Year Test 1 Flashcards
Describe the legislative process
- Start at Green Paper
- To White Paper
- To Draft Money Bill
- To Act of Parliament
Explain “Green” and “White” paper
- Green Paper
- A policy doc intended for public discussion
- It sets out the Government Department’s general view of a matter under consideration - White Paper
- The more refined version of the Green Paper
- It may be subject to further r commentary and discussions before it can becomes the Draft Money Bill
Describe the Draft Money Bill
- It should be prepared by National Treasury and submitted to Minister of Finance
- Once Cabinet approve it, it must be reviewed by State Law Advisors to ensure it does not contradict any current legislation
- Once approved by State Law Advisors, it is introduced in Parliament by Min. of Finance
Differentiate btwn Equity and Equality
- Equity
- Refers to the quality of being fair and impartial
- Requires fairness in the way people are treated
- (EG: Progressive tax systems, VAT system) - Equality
- Is a situation where taxes should equally affect all members in a group of ppl who share the same economic circumstances
- (EG: Tax brackets in progressive tax systems, VAT itself)
Explain what happened Before, During and After the Boston Tea Party
- Before
- The 13 Colonies objected to the very idea of being taxed - During
- The Colonists threw the tea sent by England to them in the Boston harbour - The agreement among the Colonies brought them together to fight for independence
What are the dimension of equity and explain each
- Vertical Equity
- Different levels of income should be taxed differently - Horizontal Equity
- The same levels of income should be taxed the same - Individual Equity
- Same level of income should be taxed differently depending on the individual TPs circumstances
The term “ordinarily resident” is not defined in the Income Tax Act, so what factors do the courts consider when deciding a TP is ordinarily resident or not
- The degree of continuity
- The mode of of life of a TP
- The TPs physical presence
- The TPs intention of being in the country
What are the 2 cases that dealt with Ordinary Reseidene
- Cohen v CIR
- CIR v Kuttel
What does Cohen v CIR say about ordinary residence
A TPs “ordinary residence would be the country they would naturally and as a matter of course return to from their wanderings”
What does CIR v Kuttel say about ordinary residence
“Natural and ordinary meaning of ordinarily resident was that a person must be habitually and normally resident in the country, apart from temporary absence of long/short duration”
What are the requirements for a TP to be a resident by the Physical Presence Test
- Present for more than 91 days in the current year, AND
- Present for more than 91 days in each of the previous 5yrs
- Spent 915+ days in total in the country in the last 5yrs
- However, the TP must not have been continuously absent from South Africa for a period of at least 330 consecutive days
Can a TP be a resident in more than 1 country
Yes, BUT only ordinarily resident in 1
Define the following common law principles
- Audi alteram partem
- Contra fiscum
- Cassus omissus
- Substance over form
- Audi alteram partem
- Listen to the other side…each party must be heard - Contra fiscum
- States if a statute of a reading is ambiguous, a decision will be made in favour of the taxpayer - Cassus omissus
- States if a situation is omitted or not provided for by statute, it will be governed by the common law principles. - Substance over form
- States TXs should reflect their economic substance rather than merely their legal form
Define progressive, proportional and regressive tax rate structures
- Progressive tax
- As TB increases, the tax rate increases - Proportional tax
- Tax rate does not change - Regressive tax
- As TB decreases, tax rate increases
What are principles of a good tax system
- Equality principle
- Simplicity principle
- Convenience principle
- Economic efficiency principle
- Administrative efficiency principle
- Certainty principle
Rebates =
- Primary
= 17 235 - Secondary (mense 65+)
= 9 444 - Tertiary (mense 75+)
= 3 145
What is Output VAT
- Tax charged by a vendor on supply of goods/services produced by him
What is Input VAT
- VAT claimable if the purchased goods/services will be used to produce taxable supplies
In calculating VAT payable/receivable what do you do?
Take VAT Output and MINUS Input VAT
What are examples of 0 rated VAT items
- Exports
- Fuels
- Basic foods
- Paraffin
What are examples of items exempt from VAT
- Int on back acc
- Educational services provided by an approved educational institution
- Residential rental accommodation
- Public road and rail transport
- Membership to EE orgs (eg Trade unions)
- Creche or after school care
Items that are denied Input VAT
- Entertainment
- Passenger vehicles
- Club subscriptions
- 2nd hand goods
