*Electronic Theses and Dissertations (Masters)

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    Tax Implications of intellectual property transactions in South Africa
    (2024) Sinobolo, Phindulo
    Intellectual property law is a category of property that includes intangible creations of the human intellect, and primarily encompasses copyrights, patents, designs, trade marks and know-how. The intention of the use of intellectual property is important to determine the correct tax treatment to be assigned in the calculation of taxable income in a particular year of assessment. The Income Tax Act 58 of 1962 (‘Income Tax Act’) is used, in this discussion, as a basis for determining the appropriate tax treatment of intellectual property transactions. Extensive focus is placed on discussing the tax incentives of royalties, premiums, acquisition of intellectual property and internally generated intellectual property. It should be noted that one should consider case law and the specific circumstances of each case, to determine whether the amount related to intellectual property will be deductible in terms of s 11(a). An overview of the tax implications for a franchisor and a franchisee is depicted when both parties enter into a franchise agreement. The taxation of image rights is specifically included in this discussion as companies, through their brands (i.e., trade marks) affiliate themselves with celebrities, sports professionals and influencers to drive their marketing strategy. A brief transfer pricing discussion regarding intellectual property is contained in the research report as it is imperative to determine whether an affected transaction has been entered into between connected persons which results in a tax benefit being derived.
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    The role of design houses in the evolution of integrated reporting
    (2022) Wadee, Zubair
    Integrated reporting matters. South African companies are at the forefront of integrated reporting (R. G. Eccles, M. P. Krzus, & C. Solano, A, 2019) due to many factors, including the role played by the governance framework King IV, the work of the Integrated Reporting Committee of South Africa (IRCSA) and South Africa's experience with different types of social and environmental reporting (Jill Atkins et al., 2020; De Villiers, Rinaldi, & Unerman, 2014). It is within this context that listed companies face isomorphic pressures in the preparation of the integrated report in search of legitimacy. In response to these external pressures, which are considered to be an external jolt, companies must respond. Their responses are driven by management’s attitude to the change and result in outcomes ranging from inertia where the entity does not change to evolution where there are changes to the systems, processes and culture of the organisation. This study finds that a mechanism by which management of companies that prepare integrated reports respond to the external pressure is by using design houses. The study finds that design houses act as a vector. The design house thus enables management to continue with 'business as usual' thus becoming immune to the external jolt and resulting in very little to no change within the organisation, or the design house may play a role in facilitating evolutionary change, with a range of other outcomes in between these two points.
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    An analysis of the section level of detail and disclosure of the six capitals in the strategy, risk and performance sections of the integrated reports of top JSE-listed companies
    (2022) Steenkamp, Amy Catherine Regina
    Purpose: This thesis assesses the level of detail of the strategy, risk and performance sections of 240 integrated reports of 30 companies selected from the top 100 JSE-listed companies by market capitalisation on 09 June 2021 for their 2013 to 2020 financial years. It also assesses whether the six capitals of the IIRC’s Framework are addressed in these sections. Method: A disclosure checklist was developed interpretively, based on relevant literature. Content analysis was used to evaluate the level of detail of the respective sections of the sampled companies’ integrated reports and whether the six capitals are addressed in these sections. Descriptive statistical tools, Kruskal-Wallis H tests, Jonckheere-Terpstra tests, and correlation tests (Spearman’s rho and Kendall’s tau-b), were performed to analyse the data and determine if there are significant associations between year, industry, market capitalisation (grouping variables), and level of detail and capital presence (dependent variables). Key findings: There was a great level of detail in the strategy, risk and performance sections of the integrated reports. In the respective sections, the companies mentioned their strategy, risk and performance factors. They provided descriptions of these factors and/or provided company specific results on the factors mentioned. Significant positive associations were evident between level of detail and the grouping variables. The six capitals were often included in the sections. On average, companies included between 4 and 6 capitals in all integrated report sections. The presence of financial capital and social and relationship capital were prominent in the various sections. The presence of natural capital was the least referenced of the six capitals. Significant differences were evident between the grouping variables and various capitals in the sections. Contribution: This paper is an exploratory study which assesses the level of detail and capital presence in specific integrated reporting sections. The longitudinal nature of the study (which coincides with the publication of the IIRC’s Framework (2013) and King IV (2016)) can add to the limited number of studies on integrated thinking and reporting. A basic level of detail analysis of the strategy, risk and performance sections may be useful to understand content which firms are relaying about their value creation processes. This paper can assist stakeholders in better understanding integrated thinking through the IIRC’s six-capital model.
