Masters Degrees (Taxation)

Permanent URI for this collectionhttps://hdl.handle.net/10413/8415

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Closing the fiscal deficit in South Africa: challenges and solutions to the current taxation framework.
(2024) Dlamini, Thembinkosi Perceverance.; Gregory, Vanessa Margaret.; Tsabo, Tholang William.
South Africa faces persistent fiscal challenges, primarily driven by a widening budget deficit, inefficient revenue collection, and increasing public debt, exacerbated by global economic crises and the COVID-19 pandemic. Despite efforts to reduce debt-to-GDP ratios in the past, discretionary fiscal decisions and limited infrastructure investment have worsened fiscal imbalances. Debt servicing now consumes a significant portion of the national budget, surpassing allocations for education, health, and social protection, thereby hindering economic growth and public service delivery. Structural inefficiencies in the tax system, coupled with governance issues and a rising public sector wage bill, contribute to revenue shortfalls, in addition to corporate tax and VAT underperformance. This study investigated the relationship between fiscal deficits and revenue collection in South Africa, identifying the factors that result in insufficient revenue generation in South Africa. By focusing on strategies to bridge the deficit, the research aimed to inform policymaking, strengthen South Africa’s fiscal health, and support sustainable economic development, while addressing global and regional fiscal trends. This study adopted a quantitative research design, leveraging measurable data and statistical techniques to analyse the relationship between fiscal deficit and revenue collection in South Africa. In particular, ordinary least squares and robust regression were used to determine the relationship. The study integrated systematic literature reviews to identify the factors resulting in insufficient revenue generation in South Africa. Secondary data from credible sources like the South African Reserve Bank, South African Revenue Services, National Treasury, World Bank, OECD, IMF, Google Scholar, Scimago, and other international organisations, were analysed to ensure validity and reliability. Construct validity was established through theoretical alignment and empirical testing, while data were presented via clear statistical methods, including meta-analyses for consistency. The findings reveal a persistent fiscal deficit averaging 4.4% of GDP, underpinned by stable but limited tax revenue at 25.1% of GDP. A weak correlation between tax revenue and fiscal balance underscores the greater influence of government expenditure efficiency and macroeconomic conditions on fiscal sustainability. Effective tax administration is impeded by issues like corporate tax avoidance, corruption, and difficulties in regulating the informal and digital economies. Key obstacles are outdated tax laws, institutional inefficiencies, and high informality. Digital transformation presents opportunities to enhance compliance and broaden the tax base, but these require supportive governance reforms and international collaboration. Anti-corruption measures, simplified tax systems, and targeted strategies for taxing digital services are crucial for sustainable revenue generation. Addressing illicit trade, particularly in tobacco, demands coordinated inter-agency efforts. Recommendations emphasize improving expenditure efficiency, diversifying revenue streams through progressive taxes, leveraging digital tools for tax administration and strengthening intergovernmental relations. Future research should explore broader determinants of fiscal balance, governance quality, and the integration of sustainability considerations into tax policies. This multifaceted approach seeks to enhance fiscal stability, equity, and economic growth.
Investigating the use of trusts in tax avoidance and tax evasion practices in South Africa.
(2024) Tshilimandila, Rofhiwa.; Algu, Aarthi.; Matenda, Frank Ranganai.
