Masters Degrees (Taxation)

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The interface between capital gains tax and estate duty and the double tax implications thereof.
(2014) Ramson, Varshani.; Schembri, Christopher Carmelo.
This study, called, “The Interface between Capital Gains Tax (CGT) and Estate Duty and the Double Tax Implications thereof” examined the interface between CGT and Estate Duty in South Africa, the double tax implications thereof, and whether these were mitigated by legislation in any manner, and, where it had not been addressed by legislation, to suggest ways in which it could be mitigated. The study emerged from a concern that the current legislation does not function optimally to provide sufficient relief or remedies to a taxpayer affected by double taxation, or where one asset is subject to tax twice. CGT, which is governed by the Eighth Schedule of the Income Tax Act, forms part of Income tax and is levied on all capital losses and capital gains by individuals, trusts and companies unless specifically exempt. Estate Duty is a separate tax governed by the Estate Duty Act and is levied and collected from the estate of every person who dies after the date of enactment. It is submitted that the operation of CGT has a similar purpose to that of the operation of Estate Duty or Donations Tax, and thus there is an avenue for double taxation. The interface between these taxes appears to occur at death of an individual. This is because death constitutes a disposal for CGT purposes, and estate duty is also levied on the deceased estate. The death of a person triggers a deemed disposal for capital gains tax purposes and therefore it impacts the liquidity of the deceased estate, together with the estate duty. Therefore, this dissertation undertakes an exploration of the effect of levying both taxes on death. The following key question is asked: Are there any double tax implications in the interface between CGT and estate duty; and if so, how does legislation mitigate these implications? The following sub-questions emanating from the key question are: How does CGT operate? How does Estate Duty operate? Are there any overlaps in the operation of these two taxes? Are these overlaps in the legislation cause for double tax? Does the legislation mitigate these overlaps? If not, how can these implications be mitigated? Alternate taxation models of the United Kingdom and Australia are examined for their viability for South Africa. It is suggested that the phenomenon of double taxation in South Africa remains a fundamental unfairness to the taxpayer. It is proposed that Estate Duty should be abolished and other possible tax collection alternatives, like increasing the CGT rate, should be adopted, with continued reformation of the CGT system thereafter. While the necessity of greater planning and more time is acknowledged, it is submitted that the challenges South Africa may face in attaining an equitable system in the short term, will be outweighed by the benefits to both the fiscus and taxpayers alike, in the long run.
Taxation in South Africa and the use of trusts as an effective estate planning and tax saving mechanism.
(2015) Hussain, Mohamed Raees.; Schembri, Christopher Carmelo.
The Income Tax Act, 58 of 1962 provides for the taxation of income, capital gains as well as donations which are received by, accrued to, or in favour of natural persons, companies as well as trusts however there are also other Acts which cater for the various other taxes and duties which include amongst others, the Estate Duty Act, 45 of 1955; the Transfer Duty Act, 40 of 1949 and the Value-Added Tax Act, 89 of 1991. The use of trusts in South Africa is still relatively young, so much so, that despite this tool being brought to South Africa by the 1820 English Settlers, the first South African case to deal with its validity occurred in 1915, in the case of Estate Kemp v Mc Donald’s Trustee, which case then led to the incorporation of trusts into South African Law. The taxation of trusts is an ever increasing concern for the Taxman as trusts have been used and are still to an extent being used as a vehicle for the avoidance of the various taxes and duties that exist in South Africa today. The avoidance of taxes and duties is not in itself unlawful save for where the Taxpayer seeks to achieve this avoidance through means explicitly forbidden by the Taxman; this phenomenon is referred to Tax evasion. The avoidance of taxes and duties, ultimately its evasion has led to the Taxman creating and enacting legislative provisions to counter and combat the attempts made at doing so, these are commonly known as the anti-avoidance measures of which exist both general and specific measures. These provisions have made it increasingly more difficult for the honest Taxpayer to lawfully minimise his taxes and duties, however the minimisation of some of these taxes and duties are not entirely unattainable. Estate planning and the use of a trust as a mechanism to achieve certain objectives, one of which is the minimisation of these taxes and duties has occurred and still continues to occur in today’s society. A well prepared estate plan wherein a trust is utilized by the Taxpayer (Estate planner), can still legally result in the minimisation of certain taxes and duties which ultimately is a major objective.
The taxation of trusts in South Africa with emphasis on the capital gains tax and estate planning implications of various transactions concluded by a trust.
(2014) Moodley, Devakalyani.; Schembri, Christopher Carmelo.
For years trusts have been at the fore front of speculation and scandal. As an effective tool in estate planning, trusts have allowed many to structure their estates in a way which is the most beneficial for themselves and also saves on taxation. In light of the continuous use of trust in estate planning, the taxation of trust have recently come under fire as a tool used by many to avoid tax and to hide assets. In the 2013 budget speech Treasury announced a desired to tighten the reins on the taxation of trust so as to weed out abuse and misuse. One proposed way to achieve this is the doing away of the conduit principle. This has both normal tax and capital gains tax implications. The aim of this dissertation is to investigate how trusts are taxed in South Africa, more specifically the capital gains tax implications of transactions concluded by a trust, when a trust is used as an estate planning tool. This will enable us to identify the most viable way to structure one’s estate and to hold assets, from both a normal tax and capital gains tax perspective. In conducting my research the relevant sections of the Income Tax Act 58 of 1962 will be examined. The implications of those sections on transactions concluded by a trust will also be discussed. On account of the fact that South Africa has developed its capital gains tax legislation based on the legislation used in Australia, an analysis of the recent development of the taxation of trusts in Australia will be looked. This will be done in order to identify any possible lessons South Africa may take away from these developments in Australia. What the research has shown is that despite Treasury’s push to impose stricter legislation in respect of the taxation of trusts, trusts will still have a place in estate planning. The advantages which the use of trusts offer seem to out way the consequences which come with Treasury’s proposed change. As far as the lessons to be learnt from Australia. South Africa has currently followed in Australia’s shoes with the implementation of the new detailed tax return for trusts. Alternatives to the doing away with estate duty and the conduit principle should also be looked at, for instance a more refined conduit principle which applies to specific tax types as Australia has done. May be what needs to be looked at are the problems experienced by Australia and ways in which South Africa can avoid experiencing the same problems.

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Browsing Masters Degrees (Taxation) by Subject "Capital gains tax."