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    Evaluation of the use of debt by South African retail firms and the relationship between debt and profitability in these firms
    (2022) Shoba, Mandlenkosi
    This study investigates whether the retail sector responded to the reduction of interest rates in the period 2010 to 2020 by increasing debt utilisation and whether the increased debt utilisation had a positive impact on profitability. The year 2020 was given notable attention as interest rates were at their record low in an effort to stimulate the South African economy. Measures of debt utilisation included the short-term debt ratio, the long-term debt ratio, and the total debt ratio, while profitability was measured through return on assets and return on equity. A total of 57 JSE listed retail firms were used in the study. Panel regression was used to test the relationship between debt utilisation and profitability. The findings indicate that there was an upward trend in debt utilisation over the years with a steeper increase in 2020. Positive financial leverage was only realised up to 2017 and in 2019. Although interest rates were at their all-time low in 2020, retail firms could not take advantage of this as Covid 19 impacted the benefits of cheaper debt negatively. The findings further show that there was a negative relationship between debt utilisation and profitability and that this relationship was consistent for all indicators of debt and profitability. The year 2020 worsened this relationship. These findings imply that the reduction of interest rates may lead to increases in debt utilisation, but the potential benefit of the increased debt may be eroded in adverse economic environments.
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    Impression management analysis of South African State-Owned Enterprises: six capitals disclosure in the chairman, CEO, CFO and Performance Report
    (2022) Shaikh, Sumaiyabanu
    Orientation: State-Owned Enterprises (SOEs) in developing economies, such as South Africa, have a critical economic, social, and environmental influence. However, South African SOEs are currently dealing with increased public scrutiny, putting their organisational legitimacy in jeopardy as they continue to drain public funds. As a result, SOEs may find it difficult to defend their value relevance and may resort to impression management strategies to maintain their legitimacy. Research Purpose: The purpose of this study is to analyse if certain impression management techniques, namely attribution, neutralisation, and thematic manipulation, are employed by Schedule 2 South African SOEs in specific sections of their integrated reports. The study also aims to understand the use of the six capitals in SOEs’ integrated reports and the application of impression management techniques to the six capitals. Significance of study: This study could benefit society at large, as users could factor impression management into their decisions. There is currently limited research regarding impression management in the public sector. This study contributes to the body of literature on impression management within the public sector in an emerging economy. Overview of Research Method: The SOEs analysed are those included in Schedule 2 of the Public Finance Management Act (PFMA). Within the integrated report, the focus is on the Chairman, CEO, CFO Statements, and the Performance Report. A qualitative approach, using content analysis with the data being analysed using quantitative methods, was adopted. Main Findings: The findings of this study highlight that SOEs engage in some form of impression management (either through thematic manipulation, attribution, or neutralisation) when presenting the six capitals. SOEs employ assertive impression management through the technique of thematic manipulation to gain legitimacy and employ defensive impression management through the techniques of attribution and neutralisation to repair legitimacy. Despite the challenges that SOEs have faced over the two years, the narratives disclosed create a notion of optimism to achieve legitimacy, and this is accomplished by managing the impression of the words in the Chairman, CEO, CFO and Performance Reports.
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    Is the Environmental, Social and Corporate Governance (ESG) score the missing factor in the Fama and French five-factor asset pricing model?