Tax avoidance and tax evasion by trusts have long been a significant challenge for governments around the world, which also led to significant losses of revenue and undermining the integrity of the tax systems. As highlighted in the literature reviewed, trusts are being used to evade and avoid taxes. Over the past three decades, it has become clear that the trust institution have been misused by both the trustees and founders. The Trust Property Control Act No. 57 of 1988 ("the Act") is a combination of English, Roman-Dutch, and South African law, which provides the legal specifications for the creation and management of trusts in South Africa. According to the act, trusts must be created in writing and must provide a detailed description of the trust's objectives, beneficiaries, and assets ("Trust Property Control Act No. 57," 1988). The taxation of trusts in South Africa is primarily governed by Section 25B of the Income Tax Act No. 58 of 1962, which determines how trust income is taxed, either in the hands of the trust or its beneficiaries depending on the circumstances, meanwhile, (Sections 80A to 80L) of the same Act addresses tax avoidance practices. This study investigated ways in which trusts are used for tax evasion and tax avoidance and explores the underlying factors leading to such practices in South Africa. The study also investigates the systems and methods used to detect tax evasion and tax avoidance by trusts and analyses strategies that can be used to prevent tax evasion and avoidance by trusts in South Africa. The study employed a scoping review to analyse existing literature on tax avoidance and tax evasion practices by trusts in South Africa. The study reviewed papers published in peer-reviewed journals and dissertations that analysed the use of trusts in tax evasion and avoidance practices. Studies were pooled from Google Scholar, ResearchGate, Google, ScienceDirect and published reports. The Trust Property Control Act of 1988, which regulates the control of trust property, and the Income Tax Act of 1962, which governs tax obligations, were also examined for their implications on trust management and taxation. The observation period for the study spanned from 2000 to 2024. The findings from the scoping review suggested that the complexity of trust laws and the loopholes in the Income Tax Act create opportunities for tax avoidance. Trusts use discretionary and offshore structures, capital gains tax planning, and conceal income and assets to evade and avoid taxes. The complexity of tax laws, behavioural factors, regulatory issues, corruption, and economic incentives contribute to tax evasion and tax avoidance by trusts. To enhance clarity and ease for taxpayers, the South African Revenue Service (SARS) is streamlining the Income Tax Return filing process for Trusts (ITR12T). The National Treasury has proposed new laws to prevent tax avoidance through trusts, particularly concerning low-interest or interest-free loans. The Financial Intelligence Centre (FIC) monitors trusts for suspicious activities related to money laundering and tax evasion. Trustees must maintain accurate records and report any suspicious transactions. Having an independent trustee may help deter abuse, but it does not guarantee that abuse will not occur. Implementing measures that require discretionary trusts to be taxed at the trust level, rather than allowing income to flow directly to beneficiaries, can reduce opportunities for tax avoidance and evasion. While trusts serve essential functions in estate planning and asset management, their potential for misuse necessitates ongoing oversight and legislative action. As the government seeks to improve its approach to trust taxation, it must strike a balance between allowing legitimate uses and prevent abuse in an increasingly complex and regulated environment.
Evaluating South Africa’s tax administrator’s Authorised Economic Operator (AEO) programme in promoting taxpayer and trader compliance.
(2024) Nkhahle, Olebogeng Nkone Teboho Jacob.; Baldavoo, Kiran.
The Authorised Economic Operator (AEO) programme, created by the World Customs Organisation in 2007, was introduced in South Africa in 2020. Despite its potential benefits, the programme faces several challenges. Out of 357,653 eligible customs companies, only 137 registered in 2021, increasing slightly to 144 in 2022, representing less than 1% participation. (Government of South Africa, 2021). Concerns include low participation rates, minimal impact on trade facilitation and compliance, and high entry barriers, despite active promotion by the tax administrator. This study aimed to evaluate the effectiveness and efficiency of South Africa’s AEO programme in promoting compliance among taxpayers and traders. The objectives were to assess the low participation rate, identify challenges and barriers, and determine the programme’s impact on customs and trade facilitation. A mixed-method research approach was used, combining qualitative and quantitative data from a survey. The sample size was 22, selected through purposive stratified sampling, including 1 tax lecturer from the University of KwaZulu-Natal and 21 middle management employees from the South African tax administrator’s AEO department. Findings indicate that the participation rate, while low, is considered acceptable by some key informants, with 400 approved clients seen as satisfactory. The programme aligns with international standards and performs well compared to other regional countries. However, qualitative analysis revealed barriers to adoption, such as insufficient awareness and understanding of the programme, internal system challenges, and strict procedures. The study found that the AEO programme significantly enhances customs tax compliance and trade facilitation in South Africa. Businesses involved in the programme experience positive impacts, particularly in compliance and trade facilitation. The programme also provides good data security, aligning with international standards and legislative requirements, offering significant benefits to compliant clients by streamlining processes. Overall, the AEO programme’s implementation in South Africa is rated positively in terms of data security and strategy, despite the challenges in increasing participation and awareness.
Assessing digital technology adoption in enhancing tax compliance in South Africa: a scoping review.
(2024) Goldstone, Nadia Isobelle.; Lathleiff, Charmaine.
