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

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.

Taxpayers in the Canadian professions have expressed their opinions, individually, and through their professional association, that they are unfairly taxed under present taxation legislation. While they are able to deduct the expenses incurred to earn their professional income, they would like to be placed on an equal tax basis with merchants and other taxpayers in the service industries who are able to incorporate and take advantage of certain tax concessions available to corporate taxpayers. The British Columbia government enacted the Professional Corporations Act in 1970 which gave the option of incorporation to all taxpayers who previously, due to either law, tradition, or their professional code of ethics were unable to incorporate. Confusion arose as to whether the Department of National Revenue would recognize professional corporations and the British Columbia Act was subsequently suspended. The Canadian taxation system has been intensively investigated in recent years and extensive amendments have been proposed by the government. To achieve equity Canadian professionals should be subject to the same tax burden as other Canadian businesses. Professional incorporation should not be permitted due to the ethical problems it would raise. Instead professionals should be given the option under the Income Tax Act of having their income taxed at corporate rates and in addition being able to take advantage of the other tax planning mechanisms presently available to corporations. Equity will thus be established between taxpayers in the professions and other Canadian businesses. / Business, Sauder School of / Graduate

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) / Tampon tax is a colloquial term in common usage describing taxes levied on female menstrual hygiene products that are taxed as luxury goods in spite of the fact these items are considered necessities such as food and medicine, which are either exempted or taxed at 0% in some countries. Tampon tax in South Africa is the levying of value-added tax (VAT), to female menstrual hygiene products. Internationally, activists have initiated various campaigns and protests for the removal of tampon tax as it is not regarded as a luxury but rather a necessity, and South Africa has followed suit. There have been various campaigns and initiatives towards making female menstrual hygiene products more affordable and/ or accessible to the females from low-income households in South Africa. Reduction in sales tax rates, removal of goods and services tax on female menstrual hygiene products and the utilisation of the income earned from sales tax on female menstrual hygiene products are options available to negate the economic effects of tampon tax on females in their reproductive years. This paper discusses tampon tax and its effect on social, health and the economic well-being of South Africa. The paper will include comparative analyses to what is being done in some countries to alleviate the negative effects of the tampon tax. This paper will also examine the value-added tax in South Africa. Arguments in favour of and against tampon tax are also discussed. / NG (2020)

Section 24J is regarded to be one of the most complex provisions in the Income Tax Act No. 58 of 1962. This study specifically focuses on the income tax treatment of section 24Jinstruments denominated in a foreign currency, specifically with regards to whether such instruments are fixed or variable rate instruments for purposes of section 24J and the interaction between section 24J, section 25D (foreign currency translation rules) and section 24I (gains and losses on foreign exchange transactions).The basic concepts surrounding the incurral and accrual of interest for income tax purposes, as well as of some of the general issues faced when section 24J is practically applied are discussed. Importantly it is found that although the definition of 'instrument' includes all debt instruments, regardless of whether such instruments are interest-bearing, the application of section 24J would have no impact on the issuer or holder of an instrument that is a non-interest bearing debt instrument. Also, the section 24J definition of 'interest' is wider than the common law meaning of the same term. However, as 'interest'is defined with reference to itself, the common law meaning is still very relevant. It is confirmed that section 24J poses various interpretational uncertainties which are especially highlighted when some of the key provisions of section 24J are applied in determining the interest accrual amounts based on the yield to maturity method. Applying the rules of statutory interpretation and with the aid of hypothetical examples, itis argued that foreign exchange rates would fall within the definition of a variable rate for purposes of section 24J. However, an instrument denominated in a foreign currency would be regarded as a fixed rate instrument to the extent that the amounts payable are fixed amounts specified in the applicable foreign currency or the calculation of the amount payable in the applicable foreign currency does not involve the application of a 'variable rate' (as defined).Further is it argued that section 24J merely provides for a single accrual or incurral event during each year of assessment in relation to each instrument. Therefore, where accrual amounts be denominated in a foreign currency it should be translated at the spot rate on the last day of the year of assessment (or on the date of redemption/transfer in the instance where the instrument was transferred/redeemed during the year of assessment) for purposes of determining the sum of the accrual amounts to be included in taxable income. It is also argued that the timing of the accrual and incurral of interest amounts in terms of section 24J is applied in establishing the 'transaction date' of the interest amount owing for purposes of determining 'exchange differences' at the end of any year of assessment in terms of section 24I.

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M.S.

This thesis sets forth a guaranteed minimum income proposal which would close part of the "poverty gap"--the gap between the income of poor families and individuals and the income they need in order to maintain a standard of living above the poverty level. The proposal, called negative rates income taxation, combines into a single program the giving and taking of income by the federal government. The negative income tax proposal is distinguished from other guaranteed income programs in two primary respects: (1) the focus on filling part of the poverty gap, that is, a marginal tax rate (negative) of less than 100 per cent; and (2) the emphasis upon income in relation to family size in determining whether an individual or family is eligible for allowances. This means that the benefits of the plan are income-based rather than being based upon such present characteristics as age(OASI), occupation (farm price supports), status (veterans benefits), etc. The scope of the thesis attempts to cover the various subjects related to the negative income tax, although this is an almost impossible task. For example, subjects such as early utopian ideas, past federal legislation, and present socio-economic problems are related to the concept of the proposal, Also, the principles of negative taxation, the cost and administration of the plan. and economic results of the plan are vital to appraising its applicability. / Master of Science