Author: Beric Croome (ENSafrica) 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.
Category: Court Cases
Tax Avoidance (GAAR) – Real intention of contracting parties
CIR v Sunnyside Centre (Pty) Ltd [1996] 58 SATC 319 clearly stated that South African taxpayers must sleep in the (contractual) beds they make: “When a scheme works, no tears are shed for the Commissioner. That is because a taxpayer is entitled to order his affairs so as to pay the minimum of tax. When he arranges them so as to attract more than the minimum he has to grin and bear it.”
Tax Administration Act – Applications to rescind a "judgment"
The judgment reported as Kadodia v CSARS [2013] 75 SATC 313 is a decision of the KwaZulu-Natal High Court in which the applicant taxpayer unsuccessfully applied to court for rescission of a “default judgement” granted against him in terms of section 114(1)(a)(ii) of the Customs and Excise Act, No. 91 of 1964 (the Customs and Excise Act). The judgment was in respect of an alleged underpayment of customs duty and value-added tax amounting to R171 731.
Tax Administration Act – Search and seizure requirements
In an unreported decision, Jen-Chih Huang and 13 others v Commissioner of SARS and others with case number: SARS 4/2013 and dated 18 November 2013 (the Unreported Judgment), Tuchten J of the North Gauteng High Court handed down an important judgment in relation to information and documentation obtained by the South African Revenue Service (SARS) in terms of Part D of the Tax Administration Act No. 28 of 2011 (the TAA).
UK Court decision on corporate tax residency
Author: Justin Liebenberg (CliffeDekkerHofmeyr) A company incorporated outside South Africa can be tax resident here if its place of effective management (POEM) is located in South Africa. POEM is also often used as the tie-breaker to finally determine corporate tax residency under double tax agreements. A recent court decision in the UK sheds further light on POEM especially in the context of a double tax agreement.
Demystifying adequate delivery of a section 129 notice
A few weeks ago the Constitutional Court (CC) handed down judgment in the case of Kubyana v Standard Bank of South Africa Ltd (CCT 65/13) (Kubyana) regarding the interpretation of s129(1) of the National Credit Act, No 34 of 2005 (Act). S129 of the Act deals with the required procedures to be followed by a credit provider before debt enforcement can take place. This section provides that if a consumer is in default under a credit agreement the credit provider:
Forum shopping – who decides on legal status of assessments?
The Tax Court is a specialist court equipped to adjudicate on tax-related matters pertaining to the legality and correctness of disputed assessments. Sections 104 to 107 of the Tax Administration Act(1) together with the rules of the Tax Court, prescribe the procedures to be followed where a tax assessment is disputed and essentially entrust the Tax Court with the power to determine the merits of a tax assessment. In Medox Limited v The Commissioner for the South African Revenue Service(2) the North Gauteng High Court was recently faced with the question of whether the High Court has the necessary jurisdiction to rule on the legal status of income tax assessments.
Are audit fees tax deductible?
By Hylton Cameron, Associate Tax Director, Grant Thornton Johannesburg The Supreme Court of Appeals findings in the matter relating to the tax deductibility of audit fees between CSARS v MTN Holdings (Pty) Ltd (MTN) has highlighted the care companies must take in analysing expenses.
Sars accepts Malema tax commitment
Economic Freedom Fighters leader Julius Malema’s acknowledgement that he failed to comply with past tax obligations was welcomed by the SA Revenue Service (Sars) on Monday. “The sentiments and apology expressed in the public statement released by Mr Malema are also welcomed,” spokesman Adrian Lackay said in a statement.
Full statement – Julius Malema on Sars deal
“I can confirm that I was informed by SARS today that it has accepted an offer of compromise I submitted in respect of my outstanding tax. This followed my making such an offer to SARS as provided for in the Tax Administration Act. I was informed that a governance committee considered my submission and found it to have complied with the requirements for such an offer.