On 18 February 2014 the North Gauteng High Court delivered a judgment on the remedies available when a tax clearance certificate (‘TCC’) is declined by SARS. What is clear from the judgment is that when a taxpayer is dependent on a TCC for financial or business purposes and it gets declined by SARS, the potential impending economic harm that may come to a taxpayer from such refusal does not entitle the taxpayer to a court order compelling SARS to issue such a TCC sought.
Category: Court Cases
Tax Court determines merit of tax assessments
The Tax Court is a specialist court specifically equipped to adjudicate on tax-related matters pertaining to the lawfulness and correctness of disputed assessments. Sections 104 to 107 of the Tax Administration Act, No 28 of 2011 (previously s81 to 88 of the Income Tax Act, No 58 of 1962 (Act)) together with the rules of the Tax Court, prescribe the procedures to be followed where a tax assessment is disputed and essentially entrusts the Tax Court with the power to determine the merits of a tax assessment.
Tax Prescription – when does it apply?
Authors: Peter Dachs and Bernard Du Plessis of ENSafrica Many taxpayers are generally aware that there is a prescription provision contained in our tax law. However it is not always understood that the prescription provisions apply only if certain statutory requirements are met. In this regard it is not uncommon for SARS to assess taxpayers beyond the prescription period of three years. It is therefore necessary for taxpayers to understand the circumstances in which prescription will apply and also the relevant statutory provisions dealing with prescription.
Interpreting court judgments
The South Gauteng Tax Court has had to make a determination of the effect of a direction given in a judgment handed down by the Supreme Court of Appeal in referring an assessment back to the Commissioner for the South African Revenue Service (SARS) for correction. The matter that was heard by the SCA (C:SARS v South African Custodial Services (Pty) Ltd [2012]74 SATC 61) had principally been concerned with whether improvements made to State property in terms of a public-private partnership constituted trading stock of the taxpayer. The costs incurred by the taxpayer had been claimed as a deduction on the basis that they were part of the cost of construction. Included in these costs were costs in respect of certain financial arrangements. In particular, the following were disputed by SARS: introduction fee, guarantee fees, consultation fees, financial advisory fee, margin fee and bid guarantee fee.
The Supreme Court of Appeal sets the record straight on what constitutes a simulated transaction
The decision in Roshcon (Pty) Ltd v Anchor Auto Body Builders CC & Others [2014] ZASCA 40 was handed down on 31 March 2014 as a unanimous judgment of the Supreme Court of Appeal. In fact, two separate judgments were given, but all five justices of appeal on the bench concurred in both judgments. The significance of the decision is that, to a considerable extent, it clears the fog of confusion that has prevailed since the decision of the Supreme Court of Appeal three years ago in CSARS v NWK Limited 2011 (2) SA 67 (SCA) in regard to what constitutes a simulated transaction.
TAX CLEARANCE CERTIFICATES AND A TAXPAYER’S ONLY REMEDY
Tax clearance certificates play an important role in our economy and are, almost without exception, a requirement when a person submits a tender or bid for doing business with government. In this regard, tax clearance certificates had always been issued by the South African Revenue Service (SARS) in terms of internal policy. As there was no legislative framework governing the issue of tax clearance certificates, there was much uncertainty among taxpayers as to their entitlement to a tax
Simulated transactions: welcome clarification from the Supreme Court of Appeal
In Roshcon (Pty) Ltd v Anchor Auto Body Builders CC (“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 (“NWK”). Roshcon was not a tax case; it concerned supplier and floorplan 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
Chittenden NO & Another – HC 12795/14 NG – 18 Feb 2014
Introduction This case considers an application made by the second applicant (Kestrel Network Solutions (Pty) Ltd) to the North Gauteng High Court which arises from business rescue proceedings in respect of the second applicant and to which the first applicant (Grant Chittenden N.O) was appointed as business rescue practitioner on 30 May 2013. The Commissioner of the South African Revenue Services (CSARS), in his capacity as first respondent, opposed the business rescue
A Company & Two Others v Commissioner for SARS – 17 March 2014
Introduction This case considers an application made by three applicants to the Western Cape High Court for a declaratory order that certain content contained in the invoices between the first applicant and its attorneys is subject to legal advice privilege. This was asserted as the basis for the applicants’ refusal to disclose portions of the invoices (alternatively referred to as ‘fee notes’), when complying with a request by the Commissioner of the South African Revenue Service (SARS) in terms of section 46 of the Tax Administration Act No. 28 of 2011 (hereafter the “TA Act”).
ABC (Pty) Ltd v Commissioner for SARS ITC12466 – 12 March 2014
Introduction This case (ABC (Pty) Ltd v Commissioner for SARS ITC12466) considers the reasonability of the valuation method utilised by the appellant, ABC (Pty) Ltd, in valuing its shares in D entity which were sold during the 2002 and 2003 years of assessments. The value of those shares impacted their base cost for Capital Gains Tax (CGT) purposes and resulted in a capital loss of approximately R8 million for ABC.