An evaluation of the income tax treatment of client loyalty programme transactions by South African suppliers
Date
2015-04
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
AOSIS
Abstract
The popularity of client loyalty programmes has increased drastically over the past few years, with more than 100 suppliers in South Africa currently making use of them. Despite the fact that client
loyalty programmes have been prevalent in South Africa since the 1980s, the South African Revenue Service has issued no specific guidance on the income tax treatment of client loyalty programme
transactions. The main objective of the research was to determine whether South African client loyalty programme suppliers treat client loyalty programme transactions correctly for income tax
purposes. In order to meet this objective, available local and international literature were analysed to determine the proposed income tax treatment of a client loyalty programme transaction expenditure incurred by supplier for purposes of the client loyalty programme. The proposed correct income tax treatment was compared with a survey circulated to a population of client loyalty programme suppliers in South Africa. The comparison indicated that in practice the Income Tax Act No. 58 of 1962 is treated differently from the proposed treatment. This incorrect tax treatment could result in possible financial loss to the client loyalty programme supplier as taxpayer.
Description
CITATION: Brink, S. M. 2015. An evaluation of the income tax treatment of client loyalty programme transactions by South African suppliers. Journal of Economic & Financial Sciences, 8(1):145-164.
The original publication is available at https://jefjournal.org.za
The original publication is available at https://jefjournal.org.za
Keywords
Customer loyalty programs -- Taxation -- South Africa
Citation
Brink, S. M. 2015. An evaluation of the income tax treatment of client loyalty programme transactions by South African suppliers. Journal of Economic & Financial Sciences, 8(1):145-164.