The Income Tax Bill (2012) proposes certain changes to the existing Income Tax Act that will impact on the method used to determine the taxable income of a taxpayer in Zimbabwe. Therefore, it is important to understand the tax consequences the Income Tax Bill creates for the taxpayer. The research aimed to elaborate on and explain the tax consequences that will arise as a result of applying the Income Tax Bill in Zimbabwe. The research was based on a qualitative method which involved the analysis and the interpretation of extracts from legislation and articles written on the proposed changes. The current “gross income” of a taxpayer consists of amounts earned from a source within or deemed to be from within Zimbabwe The proposed changes to the Act will change the tax system to a residence-based system, where resident taxpayers are taxed on amounts earned from all sources. Therefore, the driving factor which determines the taxability of an amount will become the taxpayer’s residency. Clause 2 of the proposed Act provides that income earned by a taxpayer should be separated into employment income, business income, property income and other specified income. This will make it unnecessary to determine the nature of an amount because capital amounts will be subject to income tax. The current Act provides for the deduction of expenditure incurred for the purpose of trade or in the production of income. Section 31(1)(a) of the proposed Act will restrict permissible deductions to expenditure incurred in the production of income. Consequently, expenditure not incurred for the purpose of earning income will no longer be deductible when the Income Tax Bill is implemented. The proposed Income Tax Act will increase the taxable income of a taxpayer as it makes amounts that are not currently subject to tax taxable, whilst restricting the deductions claimable.

M.Com. / The existence of a person is a prerequisite before any liability for tax can come into being. Some of the most successfultax avoidance schemes of the past few years have relied on this principle, but the legislator has now . apparently closed these loopholes by specifically bringing the trust and the deceased estate within the definition of a person as far as the taxability of these entities is concerned. The courts have, however, set the following general principles relating to the taxation of non-existent persons: (i) The existence of a person is an absolute prerequisite before liability for tax can come into being, nor can there be any representative taxpayer if there is no person to represent. (ii) An aggregate of assets and liabilities, although no legal persona, can to a limited extent take part in day to day economic activities. It is here argued that these principles may be applied to otherareas of the mercantile and private law, resulting in unforseen and beneficial consequences for the taxpayer. Section 35 of the Companies Act creates a possibility for a company to enter into contracts and acquire rights from these, even before being duly incorporated. The company, not being a legal persona before incorporation, would thus not be taxable on income it may receive or which may accrue to it up to the date of incorporation. At present, only two special tax court cases address the issue of pre-incorporation profits. Neither of the decisions handed down, however, reflects the above view, a situation which is highly unsatisfactory and supported by dubious authority. When proper consideration is given to the difference between a person professing to act as agent, and a person professing to act as trustee of a company not yet incorporated, the vesting of income andthe tax effects of retrospective contracts,it becomes clear thata real possibilityfor substantial tax savings does exist. South African writers on this subject are divided, some of them meekly accepting the present unsatisfactory situation, others acknowledging the obvious flaws in it, but declining to make definite suggestions as to how this issue should be approached. A human being becomes a legal persona at time of birth. The nasciturus fiction which stems from Roman law, provides that the rights to an inheritance are kept floating until birth of the nesduuus, to determine whether the nasciturus should share in the bequest. Depending on the interpretation of the legal effects of the nasciturus fiction, and the vesting of the right to income from the inheritance, there is a distinct possibility that liability for tax on income, until time of birth of the nasciturus, may altogether be avoided. Provisions similar to section 35 of the Companies Act and the nasciturus fiction also exist in foreign legal systems. It could, however, not be established how the tax implications resulting from the application of these legal fictions are accommodated within these systems.