Tax compliance prior to digital technology advancements in tax was a complex and labourintensive process, which relied on paper-based systems and extensive manual tax administration. Streamlined processes and faster transactions enabled by digital technology, make it simple for taxpayers to become tax compliant. With a specific focus on understanding how these technologies enhance tax compliance, this research investigated the adoption of digital technologies within tax administration in South Africa. The intent of the study was to provide a comprehensive literature review to assess the determinants influencing the adopting of digital technologies by exploring what drives their successful adoption in tax administration and examining the potential challenges and barriers that may hinder their adoption. The research utilised academic literature from sources like Google Scholar and ResearchGate to map the extent of digital technology adoption and its impact on tax compliance in South Africa by drawing from scoping review methodology that Arksey & O'Malley (2005) endorsed. Selected studies in the review spanned from 2019 to 2024. During this period, the South African tax authority enhanced online tax filing features. These improvements marked a major step forward in using digital technology for tax compliance. The insights gained from the review revealed that digital technology adoption is impactful on taxpayer compliance in South Africa. Among the determinants identified are the availability of robust digital infrastructure like network signal availability and access to a continuous and uninterrupted electrical power, government and tax policy support, taxpayer education and ease of use of digital platforms. The research also identified possible adversities affecting the technology adoption such as taxpayer behaviour, inequality in access to digital technology for example limited availability of digital devices in rural regions and complexity of the tax system. The study recommends that the government implements digital literacy and tax education programs, increases transparency in tax revenue usage and addresses digital technology access inequalities to further enhance the adoption process. Future researchers may explore how specific digital infrastructure components such as internet speed and reliability, mobile network quality, and electricity availability impact the adoption of digital tax technologies by using primary data analysis.
An analysis of intention to invest in a retirement annuity fund at a South African University of Technology.
(2024) Zwane , Bonginkosi.; Marais, Alastair Malcolm.; Khumalo, Qondeni Penelope.
The significance of saving for retirement cannot be overstated. Governments worldwide are worried about the increasing number of older people who have become dependent on the government and over-stretched public finances. Advancements in medical technology and adopting better lifestyles are projected to increase life expectancy for individuals in South Africa and globally. This will result in many individuals exhausting their retirement funds, rendering them unable to retire or necessitating considerable adjustments to their living standards. This study analyses the factors influencing an individual’s intention to invest in a Retirement Annuity Fund (RAF), which provides significant tax benefits to contributors. The study employed a quantitative methodology, and the sample was chosen using a simple random sampling procedure. It consisted of 300 academic and support staff employed at a South African University of Technology with an annual income ranging from R1 to R625 992. The data was gathered through a web-based questionnaire created using Google Forms and shared with participants by email. The data were utilised to construct a multinomial logistic regression model to examine the investment intentions of the participants and identify influential factors. Most participants had sufficient basic financial literacy skills necessary to make investment decisions. The study found that the marketing efforts of RAF providers, concern for financial well-being, financial planning, awareness, and knowledge about tax benefits offered by RAFs did not influence an individual’s intention to invest in RAFs. However, it found that financial literacy, social influence, and a positive attitude towards RAFs influenced the intention to invest in RAFs. The study contributes to the existing literature by providing insights into factors influencing investment intentions towards RAFs. The fact that the tax benefits for contributors did not impact an individual’s intention to invest in RAFs is concerning. The government must increase efforts to educate low and middle-income earners on its tax reforms, ensure that tax reforms are aligned to achieve their intended goals and improve individuals’ understanding of retirement tax benefits. The findings will guide the National Treasury and RAF providers to enhance awareness about the advantages of investing in an RAF. This will aid in reducing the burden on welfare systems and generate capital that can be invested in the economy.
Trusts, do they still have any significance as a tax planning and estate planning tool?
(2022) Chirkoot, Jothi.; Schembri, Christopher Carmelo.
