Module One: Introduction to Taxation, Tax landscape and strategy
• Taxation is when the state collects funds to pay for
o Administration
o Benefits for residents
• Maxims of Taxation
o Equity o Convenience
o Certainty o Economy
• Role players that influence the tax landscape in SA
o Legislation o Professional bodies (give tax
o Parliament (make legislation) assistance to public)
o SARS (collects tax) o Taxpayers
o National treasury (manages o International tax policy
gov finances[budget]) organisations (help
o Tax review committees development of tax policies)
(assess SA tax policies)
• Normal tax is the focus of this course
• Other types of taxes
o Direct o Indirect
▪ Normal ▪ VAT
▪ Estate duty ▪ Transfer duty
▪ Donations ▪ Securities transfer tax
▪ Dividends ▪ Customs and excuse
▪ Skills development duty
levies
• Tax strategies are important to help you pay tax
o Tax avoidance > Tax evasion
Taxable Income framework
Rebates: primary- 14 958, 65+ 8 199, 75+ 2 736
Gross income
Less: exempt income
Income
Less: deductions
Add: taxable capital gain
Taxable income
Tax per tax tables
Less: rebates
, Normal tax
Less: provisional tax
Less: employees’ tax
Normal tax Liability
Module Two: Interpretation of statute and Gross income
Submodule One: Interpretation of statute and the general gross income definition
• Gross income is the first line of the taxable income framework.
• Gross income: In any YOAi
o The total amount in cash or otherwise
o Received by or accrued to
▪ Worldwide (resident)
▪ From an SA source (non-resident)
o Not of a capital nature
• Total amount in cash or otherwise
o Amount includes incorporeal things (SARS has onus of proving what that amount
is)
o Amount has ascertainable monetary amount
• Received by
o Amount received by taxpayer for their own benefit and on their own behalf
o If illegal, received by if it was intended to be received for their own benefit
o Incl deposits that are received (not in a separate account)
▪ Can get deduction if they are refunded
o Not incl receipts from gift cards unless they are used or have expired
▪ Benefit is for the owner of the gift card and not the issuer
• Accrued to
o To be entitled to payment
o To accrue means to be unconditionally entitled to something
o Value of accrual is the market value of the asset received or the face value of a
debt (PV)
• If income is disposed after accrual (not on a legal obligation), it is still included in gross
income
• Use SIOPAC when answering discussion questions
o Note there may be more than one issue
, o You get one onus mark
o Conclude in a way that makes sense with your argument
Submodule Two: The general gross income definition, Residence and Source
• Not of a capital nature
o Determined by intention of taxpayer
▪ Intention at acquisition can either be speculative (profit making scheme)
or investment (to earn a return)
▪ Intention can change does NOT include
• Realizing at best advantage
• Selling at a profit
• Selling an asset
o Using a realization company does not change intention
o Onus on taxpayer to prove something is capital in nature
o Damages for capital asset = capital in nature, for loss of profits = revenue in
nature
o If contract is so crucial it would cripple company, amount received to cancel it is
capital (even though such amounts are usually revenue)
o Fortuitous gains such as gifts, inheritance, prizes and donations are capital in
nature.
o Sporadic gambling is capital, professional is revenue (can also get deductions)
• Illegal business
o If amount was received for their benefit falls under gross income
o If income was taxable, should also allow deductions as if income was legal
• Residence – use IPAC
• Natural person can be resident by being ordinarily resident or meeting PPT.