The Budget speech of 23 February 2000 by the Minister of Finance marked the introduction of significant changes to the income tax system of the Republic of South Africa (Republic). A residence-based system of taxation (RBT) was adopted for years of assessment commencing on or after 1 January 2001 and Capital Gains Tax (CGT) was introduced with effect from 1 October 2001. According to the 2000 Budget Review a move to a residence-based system would significantly broaden the tax base, limit opportunities for tax arbitrage and bring the tax system in line with generally accepted international practice. The relaxation of exchange controls for South African residents with effect from 1 July 1997 made it possible for residents to invest limited funds offshore. The Fifth Interim Report of the Katz Commission suggested that if exchange controls were relaxed, the taxation of active income should remain on a source basis, but that passive income should be taxed on a residence basis. As a result deemed source rules in the form of section 9C and 9D were introduced into the Act with effect from 1 July 1997 and applied to “investment income” as defined. Section 9C taxed investment income of both residents and non-residents (from activities carried on by a permanent establishment in the Republic). Section 9D taxed investment income of controlled foreign entities and investment income arising from donations, settlements or other dispositions in the hands of residents The taxation of foreign dividends with effect from 23 February 2000 as a first phase in the move to a residence based system, lead to the introduction of s 9E. Foreign Dividends were taxed in the hands of residents subject to certain exemptions. The basic interest exemption was extended to foreign dividends. Section 6quat was revised to extend the rebate to foreign dividends and profits of a company from which dividends were declared. Section 9D was amended to cater for foreign dividends received by or accrued to controlled foreign entities. The implementation of a full residence-based system of taxation with effect from years of assessment commencing on or after 1 January 2001 required amendments to various sections of the Income Tax Act as well as the introduction of new sections. A residence minus system was adopted which means that residents as defined are now taxed on their world- wide income with certain exemptions. Non-residents are taxed on their income from sources within or deemed to be within the Republic. The provisions relating to the taxation of foreign income of residents is complex; adding to the complexity is the fact that several changes have already been made to these provisions since the inception of the world-wide basis of taxation. The provisions must also be interpreted against the background of any double taxation agreement (DTA) between the Republic and the relevant foreign country as the applicable DTA may override the Republic domestic legislation. For purposes of this treatise the amending Acts enacted up to the end of December 2003 are taken into account. Hardly five years after the Katz commission of inquiry into the tax structure concluded that RBT and CGT were too complicated to be administered by SARS, the implementation of RBT and CGT were announced in the 2000 Budget. A detailed examination of the provisions relating to foreign income of residents as defined was undertaken. Interpretational issues to be clarified by legislation and certain planning issues are highlighted. It is essential to understand and carefully consider the Republic tax laws and the relevant double taxation agreements, for the successful application of the provisions. Careful planning before concluding transactions is of vital importance in order to avoid or minimize any unwanted tax consequences resulting from the RBT and CGT provisions.

The Budget speech of 23 February 2000 by the Minister of Finance marked the introduction of significant changes to the income tax system of the Republic of South Africa (Republic). A residence-based system of taxation (RBT) was adopted for years of assessment commencing on or after 1 January 2001 and Capital Gains Tax (CGT) was introduced with effect from 1 October 2001. According to the 2000 Budget Review a move to a residence-based system would significantly broaden the tax base, limit opportunities for tax arbitrage and bring the tax system in line with generally accepted international practice. The relaxation of exchange controls for South African residents with effect from 1 July 1997 made it possible for residents to invest limited funds offshore. The Fifth Interim Report of the Katz Commission suggested that if exchange controls were relaxed, the taxation of active income should remain on a source basis, but that passive income should be taxed on a residence basis. As a result deemed source rules in the form of section 9C and 9D were introduced into the Act with effect from 1 July 1997 and applied to “investment income” as defined. Section 9C taxed investment income of both residents and non-residents (from activities carried on by a permanent establishment in the Republic). Section 9D taxed investment income of controlled foreign entities and investment income arising from donations, settlements or other dispositions in the hands of residents. The taxation of foreign dividends with effect from 23 February 2000 as a first phase in the move to a residence based system, lead to the introduction of s 9E. Foreign Dividends were taxed in the hands of residents subject to certain exemptions. The basic interest exemption was extended to foreign dividends. Section 6quat was revised to extend the rebate to foreign dividends and profits of a company from which dividends were declared. Section 9D was amended to cater for foreign dividends received by or accrued to controlled foreign entities. The implementation of a full residence-based system of taxation with effect from years of assessment commencing on or after 1 January 2001 required amendments to various sections of the Income Tax Act as well as the introduction of new sections. A residence minus system was adopted which means that residents as defined are now taxed on their world- wide income with certain exemptions. Non-residents are taxed on their income from sources within or deemed to be within the Republic. The provisions relating to the taxation of foreign income of residents is complex; adding to the complexity is the fact that several changes have already been made to these provisions since the inception of the world-wide basis of taxation. The provisions must also be interpreted against the background of any double taxation agreement (DTA) between the Republic and the relevant foreign country as the applicable DTA may override the Republic domestic legislation. For purposes of this treatise the amending Acts enacted up to the end of December 2003 are taken into account. Hardly five years after the Katz commission of inquiry into the tax structure concluded that RBT and CGT were too complicated to be administered by SARS, the implementation of RBT and CGT were announced in the 2000 Budget. A detailed examination of the provisions relating to foreign income of residents as defined was undertaken. Interpretational issues to be clarified by legislation and certain planning issues are highlighted. It is essential to understand and carefully consider the Republic tax laws and the relevant double taxation agreements, for the successful application of the provisions. Careful planning before concluding transactions is of vital importance in order to avoid or minimize any unwanted tax consequences resulting from the RBT and CGT provisions.

published_or_final_version / Economics and Finance / Master / Master of Economics

No description available.

