School of Accountancy

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This Department was known as the Department of Accounting until 27 June 2013.

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Browsing School of Accountancy by Author "Badenhorst, David Frederick"

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    ‘n Kritiese ontleding van die inkomstebelastinghantering van voortydige beeindigingsboetes ingevolge huurooreenkomste
    (Stellenbosch : Stellenbosch University, 2012-03) Badenhorst, David Frederick; Willemse, L. C.; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Accouncy.
    ENGLISH ABSTRACT: Leases are common phenomena in the South African and international business arena. Leasing is a popular and often cheaper method to obtain the use of property without the property being acquired. Included in property is immovable, movable, tangible and intangible property. The premature termination of lease agreements are also a common phenomenon in the South African and international business arena. When a lease is terminated prematurely, it is currently the practice that the person who terminates the lease agreement has to pay a termination penalty to the other party of the lease agreement. A lease agreement can however be terminated by either the lessee or the lessor. When both the paying and receiving parties assess their income tax liabilities, they may be confronted with the issue of how the payment or receipt of the termination penalty should be treated for income tax purposes. In practice there currently exists uncertainty whether the penalty should be treated as revenue- or capital in nature. The nature of this penalty depends on the background facts and must be judged individually on the basis of the guidelines approved by the courts laid down with respect to the issue of income versus capital. For this issue to be satisfactorily answered, the income tax treatments of lease termination penalties in Australia, Canada and the United States of America are investigated. The purpose of this study is to find guidelines, tools and principles to be used in a South African context, which may lead to the efficient and careful handling of lease termination penalties for South African tax purposes. The treatment of a lease termination penalty under current South African tax legislation is also studied.