysing na die nuwe begrip buitelandse besigheidsaak. Die ‘Explanatory Memorandum on the Revenue Laws Amendment Bill, 2000’ (SARS 2000:1-12) verskaf nie ’n rede vir die vervanging van die begrip permanente saak nie. Die doel van die studie was om die begrippe permanente saak en buitelandse besigheidsaak te vergelyk sodat voorstelle gemaak kan word rakende die nodige byvoegings en wysings om die begrip buitelandse besigheidsaak met die internasionaal aanvaarde en erkende begrip, permanente saak, te vervang. Die voorgestelde vervanging van die begrip buitelandse besigheidsaak met ’n internasionaal aanvaarde en erkende begrip sal die internasionale verenigbaarheid van die Suid Afrikaanse wetgewing bevorder. Die gebruik van ’n begrip wat internasionaal aanvaar en erken word, sal sekerheid en duidelikheid bewerkstellig vir diegene wat deur die artikel geaffekteer word. Daar is bevind dat die begrippe permanente saak en buitelandse besigheidsaak in die Wet in verskillende verbande gebruik word. Die begrippe is ook van toepassing op verskillende belastingbetalers in verskillende situasies. Die twee begrippe het egter dieselfde doelwit naamlik die identifisering van kriteria vir die bestaan van wesenlike en volwaardige besigheidsaktiwiteite in die buitelandse belastingjurisdiksie. ’n Vergelyking tussen die definisies van die twee begrippe toon dat verskeie komponente van die definisies dieselfde woorde en betekenis bevat. Na ’n detail vergelyking van die twee begrippe is daar bevind dat, onderhewig aan sommige voorgestelde byvoegings en wysigings, die internasionaal erkende en aanvaarde begrip permanente saak die begrip buitelandse besigheidsaak in artikel 9D(9)(b) van die Wet kan vervang. Die vervanging is moontlik weens die gemeenskaplike doelwit en soortgelyke komponente in die definisies van die begrippe permanente saak en buitelandse besigheidsaak.

M.Com. (Taxation) / Please refer to full text to view abstract

No abstract available. / Thesis (M.Com.)-University of KwaZulu-Natal, 2005.

The aim of this collection of essays is to provide a detailed and critical commentary on and analysis of the legislation and case law relating to the impact of the 'business purposes test' on section 103(1) of the Income Tax Act. The Income Tax Act No. 58 of 162 and case law that are the subject of these essays were promulgated on or before 28 February 1999. / Thesis (M.Acc.)-University of Natal, Durban, 1999.

