Full Text Available
Note: Clicking the button above will open the full text document at the original institutional repository in a new window.
An analysis of the factors leading to divergence between the tax and financial reporting classification of financial instruments issued by corporate taxpayers
Dissertation (MCom)--University of Pretoria, 2012.
Saved in:
| Other Authors: | |
|---|---|
| Format: | Thesis |
| Language: | English |
| Published: |
University of Pretoria
2014
|
| Subjects: | |
| Tags: |
No Tags, Be the first to tag this record!
|
| _version_ | 1867613654133768192 |
|---|---|
| access_status_str | Open Access |
| author2 | Venter, Elmar Retief |
| author_browse | Venter, Elmar Retief |
| author_facet | Venter, Elmar Retief |
| collection | Thesis |
| dc_rights_str_mv | © 2014 University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria. |
| description | Dissertation (MCom)--University of Pretoria, 2012. |
| format | Thesis |
| id | oai:repository.up.ac.za:2263/41565 |
| institution | University of Pretoria (South Africa) |
| language | English |
| last_indexed | 2026-06-10T12:39:34.803Z |
| license_str | Other — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from UPSpace — University of Pretoria Institutional Repository |
| publishDate | 2014 |
| publishDateRange | 2014 |
| publishDateSort | 2014 |
| publisher | University of Pretoria |
| publisherStr | University of Pretoria |
| record_format | dspace |
| source_str | UPSpace — University of Pretoria Institutional Repository |
| spelling | oai:repository.up.ac.za:2263/41565 An analysis of the factors leading to divergence between the tax and financial reporting classification of financial instruments issued by corporate taxpayers Venter, Elmar Retief Van der Merwe, Divan Financial instruments Financial reporting tax corporate tax Equity instruments Accounting classification UCTD Dissertation (MCom)--University of Pretoria, 2012. Determining with certainty how the tax authorities will treat a particular financial instrument issued is not straightforward, and this poses a risk to corporate taxpayers tasked with generating shareholder value and predictable shareholder returns. The tax classification of financial instruments, as either debt or equity instruments, may have a profound impact from a corporate taxation perspective and the reclassification of financial instruments by a tax authority, in an unanticipated manner, can alter expected tax consequences. Previous studies have placed less emphasis on the potential discrepancies between the debt or equity classification of financial instruments from a tax-versus-corporate-reporting perspective and the reasons for such potential discrepancies. This study aims to identify potential factors, giving rise to divergent financial instrument classifications between tax and financial reporting, in order to gain insight into the reasons for the potential divergence. The research objectives of the study are to determine whether there is incongruity between the tax and accounting classification of selected financial instruments; to identify the factors giving rise to a possible incongruent outcome; and to evaluate the reasons for incongruity, in order to gain insight into the differing objectives of taxation and corporate reporting. Case studies were obtained from the technical department of a large accountancy firm in South Africa to analyse specific fact patterns. It was found that incongruence exists between the financial reporting and taxation classification of financial instruments from the perspective of the issuer of those instruments. This incongruence was attributed to the impact of contingent settlement provisions and the rules-based approach adopted by tax authorities, as opposed to the principle or substance-based approach favoured by financial reporting. The incongruence noted suggests that, based on their differing objectives, financial reporting favours the classification of financial instruments as debt whilst taxation favours the classification of financial instruments as equity. Although the approaches currently followed by financial reporting and taxation are different, recent taxation amendments have incorporated financial reporting guidance into the Income Tax Act 58 of 1962. Future research can be conducted to determine the impact of aligning financial reporting and taxation principles on tax certainty from a taxpayer perspective. lmchunu2014 Taxation unrestricted 2014-08-25T07:57:06Z 2014-08-25T07:57:06Z 2014-04-01 2012 Mini Dissertation Van der Merwe, D 2014, An analysis of the factors leading to divergence between the tax and financial reporting classification of financial instruments issued by corporate taxpayers, MCom dissertation, University of Pretoria, Pretoria, viewed yymmdd <http://hdl.handle.net/2263/41565> F14/4/510/lm http://hdl.handle.net/2263/41565 en © 2014 University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria. application/pdf University of Pretoria |
| spellingShingle | Financial instruments Financial reporting tax corporate tax Equity instruments Accounting classification UCTD An analysis of the factors leading to divergence between the tax and financial reporting classification of financial instruments issued by corporate taxpayers |
| title | An analysis of the factors leading to divergence between the tax and financial reporting classification of financial instruments issued by corporate taxpayers |
| title_full | An analysis of the factors leading to divergence between the tax and financial reporting classification of financial instruments issued by corporate taxpayers |
| title_fullStr | An analysis of the factors leading to divergence between the tax and financial reporting classification of financial instruments issued by corporate taxpayers |
| title_full_unstemmed | An analysis of the factors leading to divergence between the tax and financial reporting classification of financial instruments issued by corporate taxpayers |
| title_short | An analysis of the factors leading to divergence between the tax and financial reporting classification of financial instruments issued by corporate taxpayers |
| title_sort | analysis of the factors leading to divergence between the tax and financial reporting classification of financial instruments issued by corporate taxpayers |
| topic | Financial instruments Financial reporting tax corporate tax Equity instruments Accounting classification UCTD |
| url | http://hdl.handle.net/2263/41565 |