In the estate planning domain, trusts specifically have been “in the line of fire” over a period of time. There have been punitive amendments made to existing trust legislation and new trust legislation introduced which has brought trusts under the spotlight. To compound the problem, trusts are exploited and utilsed as vehicles through which various schemes are developed and implemented to meet illicit objectives. However, despite these drawbacks, at the very core of trusts is where the true and essential purpose of a trust is found in its purest form, which is to protect and preserve assets for the benefit of its beneficiaries. This is the primary focus of the dissertation. The dissertation commences with the origins of trusts to establish the underlying reason why such an institute was created and accepted into South African law. There has been much development of trust law in South Africa since inception which is indicative of the need for the use of trusts. It becomes evident from the indepth analysis about the tax legislation applicable to trusts and the exploitation of trusts, how closely linked these two aspects are. The author agrees that a response to misconduct of the parties to a trust is necessary, but not necessarily through punitive tax legislation. In applying the latter, even the legitimate and well-managed trusts are prejudiced. There appears to be a need for a more stringent approach to deter the parties to a trust from engaging in misconduct from inception of the trust and not only after the problem has arisen. Relinquishing control by the founder or estate planner and complete independence and objectivity of trustees is a huge predicament. It is worth noting though, that the benefits a trust offers has not been lost. Infact it is likely that the benefits of a trust will continue to evolve with each generation. Government’s intervention in making the appropriate resources available to oversee the operation and proper management of trusts is of crucial importance. A trust that is correctly structured, well managed and operates within the legal framework, will undoubtedly reap the benefits for its beneficiaries and contribute to the fiscus and the economy at large.
The analysis of value added tax, the effects of zero-rated VAT and exempt supplies and a look into who benefits more, the rich or the poor.
(2021) Mjindi, Wandisa.; Schembri, Christopher Carl.; Bosch, Shannon Joy.
No abstract available.
A critical analysis of the effectiveness of taxation regulation of cryptocurrencies in mitigating the facilitation of tax evasion in South Africa.
(2021) Singh, Pratista Yudvir.; Swales, Lee Jay Edwin.; Bosch, Shannon Joy.
In finance, law and technology, change is an inevitable result of development. Whilst governments, legal authorities and financial regulatory bodies may be sceptical or hesitant to accept the natural progression of technology, the digital revolution will not regress, but merely continue to thrive against a background of hostility. Thus, the importance of regulatory structures which effectively standardise digital innovations is reflected through the necessity thereof. It is submitted therefore, that it is wise to mitigate the consequences of the ineffective regulation of digital innovations. One such innovation which has been exponentially gaining traction in the field of technology is that of cryptocurrency.1 This research explores the need for effective cryptocurrency regulation by examining the necessity of a solid legal regulatory foundation upon which it may be integrated into the financial sphere in South Africa.2 Submissions will be made that it is insufficient to merely impose superficial legal regulations on cryptocurrency without accounting for various factors of consideration where the novelty of cryptocurrency is concerned in relation to the nature thereof. In SA specifically, taxation authorities3 have been implementing regulations regarding cryptocurrency, which will be analysed and evaluated through this research. In the likely event of cryptocurrency becoming a primary medium of transacting, the taxation regulations thereof must be effective to mitigate any negative effects (of insufficient and ineffective regulation) for taxpayers and the fiscus. It is imperative that regulatory bodies such as the legislature and the South African Revenue Service,4 ensure that the regulation of cryptocurrency in SA is effective so that any lacunae in existing legislation which could yield negative consequences for taxpayers and/or the fiscus are adequately addressed and effectively mitigated. From a taxation perspective, it is submitted that one of the main negative consequences of the lack of effective regulation of cryptocurrency is the potential of tax evasion. Tax evasion in relation to cryptocurrency will be analysed and discussed in this research based on the nature of cryptocurrency. The lack of cryptocurrency regulation is also cause for concern among taxpayers who use cryptocurrency without surety of how the proceeds therefrom will be taxed. Recommendations will thus be made regarding the implementation of a legislative definition of cryptocurrency to provide preliminary regulatory clarity on the taxation of cryptocurrency. This research envisages that the lack of understanding and effective regulation of cryptocurrency in SA should also be addressed by advisory, regulatory and authoritative bodies insofar as these bodies taking active steps to resolve the confusion surrounding the categorisation of cryptocurrency is concerned. The effectiveness of taxation regulations (or rather, the lack thereof) of cryptocurrency in SA will therefore be examined through this research, by analysing existing plans, proposed policies and new legislation as well as criticising the lacunae in the law which exist in cryptocurrency regulation. Furthermore, this research aims to prove that cryptocurrency regulation in SA is inadequate and ineffective. This issue will be explored in a holistic sense in order to assert that the lack of adequate cryptocurrency regulation is in fact a global issue. The legislation addressing the taxation of cryptocurrency in SA will be evaluated in order to ascertain whether the relevant legislative provisions will be sufficient in addressing the issues related to the taxation of cryptocurrency and tax evasion specifically, and subsequently used to prove that cryptocurrency regulation is in fact insufficient. In addressing the issues explored through this research, it is proposed that the nature of cryptocurrency must be considered as the foundation upon which the legislature constructs cryptocurrency regulations. From a practical perspective, it is proposed that a formal definition of cryptocurrency be implemented in legislation (in order to provide further clarity on the taxation treatment thereof) and a provision be inserted in legislation addressing the taxation treatment of cryptocurrency. It is also recommended that the UK and Germany be looked towards for cryptocurrency regulation in terms of SARS implementing an interpretation note thereon as well as ensuring that the content of the interpretation note/position paper is formulated in accordance with the UK government’s position paper on the taxation treatment of crypto assets. This research proposes that authoritative bodies must ensure cohesion regarding the categorisation of cryptocurrency as well as regulation thereof in order to provide clarity on cryptocurrency regulation as well as ensure the effective regulation thereof.
