School of Accountancy (ETDs)

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    Review of the tax challenges faced by the South African real estate investment trusts on the application of the tax laws and regulations
    (University of the Witwatersrand, Johannesburg, 2023) Mabuza, Harrieth Mcondisi; Soni, Faeeza
    The introduction of the Real Estate Investment Trust (REIT) regime in South Africa in 2013 has created a substantial world-class real estate industry which has contributed significantly to the country's economic growth and prosperity over the long term. The REIT regime replaced the Property Unit Trusts and the Property Loan Stock property investments, which were in existence before the REIT regime was enacted in 2013. The REIT regime came with special tax dispensation for the South African REITs,and as a result, the investors of a REIT are taxed on the income generated by a REIT instead of the REIT itself; the REIT operates as a conduit for income derived from the immovable properties. Although most aspects of the SA REIT laws and regulations and taxation were confirmed, a few unresolved matters still require attention regarding the taxation of South African REITs. The 2019 budget review documents indicated that amendments are still required to the South African REIT tax laws and regulations to iron out current inconsistencies and challenges identified in applying the REIT tax laws and regulations. Currently, many other REIT markets, especially in underdeveloped countries, are looking to change their REIT tax regime to make it more attractive to foreign investors and to compete in global REIT markets. The study investigated the current tax challenges faced by SA REITs on the application of the SA REIT tax laws and regulations and made recommendations for necessary amendments to ensure the attractiveness of the SA REIT regime. The study made use of the qualitative and interpretive approach through the examination of existing discussion papers, both locally and internationally, legislation, reports, guiding memoranda, journals, books, case laws, website documents, and other material to understand the taxation of REITs. Interpretation ii notes and current discussions are looked at to understand the challenges faced by REITs relating to the Income Tax Act, value-added tax, Tax Administration Act, and tax treaty issues relating to REITs. The study provided a detailed understanding of the key tax design elements that underpin the SA REIT industry by comparing the SA REIT regime to the United States and United Kingdom REIT regimes. The study identified challenges that expose the REIT to double taxation, challenges that are violating the REIT conduit principle; issues that threaten the REITs to failure in meeting the 75% income test, possible exposure to fines and penalties, and threats to the loss of the REIT status. Furthermore, we have identified administration issues that cause unnecessary delays in the REIT tax administration process and tax treaty issues that affect the taxation of REITs. Further, the study made suggestions for amendments that can be made to REIT tax laws and regulations to address each of the identified tax challenges affecting SA REITs.
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    Understanding the attributes and characteristics of cryptocurrency ownership: A South African study
    (University of the Witwatersrand, Johannesburg, 2023) Jetha, Hesita; Brahmbhatt, Yogesh
    Background: This study investigates the attributes and characteristics of cryptocurrency investors in South Africa and the attributes of cryptocurrencies that drive investment or non-investment. Objectives: This study aims to explore the demographics and sociodemographic factors of cryptocurrency investors as well as the emotions and biases that impact investors’ decisions to invest in cryptocurrency in order to investigate the individuals who invest in cryptocurrency and the reasons why they invest in cryptocurrency. Methods: A sample of 298 South African residents aged 18 and above completed an online survey that assessed their cryptocurrency ownership, demographics, motives for investment, attitudes toward cryptocurrency, and other relevant variables. Descriptive statistics and logistic regression analyses were conducted to examine the relationship between these variables. Results: The results showed that cryptocurrency investors are more likely to be males, under the age of 35, who are currently employed and have higher income levels. The individuals’ main motives for investing in cryptocurrency were the opportunity to obtain high returns and the new technology that cryptocurrency encompasses. In addition, the results showed that attitudes toward cryptocurrencies significantly impact their decision to invest in cryptocurrency. Conclusion: These findings suggest that more information relating to the risks involved in cryptocurrency investment as well as the potential of cryptocurrency to be used as a medium of exchange is required among individuals to protect themselves against losses and simultaneously allow them to take advantage of the lucrative benefits that cryptocurrencies offer. Furthermore, policymakers, the government, and businesses require more information regarding cryptocurrencies in order to have the necessary policies in place and to stay competitive
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    Market reaction to the FTSE/JSE responsible investment index series
    (2019) Usher, Hayden Philip
    Responsible investment has seen considerable growth since the turn of the millennium, and this has spurred the creation and continuous development of responsible investment indexes across the globe. The purpose of this paper is to investigate whether the release of the RI index series contains price sensitive information content and therefore has value relevance for the market. Using event study methodology applied to the six releases of the FTSE/JSE Responsible Investment Index series from October 2015 to June 2018, this paper investigates the impact on the share prices of constituent, included and excluded firms from this index series. The study finds that the release of the constituents of the RI index does not contain new information content while constituents of the RI top 30 experience positive and statistically significant abnormal returns as a result of their constituency. The inclusion of firms on the RI index is not a release of new price-sensitive information, while firms included on the RI top 30 experience a sustained increase in share price throughout the event window. Firms excluded from the RI index and RI top 30 experience negative and statistically significant share returns and the market applies a greater discount toward firms excluded from the RI top 30. Finally, there are statistically significant differences between firms that were included and firms that were excluded from the RI index and the RI top 30 post-announcement date, and this is caused by the market applying a value discount toward firms with deteriorating ESG performance and disclosure. From an investors perspective, investors are able to generate significant arbitrage returns by shorting (longing) shares of firms expected to be to be excluded (included) from the RI index series. Consequently, firms should strive to be included or remain on the RI index series in order to signal the market that there has not been a deterioration in their ESG performance and disclosure, which would have a negative impact on their share price.