A research report submitted to the Faculty of Commerce, Law and Management in partial fulfilment of the requirements for the degree of Master of Commerce (specialising in Taxation). Johannesburg, 25 March 2015 / The research reviews the legislation pertaining to the understatement penalty provisions of the Tax Administration Act 28 of 2011. The problems associated with the levying of understatement penalties in the previous legislation are determined. A detailed evaluation is made of the understatement penalty provisions, with an emphasis on the determinants for the ‘behaviour’ and ‘case’ types, and the penalty percentages derived therefrom. The fiscus’s stated goals and intentions in respect of the understatement penalties are identified and reviewed to determine if they are aligned with those considered to be international best practice. The requirements of the Constitution of the Republic of South Africa of 1996 are reviewed with respect to the understatement penalties. A comparative analysis of South Africa’s understatement penalties and those of tax authorities identified as having similar tax administration regimes is presented. The research suggests that while a more systematic and uniform approach, to understatement penalties, has been established under the new legislation, the subjective nature of the ‘behaviour’ and ‘case’ determinants applied is likely to result in disputes between the South African Revenue Service (SARS) and the taxpayer. The research indicates that while the categories and nature of understatement penalties levied are broadly aligned with those of comparable countries’ regimes, the penalty percentages applied in South Africa, are relatively high. Key words and terms: understatement penalties, international best practice, goals, uniform, systematic, ‘behaviour’, ‘case’, subjective, similar tax administration regimes, penalty percentages. / MT2016

This dissertation consists of three research articles in political economy and public finance. The first chapter provides evidence on the effect of electoral institutions on the performance of public officials. Using panel data on state supreme courts between 1947 and 1994, we measure the effects of changes in judicial electoral processes on judge work quality -- as measured by citations by later judges. Judges selected by non-partisan elections write higher-quality opinions than judges selected by partisan elections. Judges selected by technocratic merit commissions write higher-quality opinions than either partisan-elected judges or non-partisan-elected judges. Election-year politics reduces judicial performance in both partisan and non-partisan election systems. Giving stronger tenure to non-partisan-selected judges improves performance, while giving stronger tenure to partisan-selected judges has no effect. These results are consistent with the view that technocratic merit commissions have better information about the quality of candidates than voters, and that political bias can reduce the quality of elected officials. The second chapter contributes to recent work in political economy and public finance that focuses on how details of the tax code, rather than tax rates, are used to implement redistributive fiscal policies. I use tools from natural language processing to construct a high-dimensional representation of tax code changes from the text of 1.6 million statutes enacted by state legislatures since 1963. A data-driven approach is taken to recover the effective tax code – the set of legal phrases in tax law that have the largest impact on revenues, holding major tax rates constant. Exogenous variation in tax legislation from judicial districts is used to capture revenue impacts that are solely due to changes in the tax code language, with the resulting phrases providing a robust out-of-sample predictor of tax collections. I then test whether political parties differ in patterns of effective tax code changes when they control state government. Relative to Republicans, Democrats use revenue-increasing language for income taxes but use revenue-decreasing language for sales taxes – consistent with a more redistributive fiscal policy – despite making no changes on average to statutory tax rates. These results are consistent with the view that due to their relative salience, changing tax rates is politically more difficult than changing the tax code. The third chapter reports evidence on the potential benefits to local labor markets of increasing property taxes as a source of local government revenue. The data come from three states (308 tax districts, 16 years) where tax districts reassess properties on a state-mandated staggered cycle, resulting in exogenous variation in assessments and accompanying taxes. I find that an increase in taxes due to random assessment causes economic expansion, with an increase in local population and the number of local business establishments. These effects appear to be driven by increases in government revenues and expenditures, rather than by changes in borrowing behavior. These results suggests that property taxes are too low in this sample of states.

Unrelated business enterprises have been an appropriate way for nonprofit organizations to generate income since the first income tax was enacted into law. The Internal Revenue Act of 1950 clarified this opportunity and enacted the Unrelated Business Income Tax to ensure that fair competition existed between nonprofits and for profit organizations. Nonprofit organizations conducting unrelated business enterprises are faced with a dilemma: it is legal for them to conduct such enterprises but if they do so they face potential litigation from for profit business for unfair competition and/or potential loss of tax-exempt status for operating outside of their exempt function. This dissertation traces the history and theory of tax-exempt status, the history of unrelated business enterprises, and how several states, including Oregon, have addressed the issue. It then explains two major pieces of litigation in Oregon in the 1980's, Southern Oregon State College and YMCA of Columbia-Willamette, then discusses the history of the media attention and legislative/bureaucratic action in the same period. Current litigation and media attention is then discussed. The paper then discusses two theoretical frameworks, Agenda Building and Advocacy Coalition, as a means to analyze the data. Following is a discussion of how the issues of unrelated business enterprises and unfair business competition can be handled by nonprofits and the changing criteria for tax-exempt status in Oregon. The dissertation concludes with the changing criteria for tax-exempt status in Oregon and fundamental philosophical and political issues yet to be decided. Included are recommendations such as a periodic review of tax-exempt status of nonprofits, the need for nonprofits to continually review their mission and exempt purpose, the need for nonprofits to maintain their relationships with the community they serve, and how nonprofits need to develop a self-governing program before government develops one for them.

