The lack of specific tax legislation and practice dealing with the taxation of derivatives in South Africa necessitates the construction of a framework for the taxation of derivatives: the subject of this dissertation. The lack of sophistication within the Income Tax Act, No. 58 of 1962 and the lack of clarity provided by the South African Revenue Service with regard to derivatives, specifically in a hedging context, is expected to be overcome to a large degree by virtue of the contents of this dissertation. The dissertation considers the meaning of a derivative and a hedge in a tax context and culminates in the drafting of suggested definitions of a derivative and a hedge to be housed within our tax legislation. The definitions have been constructed from key themes and features extracted from various comparative studies. Given the changes in accounting methodologies and practice of derivative transactions, it is considered that the need, from a tax perspective, is to move closer to the accounting treatment of gains and losses on derivative transactions. The analysis in this dissertation favours this approach in the instance specifically where derivatives are transacted as a hedge of an underlying capital transaction. The purposes for which derivatives are used are finally considered specifically in the context of the common law doctrine of substance over form. The subjective test of the taxpayer’s mindset plays a major part in balancing the legal form of a transaction and its legal substance. It is hoped that a fresh view on the taxation of derivatives and the construction of this framework provides users of tax legislation with a concise pathway to the tax effect and consequences of their application. / Prof. D Coetsee
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:uj/uj:14673 |
| Date | 06 December 2007 |
| Creators | Rudnicki, Michael |
| Source Sets | South African National ETD Portal |
| Detected Language | English |
| Type | Thesis |
Page generated in 0.0134 seconds