Editorial

• Author: Des Kruger
• Pages: V-VI
• Published date: 01 December 2013
• Date: 01 December 2013
• DOI: 10.10520/EJC174102

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© SIBER INK

Editorial

Another year, another batch of complex legislative tax changes in the

offering. Some of these changes will be far reaching , such as the proposed

interest-deductibility limitation where the debtor and creditor are in a

so-called ‘controlling relationship’ and the interest receipt is not subject

to tax, while others seek to clarify existing complex provisions. Two of

this issue’s articles deal with two important proposed amendments, namely

those dealing with hedge funds and the understatement penalty regime.

But it is not only tax law that continues to evolve, commentators continue

to try and unravel numerous contentious provisions of the 2008 Compa-

nies Act, and the third article of this issue focuses in particular on proposals

for a scheme of arrangement under section 114 of the 2008 Companies Act

and the requirements of section 115 that must be satisf‌ied before such a

scheme can be implemented.

The, as usual, erudite article by Milton Seligson SC explores two inter-

esting and important issues: f‌irstly, whether the provisions of sections 114

and 115 of the 2008 Companies Act are mandatory whenever it is sought

to implement an arrangement between a company and the holders of

its securities, or merely provide an optional method of achieving such a

transaction; and, secondly, whether the line of judicial decisions relating

to section 311 of the 1973 Companies Act (the provision which governed

schemes of arrangement under that Act), that gave a narrow interpretation

to ‘‘arrangement’,’ thereby limiting recourse to the section, would still apply

to arrangements that fall under section 114 of the 2008 Companies Act. His

conclusions in this regard may come as a surprise to many!

Michael Rudnicki tackles the proposed amendments that seek to

address the tax status of hedge funds that are structured as partnerships.

The article not only explains the key components of a hedge fund, but

also examines the peculiarities of the taxation regime that applies to hedge

funds at present and the impact of the new proposed tax rules. The article

concludes that the proposed amendments do not go far enough.

The f‌inal article tackles once again the new understatement penalty

regime provided for in the Tax Administration Act, 2011 (‘TAA’) and

considers whether the proposed amendments to the transitional provi-

sions of the TAA achieve their stated purpose of clarifying whether the new

understatement penalty regime applies in respect of an ‘understatement’

that occurred prior to the introduction of the TAA. The article concludes

that, as presently enacted, section 270(6) of the TAA requires understate-

ments that occurred prior to the commencement date of the TAA to be

dealt with under the relevant penalty provisions of the various tax acts. The