Possession, as they say, is nine tenths of the law. Generally in commercial litigation where, for example, a claim for an outstanding amount is brought against a party, such party is not required to make payment to the claimant until a court has adjudicated on the matter. However, when it comes to matters of tax, the Tax Administration Act, No. 28 of 2011 (‘TAA’) requires taxpayers to first make payment to SARS on assessment and then to pursue their various remedies against SARS.
Category: Court Cases
Court sets ‘rules of the game’ for SARS audit
Author: Amanda Visser (BDlive) A judgment by the Supreme Court of Appeal sets out the “rules of the game” for an audit by the South African Revenue Service (SARS) on a taxpayer, in terms of the new Tax Administration Act that came into effect two years ago. In the judgment delivered last month the court found that raising additional assessments in the course of an audit should be based on “proper grounds” and that it was imperative for auditors to familiarise themselves with the business environment in which taxpayers operated.
Tax Avoidance -Simulated transactions
In Roshcon (Pty) Ltd v Anchor Auto Body Builders CC [2014] ZASCA 40 (Roshcon) the Supreme Court of Appeal (SCA), in a unanimous judgment drafted by Wallis JA, has clarified the issues caused by its previous decision in SARS v NWK Limited [2011] SA 67 (NWK). Roshcon was not a tax case; it concerned supplier and floor plan agreements relating to the sale of trucks, with a reservation of ownership to a finance house as security until the trucks were fully paid for by the purchaser. On the assumption that NWK had transformed our law in regard to simulated transactions, counsel contended that the agreements in question were a disguise or simulation, amounting in fact to a pledge of the trucks without delivery or possession as required by law. In rejecting this argument, the SCA took great care to reaffirm the well-established principles relating to simulations, and to explain its Read More …
Deductions – Apportionment of holding company expenses
Mobile Telephone Networks Holdings (Pty) Ltd (the taxpayer) v Commissioner for the South African Revenue Service [2011]73 SATC 315, the taxpayer was the holding company of five directly held subsidiaries and a number of indirectly held subsidiaries and joint ventures, within a group of companies. The collective business of the operating companies within the group was the operation of mobile telecommunication networks.
A taxpayer is entitled to object to an assessment on the grounds that the information given in his return was incorrect
One of the issues in GB Mining v Commissioner: SARS [2014] ZASCA 29 was the deductibility or otherwise of expenditure that had been outlaid by the taxpayer, GB Mining and Exploration (SA) (Pty) Ltd, in an attempted rescue of a company listed on the Johannesburg Stock Exchange, OTR Mining Ltd, with the intent that GB Mining would transfer its business to OTR and become its principal shareholder, thereby securing access to the JSE.
Noose tightens on tax dodgers
Author: Philani Nombembe (Times Live) Dodgy tax consultants are hitting the SA Revenue Service hard with more than R80-million in fraudulent claims filed during the past financial year. This week the Cape Town Regional Court sentenced tax practitioner Zaida Johaar to four years in prison for income tax fraud. The hefty sentence, despite Johaar being a first offender, underlines the new severity with which tax fraud is regarded.
Default judgement in tax litigation
Author: Robert Gad and Jadyne Devnarain (ENSAfrica) In terms of the current Tax Court rules published under the Income Tax Act No. 58 of 1962, where the Commissioner for the South African Revenue Service (“SARS”) did not comply with the prescribed time frames in respect of dispute resolution, practically, there was little that a taxpayer could do. This could change in terms of the proposed new Tax Court rules expected to come into force later this year.
Supreme Court of Appeal addresses administrative fairness in raising assessments and disputes before the Tax Court
An interesting judgment was handed down in the Supreme Court of Appeal (SCA) on 12 June 2014 in the matter of Commissioner for the South African Revenue Service v Pretoria East Motors (Pty) Ltd (291/12) [2014] ZASCA 91. The taxpayer operated a car dealership in Pretoria. The South African Revenue Service (SARS) conducted an audit on the taxpayer in respect of its 2000 to 2004 years of assessments, and as a result raised various additional assessments in respect of, inter alia, income and value-added tax (VAT).
Tax fraudsters sentenced
The scheme was discovered after seven years when Sars became suspicious because so many taxpayers used the same addresses. One of the most complex tax fraud trials the SA Revenue Service (Sars) ever had to deal was concluded on Monday, when the leaders of a crime syndicate were sentenced to between 20 and 15 years’ imprisonment.
Preservation orders and the Tax Administration Act
Prior to the enactment of the Tax Administration Act No. 28 of 2011 (“TAA”), the Commissioner: South African Revenue Service (“Commissioner”) was required to apply for a preservation order under the common law, as the Income Tax Act did not itself contain a mechanism whereby the Commissioner could apply for a preservation order under the fiscal statutes to ensure the preservation of assets where there was a concern that a taxpayer may dissipate assets and frustrate SARS’ attempts to recover the tax due.