Thesis (MComm.)--Stellenbosch University, 1995. / Many co-operative societies make use of a system of pooling the produce
delivered to it by its members. The delivered produce is thrown into one
common stock and its identity is lost in the process. Each season's harvest
would normally form a separate pool. The co-operative keeps record of all the
pool transactions in the form of a pool account. In short these transactions
consist of the proceeds from the sale of the pooled mass, commission charged
by the co.:.operative, expenses incurred in the processing and marketing of the
products, as well as advances to the members. The surplus of the pool account
is divided among the members at the closing of the account, in proportion to
their contributions to that specific pool. Each member's share in the surplus is
reduced by advances already received.
In practice, only the advances and the final share of the surplus, reduced by
advances already received, are included in the taxable income of the members.
Realised sales, not yet distributed to the members are therefore not included in
the taxable income of the members, nor of the co-operative society. The value
of unsold pool stock at year end is further not included in the taxable income of
the individual members, nor of the co-operative society.
In this study, the treatment of co-operative pools from an income tax
perspective is investigated in order to determine whether the treatment in
practice is a correct reflection of the law.
The study first gives a general background of the co-operative society as a form
of a business enterprise. This is necessary in order to understand the creation
of co-operative pools. The study further deals specifically with co-operative pools and the income tax consequences thereof. The following aspects are
discussed:
(a) The legal nature and consequences of pooling are investigated. The rights
and obligations between the relevant parties will determine the income tax
consequences. The study concentrates on whether ownership of the
produce is transferred to the co-operative society as well as the
implications in law of the mixing of all the produce and the further
processing thereof. The capacity in which the co-operative processes and
disposes of the products are also investigated.
(b) A discussion is also given on whether the participants of a particular pool
form an association of persons. Certainty in this regard is necessary
before the income tax consequences of pooling for the co-operative
society or the individual members can be discussed. An association of
persons is regarded as a person for income tax purposes and is therefore
a separate taxpayer. A partnership will, however, not be a separate
taxpayer. As the circumstances with pooling resembles that of a
partnership, the legal requirements of partnerships are also investigated.
(c) The income tax consequences of pooling for the co-operative society as
well as the individual members are discussed in detail. The conclusions
are reached by applying the general income tax principals, as laid down
by the courts, on the circumstances that exist with pooling. The fact that
the members are co-owners of the pooled mass and the co-operative
society is regarded as the irrevocable agent of the members, has a
significant influence on the income tax consequences.
From the above, the conclusion is reached that the income tax treatment of
pooling in practice, is a correct reflection of the law, not only in respect of
receipts and accruals, but also in respect of the treatment of unsold pool stock.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/50859 |
| Date | 12 1900 |
| Creators | Esterhuyse, Friedrich Hans |
| Contributors | Matthee, J. A., Du Plessis, F., Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Economics. |
| Publisher | Stellenbosch : Stellenbosch University |
| Source Sets | South African National ETD Portal |
| Language | af_ZA |
| Detected Language | English |
| Type | Thesis |
| Format | 129 p. |
| Rights | Stellenbosch University |
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