M. Comm. / The purpose of this study is to determine the desirability of implementing of a system of capital transfer tax in South Africa. The implementation of a capital transfer tax system in South Africa should generate additional income without placing a further administrative or financial burden on the South African Revenue Services. A system of capital transfer tax will replace the current system of donation tax and estate duty in South Africa. Any new system will be based on the principles established by these two forms of taxation, but should simultaneously address many of the loopholes in these two systems. Since the Margo Commission's recommendation in 1986 that South Africa should implement a system of capital transfer tax, much has been written about this form of capital tax but the government has never implemented the recommendations. However, it is certain that a system of capital transfer tax will be implemented in South Africa in the future. The current system of donation tax and estate duty is not effective in levying the taxes and earning the income for the government for which it was originally designed. Over the years numerous ways have been developed to legally avoid these taxes, which is why they are referred to as voluntary taxes (Anon, 1988:17). This dissertation consists of three parts: The first part is a literature study in which capital taxes are discussed. The distinction between income and capital is reviewed. The various forms of capital taxes are identified and the arguments for and against introducing one of them are discussed. This part concludes with arguments for and against a system of capital transfer tax for South Africa. The second part is an analysis of donation tax and estate duty as currently levied in South Africa. The shortcomings of the current legislation are discussed and legal ways to avoid estate duty are identified. The inheritance tax system in the UK and the donation tax and estate duty system in the USA are also briefly discussed. The anti-avoidance measures implemented in these countries are discussed in some detail in view of recommendations to implement similar measures in South Africa. In the third part a capital transfer tax system for South Africa is proposed. Precautions to minimise the avoidance of these taxes through interest-free loans and generation-skipping devises are discussed. Finally a conclusion is reached regarding the matters analysed in this dissertation.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:uj/uj:9356 |
| Date | 15 August 2012 |
| Source Sets | South African National ETD Portal |
| Detected Language | English |
| Type | Thesis |
Page generated in 0.0018 seconds