    (2022) Nsibande, Luyanda Malusi Qiniso
    Background: Companies are increasingly encouraged to focus on the creation of sustainable value. In South Africa, financial research institutions evaluate and track companies’ performance based on environmental, social and governance-related criteria. These scores are intended to inform decisions by potential equity investors, amongst others. However, commonly-used asset pricing models do not include ESG scores. Purpose: The purpose of this research is to discover whether the inclusion of Environmental, Social and Governance (ESG) scores in the Fama and French fivefactor model (FF5) will improve the model’s predicting power of expected returns on the Johannesburg stock exchange JSE Methodology: For the largest 40 JSE-listed companies, statistical ordinary least squares (OLS) regression was employed with R statistics to analyse fundamental, share price and ESG score data over the five-year time period from 2015 to 2019. The researcher compared the predictive power of the FF5 model to that of the same model including ESG scores. Findings: The results showed that the predictive power of the FF5 model is only marginally improved when the ESG scores are incorporated. These findings may indicate that equity prices are not significantly influenced by ESG scores. Implications: The findings of this research provide the basis for further endeavours on the share-price implications of ESG performance. It makes a theoretical contribution by suggesting possible enhancements to traditional asset pricing techniques.
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    What factors contribute to South African auditors not identifying material misstatements in South African financial statements?
    (2022) Neethling, Rèzanne
    This paper’s aim is to investigate which factors increase the likelihood of a material misstatement being undetected by South African auditors. This research has used a quantitative research methodology which produced descriptive and inferential statistics. The research is limited to responses submitted by respondents based on their perceptions of South African auditors and South African financial statements. The reason for this is that what appears to be missing from the prior literature is an assessment of which factors in the South African context increase the likelihood of a material misstatement going undetected and a focus on factors under the control of auditors. Understanding which factors are most and least important in the South African context will make it possible to implement remedial actions suited to South Africa. This should enhance audit quality and ensure that errors are identified on a timely basis. This increases confidence in the South African capital market (SAICA, 2017) and may lead to lower cost of capital demands of South African companies (SAICA, 2017). As per the research, the researcher identified that the factors appear to have equal significance when contributing to auditors missing material misstatements. There were only a few statistically significant differences in responses because of firm type, previous IAS 8 experience, age or gender, which have been highlighted in the findings below. The results were predominantly in line with expectations.
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    The constitutionality of SARS information gathering powers under the tax administration act
    (2022) Modisane, Godfrey Tumelo
    This research aims to explore the Constitutionality of the South African Revenue Service’s information gathering methods as prescribed by the Tax Administration Act. The study will focus mainly on search and seizure operations by South African Revenue Service and how these operations may affect certain fundamental rights enshrined in the Constitution i.e. the right to privacy, the right not to self-incriminate, and, privilege information. This contribution will find that there must be a balancing act between tax administration and the protection of taxpayer’s civil and Constitutional rights by South African Revenue Service. The study will also touch on the question of whether these tools to gather information afforded to the South African Revenue Service extend to the covert collection or collection of intelligence, as the South African Revenue Service has been of late accused in various publications of unlawfully establishing the so called “Rogue unit” to investigate certain taxpayers.
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    An analysis of Circular Economy disclosures and the impact on Integrated Reporting
    (2022) Mahadew, Kashmira
    The impact of global markets on the natural environment has resulted in a rapid depletion of resources. The circular economy (CE) model is a sustainable business model which aims to stay within the limits of the planet and reduce the impact on the environment by decreasing excessive resource use, minimizing waste, and converting end-of-life goods into resources for further use. This research aims to investigate disclosures by Johannesburg Stock Exchange (JSE) listed companies by analysing the type of investments in developing and achieving a CE, the quality and nature of disclosures on a CE, and the related impact on the six capitals. A content analysis method was used to analyse a sample of integrated reports of JSE listed companies. Correlation coefficients were used to evaluate the relationships between the CE disclosures and 21 identified elements, and the Kruskal-Wallis and Jonckheere-Terpstra tests were used to evaluate the significant differences among industries, company size, and year when analysing the CE disclosures. This paper finds that a significant number of CE disclosures are located in the value creation and business model location of the integrated reports, the quality and type of investments to achieve a CE model tending to differ across different industries, company sizes, and year. The research revealed that CE disclosures are becoming more prominent in South Africa. The quality of reporting is moderately low. Industries which have a higher environmental impact and have extensive physical infrastructure tend to have better disclosure on their investments in the six capitals than service-driven industries. Both the quantity and quality of disclosures are better for larger companies. The research finds that companies are increasingly investing in research and development, and partnerships with research groups, think tanks and other third parties to drive their CE adoption. This paper contributes to both corporate reporting and the CE concept by evaluating the link between a CE model and integrated reporting and the impact which CE disclosures have on the six capitals of a company
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    Exploring segmental reporting in integrated reporting
    (2021) Mpete, Thato
    This paper explores the link between segmental disclosures in the integrated reports of the top 100 JSE-listed entities and integrated reporting quality (IRQ). A content analysis has been performed over 3 years to identify links between segmental disclosure in the integrated report and the annual financial statements. This paper analyses whether entities which have integrated segments throughout their reports achieve better IRQ. This paper also analyses whether the segmental disclosures within the integrated report point to the emergence of integrated thinking. The findings indicate that the segmental disclosure in the integrated report mimics that in the annual financial statements. In addition, this thesis finds a correlation between segmental disclosure and IRQ. Companies which integrate segment disclosure throughout the integrated report are also found to achieve better IRQ. The findings suggest that segmental disclosures which are integrated provide further insight into the value creation process and are indicative of integrated thinking. Integrated thinking can be evidenced by management’s understanding of the entity, disclosure consistency in the integrated reporting and annual financial statements and integration within the business model.
