The Sasol Oil case - would the present South African GAAR stand up to the rigours of the court?

South Africa finds itself vulnerable to exploitation by the measures taken by multinational enterprises (MNEs) who seek to enter into tax avoidance schemes that artificially shift profits to low- or no-tax jurisdictions. While common law, specific and general anti-avoidance measures may be used as a defence against these schemes, there has been no judicial consideration of the current South African general anti-avoidance rule (GAAR) since its replacement in 2006. In this context this paper makes two contributions. First, the paper applies the current GAAR to a recent case where the predecessor to the current GAAR was applied to a scheme entered into by an MNE. This is done in order to determine if the current GAAR (unlike its predecessor) is able to stand up to the rigours of court when presented with similar facts. In doing so it demonstrates how the untested GAAR may be interpreted and applied. Second, the paper makes suggestions for amendment to the current GAAR in order to improve its efficacy in an international context.Some of the sections of this work are based on the author's thesis, which was submitted in accordance with the requirements for the degree of Doctor of Philosophy in Accounting at Rhodes University in 2018.http://www.tandfonline.com/loi/rsar20hj2021Taxatio

Tax research methodology for untested legislation : an exemplar for the tax scholar

Tax scholars using typical doctrinal and reform-oriented methodologies often struggle to articulate the process undertaken in their research and at the same time, these methods often require an analysis of legislation that has already been the subject of judicial inquiry. However, this raises the challenge of what method to employ in the absence of such judicial inquiry. The tax environment has become so dynamic that law reform occurs rapidly and the law has to be researched, in the absence of case law post legislative amendment. This article provides tax scholars with a methodological approach described as a structured pre-emptive analysis that overcomes this problem (in other words an adaptation of typical doctrinal reform-oriented approaches). Using an exemplar of an actual tax law problem, the paper demonstrates how to conduct rigorous research in the absence of case law dealing with legislation that is the subject of enquiry. The article makes two contributions. First, it gives transparency to the traditional doctrinal reform-oriented methods primarily used in law. Second, it illustrates a method that can be used to overcome the absence of case law.Some of the sections of this work are based on my thesis submitted in accordance with the requirements for the degree of Doctor of Philosophy in Accounting at Rhodes University in 2018.http://www.tandfonline.com/loi/rsar202020-09-21hj2020Taxatio

The South African general anti-tax avoidance rule and lessons from the first world: a case law approach

Tax avoidance has been a concern to revenue authorities since the time that the concept of tax was first introduced. Revenue authorities worldwide constantly strive to ensure taxpayer compliance, while combating impermissible tax avoidance. South Africa uses a general anti-avoidance rule (GAAR) as part of its arsenal to combat the increasingly innovative ways in which taxpayers seek to minimise their tax. However, the GAAR has been the source of much criticism and its effectiveness in combatting impermissible tax avoidance is untested in the courts. Therefore, the use of hindsight to criticise the GAAR is not possible. This study applied a qualitative approach to compare the South African, Australian and Canadian GAARs in order to propose changes which are intended to improve the efficacy of the South African GAAR. This research was performed by first comparing the three GAARs using a doctrinal research methodology and then applying the South African GAAR to the facts of selected cases from Australia and Canada in the form of reform-oriented research. In order to apply the South African GAAR to the facts of the cases a framework was developed in phase 1 of the research in order to ensure consistency in the application. This allowed for a more reliable analysis to be made regarding the areas where the South African GAAR could be improved. The convergence of results from the two research methodologies validated many of the suggestions made for the improvement of the South African GAAR This thesis examined the GAARs in South Africa, Australia and Canada with a view to identifying if there are any lessons to be learned for their application and interpretation, in order to suggest improvements which can be made to the South African GAAR. Further, relevant Australian and Canadian case law was found to be instructive as to the approach that could be adopted for purposes of applying the South African GAAR. The findings of the research revealed that while the South African, Australian and Canadian GAARs differ in their structure, each is directed to achieve the same end. The results of the study identified two types of improvements to the South African GAAR. Firstly, the South African GAAR should be consolidated into a three-part enquiry instead of the current four-part enquiry. In doing so the tainted elements (previously the abnormality requirement) could be used to inform an objective test of purpose. Secondly, guidance on areas of uncertainty regarding the application of the South African GAAR needs to be provided in order to prevent possible inconsistent judicial interpretations that may limit the efficacy of the GAAR whilst still protecting the right for taxpayers to legitimately minimise their tax burdens. One additional cause for concern highlighted in this research is the use of provisions from other jurisdictions without guidance on the application in the South African context. The use of similar provisions to that of its much-criticised predecessor has also introduced areas of uncertainty regarding the application of the South African GAAR. These areas of weakness and uncertainty arguably prevent the South African GAAR from being an effective deterrent to tax avoidance and many could be addressed by the legislature