An enquiry into the constitutionality of the ‘pay now, argue later’ principle and the appointment of a third party on behalf of the taxpayer for tax purposes under the Tax Administration Act.
(2020) Zulu, Sikhulile Sithandiwe.; Schembri, Christopher Carl.; Bosch, Shannon Joy.
Prior to 2012, the tax collection practices known as ‘pay now, argue later’ and ‘agent appointment’ respectively were contained in Value Added Tax and Income tax legislation and have been the cause of many disputes between the taxpayer and the revenue collector over the years. These collection practices have sparked much controversy among the legal scholars for the longest time. When the Tax Administration Act came into operation in 2012, it still made provision for a number of controversial summary collection procedures including the ones referred to above. This was probably due to the court decision in Metcash Trading Limited v Commissioner for SARS 2001 (1) BCLR 1(CC) which upheld ‘pay now, argue later rule’ and the decision in Hindry v Nedcor Bank 1999 (2) All SA 38 (W) in which the court found in favour of ‘agent appointment’ rule. These decisions were made in the context of VAT legislation, a system in which there is a much narrower scope for a genuine dispute of tax liability, as it is a self-assessment system as opposed to income tax where tax is paid on the basis of what is assessed by the Commissioner to be due to SARS. As a result of these cases and the subsequent enactment of the Tax Administration Act, there has been an overwhelming level of confusion as to the constitutionality of these collection procedures in the context of income tax. Accordingly the desire to conduct this study was triggered by need to contribute to an attempt to achieve clarity as to whether these court decisions should be applied. In addition, the study contains a comparative analysis of the implementation of the same procedures in other selected jurisdictions. It will be established that SARS’s conduct in exercising its statutory powers more often than not is in conflict with the taxpayers’ rights. Often the remedies are limited and place the taxpayer in an inconvenient situation as they are not directly related to tax. There is an urgent need for affordable and effective relief to which taxpayers can resort instead of litigation the cost of which is rather exorbitant.
The analysis of sugar tax on sugar–sweetened beverages in South Africa: a comparative study with Mexico, Denmark and Illinois Cook County.
(2019) Perumal, Tarryn.; Schembri, Christopher Carmelo.
No abstract available
A critical analysis of the balance between effective tax collection and permissible tax avoidance provided by legislation.
(2020) De la Rey, Chrichan.; Schembri, Christopher Carmelo.; Bosch, Shannon Joy.
Abstract available in PDF.
Capital versus Revenue: a critical discussion on the correct test to be applied in determining the nature of an asset for income tax purposes.
(2019) Quarsingh, Quentin Silvanus.; Schembri, Christopher Carmelo.
No abstract available
The effect that SARS procedures contained in the Tax Administrative Act has on taxpayer’s constitutional rights.
(2019) Ouderajh, Leona Elisha.; Schembri, Christopher Carmelo.; Bosch, Shannon Joy.
No abstract available.
An evaluation of the approaches used to determine the taxability of income emanating from illegal pyramid schemes.
(2018) Madiba, Mantwa.; Schembri, Christopher Carmelo.; Bosch, Shannon Joy.
No abstract available.