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    Impression management through minimal narrative disclosures in integrated reports: an analysis of the top 100 JSE listed firms
    (2021) Chothia, Aadil
    Orientation: Two crucial aspects to corporate reporting is transparency and accountability within the Integrated Report (Leung, Parker, & Courtis, 2015). Transparency within the Integrated Report allows for the users of the report to understand the financial position and underlying economics of the firm. Narrative disclosures in the Integrated Report forms a part of the annual corporate financial report and serves as a means of communication between management and investors. Narrative disclosers can also serve as a medium for impression management strategies utilised to distract investors’ attention from a firm’s weaknesses. This can be achieved through “selectivity” which involves including or omitting certain items of information within the Integrated Report (Merkl-Davies & Brennan, 2007).Research purpose: The purpose of this study is to determine if the top 100 JSE listed companies utilise impression management strategies, specifically through minimal narrative disclosures in their Integrated Reports. This will allow the researcher to “explore the phenomenon of concealment strategy through minimal narrative disclosures. In this study, the researcher focuses on selectivity in neglecting narrative information in the Integrated Report and extends the body of knowledge relating to impression management using concealment strategy, specifically discretionary narrative disclosures. Overview of research method: This was an adaptation of a study conducted by Leung et al. (2015) and was of a quantitative nature which involved the systematic investigation of the research questions through statistical methods on the data gathered. The research involved two phases. Phase 1 involved the identification of minimal narrative disclosure firms using a disclosure corpus. Phase 2 allowed the researcher to explore the sub-research questions which involved the use of a multivariate regression model. Main Findings: The study illustrated that from the sample firms selected, 49% were classified as minimal narrative disclosure firms based on their disclosure score obtained from the disclosure checklist. The study also showed that there is no association between a firm’s current performance and their minimal narrative disclosure firm score and revealed that there is an association between a firm’s financial distress levels and the minimal narrative disclosure firm score obtained by the firm. No evidence was obtained to support that minimal narrative disclosures in Integrated Reports are associated with future performance of a minimal narrative disclosure firm (whether future performance improves or deteriorates) within the context of this research
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    The foreign business establishment exemption and other aspects of section 9D of the Income Tax Act
    (2018) Ismail, Faizel
    This research report considers a number of practical issues that arise in relation to the enforcement of section 9D of the Income Tax Act No. 58 of 1962 (“ITA”) read together with complementary provisions of the Tax Administration Act No. 28 of 2011 (“TAA”). More particularly, this research report considers the following issues: the onus and burden of proof under section 9D; the scope of SARS’ power under section 46 of the Tax Administration Act No. 28 of 2011 (“TAA”) to request information in order to give effect to section 9D; the interlinking definitions in terms of section 9D; whether an outsourcing business model can constitute the primary or core operations of a CFC for the purposes of determining whether the CFC qualifies for the ‘foreign business establishment’ exemption under section 9D status; and, if the issue of whether a CFC correctly claimed an FBE status during the years of assessment be revisited by SARS, particularly in respect of years of assessment which have prescribed. It is submitted as follows. Section 46 of the TAA provides SARS with the effective procedural powers to ensure compliance with section 9D. SARS is however required to provide the taxpayer with grounds for assessment with sufficient and reasonable detail in order to enable the taxpayer to understand the basis of and reason for such assessment and respond appropriately thereto. SARS is constrained by a three-year prescription period (from the date of an original assessment) for issuing additional assessments unless SARS can demonstrate that the taxpayer committed a fraud or misrepresentation which caused SARS failure to properly assess the taxpayer. The onus is on the taxpayer to show, on a preponderance of probability, that the decision/s of SARS in terms of section 9D against which it appeals is/are wrong. There is an arguable case for contending that the active management of service providers and agents may constitute the primary operations for purposes of determining whether an FBE arises in relation to a CFC.