o Can only be ordinarily resident in one country
▪ Intention to return from wanderings
▪ Habitually and normally resident
▪ If met, apportion for time in country
o PPT only applied when someone is no longer ordinarily resident
▪ >91 days in current year AND
▪ >91 days in each of the preceding 5 years AND
▪ >915 days on aggregate in the preceding 5 years
▪ If PPT met, treat as resident from beginning of YOA
▪ Cease to be resident if leave for 300+ days (YOA ends day before leaving
• Taxation is when the state collects funds to pay for
o Administration
o Benefits for residents
• Maxims of Taxation
o Equity o Convenience
o Certainty o Economy
• Role players that influence the tax landscape in SA
o Legislation o Professional bodies (give tax
o Parliament (make legislation) assistance to public)
o SARS (collects tax) o Taxpayers
o National treasury (manages o International tax policy
gov finances[budget]) organisations (help
o Tax review committees development of tax policies)
(assess SA tax policies)
• Normal tax is the focus of this course
• Other types of taxes
o Direct o Indirect
▪ Normal ▪ VAT
▪ Estate duty ▪ Transfer duty
▪ Donations ▪ Securities transfer tax
▪ Dividends ▪ Customs and excuse
▪ Skills development duty
levies
• Tax strategies are important to help you pay tax
o Tax avoidance > Tax evasion
Taxable Income framework
Rebates: primary- 14 958, 65+ 8 199, 75+ 2 736
Gross income
Less: exempt income
Income
Less: deductions
Add: taxable capital gain
Taxable income
Tax per tax tables
Less: rebates
, Normal tax
Less: provisional tax
Less: employees’ tax
Normal tax Liability
Module Two: Interpretation of statute and Gross income
Submodule One: Interpretation of statute and the general gross income definition
• Gross income is the first line of the taxable income framework.
• Gross income: In any YOAi
o The total amount in cash or otherwise
o Received by or accrued to
▪ Worldwide (resident)
▪ From an SA source (non-resident)
o Not of a capital nature
• Total amount in cash or otherwise
o Amount includes incorporeal things (SARS has onus of proving what that amount
is)
o Amount has ascertainable monetary amount
• Received by
o Amount received by taxpayer for their own benefit and on their own behalf
o If illegal, received by if it was intended to be received for their own benefit
o Incl deposits that are received (not in a separate account)
▪ Can get deduction if they are refunded
o Not incl receipts from gift cards unless they are used or have expired
▪ Benefit is for the owner of the gift card and not the issuer
• Accrued to
o To be entitled to payment
o To accrue means to be unconditionally entitled to something
o Value of accrual is the market value of the asset received or the face value of a
debt (PV)
• If income is disposed after accrual (not on a legal obligation), it is still included in gross
income
• Use SIOPAC when answering discussion questions
o Note there may be more than one issue
, o You get one onus mark
o Conclude in a way that makes sense with your argument
Submodule Two: The general gross income definition, Residence and Source
• Not of a capital nature
o Determined by intention of taxpayer
▪ Intention at acquisition can either be speculative (profit making scheme)
or investment (to earn a return)
▪ Intention can change does NOT include
• Realizing at best advantage
• Selling at a profit
• Selling an asset
o Using a realization company does not change intention
o Onus on taxpayer to prove something is capital in nature
o Damages for capital asset = capital in nature, for loss of profits = revenue in
nature
o If contract is so crucial it would cripple company, amount received to cancel it is
capital (even though such amounts are usually revenue)
o Fortuitous gains such as gifts, inheritance, prizes and donations are capital in
nature.
o Sporadic gambling is capital, professional is revenue (can also get deductions)
• Illegal business
o If amount was received for their benefit falls under gross income
o If income was taxable, should also allow deductions as if income was legal
• Residence – use IPAC
• Natural person can be resident by being ordinarily resident or meeting PPT.
o Can only be ordinarily resident in one country
▪ Intention to return from wanderings
▪ Habitually and normally resident
▪ If met, apportion for time in country
o PPT only applied when someone is no longer ordinarily resident
▪ >91 days in current year AND
▪ >91 days in each of the preceding 5 years AND
▪ >915 days on aggregate in the preceding 5 years
▪ If PPT met, treat as resident from beginning of YOA
▪ Cease to be resident if leave for 300+ days (YOA ends day before leaving
