Gambling has proven to be an ever growing industry and triggered tax regulating authorities in different countries to review the taxation on the income of the providers and even the individuals constantly entering into gambling transactions. South Africa is no exception to this and during the 2010 budget speech the National Treasury has indicated their intention to review the taxation of gambling winnings in the hands of the gambler. Currently only the professional gambler is taxed on his gambling winnings in South Africa. Although prior research has been performed on the taxation of gambling winnings in the United States and Australia, no research on this topic has been performed from a South African perspective. This study extends on these prior studies by performing an analysis of the taxation of gambling winnings in the hands of the individual from a South African perspective. The aim of this study is to determine how South Africa can amend the current income tax legislation effectively to include gambling winnings in the personal income tax of all gamblers. From a theoretical perspective, the study aims to identify alternative ways to tax gambling winnings which is currently not included in South African legislation and practices. Although the provision and participation in interactive gambling remain illegal within the borders of South Africa, this study aims to investigate the legalisation and/or regulation thereof as an alternative to the taxation of gambling winnings in the hands of all gamblers. This study discusses the administrative burden on the tax payer and the gambling provider if the National Treasury considers taxing gambling winnings in the hands of all gamblers and concluded that the status quo against the taxation of gambling winnings of the casual gambler should prevail. Consideration should be given to legalise and regulate interactive gambling as an alternative in order to broaden the tax base. AFRIKAANS : Dobbelary groei van krag tot krag en dit is juis as gevolg van hierdie groei dat die belastingowerhede in verskeie lande besluit het om die belasting op die inkomste van dobbeloperateurs en dobbelaars gereeld te hersien. Suid-Afrika is geen uitsondering nie en die Nasionale Tesourie het tydens die 2010 begrotingsrede aangedui dat hulle die belastinghantering van inkomste verkry uit dobbelary in die hande van die dobbelaar gaan hersien. Tans word slegs die inkomste van die professionele dobbelaar in Suid-Afrika belas. Alhoewel die belastinghantering van inkomste uit dobbelary voorheen in die Verenigde State en Australië nagevors is, bestaan geen navorsing van hierdie aard oor die situasie in Suid-Afrika nie. Hierdie studie is ’n uitbreiding van hierdie vorige navorsing deur middel van ’n analise van die belastinghantering van inkomste uit dobbelary in die hande van dobbelaars in Suid-Afrika. Die studie het ten doel om vas te stel hoe Suid-Afrika se huidige inkomstebelastingwetgewing effektief gewysig kan word om inkomste uit dobbelary in die persoonlike inkomstebelasting van alle dobbelaars in te sluit. Vanuit ’n teoretiese perspektief poog die studie om alternatiewe belastinghanterings van inkomste uit dobbelary te identifiseer wat tans nie in Suid-Afrikaanse wetgewing en praktyke vervat is nie. Alhoewel interaktiewe dobbelary onwettig is in Suid-Afrika, ondersoek hierdie studie die bekragtiging en regulering van die voorsiening en deelname daaraan as ’n alternatief tot die belasting op inkomste uit dobbelary in die hande van elke dobbelaar. Die studie bespreek die administratiewe las op die dobbeloperateur sowel as die dobbelaar indien die Nasionale Tesourie sou oorweeg om die inkomste uit dobbelary in die hande van elke dobbelaar te belas en kom tot die slotsom dat die huidige hantering waar inkomste van die geleentheidsdobbelaar nie belas word nie, in plek moet bly. Oorweging moet geskenk word aan die bekragtiging en regulering van interaktiewe dobbelary as ’n alternatief om sodoende die belastingbasis te vergroot. / Dissertation (MCom)--University of Pretoria, 2010. / Taxation / Unrestricted

