Browsing by Author "Taylor, Anna Louisa"
Now showing 1 - 1 of 1
Results Per Page
- Item'n Ondersoek na die benadering vir die toetsing van die besigheidsdoelwittoets in die normaliteitsvereiste van artikel 103(1) van die Inkomstebelastingwet, no 58 van 1962, soos gewysig gedurende 1996(Stellenbosch : Stellenbosch University, 1999-10) Taylor, Anna Louisa; Van Schalkwyk, C. J.; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of School of Accountancy.ENGLISH ABSTRACT: The Katz Commission made recommendations in the Third Interim Report on the general anti-avoidance legislation in section 103 of the Income Tax Act. The following recommendations were incorporated in section 103 of the Income Tax Act with effect from 3 June 1996. Subsection (b)(i) of section 103(1) was amended in order to distinguish between transactions in the context of business and other transactions, when the normality of the manner in which a transaction was carried out, is determined. An additional requirement, the so-called business purpose test, is laid down for transactions in the context of business. This business purpose test is contained in subsection (b)(i)(aa) of section 103(1) and requires that transactions in the context of business must be carried out in a manner normally employed for bona fide business purposes, other than the obtaining of a tax benefit. Subsection (6) was incorporated in section 103. This subsection prohibits the Commissioner from excercising his discretion in terms of section 89quat(3) and (3A) of the Income Tax Act, if section 103( 1) was applied to determine the liability for any tax imposed by the Income Tax Act. The purpose of this study was dual: • Firstly, it was to determine to what extent the previous approach laid down by South African case-law for the testing of normality in the case op possible tax avoidance, was expanded for the new business purpose requirement in section 103(1) of the Income Tax Act. • Secondly, the fairness and constitutionality of subsection (6) were examined. The approach laid down by South African case-law for applying the normality test in section 103(1)(b) before the 1996 amendment, as well as the interpretation of the business purpose test to the letter of the Act, was examined. This research was used to determine whether the previous approach for the application of the previous normality requirement needed to be expanded to accommodate the new business purpose test. The English approach to control tax avoidance was investigated in order to identify an approach which comprise the application of a business purpose test which can provide guidelines for the application of the new business purpose test. Recent case-law on tax avoidance was studied to determine whether the previous approach for applying the normality test was expanded to include the application of English law principles in the application of the business purpose test. The conclusion arrived at in this study is that the previous approach to applying the normality requirement was expanded. The business purpose test for transactions in the context of business, eliminates the possibility of transactions being regarded as normal, merely because it is frequently employed in the business community to avoid tax. The judgement in ITC 1606 ((CAPE 1995) 58 SATC 328) materially expanded the previous approach in applying the normality requirement. It is concluded that the principle laid down in ITC 1606, leads to the application of the English case, Furniss v Dawson, in the business purpose test of the normality requirement of section 103(1), in respect of a series of transactions. The Constitution of the Republic of South Africa (1996) and the opinions of the Katz Commission and tax specialists were studied to assess the fairness and constitutionality of subsection (6). The author concluded that subsection (6) is unfair and in contravention of the Constitution.