Page 504 - SAIT Compendium 2016 Volume2

IN 54 Income Tax acT: InTeRPReTaTIon noTes IN 54 3. The law
Section 23(o)
4. Application of the law
4.1 Corrupt activities [section 23(o)(i)]
Chapter 2 of the PCCA Act addresses the general offence of corruption and offences in respect of corrupt activities relating to speci c persons. It further provides for offences in respect of corrupt activities relating to both the receiving or the offering of an unauthorised grati cation and it also provides for offences in respect of corrupt activities relating to speci c matters.
Under the category of ‘speci c persons’ the chapter provides for corrupt activities relating to—
• public of cers;
• foreign public of cials;
• agents;
• members of the legislative authority;
• judicial of cers; and
• members of the prosecuting authority.
The reference in the PCCA Act to ‘offences of receiving or of the offering of an unauthorised grati cation’ concerns, in particular, parties to employment relationships.
Speci c matters identi ed for special consideration are corrupt activities relating to witnesses or evidential material in certain proceedings, contracts, the procuring and withdrawal of tenders, corrupt activities relating to auctions, sporting events, gambling games and games of chance.
Chapter 2 of the PCCA Act also provides for miscellaneous offences relating to possible con icts of interest and other unacceptable conduct. It provides for—
• the acquisition of a private interest in a contract, agreement or in an investment of a public body;
• unacceptable conduct relating to witnesses; and
• the intentional interference with, hindering or obstruction of an investigation of an offence.
The Chapter nally provides for the position of an accessory to or an attempt, a conspiracy or for inducing another person to commit one of the offences listed in the chapter.
Under section 23(o)(i) a payment will not be deductible for income tax purposes if such payment, agreement, or offer to make that payment constitutes an activity contemplated in Chapter 2 of the PCCA Act. It is beyond the scope of this Note to provide a comprehensive analysis of all of those activities. A few general observations are nevertheless made about the general offence of corruption. They are to a large extent also applicable to the other speci ed offences. Section 3 of the PCCA Act
23. Deductions not allowed in determination of taxable income. – No deductions shall in any case be made in respect of the following matters, namely—
(a)- (n). . .
(o) any expenditure incurred—
(i) where the payment of that expenditure or the agreement or offer to make that payment constitutes an activity contemplated in Chapter 2 of the Prevention and Combating of Corrupt Activities Act, 2004 (Act No.12 of 2004); or
(ii) which constitutes a ne charged or penalty imposed as a result of an unlawful activity carried out in the Republic or in any other country if that activity would be unlawful had it been carried out in the Republic.
3. General offence of corruption. – Any person who, directly or indirectly—
(a) accepts or agrees or offers to accept any grati cation from any other person, whether for the bene t of himself or
herself or for the bene t of another person; or
(b) gives or agrees or offers to give to any other person any grati cation, whether for the bene t of that other person
or for the bene t of another person,
in order to act, personally or by in uencing another person so to act, in a manner—
(i) that amounts to the—
(aa) illegal, dishonest, unauthorised, incomplete, or biased; or
(bb) misuse or selling of information or material acquired in the course of the,
exercise, carrying out or performance of any powers, duties or functions arising out of a constitutional, statutory, contractual or any other legal obligation;
(ii) that amounts to—
(aa) the abuse of a position of authority;
(bb) a breach of trust; or
(cc) the violation of a legal duty or a set of rules;
(iii) designed to achieve an unjusti ed result; or
(iv) that amounts to any other unauthorised or improper inducement to do or not to do anything, is guilty of the offence of corruption.
The word ‘grati cation’ is central in the context of corruption in the PCCA Act. ‘Grati cation’ is de ned in section 1 of the PCCA Act. It is a broad concept and includes, amongst other things, any donation, gift, contract of employment, or services, and the avoidance of punishment or loss.
The term ‘grati cation’ as de ned in section 1 of the PCCA Act reads as follows:
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