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    The implementation of Section 139(1) of the Constitution in the Ngaka Modiri Molema District Municipality
    (2017) Kampi, Zoliswa
    The Ngaka Modiri Molema District Municipality (NMMDM) is situated in the North West Province, South Africa. It has persistently been placed under provincial administration (s139 (1) of the Constitution) and continuously resisted the interventions including taking legal actions against the North West Provincial Executive. The objectives of the research study were to explore and provide insights into the factors that informed and impacted the planning and implementation of s139(1) interventions in the NMMDM, and to explain how these factors either promoted or undermined the success of these interventions. From the literature review undertaken, the researcher drew critical themes and concepts that underpin the research study. The leadership and governance theories provided the theoretical perspectives and the principal-agent theory underscored the conceptual framework. In line with the exploratory nature of the research study, the qualitative research method was preferred and the NMMDM was adopted as a single case study to get a deeper understanding of the intricacies involved in the planning and implementation of s139(1) interventions. The researcher obtained the primary data through semi-structured interviews with the municipal leadership and used document analysis to gather secondary data. The research findings revealed the richness and complexity of the local government discourses. Through analysing the results of these discourses, a number of critical aspects that informed and impacted these interventions in the NMMDM emerged. These aspects range from the nature of to the quality of support provided to the NMMDM prior to the interventions. These include the communication of the directives and notices to assume responsibility, details given on the rationale for the interventions, political dynamics and their influence on reactions to the interventions, capacity of the province to plan and implement the interventions, and perceptions of the impacts of the interventions. Nevertheless, it is not the intention of the research study to generalise the findings but to present them as they manifested in the NMMDM.
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    Income tax treatment of the transfer of contingent liabilities during the sale of a business
    (2018) Boakye, Stephen
    The objective of this report is to analyse the South African income tax consequences of the assumption of contingent liabilities such as leave pay provisions and bonus provisions during the transfer or sale of a business. This report will consider two methods utilised to transfer contingent liabilities as part of a sale of a business. An analysis of how these two methods have been derived will be performed as part of this report. The report will then consider the income tax implication of the transfer of contingent liabilities under each of the methods. Overall, this report will critically analyse the income tax implications of the assumption of contingent liabilities during the sale of a business. A business generally consists of assets and liabilities. Businesses are often sold as a single unit although for income tax purposes, a distinction would have to be made on the particular assets sold.1 The current South African Income Tax Act caters for the income tax implication of selling assets in a business.2 It however seems to be silent on the income tax implications in instances where liabilities including contingent liabilities are assumed as part of the sale of assets.3 As a result, the income tax implication is subjected to the general tax principles which sometimes yield uncertainties from a taxpayer’s perspective. In an effort to clarify uncertainties in relation to the income tax implication of the assumption of contingent liabilities as part of the sale of a business, the South African Revenue Service in December 2016 released Interpretation Note 94. This report will, firstly, test the legal nature of Interpretation Notes with specific reference to reliance being placed on such Interpretation Notes in relation to the interpretation of the Income Tax Act
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    A critical analysis of the vat apportionment method in the banking sector in South Africa
    (2018) Chitando, Makgolane Kutlwano
    Value-Added Tax (VAT) has the standing of being a fairly simple tax. Where vendors solely supply taxable goods and services, the VAT on expenditure acquired for the sole mandate of making taxable supplies may be recovered from the VAT imposed on their output. VAT is therefore a tax on the value added at every stage of production. Accordingly, the tax is levied on the value of the final product but is collected in small portions from each part in the supply chain. ―In the banking sector, consumers are not purchasing financial services from the bank, so there is no sale on which VAT must be imposed. This has resulted in the VAT exemption of financial transactions as it is difficult to define the value added of financial services‖. (Mirrlees et al 2011:196). The exemption of financial transactions raises a number of complicated issues for banks as there is a requirement to apportion input credits. This is common to all countries operating a VAT system, although the basis of apportionment differs. The intention of this research report is to draw a distinction between the taxing of financial services in South Africa compared to other countries. This research report will analyse the appropriateness of the apportionment method approved by SARS for the banking sector in light of the concept of direct attribution of costs. Through an analysis of the foreign treatment on the matter of VAT apportionment and the taxation of financial transactions, this study will seek to determine whether the taxation of financial transactions in the South African VAT System and the VAT apportionment method approved by SARS for the South African banking sector is consistent with international best practice