This thesis examines the transfer pricing issue within the perspective of setting up a cost contribution arrangement for the international management of intangible property. / To this end, the first part presents the general rules governing the transfer pricing area in Australia, Canada, France, and the United States. The provisions of these countries will serve as a guiding line of this study. The first part presents, as well, the OECD Transfer Pricing Principles. / The second part examines the structural alternatives of the CCA tax vehicle. / The third part addresses the CCA concept itself. / The fourth part deals with the operational functioning of a CCA. The new challenges and the multiple issues raised by this new tax structure are addressed as well as the tax planning perspectives opening up through transfer pricing. / Finally, the fifth part questions the new dynamics of the conflicts between tax administrations generated by the CCA vehicle.

The aim of this technical report is to provide a detailed and critical review of the suitability of the en commandite partnership for tax structuring both generally and specifically. The report takes cognisance of the requirements that a financial institution might consider in its determination of the utility of the en commandite partnership as a tax structuring tool in a structured or corporate finance environment. The report begins with an overview of the primarily legal requirements for the creation of a valid partnership. It then considers specifically whether the en commandite partnership is able to take the place of the 'Lessor Trust Arrangement' and researches specific issues germane to the enquiry. Specific legislation dealing with en commandite partnerships is then researched and includes a commentary on the provisions of s 24H and s 8(5)(a) of the Income Tax Act. Practical examples of the use of the en commandite partnership are then considered which challenges the concept of traditional loan finance and suggests the capital contribution as a tax efficient alternative. A consideration of the possibility of a challenge under the anti-avoidance provisions of the Income Tax Act concludes the report. / Thesis (LL.M.)-University of Natal, 1999.

No description available.

No abstract available. / Thesis (LL.M.)-University of Natal, Durban, 1999.

A South African taxpayer’s taxable income must be determined in rands. Several provisions of the Income Tax Act (the Act) relate to foreign currency transactions and the interaction of these provisions is complicated. A taxpayer needs to determine the provision that applies to his foreign transaction. It will then provide the rule or method that needs to be applied to his foreign transaction. If an amount is in a foreign currency, it must be translated into rands. If there is an exchange item, a foreign exchange gain or foreign exchange loss must be taken into account. If an asset is disposed of or acquired in a foreign currency then a capital gain or capital loss must be calculated when it is disposed of. Examples of typical foreign exchange transactions have been provided, discussed and analysed in this dissertation. The provisions in the Act that are relevant to the foreign exchange transactions have been identified and the interaction between them has been considered. Potential difficulties because provisions in the legislation contradict each other or do not cater for a particular situation were identified. Also possible tax-saving opportunities have been identified. / Thesis (M.Acc.)-University of KwaZulu-Natal, Westville, 2010.

South Africa's re-integration into the global trading economy and its participation in various trade agreements has resulted in an increase in the number of import and export transactions processed by the South African Revenue Services Customs Division. Importers and Exporters are expanding into new markets and regions, which require them to adhere to the legislative administrative requirements, enforced at the various designated Customs branch offices. To achieve Customs compliance, it is necessary that importers and exporters make the correct declaration to the SARS and make available the appropriate documentary information to support import and export transactions. Also, increasing pressure from other government authority and government agencies makes it a prerequisite that any goods cleared for either import and export is properly declared taking cognisance of all Acts enforced by the SARS Customs Division. This research dissertation is aimed at identifying the key factors that impact the SARS Accreditation Scheme / Program to both legitimate and illegitimate traders, it evaluates the benefits of the Accreditation program and determines what actions that are required by the SARS and traders to improve the levels of client service and Customs enforcement by the SARS Customs Division. Based on the analysis, the discrepancy between the current service expectation of the SARS Accreditation Scheme and service delivery by the SARS Customs Division urgently needs to be reviewed in light of Customs enforcement and Customs trade facilitation practices. / Thesis (MBA)-University of Natal, 2003.

The aim of this dissertation is to provide a detailed analysis of the impact electronic-commerce (e-commerce) is having upon the tax base and revenue collection of Value-Added Tax (VAT) in South Africa. This dissertation commences with a chapter that sets out the model for the treatment of VAT in an e-commerce environment. Three chapters follow this, recording how South Africa legislates for VAT, how traditional (offline) and e-commerce (online) transactions are conducted. This is followed by a chapter that makes a comparison between online and offline commerce, identifying the differences and difficulties between the two forms. Leading from this comparison is a chapter that makes suggested recommendations to overcome the identified VAT administrative difficulties. The final chapter records how the three parties, namely, governments, commerce and consumers can work together, if the freedom afforded by e-commerce is allowed to continue. The analysis shows that if certain recommendations are implemented, then the negative impact of e-commerce on the tax base and revenue collection of VAT in South Africa can be reduced. / Thesis (MBA)-University of Natal, Durban, 2003.