There has been a continuous increase in the popularity of interactive gambling in South Africa due to the wide range of channels in which the public can now quickly and easily access gambling opportunities. Although there is uncertainty related to whether or not interactive gambling is considered to be legal in South Africa, the total value of income earned from interactive gambling by South African residents is conservatively estimated to be between R4 billion and R10 billion per year. Unfortunately, due to the fact that interactive gambling does not have national boundaries, it is difficult to determine the true worth of the industry. There appears to be no academic research which has examined whether income received from interactive gambling qualifies to be taxed in terms of the Income Tax Act 58 of 1962. This study will contribute to an academic understanding of the interactive gambling industry in South Africa and an understanding of the South African Revenue Service’s (SARS’s) policies and practices relating to the taxation of income earned from interactive gambling by resident South African individuals. The purpose of this study was to critically analyse whether income earned from interactive gambling by resident South African individuals should be taxed by SARS. This study also investigated which laws currently regulate the interactive gambling industry within South Africa and how the regulation and taxation of interactive gambling in South Africa compares to that of other developing and developed countries. This study also investigated the legality and estimated value of interactive gambling income earned in South Africa by resident South African individuals. This study concluded that income earned from interactive gambling should be subject to either normal income tax or to capital gains tax (CGT), depending on the intention of the taxpayer. This study noted that enforcing regular reporting from local licensed interactive gambling service providers would be the best method of effectively collecting tax that is owed by interactive gamblers on income generated from this form of gambling in South Africa. This study further concluded that the most appropriate regulatory model to be applied in South Africa would be a protectionist model. This model protects the residents of a country by having a regulated interactive gambling industry that is protected from outside intruders. A regulated industry will result in economic benefits such as taxation, investment and employment within South Africa. The difficulties associated with electronic-commerce could be overcome through regulation of the industry which would be beneficial to SARS. AFRIKAANS : Inter-aktiewe dobbel onder die Suid-Afrikaanse publiek is baie populêr en het ‘n voortgesette toename vanweë die beskikbaarheid en toeganklikheid wat deur tegnologie daargestel word. Alhoewel daar onsekerheid is aangaande of inter-aktiewe dobbel wettig is al dan nie, word die inkomste wat deur Suid Afrikaanse inwoners verdien word konserwatief geraam en beloop tussen R4 en R10 biljoen per jaar. Aangesien die toeganklikheid wat deur die internet gebied word nie net tot Suid-Afrika beperk is nie, maar wêreldwyd strek, is dit feitlik onmoonlik om die waarde van die industrie te bepaal. Daar is tot op hede geen akademiese navorsing gedoen om te bepaal of inkomste verdien uit inter-aktiewe dobbel belasbaar is ingevolge die Inkomstebelastingwet 58 van 1962. Hierdie studie sal bydra tot ‘n akademiese begrip van SARS se beleid en die toepassing daarvan op inkomste verdien uit inter-aktiewe dobbel deur Suid-Afrikaanse individue. Dus was die doel van hierdie navorsingstudie om te bepaal of inkomste verdien uit interaktiewe dobbel deur ‘n Suid Afrikaanse individu deur SARS belasbaar is of nie en die aspekte krities te analiseer. Hierdie studie ondersoek ook die wette wat huidiglik die belasbaarheid van inkomste uit inter-aktiewe dobbel in Suid Afrika reguleer asook hoe die regulasies vergelyk met die van ander ontwikkelende en onwikkelde lande. Verder word ondersoek ingestel om die wettigheid van inter-aktiewe dobbel en die waarde daarvan te bepaal. Die gevolgtrekking is dat inkomste verdien uit inter-aktiewe dobbel onderhewig moet wees aan of normale belasting of kapitaalwinsbelasting. Die navorsing en studie toon ook dat daar gelisensieerde inter-aktiewe dobbel diensverskaffers moet wees wat dan die invordering van die inkomste uit hierdie tipe dobbel kan beheer en dat inter-aktiewe dobbelaars wel die nodige belasting oorbetaal uit inkomste verdien in Suid-Afrika op hierdie manier. Ter afsluiting van die navorsing word daar ‘n model voorgestel wat toegepas moet word in Suid-Afrika, eerstens om die inwoners van die land te beskerm deur ‘n goed-gereguleerde inter-aktiewe dobbel stelsel daar te stel en tweedens moet daar ook die nodige beskerming verleen word teen buitelandse indringers. ‘n Goed gereguleerde model vir die industrie sal voordelig wees vir Suid Afrika deurdat die belasbaarheid van die inter-aktiewe dobbelinkomste ‘n inspuiting vir die ekonomie kan wees, sowel as werkskeppingvoordele bied. Wetstoepassing en regulering van die industrie sal ook voordelig wees vir SARS aangesien die probleme wat nou geassosieer word met elektroniese-handel voorkom en tot die minimum beperk kan word. / Dissertation (MCom)--University of Pretoria, 2010. / Taxation / unrestricted