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    Using business models to drive classification: the case of debt instruments in the financial services sector
    (2018) Holmes, Dominique
    Faithfully representing financial instruments in financial statements is critical to the sustainable functioning of the global economy. This was highlighted in the aftermath of the Global Financial Crisis (GFC) where the relative financialisation of the global economy was implicated as contributing to the crisis (Barth and Landsman, 2010; Laux, 2012; Zhang and Andrew, 2014). Following the GFC, efforts to develop an improved accounting standard for reporting financial instruments were accelerated (IASB, 2014). This culminated in the release of IFRS 9 which uses the business model to determine the accounting treatment of financial assets. The standards’ predecessor, IAS 39, used the concept of management’s intention to determine accounting classification. This was perceived as being unnecessarily complex (IASB, 2008). Accounting commentators question whether the move to a business model basis is in substance different from management’s intention (Leisenring et al., 2012). Arguing that representing a contractually identical asset differently, based on its use, potentially undermines faithful representation and impairs comparability. This has led to questioning whether the use of a financial asset has the ability to alter its economic substance (Leisenring et al., 2012; Barth, 2013). This thesis explores IFRS 9’s logic of using the business model to determine the classification of financial assets in the financial services sector. Initial insights are obtained by conducting detailed interviews with some of South Africa’s leading practical and technical minds. These insights pertain to differences between management’s intention and the business model, whether a financial asset can be ‘used’ and how this may impact the economics of the financial. This research finds that financial assets can be used by financial institutions for various purposes. These are consistent with the business models of IFRS 9. Further, this thesis finds that communicating these alternate ‘uses’ is important to represent the differing economics of those assets. Participants also indicate that the business model enhances comparability through enabling comparison between similar business models, as opposed to accounting for identical financial assets in the same way. This thesis contributes to the growing calls for research into business models in financial reporting (EFRAG, 2010; Nielsen and Roslender, 2015). This thesis is also the first to provide the perceptions of South African experts on IFRS 9’s logic of using the business model as a method for classifying, measuring and presenting financial instruments.
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    Attitudes to integrated reporting in small-to medium-sized companies
    (2018) Du Bourg, Caroline
    The purpose of this research is to explore the attitudes of small- to medium-sized entities (SMEs) towards integrated reporting. This report analyses the motivations to produce an integrated report, the reasons for not preparing one, the isomorphic processes present in the field, and the logics of resistance evident. The thesis employs an interpretive methodology. Interviews were held with a sample of professionals involved with corporate reporting for SMEs’ to establish their attitudes towards preparing integrated reports. These attitudes were then analysed to identify the key themes. The research finds that the respondents perceive the primary benefits of preparing an integrated report to be improved relationships with stakeholders and an enhanced strategy and business model. Cost, lack of resources and no buy-in to the concept are the reasons that were identified for not SMEs to not adopt integrated reporting. The benefits are currently overshadowed by the perceived challenges which results in limited isomorphic pressures present in the field to engender the change. SMEs preparing integrated reports understand them to be best-practice. In contrast, those that do not prepare integrated reports disagree with this claim, as they are unaware of the topic or do not believe it to be applicable in the smaller environment. These attitudes have resulted in logics of resistance. The resistance has taken the form of either not preparing reports or not adhering to the essence of the concept. However, there is also evidence that some SMEs have complied with the requirements of integrated reporting. The research further revealed that the interaction between the isomorphic processes and logics of resistance determines the extent to which an SME prepares an integrated report. The results of this thesis indicate that the isomorphic pressures within the field need to grow to stimulate further preparation of reports. To achieve this, there needs to be widespread instruction on the topic, as well as an adaptation of the framework to be more relevant for smaller entities. This research shows how a social context impacts isomorphic processes and how the relatively new concept of integrated reporting is applied in an SME environment. The interpretive-style financial reporting research that has been employed addresses a void in the existing literature.
