Introduction of Mark-to-Market (fair value) taxation in South Africa

Abstract

This study examines the annual fair value taxation of financial instruments in respect of banks and brokers (defined as “covered person” in section 24JB of the Act) in accordance with the South African Income Tax Act (“the Act”). A “covered person” is taxed in accordance with accounting principles of International Financial Reporting Standards (“IFRS”) 9. This study investigated whether the adoption of accounting principles in section 24JB of the Act could give rise to divergent interpretations and inappropriate treatments. The study also examined how other countries tax financial instruments and how those tax rules are aligned to accounting principles. This, to identify similarities and differences, to highlight possible improvements to section 24JB of the Act. It was concluded in this study that, without proper guidance, the adoption of accounting principles in section 24JB of the South African tax legislation could give rise to divergent interpretations and inappropriate applications.

In hierdie studie is ondersoek ingestel na die jaarlikse billikewaarde-belasting van finansiële instrumente ten opsigte van banke en makelaars (omskryf as “gedekte persoon” in artikel 24JB van die Wet) ingevolge die Suid-Afrikaanse Inkomstebelastingwet (“die Wet”). ’n “Gedekte persoon” word belas ooreenkomstig die rekeningkundige beginsels van Internasionale Finansiële Verslagdoeningstandaarde (“IFVS”) 9. Hierdie studie het ondersoek of die ingebruikneming van rekeningkundige beginsels in artikel 24JB van die Wet kan aanleiding gee tot uiteenlopende interpretasies en onvanpaste toepassings. In die studie is daar ook gekyk hoe ander lande finansiële instrumente belas en hoe daardie belastingreëls in ooreenstemming gebring word met rekeningkundige beginsels. Dit is gedoen om ooreenkomste en verskille te identifiseer, om moontlike verbeteringe aan artikel 24JB van die Wet uit te wys. Die gevolgtrekking van hierdie studie was dat, sonder behoorlike leiding, die toepassing van rekeningkundige beginsels in artikel 24JB van Suid-Afrikaanse belastingwetgewing kan lei tot uiteenlopende interpretasies en onvanpaste toepassings.

Lolu cwaningo luhlole intela yenani elifanelekile lonyaka lamathuluzi ezezimali maqondana namabhange nabadayisi (okuchazwa “njengomuntu okhaviwe” esigabeni 24JB soMthetho) ngokuvumelana noMthetho Wentela yaseNingizimu Afrika (“uMthetho”). “Umuntu okhaviwe” ukhokhiswa intela ngokuhambisana nezimiso zokubala Amazinga Okubika Ngezezimali Wamazwe Ngamazwe (“IFRS”) 9. Lolu cwaningo luphenye ukuthi ukwamukelwa kwezimiso zokubalwa kwezimali esigabeni 24JB soMthetho kungase kubangele ukuhunyushwa okuhlukene kanye nokuphathwa ngendlela engafanele. Ucwaningo luphinde lwahlola ukuthi amathuluzi amanye amazwe ezezimali anentela kanjani nokuthi leyo mithetho yentela ihambisana kanjani nezimiso zokubala. Lokhu, ukuhlonza ukufana nokwehluka, ukugqamisa ukuthuthukiswa okungenzeka kwesigaba 24JB soMthetho. Kulolu cwaningo kwaphethwa ngokuthi, ngaphandle kwesiqondiso esifanele, ukwamukelwa kwezimiso zokubalwa kwezimali esigabeni 24JB somthetho wentela waseNingizimu Afrika kungase kubangele ukuhunyushwa okuhlukene kanye nezicelo ezingafanele.