In the topic of tax avoidance, there are two types of tax avoidance namely
permissible and impermissible tax avoidance. Permissible tax avoidance is
recognised throughout the world and more so it is recognised as a right. That is, a
taxpayer has the right to choose to pay the least tax where the Income Tax Act
permits. There other type of tax avoidance impermissible tax avoidance is
completely prohibited. In fact, the South African General Anti-Avoidance (GAAR)
primarily aims to combat impermissible tax avoidance although it has not been
judicially considered. The application of the GAAR face a clash of interests of two
parties namely the taxpayer s right to legally pay the least amount of tax and the
government s need to protect the revenue base from impermissible tax avoidance.
The question thereof is does the GAAR strike a balance between these two
competing interests by drawing a line between permissible and impermissible tax
avoidance. The GAAR attempts to limit the right of taxpayers to avoid tax but the
complexity of the tainted elements hinders it to effectively inform taxpayers on what
is permissible and what is not permissible.
Mini Dissertation (LLM)--University of Pretoria, 2016.