Alexa Muller – Associate at ENSafrica High net worth individuals and their associated trusts have in the past been identified by the South African Revenue Service (“SARS”) as posing a risk of non-compliance to tax legislation. The recent confirmation of a preservation order by the North Gauteng High Court in C:SARS v Krok and Jucool Enterprises Inc. (Case No. 1319/13) now renews the focus of SARS in this regard. The Krok judgment is significant for a number of reasons – including on the basis that it considers: section 185 of the Tax Administration Act No. 28 of 2011 (“the Tax Administration Act”) which empowers SARS to recover tax on behalf of foreign governments in certain circumstances; whether one can transfer beneficial ownership of “blocked” assets – i.e. assets placed under the physical control of an authorised dealer subsequent to the emigration of a South African resident; and the day-to-day actions Read More …
Category: Court Cases
CSARS v Mobile Telephone Networks Holdings (Pty) Ltd (966/12) [2014] ZASCA 4 (7 March 2014)
Introduction The Supreme Court of Appeal delivered its judgement for the case between Commissioner for the South African Revenue Service v Mobile Telephone Networks Holdings (Pty) Ltd (966/12) [2014] ZASCA 4 on the 7th of March 2014. This case concerns itself with the apportionment of audit fees incurred for a dual or mixed purpose in terms of section 11(a) read with section 23(f) and (g). Facts The group structure were as follows: the respondent, Mobile Telephone Network Holdings (Pty) Ltd (Holdings), is a wholly owned subsidiary of the MTN Group Limited and is the holding company of five directly held and numerous indirectly held subsidiaries and joint ventures.
An important judgement for public benefit organisations
Author: Ben Strauss (Cliff Dekker Hofmeyer) Fiscal policy, as manifested in the Income Tax Act, No 58 of 1962 (Act), is that philanthropy should be encouraged. The Act achieves this objective by providing that, subject to certain criteria being met and subject to limitations, charitable organisations enjoy a very favourable tax regime and taxpayers who make donations to such organisations may deduct the donations for income tax purposes. To qualify for the favourable dispensation, an organisation must be approved as a public benefit organisation (PBO) by the South African Revenue Service (SARS).
SARS eyes R10bn from tax evaders
Author: Jacques Pauw (City Press) The SA Revenue Service’s (Sars’) special investigations unit has in the past 10 years recovered, or is busy retrieving, an estimated R10bn in unpaid taxes from South Africa’s most notorious gangsters and tax evaders. Among their scalps is Economic Freedom Fighters (EFF) leader Julius Malema, Ponzi supremo Barry Tannenbaum and the who’s who of the underworld: Radovan Krejcir, Glenn Agliotti, Cyril Beeka, Lolly Jackson and Colin Stansfield. The men and women of Sars’ Tax and Customs Enforcement Investigations unit (TCEI) comprise old Sars hands and young graduates, with a sprinkling of former Scorpions, Hawks, police crime intelligence and National Intelligence Agency officers.
Bikini model says SARS ruined her life
Author: NASHIRA DAVIDS and PHILANI NOMBEMBE MODEL CITIZEN: International swimwear model Candice van der Merwe arrives at the Cape Town High Court with SARS aiming to haul her and her father before an inquiry for tax fraud Picture: Swimwear model Candice van der Merwe’s life has been “devastated” by the “draconian” South African taxman. Yesterday the Cape Town High Court ordered that she could be hauled before a SARS tax inquiry. Her father, Cape Town businessman Gary van der Merwe, has been involved in tax fraud litigation amounting to millions of rands for almost a decade. The 21-year-old model claimed late last year that an unknown Arab admirer gave $15.3-million (about R168.3-million) after she caught his eye at a private Seychelles resort.
High court sequestrates Agliotti estate over R77m tax debt
Author: ERNEST MABUZA Convicted drug dealer Glenn Agliotti’s estate has been sequestrated over a R77-million tax debt. File photo Convicted drug dealer Glenn Agliotti’s estate has been sequestrated over a R77-million tax debt. Yesterday, the Pretoria High Court confirmed a provisional order it made in November, after Agliotti, 57, failed to show why it should not be made permanent. Agliotti, who was not present in court, did not oppose the matter. The application was made by the South African Revenue Service, which accused Agliotti of failing to pay more than R77-million in income tax and VAT.
VAT – where to lodge objection – Tax Court or High Court?
The Pretoria Tax Court made an interesting ruling in ITC No 1866 [2013] 75 SATC 268. Section 32(1) of the Value-Added Tax Act No. 89 of 1991 (the VAT Act) states that the following decisions of the South African Revenue Service (SARS) are subject to objection and appeal, namely: In terms of section 23(7) of the VAT Act notifying that person of SARS’s refusal to register that person in terms of the VAT Act. In terms of section 24(6) or (7) of the VAT Act notifying a person of SARS’s decision to cancel, or refusal to cancel his registration in terms of the VAT Act.
Tax Administration Act – Criminal investigation in relation to a serious tax offence
The Tax Administration Act, No. 28 of 2011 (the TAA) took effect on 1 October 2012. In light of SARS’s strong emphasis on compliance, this article considers the procedures SARS should follow where it believes that a serious tax offence might have been committed. A “serious tax offence” is defined as “a tax offence for which a person may be liable on conviction to imprisonment for a period exceeding two years without the option of a fine or to a fine exceeding the equivalent amount of a fine under the Adjustment of Fines Act, 1991 (Act No. 101 of 1991).”
Taxation risk on Lost or stolen cheques
The principles to be applied in cases where cheques have been intercepted in the post and misappropriated by thieves have been summarised in previous case law, where it has been established that when a debtor tenders payment by cheque and the creditor accepts it, the payment remains conditional and is only finalised once the cheque is honoured. Accordingly, where the cheque is misappropriated and someone other than the payee, by fraudulent means, converts the cheque into cash, the risk will lie with the debtor since it is the debtor’s duty to seek out his creditor. However, where the creditor stipulates a particular method of payment and the debtor complies with it, any risk inherent in the stipulated method of payment is for the creditor’s account.
Setting aside business rescue
An interesting judgment was handed down in the North Gauteng High Court on 3 October 2013 in the matter of Commissioner for the South African Revenue Service v Miles Plant Hire (Pty) Ltd (case no 23533/2013). Miles Plant Hire (Pty) Ltd (the taxpayer) was involved in a dispute with the South African Revenue Service (SARS) in terms of which an appeal was pending. The taxpayer adopted a resolution to file for business rescue. When SARS became aware of the resolution, it brought an application for the setting aside of the resolution, and for the taxpayer to be wound up in terms of section 177(1) of the Tax Administration Act, No. 28 of 2011 (the TAA).