Document Type Master's Dissertation Author Muller, Theunis Christian email@example.com URN etd-05032010-121239 Document Title A critical analysis of Section 8C : taxation of directors and employees on vesting of equity instruments Degree MCom Department Taxation Supervisor
Advisor Name Title Mr T Steyn Co-Supervisor Mrs D Pieterse Supervisor Keywords
- Income Tax Act No 58 of 1962
Date 2010-04-19 Availability unrestricted AbstractWith effect from 26 October 2004, section 8C was introduced into the Income Tax Act No 58 of 1962 and replaced the previous section 8A. The main purpose of the new section was to effectively tax directors and employees on the receipt of income from equity based incentive schemes and therefore close potential ‘loopholes’ that existed in the previous section 8A. The purpose of this study was to critically analyse section 8C and specifically the principles of ‘vesting’ and ‘restricted equity instruments’ as introduced by the section. Since no case law exists and the application of the principles within the section is deemed to be detailed and complex, the possibility for inconsistent treatment or misinterpretation exists. Due to limited information being available regarding the application of section 8C and in order to determine whether different interpretations may exist in practice, selected tax practitioners and/or specialists were also asked to provide information through the completion of a questionnaire. Section 8C has already been amended since its introduction and as indicated in the study, further amendments may be necessary in order to address problem areas. Employers with equity based incentives need to be aware of the significant impact that section 8C has on the taxation of equity instruments and have to ensure that they comply. Depending on the instruments in use it could also have a major impact on the administrative duties of employers, who have the responsibility of calculating and paying the necessary taxes on time.
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Please cite as follows:
Muller, TC 2009, A critical analysis of Section 8C : taxation of directors and employees on vesting of equity instruments, MCom dissertation, University of Pretoria, Pretoria, viewed yymmdd < http://upetd.up.ac.za/thesis/available/etd-05032010-121239/ >E10/218/gm
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