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The imputability of ‘income on income’ under section 7(3) of the Income Tax Act
Thesis (MAcc)--Stellenbosch University, 2019.
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| Format: | Thesis |
| Language: | en_ZA |
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Stellenbosch : Stellenbosch University
2019
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| _version_ | 1867613950631215104 |
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| access_status_str | Open Access |
| author | Warffemius, Petra |
| author2 | Van Heerden, Linda |
| author_browse | Van Heerden, Linda Warffemius, Petra |
| author_facet | Van Heerden, Linda Warffemius, Petra |
| author_sort | Warffemius, Petra |
| collection | Thesis |
| dc_rights_str_mv | Stellenbosch University |
| description | Thesis (MAcc)--Stellenbosch University, 2019. |
| format | Thesis |
| id | oai:scholar.sun.ac.za:10019.1/106997 |
| institution | Stellenbosch University (South Africa) |
| language | en_ZA |
| last_indexed | 2026-06-10T12:44:17.380Z |
| license_str | Other — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from SUNScholar — Stellenbosch University Repository |
| publishDate | 2019 |
| publishDateRange | 2019 |
| publishDateSort | 2019 |
| publisher | Stellenbosch : Stellenbosch University |
| publisherStr | Stellenbosch : Stellenbosch University |
| record_format | dspace |
| source_str | SUNScholar — Stellenbosch University Repository |
| spelling | oai:scholar.sun.ac.za:10019.1/106997 The imputability of ‘income on income’ under section 7(3) of the Income Tax Act Warffemius, Petra Van Heerden, Linda Stellenbosch University. Faculty of Economic and Management Sciences. School of Accountancy. Taxation -- South Africa Income tax -- South Africa Income tax -- Law and legislation -- South Africa UCTD Thesis (MAcc)--Stellenbosch University, 2019. AFRIKAANSE OPSOMMING: Artikel 7(3) van die Inkomstebelastingwet, is ʼn teenvermydingsbepaling wat ontwerp is om die integriteit van Suid-Afrika se progressiewe normale belastingkoers-struktuur te beskerm deur inkomsteverdelingsreelings tussen ouers en hul minderjarige kinders teen te werk. Ingevolge artikel 7(3) word die oortredende inkomstes van minderjarige kinders aan hul skenker-ouers toegereken, met die gevolg dat sodanige inkomste aan die skenker-ouer se normale belastingkoers onderhewig is. Die oortredende inkomstes wat hier ter sprake is, is daardie inkomstes wat ‘uit hoofde van’ enige skenking, oormaking of ander beskikking wat deur die skenker-ouer gemaak is aan die minderjarige kind toeval of deur hom of haar ontvang word. Die geskiedenis wys dat die bepaling van of die inkomste van minderjarige kinders ‘uit die hoofde van’ ʼn skenking, oormaking of ander beskikking van hul ouers is, ʼn twispunt is, veral in gevalle van sogenaamde ‘inkomste op inkomste’. ʼn Dogmatiese navorsingsmetodologie word gebruik om te bepaal of die behoorlike uitleg van die sinsdeel ‘uit hoofde van’ aandui dat ‘inkomste op inkomste’ aan skenker-ouers ingevolge artikel 7(3) van die Inkomstebelastingwet toerekenbaar is, al dan nie. Die howe het die betekenis van die sinsdeel ‘uit hoofde van’ in beide Kohler v Commissioner for Inland Revenue 16 SATC 312 en Commissioner for Inland Revenue v Widan 19 SATC 341 geinterpreteer ten einde die toerekenbaarheid van ‘inkomste op inkomste’ te bepaal. Die voormelde uitsprake het uiteenlopende resultate gelewer met die gevolg dat daar onsekerheid oor die heersende uitleg van die sinsdeel ‘uit hoofde van’ is. Hierdie studie bevind dat die Hoogste Hof van Appel in Commissioner for Inland Revenue v Widan 19 SATC 341 die ratio van Kohler v Commissioner for Inland Revenue 16 SATC 341, in effek verwerp en ongedaan gemaak het. Die uitsprake in beide bovermelde sake is voor 1996 gelewer en daarom voor die inwerkingtreding van artikel 39(2) van die Grondwet. Artikel 39(2) van die Grondwet het ʼn deurdringende uitwerking op die wyse waarop wetgewing uitgele moet word gehad. Die uitwerking van artikel 39(2) van die Grondwet is sodanig dat daar moontlik van die bindende presedent in Commissioner for Inland Revenue v Widan 19 SATC 341 neergele is, wegbeweeg mag word. Hierdie studie identifiseer en bespreek die ‘praktiese en inklusiewe metode’ van uitleg, vir die doeleindes van die uitleg van wetgewing ooreenkomstig artikel 39(2) van die Grondwet. Die ‘praktiese en inklusiewe metode’ van uitleg word toegepas om die sinsdeel ‘uit hoofde van’ te herinterpreteer, met die oog op die bevestiging of die heersende regsprekende uitleg van daardie sinsdeel met artikel 39(2) van die Grondwet versoenbaar is. Hierdie studie bevind daaropvolgend dat die Hoogste Hof van Appel se uitleg van die sinsdeel ‘uit hoofde van’ in Commissioner for