For eighty-six years up to the year 2000, the South African income tax system was based primarily on the source principle. This meant that only income which was from a source in the Republic or deemed to be from a source in the Republic was taxable in the hands of residents. The election of a new Government in 1994, and the subsequent relaxation in exchange controls, necessitated a change from the source-based system of taxation to a residence-based system of taxation. The residence-based system of taxation in turn necessitated the introduction of new legislation to ensure that South African residents were taxed on their foreign source income, and appropriate anti-avoidance provisions were in place in order to prevent an erosion of the South African tax base. The residence-based system of taxation was phased into South Africa by the introduction of section 9C to the Act. Section 9C was introduced in 1997 as an interim and partial provision which provided for the taxation of foreign passive income on a residence-basis. A possible loophole that the revenue authorities needed to deal with at the time was the fact that residents could establish controlled foreign companies in low tax jurisdictions and divert and accumulate income in such foreign jurisdictions, thereby escaping the South African tax net by avoiding or at least deferring South African tax on such income. Section 9D was introduced simultaneously with section 9C in 1997 as the specific antiavoidance provision in this regard.
With the introduction of a residence-based system of taxation effective from years of assessment commencing on or after 1 January 2001, section 9C was repealed. As a result section 9C and the concepts of 'active, and 'passive' income are of historical significance, and the main focus in terms of a residence-based taxation system now remains a decision regarding whether or not a taxpayer is a 'resident' as defined in the Act. This dissertation critically analyses the structure, application, exemptions and shortcomings of section 9D as an anti-avoidance provision consequential upon the introduction of a residence-based system of taxation, and states the law up to and including the Revenue Laws Amendment Act 74 of 2002, which took effect from the commencement of years of assessment ending on or after 1 January 2003. / Thesis (M.Com.)-University of Natal, Pietermaritzburg, 2003.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:ukzn/oai:http://researchspace.ukzn.ac.za:10413/6223 |
| Date | January 2003 |
| Creators | Seonath, Manoj Kumar. |
| Contributors | Williams, Robert C. |
| Source Sets | South African National ETD Portal |
| Language | en_ZA |
| Detected Language | English |
| Type | Thesis |
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