No description available.

M. Comm. / The purpose of the study is to identify some guidelines to determine if any legal expenses — as defined in section 11(c) of the Income Tax Act, No 58 of 1962 ("the Act") actually incurred in respect of any claim, dispute or action at law arising in the course of or by any reason of the ordinary operations of a taxpayer in the carrying on of his trade —, are deductible. The admissibility of legal fees as a deduction depends primarily upon whether, in applying the provisions of section 11(a), the taxpayer is able to establish that such expenditure had been incurred in the production of income and was not of a capital nature. Furthermore, in terms of paragraph (c) of section 11, a taxpayer is entitled to deduct from his income any legal expenses, other than those of a capital nature, which he incurs and which arise in the course or by reason of the ordinary operations undertaken by him in the carrying on of his trade.The deduction is, however, limited to so much thereof as it: Is not of capital nature; Is not incurred in respect of any claim made against the taxpayer for the payment of damages or compensation if by reason of the nature of the claim or the circumstances, any payment which is or might be made in satisfaction or settlement of the claim does not or would not rank for deduction under section 11(a) or (b) of the Act; Is not incurred in respect of any claim made by the taxpayer for the payment to him of any amount which does not or would not constitute income of the taxpayer; and is not incurred in respect of any dispute or action at law relating to any such claim as in referred to in (ii) and (iii) above. The admissibility of legal expenses as a deduction depends primarily upon whether, in applying the provisions of section 11(a), the taxpayer is able to establish that such expenditure had been incurred in the production of income and was not of a capital nature. Furthermore, to establish, in terms of paragraph (c) of section 11, whether a taxpayer is entitled to deduct from income any legal expenses, other than those of a capital nature, which he incurs and which arise in the course or by reason of the ordinary operations undertaken by him in the carrying on of his trade.

M.Com. (Taxation) / This study has been undertaken to clarify the meaning of "dividend" with reference to the definition of dividend in the Income Tax Act. The study has been conducted as follows:- (1) The meaning of "dividend" as described in general mercantile and accounting terms has been investigated and a description of the term has been composed. (if) As a dividend entails the distribution of profits, the terms "profit" and "profit available for distribution" have also been addressed. Thereafter an in depth investigation was undertaken of the definition of a "dividend" 1n the Income Tax Act, and compared with the general meaning of the term "dividend, II Finally, the income tax payable on dividends received is discussed. A conclusion is reached that the definition of a dividend in the Income Tax Act has a much wider meaning than is understood by the term in the business world. Further more the Act ignores the general Accounting connotation to the term "dividend" Lastly, it is clear that no neutrality exists concerning the taxability of dividends in the hands of the various taxpayers that we find in the South African tax system.

Thesis (M.Com. (Development Theory and Policy))--University of the Witwatersrand, Faculty of Commerce, Law and Management, School of Economic and Business Sciences, 2017 / A flat tax is a single-rate tax on all types of income with a minimum tax-free bracket. In theory, such a tax can improve the efficiency, effectiveness, and simplicity of a system, while the distributional effects vary depending on the tax and exemption structure. This dissertation analyses the effects of the flat tax reform introduced in Kazakhstan in 2007, through the review of the major tax changes in the country and a tax simulation exercise. Kazakhstan is a particular case because of a large number of taxes and contributions levied on income and a maximumearnings bracket above which an individual is not taxed. The analysis of macroeconomic data over two decades suggests that the benefits in efficiency, effectiveness, and simplicity are marginal, as well as debatable. The simulation analysis, based on 2007 data, shows that redistribution happened at the expense of the middle-income group as a result of the flat tax reform. The results show that while the flat tax system, along with other factors such as the general trend in the poverty reduction, the imperfect tax schedule of the preceding system, and pro-poor public expenditures, contributed to the improvement of equity overall, the results might be reversed once there is a higher share of the high-income earners. / GR2018