Inland Revenue v Widan 19 SATC 341, waarskynlik aan artikel 39(2) van die Grondwet voldoen en dat die voortgesette staat maak op die ratio van hierdie uitspraak geregverdig is. Hierdie studie kom uiteindelik tot die gevolgtrekking dat die sinsdeel ‘uit hoofde van’ aandui dat ‘inkomste op inkomste’ aan skenker-ouers ingevolge artikel 7(3) van die Inkomstebelasting toegereken kan word maar dat dit nie noodwendig toerekenbaar is nie. ENGLISH SUMMARY: Section 7(3) of the Income Tax Act is an anti-avoidance provision that is designed to protect the integrity of South Africa’s progressive normal tax rate structure by countering income-splitting arrangements between parents and their minor children. Under section 7(3) the offending incomes of minor children are imputed to their donor parent, with the result that the income is subject to the donor parent’s normal tax rate. The offending incomes in question, are those that have been derived by the minor children ‘by reason of’ any donation, settlement or other disposition of their donor parent. Determining whether such incomes have been derived ‘by reason of’ their parent’s donation, settlement or other disposition has historically been a point of contention, especially in cases concerning so-called ‘income on income’. A doctrinal research methodology is adopted with the view of determining whether or not the proper construction of phrase ‘by reason of’ causes ‘income on income’ to be imputable to donor parents under section 7(3) of the Income Tax Act. The courts have interpreted the phrase ‘by reason of’ with the view of determining the imputability of ‘income on income’ in Kohler v Commissioner for Inland Revenue 16 SATC 312 and Commissioner for Inland Revenue v Widan 19 SATC 341. The aforementioned cases had divergent outcomes, which has created uncertainty as to what the reigning judicial interpretation of the phrase ‘by reason of’ is. This study finds that the Supreme Court of Appeal in Commissioner for Inland Revenue v Widan 19 SATC 341 effectively rejected and overturned the ratio of Kohler v Commissioner for Inland Revenue 16 SATC 341. The judgements in both of the aforementioned cases were delivered pre-1996 and therefore prior to the inception of section 39(2) of the Constitution. Section 39(2) of the Constitution has had a pervasive effect on the manner in which statutes are required to be construed. The impact of section 39(2) of the Constitution is such that it could influence a departure from the binding legal precedent established in Commissioner for Inland Revenue v Widan 19 SATC 341. This study identifies and discusses the ‘practical and inclusive method’ of interpretation for the purposes of interpreting statutes in conformity with section 39(2) of the Constitution. The ‘practical and inclusive method’ of interpretation is applied to re-interpret the phrase ‘by reason of’ with the view of confirming whether or not the reigning judicial interpretation of the phrase ‘by reason of’ conforms to section 39(2) of the Constitution. This study subsequently finds that the Supreme Court of Appeal’s interpretation of the phrase ‘by reason of’ in Commissioner for Inland Revenue v Widan 19 SATC 341 probably conforms to section 39(2) of the Constitution and that continued reliance on the ratio of that case is justified. This study ultimately concludes that the phrase ‘by reason of’ indicates that ‘income on income’ can be but is not necessarily imputable to a donor parent under section 7(3) of the Income Tax Act. Masters 2019-08-19T07:35:55Z 2019-12-11T06:42:22Z 2023-01-04T03:00:12Z 2019-12 Thesis http://hdl.handle.net/10019.1/106997 en_ZA Stellenbosch University ix, 97 pages : illustrations application/pdf Stellenbosch : Stellenbosch University |
| spellingShingle | Taxation -- South Africa Income tax -- South Africa Income tax -- Law and legislation -- South Africa UCTD Warffemius, Petra The imputability of ‘income on income’ under section 7(3) of the Income Tax Act |
| title | The imputability of ‘income on income’ under section 7(3) of the Income Tax Act |
| title_full | The imputability of ‘income on income’ under section 7(3) of the Income Tax Act |
| title_fullStr | The imputability of ‘income on income’ under section 7(3) of the Income Tax Act |
| title_full_unstemmed | The imputability of ‘income on income’ under section 7(3) of the Income Tax Act |
| title_short | The imputability of ‘income on income’ under section 7(3) of the Income Tax Act |
| title_sort | imputability of income on income under section 7 3 of the income tax act |
| topic | Taxation -- South Africa Income tax -- South Africa Income tax -- Law and legislation -- South Africa UCTD |
| url | http://hdl.handle.net/10019.1/106997 |
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