scholarly journals Merchant cash advances: investigating the taxation consequences in South Africa

2015 ◽  
Vol 8 (2) ◽  
pp. 415-431
Author(s):  
Eduard Kilian ◽  
Rudie Nel
Keyword(s):  
South Africa ◽  
Service Provider ◽  
Income Tax ◽  
Cash Flows ◽  
Financial Service ◽  
Debit Card ◽  
Lump Sum ◽  
Gross Income

The merchant cash advance is an emerging lending product designed to address the need to maintain cash flows and is essentially the business equivalent of a “payday” loan. A lump-sum advance is made by the merchant cash advance service provider to a business (the merchant) in exchange for an agreed upon percentage of future credit and/or debit card receivables. This article investigates the taxation consequences of merchant cash advance transactions in South Africa, in an attempt to provide guidance which is currently lacking. Although it is posited that a merchant cash advance is a form of debt factoring, the income tax treatment of the initial advance and the resulting discount reflect that of a loan. Through the investigation it was determined that merchants will be able to deduct the discount and processing fees from income. The merchant cash advance service provider will include such discount and processing fee in ‘gross income’. The initial advance and any resulting discount are held to be a ‘financial service’ and therefore an exempt supply for VAT purposes, with the processing fee constituting a taxable supply.

scholarly journals Pyott case: A lasting deposit for our tax heritage

2019 ◽  
Vol 19 ◽  
pp. 47-70
Author(s):  
A C Engelbrecht ◽  
G K Goldswain ◽  
A Heyns
Keyword(s):  
South Africa ◽  
Income Tax ◽  
Rental Housing ◽  
Value Added ◽  
Point Of View ◽  
Relevant Today ◽  
Consumer Protection Act ◽  
Contingent Liability ◽  
Beneficial Ownership ◽  
Gross Income

Pyott Ltd v CIR is generally regarded as the seminal case in South Africa on the tax treatment of deposits received on containers that may be returned at a later stage for a refund. This article analyses the tax treatment of deposits, prepayments and advances from a gross income point of view, as well as the possibility of claiming a deduction for the contingent liability to refund such deposit. 6The main objective of this article is to discuss the judgment in the Pyott case and establish whether the principle enunciated that deposits,received in respect of returnable containers, are taxable in full once received, can also be extended to receipts of deposits, prepayments and advances where no returnable container is involved. 7The conclusions reached are that the principles laid down in the Pyott case are still relevant today, apart from possible relief which may now be claimed under the subsequently introduced section 24C. Where no container is involved, beneficial ownership must first be established before such deposit, prepayment or advance becomes taxable, taking into account the specific provisions of legislation such as the Rental Housing Act and the Consumer Protection Act. The research has also shown coherence in the treatment of deposits for income tax purposes and other taxes, such as value-added tax.

scholarly journals MP Finance Group CC (In Liquidation) v C: SARS: Adding to the financial hardship of victims of illegal transactions

2019 ◽  
Vol 19 ◽  
pp. 121-138
Author(s):  
J MP Venter ◽  
W R Uys ◽  
M C Van Dyk
Keyword(s):  
South Africa ◽  
Income Tax ◽  
South Africans ◽  
Contractual Relationship ◽  
The Supreme Court ◽  
Gross Income ◽  
The Republic ◽  
Definition Of ◽  
The Relationship ◽  
Court Of Appeal

This article analyses the interpretation of the phrase “received by, accrued to or in favour of” in the gross income definition of the Income Tax Act, as applied to illegal receipts. During the last few decades, South Africans have been victims of a number of Ponzi-type schemes. In MP Finance,1 the Supreme Court of Appeal considered whether illegal receipts received by the Krion Ponzi-type scheme should be included in gross income. After considering the relationship between the taxpayer and the fiscus, the court concluded that, as from a specified juncture, the taxpayer received the amount for its own benefit and it should therefore be included in gross income. The court recognised that the contractual relationship between the investor and the scheme (taxpayer) could in fact be void, resulting in the investor having a right to recover the investment from the taxpayer. The court did not consider whether the levying of income tax on amounts received by the operator of the scheme could infringe on the investor’s right to property espoused under the Constitution of the Republic of South Africa, 1996. It is submitted that the levying of tax does infringe on this right as it reduces the amount that could be recovered from the scheme because the original investment in the scheme is void.

