Background ITC 13003 [2013] involved the disposal of shares by a taxpayer and whether the proceeds realised constituted gross income and were of a revenue nature. The taxpayer happened to be a Special Purpose Vehicle and it was argued that the proceeds of the sale of shares were of a capital nature. There were also additional costs incurred which were closely associated with the acquisition of the shares in question. These costs incurred were the so-called ’equity-kicker’ and ‘indemnity costs’.
Category: Court Cases
The Decision in KwaZulu-Natal High Court in Kadodia v CSARS
The judgment of the KwaZulu-Natal High Court in the case of Kadodia v CSARS, which was delivered on 5 April 2013. The facts were that the taxpayer, Kadodia, a businessman engaged in the importation of tobacco products and cigarettes into South Africa, was informed by SARS that there had been an underpayment of value-added tax and customs duty amounting to some R171 000. Through his attorney, Kadodia admitted that he had contravened the Customs and Excise Act and proposed that the goods in question either be sold to offset the amounts claimed or be released to him for sale in order to raise the necessary proceeds to pay the tax debt to SARS.
Gaertner & Others (including Orion Cold Storage) v the Minister of Finance & Others
Background to the case Orion Cold Storage (Pty) Ltd (‘OCS’), the third applicant in this case, is involved in the importation and distribution of frozen foods. When a Canadian supplier instituted motion-proceedings against OCS, it came to SARS’s attention that the prices according to the supplier’s invoices were substantially higher than those on the invoices submitted to SARS for custom duty purposes. SARS suspected that OCS fraudulently manipulated these invoices in order to pay less duty and consequently a search was conducted on OCS’s premises in Muizenberg.
A Custom(ised) VAT Analysis
Author: Ross Robertson (Norton Rose Fulbright) A recent decision of the Supreme Court of Appeal has attracted a significant amount of attention. The court dismissed an appeal by a licensed foreign exchange dealer, Master Currency, against a revised value-added tax (VAT) assessment for two of its branches in the duty-free area at OR Tambo International Airport. Historically, the company had assumed that no VAT was chargeable as it was operating the branches in the duty-free area of the airport, which it considered to be located outside the Republic. The South African Revenue Service (SARS) disagreed with the taxpayer’s interpretation of a “duty-free area”, stating that the fees received by the two branches
SA model has to explain expensive gifts to SARS
Cape Town – A South African swimwear model, Candice van der Merwe, may be summoned to the Cape High Court to explain the origins of $15.3m (R155m) she claims was a gift from an unnamed Arab admirer. Van der Merwe says the astounding sum was a gift from “a companion” she met at a private Seychelles resort.
Sars to clamp down on tobacco companies
President Jacob Zuma’s eldest son Edward Zuma was listed as a director at the Amalgamated Tobacco Manufacturing company until 2011. Photo: Marilyn Bernard Johannesburg – Sars will be asking the National Prosecuting Authority to prosecute 15 local tobacco manufacturers and importers for tax evasion and smuggling as they continue probing and clamping down on illicit trade. And other traders, who are at “a risk of non-compliance” have been issued a warning of “regular and random audits and verification exercises”. Should any of these traders be found to be non-compliant, their manufacturing licences could be withdrawn.
What a Wicked Web We Weave, When We Issue Bogus VAT Invoices To Deceive!
Cash-strapped companies that are staring liquidation in the face sometimes resort to desperate measures to convince the court hearing an application for winding-up that they are not, in fact, insolvent and should not be wound up. A novel and imaginative method was adopted by the company, a VAT vendor, in ITC 1865 (2013) 75 SATC 250, though it is unlikely to become popular or to find its way into tax-planning manuals.
The Respective Jurisdiction Of The Tax Court And The High Court
An aggrieved taxpayer who wishes to institute legal proceedings against SARS in relation to some aspect of his tax affairs must be sure to raise his grievance in the proper forum. That forum may be either the Tax Court or the High Court.
SARS Successfully Opposes Business Rescue Application
A recent judgment of the North Gauteng High Court dealt with the powers of the South African Revenue Service to bring an application under section 177 of the Tax Administration Act for the sequestration, liquidation or winding-up of a taxpayer that is a tax debtor (CSARS v Miles Plant Hire (Pty) Ltd, judgment delivered on 30 September 2013).
Securities lending – tax implications arising from the taking of cash collateral
South African residents are taxed on their worldwide income. In particular, the Income Tax Act includes in “gross income” any amount received or accrued that is not of a capital nature. Based on case law, an amount “accrues” to a taxpayer when the taxpayer becomes unconditionally entitled to receive it (CIR v Genn and Company (Pty) Ltd, (20 SATC 113)).