TAX2601 LATEST EXAM PACK with All the Answers 2021 Update

MODULE NOTES Introduction As Benjamin Franklin once part it “if you do not want to be taxed, never get born.” Governments exist to fill the void that would exist if everything was left to private individuals. No one would concerned with other people’s issues so long as it does not affect them. Think of goods like provisions of road and e-toll, if you can pay you will not be able to use the road governments exist so that everyone in society is concerned for. To provide those essential services government need money to do that and governments get their money through taxation, which is part of the laws government use. To be proficient in taxation are needs to understand the law and how the various governmental agencies apply them and how courts interpret those laws whenever a question of the law arises between a person and the Governmental agencies charged with Enforcing those laws. Tax laws are enforced by SARS through the commissioner. The Laws of the country are subject to the Constitution of the South Africa and the Bill of Rights of South Africa, that is all Laws and regulations must obey the spirit of the Constitution or they will be void. Law are enacted by parliament after they have been debated as bills, after they have been enacted by parliament they are signed by the President into Law. Parliament enacts Laws by statute. Application and Interpretation of the Law When Laws are being interpreted, they are interpreted literally unless such literal interpretation would lead to an ambiguous result. Laws that are clear in legislation that need no courts to interpret them are called statute or statutory law. Where a question of the interpretation of the law arises between a personal government agencies that enforces them, where that happens, that would leave the interpretation of that Law to the courts who are the authority on the interpretation of the Law. Courts in South Africa apply the dovine of stare decisis, which states that are precedent is established, it should be followed, and if a higher court sets a precedent all lower courts are bound to follow it (previous rulings of higher Courts to be followed by lower courts). Level of Courts in South Africa Constitutional Court (deal with Constitutional issues only) (Tax Court – it is a special form only Supreme Court governed when a case on tax is there). Therefore it is no court in itself High Court Magistrates Courts Before an aggrieved party can approach the Courts they may try to settle the tax issue using the Alternative Dispute Resolution Method or the Tan Board. Alternative dispute Resolution Is used to settle any type or level of Tan dispute and for it to be effective and binding on the Parties both must agree to it. SARS obliged to keep a register of all disputes settled using this Method. The Tax Board Owing taxpayer who disagrees with any decision of the Commission of SARS may appeal to the tax Board provided that The amount in dispute is less than R500 000.00 OR The taxpayer and the Commissioner both agree to take the matter to the tax board. The team player or the Commissioner does not object to the Board making a ruling on the tax issue. The Tax board will be composed of an advocate or attorney who will chair the An accountant or representative of the Business / Commercial Community. The Tax Court Is a creation of statute and has no standing in its own right, its decision are only binding on the parties involved. However its rulings or decision have persuasive value on other parties as well. The Tax Court will consist of judge of the Supreme Court (who will be Court President), An Accountant 9who has been in practice for 10years) and a representation of the Commercial Community/ Business Community. The tax Court will always hear the case between the taxpayer and SAR from the beginning. Tax Court rulings do not set precedent hence the tax Court is not bound by its own decisions of the past. In any dispute before the Tax Court the burden of proof lies with the tax payer unless an amount is to be determined where the one shifts to the Commissioner. High Court High Courts only adjudicate issue that are on appeal from the high court or tam issues too serious for the Tam Board or Tam Court. Decisions of the High Court are binding on all lower courts indulge the Tan Court. Supreme Court Hears tax case appeal from the High Court or from the Tan Court with Court President permission. Decision of the Supreme Court are binding on all Courts. Constitutional Court Deal with only Constitutional issues. Taxpayer can only appeal to this court based on Constitutional challenges to the Law. One always precedent that has been set by Prior cases brought before the Courts to see how the Courts might decide on a particular issue of the Law or how it is supposed to be applied by the governmental agencies, this is known as case law. In Interpretation Case Law one always has to pay particular attention to the Rati decidendi of a case (Reason or ground for decision in that Case) and the Obiter dicta of that case(statement made in passing to support the reason for the decision in the case). The level of the Court giving the decision also has to be looked into. The Ratio decidendi of a higher court is binding on all lower courts while the Obiter dicta may be used as persusive evidence in the lower courts. In administrating the tax system SARS is bound by legislation to keep the affairs of taxpayers secrete and not to disclose them unless they pose a public danger section 4 of the Act. Taxation and Statute Tax is chargeable by virtue of section 5 of the income tax Act 58 of 1962 which states that “there shall be paid annually for the benefit of the national Revenue had an income tax…” sotax is paid on income and on other transaction by virtue of different legislation like VAT, Estate duty etc