The tax effects on South African taxpayers involved in foreign exchange transactions.
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Date
2010
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Abstract
A South African taxpayer’s taxable income must be determined in rands. Several provisions
of the Income Tax Act (the Act) relate to foreign currency transactions and the interaction of
these provisions is complicated. A taxpayer needs to determine the provision that applies to
his foreign transaction. It will then provide the rule or method that needs to be applied to his
foreign transaction. If an amount is in a foreign currency, it must be translated into rands. If
there is an exchange item, a foreign exchange gain or foreign exchange loss must be taken
into account. If an asset is disposed of or acquired in a foreign currency then a capital gain or
capital loss must be calculated when it is disposed of. Examples of typical foreign exchange
transactions have been provided, discussed and analysed in this dissertation. The provisions
in the Act that are relevant to the foreign exchange transactions have been identified and the
interaction between them has been considered. Potential difficulties because provisions in the
legislation contradict each other or do not cater for a particular situation were identified. Also
possible tax-saving opportunities have been identified.
Description
Thesis (M.Acc.)-University of KwaZulu-Natal, Westville, 2010.
Keywords
Taxing power--South Africa., Taxation--Law and legislation--South Africa., Foreign exchange rates., Theses--Accounting.