Summary
tax388 ch1 principles of tax summary
- Course
- Institution
- Book
this is a summary on the work covered in ch1 in the SILKE: South African Income Tax textbook as well as extra notes from the lectures
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
More summaries for
-
tax388 ch7 natural persons summary
-
tax388 ch4 specific inclusions summary
-
tax388 ch5 exempt income (for A1S1)
1 review
By: joubertanja505 • 6 months ago
Seller
Follow
jana20
Reviews received
Content preview
ch1 general principles of taxationTuesday, 20 February 2024 19:21
outcomes of this chapter:
- define & understand taxation
- describe components of taxation
- evaluate the tax policy by applying the principles
overview [SILKE p.1]
the formulation of a tax policy is concerned with the design of a tax system that is capable of financing the necessary level of public
spending, by government, in the most efficient & equitable manner.
there is a relationship between a government & its citizens - this is referred to as the social compact. taxes are defined as compulsory
payments that are imposed on citizens to raise revenue i.o.t. fund general expenditure - e.g., education, health & housing for the benefit
of society as a whole.
types of taxes
1. direct taxes: taxes imposed on a person [natural persons, companies & other persons as defined]
○ income taxes
○ wealth taxes
○ corporate taxes
○ estate duty
2. indirect taxes: taxes levied on transactions & that are collected by intermediaries on behalf of SARS [persons bears tax burden, but
the intermediary pays tax over to SARS]
○ STT
○ customs & excise duty
○ transfer duty
○ value added tax [VAT]
○ fuel levy
○ environmental taxes
○ sugary beverages levy [SBL]
tax base [SILKE p.2]
the amount on which tax is imposed - this is usually determined by legislation provisions that provide guidance on what should be incl. &
excl. from the tax base. amounts incl. do not necessarily correlate with our normal understanding of economic income.
while a specific tax base will be defined within each piece of legislation, a tax base is broadly based on income, wealth, or consumption:
○ an income tax base incl. income earned or profits generated
○ a wealth tax base consists of the value of assets or the value of property
○ a consumption tax base encompasses the amount spent by taxpayers on goods & services
how should taxes be levied? [what do you think?]
i. all taxpayers should pay the same R amount of tax irrespective of their resources - wealth & earnings
ii. all taxpayers should pay the same % of their income taxes
iii. higher earning taxpayers should pay a higher % of their income in taxes - according to a sliding scale
tax rate structure & incidence [SILKE p.2] [see tax rates (SAICA) p.295 - schedule 1: rates of normal tax (section 2)]
tax rates are expressed as:
a. fixed % [e.g., value added tax has a fixed % of 15%]
b. amount per unit [excise duty on each packet of cigarettes]
c. sliding scale - variable % [natural person's income tax rate]
the following terminology is important when wanting to understand tax rates
• marginal tax rate: tax rate that will apply if the tax base increases by R1
• statutory tax rate: tax rate imposed on tax base as determined by legislation
• average tax rate: tax rate at which tax is paid with reference to the total tax base of a taxpayer
• effective tax rate: effective tax rate is often used as a measure to facilitate comparability between tax liabilities of different taxpayers
tax rates are usually determined with reference to structures
- progressive tax rate structure: tax rate increases as the tax base increases
- proportional tax rate structure: tax rate does not change in line with the tax base :. flat-rate tax
- regressive tax rate structure: tax rate increases as the tax base decreases
principles of taxation [SILKE p.5]
it is highly unlikely that a tax policy will ever be considered to be perfect, tax policy can be benchmarked against the commonly accepted
principles of a good tax system
▫ equity: taxpayer's taxable ability or capacity
ch1 Page 1
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller jana20. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $3.41. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75057 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now