The usefulness (or otherwise) of the concept of

Driman, Robert Frank

The usefulness (or otherwise) of the concept of

Master Thesis

2014

Publisher

University of Cape Town

Department

Department of Finance and Tax

Faculty

Faculty of Commerce

Abstract

The paper discusses and traces the history of tax policy which creates the basis for the difference between illegal tax evasion, and tax avoidance (which may also be illegal). The discussion reveals the cause of ambiguities in judicial interpretation (and through this the effect of avoidance legislation) of schemes which cause tax to be avoided - which is found in policy considerations. The South African anti-avoidance common law and legislation is described. A spotlight is placed on the most subjective policy factor which is used to test for impermissible avoidance - the concept of abnormality. The NWK2 decision is examined in some detail as a useful illustrator of how the policy by which the court approaches anti-avoidance matters affects the outcome of the case - and just how subjective are policy-based tests for what is permissible or not. There is an examination of the obverse of using subjective concepts by removing them from the law. The paper finds that subjective factors while having some use - lead to uncertainty in tax planning, and states why this is undesirable. The paper does not examine in detail whether courts have a pre-judgmental approach to tax matters, but recommends that as far as possible tests in anti-avoidance measures should avoid subjective elements. A recommendation is proposed of how this may be achieved in relation to the concept of abnormality.

Description

Includes bibliographical references.

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