Determining the residence of a trust : a South African income tax perspective

[摘要] ENGLISH ABSTRACT:In the tapestry of history the subjects of trusts and taxes are frequently interwoven. Owing to such frequent interaction, one may assume that all signifcant aspects regarding the taxation of trusts have long since been resolved. This would be an incorrect assumption as for example, one quite fundamental and important issue, the tax 'residence of a trust, has not been adequately considered. Residence forms the cornerstone of our taxation system in South Africa and is an important pre-requisite for taxes to be imposed upon a trust. Yet as the residence of a trust has received little attention from South Africa's legislature, judiciary, fiscal authorities and legal authors, it remains an area of uncertainty, which potentially undermines our taxation capacity. This thesis therefore seeks to address this lacuna in our law.In South Africa, the Income Tax Act, 58 of 1962, provides a definition for the term residence. This statutory definition is critically analysed so as to assess its meaning and practical application in a trust setting. In so doing, certain deficiencies and aspects giving rise to uncertainties are identified and recommendations made for the legislature to intervene. The guidance provided by the South African Revenue Service in its Interpretation Notes, and Discussion Paper, is also assessed. Historical judicial precedent is reviewed and the recent case of the Oceanic Trust Co Ltd No v Commissioner of SARS which dealt specifically with this topical issue, considered.The approach followed in South Africa is further compared to that followed in the international tax treaty setting, and in particular, the Organisation for Economic Co-operation and Development's (OECD) model tax convention and its commentaries, critically analysed. More specifically the approach in two foreign jurisdictions, Canada and the United Kingdom, are also investigated so as to identify suggestions for possible reform and development. Against the underlying justification for a residence-based taxation and the objectives it seeks to achieve, an analysis of the various tests for the residence of a trust is conducted so as to determine the most appropriate and effective test to be applied in the South Africa income tax setting, and recommendations made.

[发布机构] Stellenbosch University