M.Comm. / Herstelwerk vorm 'n belangrike gedeelte van die koste-struktuur van ondernemers. Natuurlike verwering en agteruitgang het tot gevolg dat herstelwerk aan sekere bates gedoen word. Meeste persone het 'n persepsie wat herstelwerk verteenwoordig. Die persepsie van wat ondernemers beskou as herstelwerk is nie noodwendig in ooreenstemming met artikel 11(d) van die Wet nie asook toetste wat deur die howe neergele is nie. Ten einde 'n sinvolle uiteensetting te verskaf was dit nodig om die onderwerp in sinvolle komponente te verdeel. Die inleidende paragraaf tot artikel 11 is eers ontleed aangesien dit ook die inleidende paragraaf tot artikel 11(d) – wat handel oor herstelwerk -verteenwoordig. Vervolgens is artikel 11(d) van die Wet ontleed ten einde die studie in konteks te plaas. Die begrip van herstelkoste is daarna ontleed en 'n onderskeid is gemaak met faktore wat kan dui op 'n verbetering. Die invloed van koste op beslissings is ook ondersoek. Met betrekking tot die inleidende paragraaf van artikel 11 is gevind dat "belasbare inkomste" bereken word deur van "bruto inkomste" vrystellings (soos in artikel 10 van die Wet uiteengesit) of te trek en daarna die ander aftrekkings soos in die Wet uiteengesit. Een van hierdie aftrekkings is herstelwerk wat in artikel 11(d) van die Wet uiteengesit word en die onderwerp van hierdie studie is. Aangesien hierdie "belasbare inkomste" deur 'n "persoon" verdien moet word is hierdie begrip ontleed. Daar is gevind dat die begrip "persoon" 'n afdelingsraad, munisipale raad, dorpsbestuur of derglike gesag; 'n maatskappy (of beslote korporasie); enige liggaam van persone, 'n natuurlike persoon; 'n vereniging van persone; die boedel van 'n oorlede persoon; 'n insolvente boedel en 'n trust insluit. Voordat 'n aftrekking toegestaan kan word om "belasbare inkomste" te bereken moet 'n "persoon" 'n bedryf "beoefen". Daar is vasgestel dat beoefen `n daadwerklike optrede moet wees en dat die "persoon" homself daarop moet toele. In die studie is gevind dat die begrip "bedryf' baie wyd is en nie uitputtend is nie. Daar is wel 'n omskrywing in artikel 1 tot die Wet maar die vraag of 'n bedryf beoefen word moet op grond van die feite beslis word. Met betrekking tot artikel 11(d) is eerstens gevind dat "onkoste" en "uitgawes" dieselfde betekenis het. Daar is vervolgens bevind dat daar 'n onvoorwaardelike regsaanspreeklikheid in die jaar van aanslag moet wees voordat die onkoste as 'n aftrekking toegelaat sal word. Alhoewel daar nie hofsake is wat handel oor die betekenis van "eiendom" ingevolge die spesifieke bepalings van artikel 11(d) nie word die afleiding gemaak dat dit verwys na geboue. Dit is 'n vereiste dat die eiendom of vir bedryfsdoeleindes geokkupeer moet word Of die eiendom moet in staat wees om inkomste voor te bring.

The purpose of the study was to critically analyse sections 15 and 36 of the South African Income Tax Act which deals with capital allowances for mining taxpayers from an alluvial diamond miners’ perspective. The South African analysis was also compared to that of Canada and Namibia. In the analysis it was found that the ring fencing provisos in section 36 is unfair towards the alluvial diamond mine due to the potential loss of capital cost allowances and that there are grey areas in this proviso that may lead to disputes between SARS and the taxpayer. It was also found that the cross over from prospecting to mining activities in relation to alluvial diamond mining presents a grey area which might lead to disputes between the tax payer and SARS. It was also found that there is no case law, SARS interpretation notes or practise notes on the application of these sections to provide certainty as to the tax payers’ position. It was recommended that SARS and treasury evaluate and address the identified grey areas and short comings in the current legislation and practises to ensure a fair and equitable tax dispensation for the alluvial diamond miners. Copyright / Dissertation (MCom)--University of Pretoria, 2009. / Taxation / unrestricted

LL.M. (Tax Law) / This dissertation seeks to analyse the phrase “carrying on a trade” in the context of South African income tax law. South African income tax law places emphasis on the phrase “carrying on a trade”. The Income Tax Act 58 of 1962 (hereinafter referred to as “the Act”) makes reference to the phrase in several different contexts. Trading is relevant to the tax treatment of both income (the amount that falls in the gross income of the taxpayer) and expenditure (the amount that qualifies for deduction). The importance of “carrying on a trade” within the income tax law can be seen in light of the following provisions of the Act that form the crux of this dissertation: section 1 defines trade; section 7 provides for the treatment of income from the trade of spouses married in community of property; section 11 deals with deductions; section 20(1) deals with setting off of assessed losses; section 23(g) deals with deductions not permitted in terms of the Act; and section 24H deals with the treatment of income derived by a partner carrying on a trade in a partnership. It is important to note that though it is not explicitly mentioned in the Act, the revenue receipts or accruals arising out of trade are included in the taxpayer's gross income provided that the trade constitutes a scheme of profit-making. Section 11(a) of the Act contains what is often described as the general deduction

M.Com. (Taxation) / Please refer to full text to view abstract