Perceptions of online self- and peer-assessment : accounting students in a large undergraduate cohort

PURPOSE : Self-assessment (SA) and peer-assessment (PA) are considered useful tools in the development of lifelong learning and reflective skills. The authors implemented a teaching intervention using SA and PA amongst a large cohort of final year undergraduate students. The purpose of this study was to investigate students' perceptions of online SA and PA in order to understand the differences between these perceptions and to allow instructors to adopt differentiated instruction in developing a diverse student group's professional skills. DESIGN/METHODOLOGY/APPROACH : The research design adopted a mixed methods approach through the use of surveys that were administered before and after the SA and peer-assessment intervention in a taxation module taught at a large public South African university. Through the use of a series of open and closed questions students' perceptions on SA and peer-assessment were analysed both quantitatively and qualitatively. FINDINGS : The findings show that student perceptions of SA and peer-assessment differed significantly, where perceptions of SA were more positive than those towards PA. The findings indicate that SA and peer-assessment still present a challenge in an online context for large student cohorts, despite improved tracking, faster feedback and anonymity. ORIGINALITY/VALUE : The study contributes to the literature by analysing students' perceptions about SA and peer-assessment in an accounting education context and in an online setting in South Africa.http://www.emeraldinsight.com/loi/jarhehj2022Taxatio

Did New Zealand get it right? : Lessons for the South African GAAR

Tax avoidance has various harmful effects, one of which is the loss of revenue for governments. While an effective general anti-avoidance rule (‘GAAR’) may be instrumental in mitigating this risk, there is still uncertainty as to the effectiveness of the current South African GAAR and whether the latest amendments, in 2006, adequately addressed the weaknesses identified in its predecessor. This uncertainty is compounded by the fact that the current South African GAAR has never been subject to judicial enquiry in its entirety. This article seeks to identify potential weaknesses and improvements to the interpretation and application of the South African GAAR through comparison to its New Zealand counterpart.https://www.atta.network/jatta-published-editionshj2023Taxatio

Progressive tax : a proposal for customer loyalty programmes

PURPOSE : The South African Government needs to increase fiscal revenues to cater to increased government spending. This paper aims to argue that the South African Revenue Service (SARS) has an opportunity to tax the receipt of customer loyalty programme awards in the hands of customers, with little amendment to current tax legislation or administration. This provides the South African Government an opportunity to increase much needed tax revenue in spite of limited resources. DESIGN/METHODOLOGY/APPROACH : Five instrumental case studies were used and analysed from a financial reporting perspective to quantify customer loyalty points earned by customers. These can form a basis for deriving the potential benefits from the taxation of customer loyalty programmes in the retail industry. The multiple instrumental case studies used and the application of accounting guidance in International Financial Reporting Standards allow generalisations to be made to highlight the amount of customer loyalty awards granted and possible tax revenues forgone in just one sector of the South African economy. FINDINGS : Should the proposals for taxation of customer loyalty programmes be implemented, the fiscus would be able to collect over R 234.35m (US$16.91m) in tax revenue from only five companies providing customers with loyalty awards. This indicates that this proposal for taxation is critical for investigation by the South African Government, as it may aid in achieving revenue goals for South Africa. ORIGINALITY/VALUE : This paper contributes to the literature on taxation legislation within South Africa by proposing a model that may be used by the SARS to increase tax revenues to meet the Government’s needs.https://www.emerald.com/insight/publication/issn/0114-0582hj2019Taxatio

To tax or not to tax? Questioning customer loyalty programmes

South Africa, like many other countries, needs additional sources of tax revenues. Recent debate indicates that one potential source of revenue is the taxation of customer loyalty rewards in the hands of customers. The arguments for the taxation of these rewards have been put forward from a principled perspective and not from a legal basis. We argue that while the taxation of these rewards would increase tax revenue, legislative reform is required as there are strong arguments that the rewards are actually not taxable. We suggest tax reforms that attempt to provide certainty and equity in the treatment of such rewards as a whole in order to provide additional revenue for the fiscus.https://journals.co.za/content/journal/jlc_samljhj2021Taxatio