What South African can learn from Mauritius in order to be the preferred country for multinational companies to establish of headquarter company in African.
(2018) Masina, Ayanda Success.; Schembri, Christopher Carmelo.; Bosch, Shannon Joy.
No abstract available.
The taxation of income and expenditure of trusts in South Africa. Are they still viable estate planning tools?
(2019) Maharaj, Yuleesha.; Schembri, Christopher Carmelo.
No abstract available.
The common law conduit pipe principle: should we retain this principle in our South African law?
(2018) Zwezwe, Mlungisi.; Schembri, Christopher Carmelo.; Bosch, Shannon Joy.
More than a decade has passed since the ‘common law conduit pipe principle’ was introduced into our South African law of taxation. Following this introduction in 1938, a trust has in some situations operated as a retainer or saver of the identity of certain types of amounts from the point the trust receives each amount type up until that amount exits the trust. Consequently these amounts are not exposed to normal tax even when they finally reach the hands of their beneficial owner. This principle was later incorporated into the Income Tax Act 58 of 1962 by the insertion of both section 25B and para 80 of the Eighth Schedule to that Act. With the passage of time and taxpayers becoming more and more knowledgeable and consistently strategizing new ways of avoiding triggers of certain types of taxes, they realised that the conduit pipe principle could easily be manipulated within a discretionary trust to obtain various tax benefits. As a result of these tax benefits the use of discretionary trusts in South Africa is constantly on the rise. However, their continued use was first brought into question after the 2013 National Budget speech in which it was indicated that these types of trusts would no longer operate as a conduit pipe. This suggested the repeal of section 25B and para 80 of the Eighth Schedule. The doing away with the conduit pipe principle in our law of taxation has necessitated the imposition of the question whether its real purpose and value is properly understood. The National Treasury and SARS do not appear to fully comprehend this purpose – the purpose seems to be to facilitate the avoidance of normal tax. Hence the aim of this study is to attempt to determine the true purpose and value of this principle within our tax law system. This study realises this objective by embarking on an in-depth analysis of Armstrong v Commissioner for Inland Revenue 1938 AD 343 which introduced this principle into our South African law of taxation. This study successfully found that the true purpose of the ‘conduit pipe principle’ is to rule out the possibility of double taxing the amount which has already suffered the consequences of tax at its originating source when it subsequently lands in the hands of its beneficial owner. This means that through the conduit pipe operation of a trust there is assurance that each identity of amount is protected against being lost between the time that amount is paid to the trust and the time the trust pays it over to the beneficiary who will also take advantage of the exempt status of that amount in his hands. This tax benefit is only available if the amount is paid over in the year of assessment during which the trust received it – otherwise it gets caught up in the normal tax net in the beneficiary’s hands. Trustees successfully escape this trap by insisting on making this payment within the same tax period the trust received the amount. The study also looked at the current normal tax treatment of the income that is inclusive of both local dividend(s) and interest from investment(s) and analysed the tax impact these types of amount have on reducing the taxable income of both a discretionary trust and its beneficiary. A comparison was made from a current income tax treatment point of view with the hypothetical time when the conduit pipe principle is finally abolished. It was discovered that beneficiaries of these types of trusts would be taxed more than they are currently being taxed as the dividends and basic interest exemption under the Income Tax Act 58 of 1962 would no longer be available to them. A discretionary trust would no longer be an ideal tool to use in a tax avoidance strategy but will still be a good shelter for the protection of assets. This study further concludes that the conduit pipe principle should be retained in our law because it abolition was apparently recommendation on the basis of its true purpose being misunderstood for tax avoidance rather than avoidance of imposing double tax on an amount that has already been taxed at its source.
The tax implication of prompt settlement discount offered by the seller.
(2018) Vilakazi, Nicholas Vusumuzi.; Schembri, Christopher Carmelo.; Bosch, Shannon Joy.
No abstract available.
A critical analysis of the law that governs the taxation of public benefit organisations (PBOs): a case study of South Africa and Zimbabwe.
(2018) Rice, Johannes.; Schembri, Christopher Carmelo.; Bosch, Shannon Joy.
No abstract available.
A critical analysis of the retrospective introduction of tax legislation.
(2018) Campbell, David Lawrence.; Schembri, Christopher Carmelo.
No abstract available.

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