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    Tax deductibility of interest and finance charges: the real cost of credit
    (2017) Haines, Chantelle
    Borrowers will commonly incur various finance charges when acquiring loan funding, which may include, inter alia, interest expenditure, guarantee fees, introduction fees, commitment fees and service fees. The tax deductibility of these finance charges is an important consideration for borrowers. Prior to the amendment of the definition of ‘interest’ in section 24J of the Income Tax Act 58 of 1962 (as amended), related finance charges were deductible for tax purposes. The term related finance charges was interpreted very widely by the Supreme Court of Appeal in C:SARS v South African Custodial Services (Pty) Ltd1 to include guarantee fees, introduction fees, commitment fees and even selected service fees. It is submitted that following the recent amendment of the interest definition by the Taxation Laws Amendment Act 15 of 2016, to now allow the deduction of ‘similar finance charges’ rather than ‘related finance charges’ the tax treatment of finance charges are uncertain. The objective of this study is to evaluate how this amendment will affect the deductibility of finance charges incurred by borrowers for tax purposes. The study proposes to first evaluate whether finance charges will be deductible in terms of section 24J, consider the definition of ‘interest’ and provide some general tests aimed at assessing the ‘trade requirement’ and the meaning of the phrase ‘in production of income’. The impact of the anti-avoidance legislation in sections 8F and 8FA will be considered, and finally, a brief discussion of the deductibility of finance charges in terms of the general deduction formula in section 11(a) read with section 23(g).
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    Application of South African VAT on e-commerce transactions
    (2017) Xaba, Nduduzo Justified
    The present study sought to investigate self-selection among internal and international migrants in Gauteng by making use of the Gauteng City Region Quality of Life Survey data. The present study also sought to disentangle the effects of observed and unobserved characteristics in the self-selection of migrants by conducting Oaxaca-Blinder decomposition on overall employment and self-employment outcome variables. Preliminary descriptive statistics indicated that international migrants experienced markedly higher levels of employment than both locals and internal migrants driven by higher rates of informal and self-employment. System GMM analysis of pseudo panel data confirmed these results and showed that international migrants had a higher probability of employment and self-employment. Oaxaca Blinder decomposition indicated that unobserved characteristics explained the greatest share of the differences in the rates employment and self-employment of locals, internal migrants and international migrants. These results provide evidence for the positive selection of international migrants to Gauteng on unobservable characteristics relevant to the region’s labour market. Key Words Self-Selection; Migration; Self-Employment; Employment
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    A critical analysis into the Organisation for Economic Co-operation and Development ‘Standard for Automatic Exchange of Financial Account Information in Tax Matters’
    (2017) Mohanlal, Dhanesh
    The impact of the Organisation for Economic Co-operation and Development’s Standard on Automatic Exchange of Financial Account Information in Tax Matters has a significant impact on Financial Institutions globally. This paper aims to critically evaluate the current South African legislation and the obligations it places on financial institutions. The research also highlights the challenges faced by a financial institutions in interpreting and implementing the often complex requirements of the regulations with a particular focus on the following areas namely customer on-boarding and enhanced due diligence procedures, monitoring of accounts, remediation of the existing customer base, system development, and reporting to the South African Revenue Service. The research also looks into the readiness of developing countries in implementing the Automatic Exchange of Information. The research concludes with a discussion into the appropriateness of South Africa’s decision to agree to be one of the early adopters of this legislation despite the challenges identified above. Key Words: OECD, Standard on Automatic Exchange of Financial Account Information for Tax purposes, Common Reporting Standard, Financial Institutions.