This dissertation aims to establish whether individuals who have to incur e-toll expenses in travelling between their home and workplace since the implementation of e-tolling on roads forming part of the Gauteng Freeway Improvement Project (GFIP), referred to as “e-toll commuting expenses”, should be allowed to deduct these expenses for income tax purposes. These individuals are referred to as salaried individuals or salaried work commuters.
The implementation of e-tolling on GFIP roads has led to a situation where salaried work commuters who have to make use of these roads in travelling between their home and workplace will now have to incur this additional e-toll commuting expense without receiving any tax relief.
Although e-toll commuting expenses meet the requirements of the general deduction formula in s 11(a) of the Income Tax Act 58 of 1962 (“ITA”) to qualify as a deduction for income tax purposes, there are other provisions in the ITA which effectively prohibit the deduction of such commuting expenses.
Section 23(b) of the ITA prohibits the deduction of all commuting expenses on the basis that they constitute a domestic or private expense. This was the decision of the Appellate Division in Commissioner for Inland Revenue v De Villiers, which is the leading authority on this topic. This was also the decision in a number of court cases decided before and after this judgment was handed down. Section 23(b) has been amended by the Legislature from time to time and although these amendments related to the deductibility of home office expenses and not to the deductibility of commuting expenses, the reason behind these amendments are relevant to the topic of this dissertation.
Furthermore, s 23(m) also effectively prohibits the deduction of such commuting expenses by limiting the number of specific deductions in s 11(a) that are available to salaried individuals. As this limitation does not apply to individuals who work as agents or representatives and who earn their income mainly from commission, the question arises whether the differentiation created by this section is rational and constitutionally permissible in terms of s 9(1) of the Constitution of the Republic of South Africa, 1996. It is submitted that such differentiation is indeed rational.
Considering the public’s vehement opposition to the implementation of e-tolling and in light of the fact that, internationally, public acceptance is one of the factors that affect the success of such a road pricing initiative, it is argued that a tax deduction should be granted to salaried work commuters for all e-toll commuting expenses incurred by them. It is submitted that such a deduction will improve public acceptance by addressing some of the equity and socio-economic concerns caused by e-tolling and improve compliance with the e-tolling payment provisions without leading to a significant increase in congestion on GFIP roads. Although this will reduce government’s revenue from income tax, the reduced government funding required by SANRAL can offset such loss in revenue due to increased public compliance with the e-tolling payment provisions.
Finally, it is submitted that a tax deduction for e-toll commuting expenses should only be granted to salaried work commuters who are also registered users in terms of the E-Road Regulations in Government Gazette 36911. Such a deduction provision should also require salaried work commuters to keep records of when they incurred these deductions. It is also argued that the amount that ought to be allowed as a deduction should be determined by having regard to the social and economic impact of the provisions of the ITA on salaried work commuters and so as to alleviate their tax burden without eroding the existing tax base. / Dissertation (LLM)--University of Pretoria, 2014. / lk2014 / Mercantile Law / LLM / Unrestricted
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:up/oai:repository.up.ac.za:2263/43283 |
| Date | January 2014 |
| Creators | Botha, J.L. (Jacobus Louis) |
| Contributors | Harms, Louis T.C., Kok, Anton |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Dissertation |
| Rights | © 2014 University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria. |
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