Factors Associated with U.S. Public Companies' Investment in Internal Auditing

2005 ◽  
Vol 19 (2) ◽  
pp. 69-84 ◽  
Author(s):  
Joseph V. Carcello ◽  
Dana R. Hermanson ◽  
K. Raghunandan
Keyword(s):  
Audit Committee ◽  
Internal Audit ◽  
Cash Flows ◽  
Financial Service ◽  
Company Size ◽  
Internal Auditing ◽  
Public Companies ◽  
Ability To Pay ◽  
Factors Associated ◽  
Operating Cash Flows

Internal auditing has been the focus of much attention in recent years. This study examines factors associated with U.S. public companies' investment in internal auditing. Data from a survey administered to Chief Audit Executives of midsized U.S. public companies were supplemented with publicly available data. Based on data from 217 companies, the results indicate that total internal audit budgets (inhouse plus outsourced portions) are related to several factors associated with company risk, ability to pay for monitoring, and auditing characteristics. Specifically, we find evidence that internal audit budgets are positively related to company size, leverage, financial, service, and utility industries, relative amount of inventory, operating cash flows, and audit committee review of the internal audit budget. Total internal audit budgets are negatively related to the percentage of internal auditing that is outsourced. This study contributes to our understanding of internal audit services, and it allows companies to benchmark their investment in internal auditing.

Quality Quandaries: Deploying Operational Excellence at a Financial Service Provider

2013 ◽  
Vol 25 (3) ◽  
pp. 298-306 ◽  
Author(s):  
Jeroen de Mast ◽  
Benjamin P. H. Kemper ◽  
Astrid Wiltjer ◽  
Ronald J. M. M. Does
Keyword(s):  
Service Provider ◽  
Financial Service ◽  
Financial Service Provider ◽  
Operational Excellence

Victim Empowerment Programme in a Selected Municipality of the Eastern Cape, South Africa: Service Provider Perceptions

2012 ◽  
Vol 22 (3) ◽  
pp. 447-450
Author(s):  
Nancy Phaswana-Mafuya ◽  
Karl Peltzer ◽  
Gladys Mlambo ◽  
Seth Mkhonto ◽  
Cily Tabane
Keyword(s):  
South Africa ◽  
Service Provider ◽  
Eastern Cape ◽  
Provider Perceptions

Contingent Legal Fees on Settlements and Awards and the Calculation of Gross Income by Individuals for United States Federal Income Tax Purposes

2004 ◽  
Vol 2 (1) ◽  
pp. 1-12
Author(s):  
Michael P. Coyne ◽  
Richard Mason ◽  
John R. Mills
Keyword(s):  
Income Tax ◽  
Internal Revenue Service ◽  
Current Position ◽  
Significant Difference ◽  
The Supreme Court ◽  
Federal Income Tax ◽  
Gross Income ◽  
Legal Fees ◽  
Circuit Courts ◽  
Congressional Action

Lawsuits involving contingent legal fees are reasonably common. This paper focuses on the appropriateness of the inclusion in plaintiff's gross income for individual federal tax purposes of the portion of settlements going to attorneys for contingent legal fees. We present an example of the significant difference in taxes payable by a plaintiff under the two competing tax treatments. We also recap the current position of the various Circuit Courts on the issue using the opposing views of the Sixth to the Second and Seventh Circuits to frame a discussion of the issue and then discuss the treatment of securities classaction settlement proceeds that are apparently treated differently for tax purposes. The Supreme Court has recently granted certiorari in two cases and will be addressing the inclusion of contingent legal fees in gross income. We advocate that although taking the broader Sixth Circuit approach of excluding contingent attorney's fees on a joint endeavor theory would lead to more equitable results for plaintiffs, it would not necessarily be prudent judicial action and that the appropriate remedy to the situation may best be Congressional action, as the Internal Revenue Service has consistently favored inclusion.

The Interplay of Agents in Improvising Telecommunication Infrastructures' Services to Rural Community of South Africa

2015 ◽  
pp. 208-225
Author(s):  
Sharol Mkhomazi
Keyword(s):  
South Africa ◽  
Rural Communities ◽  
South African ◽  
Service Provider ◽  
Rural Areas ◽  
Service Providers ◽  
Telecommunication Network ◽  
Structuration Theory ◽  
Telecommunication Service ◽  
Network Service Provider

The deployment of telecommunication infrastructures is a challenge in many parts of South Africa particularly in the rural areas. The challenge has impact of communities' members as they do not have network coverage for Internet in some areas. The challenge gets worse with individual telecommunication service provider. Hence there is technological proposal for sharing of infrastructure by the service providers. However, the sharing of infrastructure is not as easy as notion by many individuals and groups institutions included. The article presents findings from a study on how a South African telecommunication network service provider could deploy shared infrastructures in the country's rural communities. The sharing of infrastructure is described by the structure and actions of agents within the infrastructure sharing process. Structuration theory was employed as a lens in the data analysis. The key findings include insufficient distribution of infrastructure, ownership responsibility, competitiveness, infrastructure deployment cost, and signification of regulation.

Sign in / Sign up

Export Citation Format

Share Document