IMPORTANT TAX INFORMATION
* Deferred Tax, relates to timing differences, between tax deductions and normal expenses as well as the asset book values and tax values.
* Section 13 ter, quin and sex building allowances rarely claimed. Up to 10% of the building costs deductible if the property is rented to more than 5 residential tenants.

Tax Simplification vs Tax Act Rewrite: The Debate

ACCA recently called for the simplification of SA’s tax laws and the establishment of an ‘independent office of tax simplification’. The UK Government recently commissioned a similar Office of Tax Simplification to conduct a review and make recommendations to the Chancellor on how to simplify the tax system, ease administration and reduce uncertainty for taxpayers

The debate started with Adam Smith’s book, ‘The Wealth of Nations’, in which he launched his four canons for taxation: equity, certainty, convenience and simplicity. Globally tax legislators ever since have tried, with varying degrees of success, to make their taxes meet these criteria.

The principles of certainty (able to accurately interpret and apply the law) and economy in collection (minimise compliance and administration costs) are both encompassed in the notion of tax simplification, on which much has been written. In today’s world, how simple can a tax system be? While undoubtedly a “sheikdom that can raise all the revenue it requires (and maybe much more) from a single tax on a single oil company has unquestionably the simplest tax system of all”, it is inappropriate in most jurisdictions. However, does this mean that tax simplification should be forsaken altogether?

In the findings of a research report undertaken by Professors Margaret McKerchar, Laura Ingraham and Stewart Karlinsky, it was concluded that simplification can take place on a number of levels, but argued that “it is unlikely to be achieved by cutting tax rates or simply rewriting existing legislation”.

The result? Not a win or a loos, but a tie between striking a balance between simplification and rewrite.

The taxpayer winner pays it all!

Yours truly
Stiaan Klue
Courtesy SAIT