Economics and Consumer Protection Lecture Notes

Comprehensive vocabulary flashcards covering South African financial management, taxation systems, interest rates, consumer right legislation, and common business scams.

Inflation

A measure of the average change in the price of a representative basket of goods and services over time that affects the consumer's experience in their daily lives.

Provisional tax

Tax paid semi-annually, usually by businesses or any person who receives income other than remuneration, based on their estimated taxable income.

Pay as you earn (PAYE)

A system where tax is paid by a person on a sliding scale based on the amount they earn.

Capital gains tax (CGT)

A tax that forms part of income tax, realized when a capital asset is sold or exchanged at a price higher than its basis.

Basis

An asset’s purchase price, plus commission and cost of improvements, less depreciation.

Inclusion rate

The percentage of a capital gain that is taxed; currently $40\%$ for individuals and $80\%$ for companies or trusts selling property.

Annual exclusion

The first $R40\,000$ of profit from selling an investment that is excluded from taxation in every tax year.

Direct taxes

Collections such as income tax and property taxes based on the principle that people should contribute to the wealth of the state as they contribute to their own wealth.

Indirect taxes

Taxes hidden in the price of goods and services, such as VAT, excise duty, licenses, and fuel levies.

Consumer price index (CPI)

A measure of the average change in the price of a representative basket of goods and services over time, used to inform macroeconomic policy and adjust wages.

Interest

The cost of borrowing money, usually expressed as a percentage of the amount borrowed.

Repo rate

The repurchase rate charged by the South African Reserve Bank (SARB) when lending money to banks.

Globalisation

A term describing how trade and technology have made the world a more connected and interdependent place through integration of world trade and capital flows.

Contract

A written or spoken agreement intended to create legal rights and duties between parties that becomes legally binding upon signing.

Breach of contract

When one party fails to do what they promised to do in a legally binding agreement.

Interdict

A court order obtained to prevent a guilty party from performing a specific action following a breach of contract.

National Consumer Commission (NCC)

A body that enforces the Consumer Protection Act, investigates complaints, promotes fair business practices, and ensures the recall of unsafe goods.

National Consumer Tribunal (NCT)

An independent adjudicative entity established under the National Credit Act 24 of 2005 to adjudicate violations and resolve disputes between consumers and suppliers.

Voetstoets

A condition where goods are sold with all defects known and disclosed; under the CPA, this generally only applies when a homeowner personally sells their house.

Exemption clauses

Clauses in a contract that exonerate a party from liability for failing to honor the agreement or for products that do not serve their purpose.

Cooling-off period

A period of five business days allowing a consumer to cancel a reservation or order resulting from direct marketing without reason or penalty.

Warranty

A written promise to replace or repair an item if it does not satisfy specific terms regarding reliability or defects within a given time limit.

Guarantee

A written promise that the quality or durability of a product will meet certain standards, and if not met, the money paid will be returned.

Grey goods

Genuine products imported into a country without the manufacturer's approval and sold through unofficial distribution channels; also known as parallel imports.

Phishing

Fake e-mails pretending to be from banks or financial institutions that use fake websites to trick users into providing personal account details.

Card skimming

The illegal copying of information from the magnetic strip of a credit or ATM card to create a cloned card.

Identity theft

A crime where a criminal obtains personal information like ID numbers to pose as someone else to access accounts or obtain credit.

419 scam

A fraudulent money-laundering scheme that plays on emotions to convince victims they will make a large amount of money.

Stokvel

A legal savings club where members pledge regular contributions to a common fund and payouts are made to members in turn.

Pyramid scheme

An illegal get-rich-quick scheme where participants earn money by enrolling others rather than selling real products, leading to financial loss for most members.

Multilevel marketing (MLM)

Legal schemes where income is derived from the sale of real products by participants and their recruits.