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Disposals of fixed property: timing of accrual and practical issues arising for provisional taxpayers
When fixed property is disposed of the proceeds are generally received anywhere from three months to a year after the transaction is required to be recognised for income tax purposes. A provisional taxpayer could therefore be required to declare and pay tax prior to the receipt of these proceeds and...
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| Format: | Thesis |
| Language: | English |
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Department of Finance and Tax
2020
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| _version_ | 1867613217801371648 |
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| access_status_str | Open Access |
| author | Barberton, Paul |
| author2 | Johnson, Tracy |
| author_browse | Barberton, Paul Johnson, Tracy |
| author_facet | Johnson, Tracy Barberton, Paul |
| author_sort | Barberton, Paul |
| collection | Thesis |
| description | When fixed property is disposed of the proceeds are generally received anywhere from three months to a year after the transaction is required to be recognised for income tax purposes. A provisional taxpayer could therefore be required to declare and pay tax prior to the receipt of these proceeds and therefore fund such tax from sources other than the transaction in question. The practical problem resulting from the time of accrual, and the due date of the tax payable in respect of such accrual, occurring prior to the receipt of the proceeds does not appear to have been addressed in the legislation. It is submitted that accrual date could be more closely linked to the date of transfer and receipt of the proceeds to mitigate this issue. The timing of such accruals is examined in the light of the conveyancing process, the relevant sections of the Income Tax Act, other taxes relevant in respect of disposals of fixed property, appropriate case law and accounting and SARS practices, in order to ascertain whether amendments to the Income Tax Act are justifiable. Particular attention is given to s 24(1) (“Credit agreements and debtors allowance”) following the ITC 14005 judgement which deemed the accrual to be the date of the agreement whether or not a credit agreement is extant. It is submitted that by making a few changes to the legislation, the risk of inequitable cash flow positions (and potential penalties) could be greatly reduced. While a closer alignment of tax accrual with cash receipt may have a material positive effect on taxpayers’ cash flows, the effect for SARS is arguably minimal. |
| format | Thesis |
| id | oai:open.uct.ac.za:11427/31150 |
| institution | University of Cape Town (South Africa) |
| language | eng |
| last_indexed | 2026-06-10T12:32:38.580Z |
| license_str | Not specified — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from UCTD — University of Cape Town Open Access Repository |
| publishDate | 2020 |
| publishDateRange | 2020 |
| publishDateSort | 2020 |
| publisher | Department of Finance and Tax |
| publisherStr | Department of Finance and Tax |
| record_format | dspace |
| source_str | UCTD — University of Cape Town Open Access Repository |
| spelling | oai:open.uct.ac.za:11427/31150 Disposals of fixed property: timing of accrual and practical issues arising for provisional taxpayers Barberton, Paul Johnson, Tracy finance When fixed property is disposed of the proceeds are generally received anywhere from three months to a year after the transaction is required to be recognised for income tax purposes. A provisional taxpayer could therefore be required to declare and pay tax prior to the receipt of these proceeds and therefore fund such tax from sources other than the transaction in question. The practical problem resulting from the time of accrual, and the due date of the tax payable in respect of such accrual, occurring prior to the receipt of the proceeds does not appear to have been addressed in the legislation. It is submitted that accrual date could be more closely linked to the date of transfer and receipt of the proceeds to mitigate this issue. The timing of such accruals is examined in the light of the conveyancing process, the relevant sections of the Income Tax Act, other taxes relevant in respect of disposals of fixed property, appropriate case law and accounting and SARS practices, in order to ascertain whether amendments to the Income Tax Act are justifiable. Particular attention is given to s 24(1) (“Credit agreements and debtors allowance”) following the ITC 14005 judgement which deemed the accrual to be the date of the agreement whether or not a credit agreement is extant. It is submitted that by making a few changes to the legislation, the risk of inequitable cash flow positions (and potential penalties) could be greatly reduced. While a closer alignment of tax accrual with cash receipt may have a material positive effect on taxpayers’ cash flows, the effect for SARS is arguably minimal. 2020-02-18T09:02:35Z 2020-02-18T09:02:35Z 2019 2020-02-18T08:08:23Z Master Thesis Masters MCom http://hdl.handle.net/11427/31150 eng application/pdf Department of Finance and Tax Faculty of Commerce |
| spellingShingle | finance Barberton, Paul Disposals of fixed property: timing of accrual and practical issues arising for provisional taxpayers |
| thesis_degree_str | Master's |
| title | Disposals of fixed property: timing of accrual and practical issues arising for provisional taxpayers |
| title_full | Disposals of fixed property: timing of accrual and practical issues arising for provisional taxpayers |
| title_fullStr | Disposals of fixed property: timing of accrual and practical issues arising for provisional taxpayers |
| title_full_unstemmed | Disposals of fixed property: timing of accrual and practical issues arising for provisional taxpayers |
| title_short | Disposals of fixed property: timing of accrual and practical issues arising for provisional taxpayers |
| title_sort | disposals of fixed property timing of accrual and practical issues arising for provisional taxpayers |
| topic | finance |
| url | http://hdl.handle.net/11427/31150 |
| work_keys_str_mv | AT barbertonpaul disposalsoffixedpropertytimingofaccrualandpracticalissuesarisingforprovisionaltaxpayers |