The Supreme Court of Appeal was approached to set aside a preservation order that had been granted in the Cape High Court. The appellant’s conduct in prosecuting the appeal was dilatory and the Court showed its displeasure. Non-compliance with legal processes and time limits in an appeal came to the fore in the recent litigation between SARS and Ms Candice-Jean van der Merwe. The latest judgment in this litigious saga involved an application by Ms van der Merwe to the Supreme Court of Appeal for condonation (a pardoning by the court) of her failure to timeously proceed with her appeal against a preservation order that had earlier been granted in favour of SARS by the Cape High Court in respect of certain of her assets.
Category: Objections & Appeals
How to substantiate an input tax deduction without a tax invoice
The VAT process is fairly simple if you have a tax invoice to substantiate your entitlement to an input tax deduction. However, if the supplying vendor fails to issue you with a tax invoice, the question then arises as to whether you, as the recipient vendor, can rely on section 20(7) or section 16(2)(f) of the Vale-Added Tax Act No 89 of 1991 (the “VAT Act”) by using the contract between the parties to substantiate your entitlement to an input tax deduction? This was the question posed in an appeal in the Western Cape High Court case of South Atlantic Jazz Festival (Pty) Ltd v CSARS 2015. South Atlantic Jazz Festival (Pty) Ltd (the ”appellant”) held annual jazz festivals and had concluded sponsorship agreements with various companies (”sponsors”) in terms of which the sponsors paid money and provided goods and services to the festivals and, in return, the appellant provided branding and marketing. All parties were registered VAT vendors. The court Read More …
Notice of judgment in terms of the Tax Administration Act
Judgment was handed down in the matter between Lifman and others v The Commissioner for the South African Revenue Service and others (case no 5961/15, as yet unreported) on 17 June 2015 in the Western Cape Division of the High Court. The applicants were Mark Lifman and a number of close corporations of which he was the sole member. During an enquiry in terms of s50 of the Tax Administration Act, No 28 of 2011 (TAA), conducted by the South African Revenue Service (SARS) into the affairs of the applicants, it came to light that the applicants owed SARS tax of approximately R13 million.
SARS incorrectly treating objections as invalid
Author: Mmangaliso Nzimande – Tax Director at ENSafrica In terms of section 104 of the Tax Administration Act No. 28 of 2011 (“the TAA”), a taxpayer who is aggrieved by an assessment made in respect of that taxpayer may object to the assessment. Furthermore, in terms of section 106 of the TAA, SARS must consider a valid objection in the manner and within the period prescribed under the TAA and the rules promulgated under section 103 of the TAA, prescribing the procedures to be followed in lodging an objection and appeal against an assessment or decision subject to objection and appeal (“the Rules”).
Exchange Control Appeal Won Against Shuttleworth
Author: By Ferdie Schneider, Head of Tax, BDO The Constitutional Court delivered judgement on 18 June 2015 against Mark Shuttleworth in favour of the South African Reserve Bank (SARB) and the Minister of Finance. Mark Shuttleworth emigrated to the Isle of Man in 2001 to invest outside South Africa and applied to SARB to transfer approximately R2.5 billion. SARB imposed an exit charge of 10% on the capital and Shuttleworth paid approximately R250 million although he challenged the constitutionality of imposition.
Shuttleworth’s exit charge was valid and did not constitute a tax
In an about-turn the Constitutional Court handed down judgment in the Shuttleworth matter on 18 June 2015. Not only was it found that Shuttleworth’s exit charge constituted a regulatory charge as opposed to a tax, but it was also found that the Exchange Control Regulations were not unconstitutional. Should one consider the history of the matter, Shuttleworth made application to the South African Reserve Bank (Reserve Bank) to transfer approximately R2,5 billion out of South Africa. This approval was granted subject to an exit charge of 10% being imposed on the capital that was exported. The payment of this exit charge was challenged by Shuttleworth:
VAT – Input tax and tax invoices
An attack by SARS backfired in an appeal in the Western Cape High Court when the Court delivered its judgment in South Atlantic Jazz Festival (Pty) Ltd v Commissioner for the South African Revenue Service [2015] ZAWCHC 8 (judgment delivered on 6 February 2015). The facts The appellant, a registered VAT vendor, had, for a number of years, been the organiser of an international jazz festival. In order to finance and facilitate the holding of the festival, it sought sponsorships from large enterprises. The enterprises undertook to provide cash, goods or services to an agreed value, in consideration for which they were given preferential advertising and branding rights. In the matter before the Court, the enterprises concerned were South African Airways, the City of Cape Town, Telkom and the South African Broadcasting Corporation.
Invalid assessments are subject to objection and appeal
Judgment was delivered by the Supreme Court of Appeal (SCA) in the case of Medox Limited v Commissioner for the South African Revenue Service on 27 May 2015. While under provisional liquidation, Medox Limited (Taxpayer) incurred an assessed loss during its 1996 year of assessment. The Taxpayer failed to submit a return for the 1997 year of assessment. In its returns for the 1998 and subsequent tax years, it neglected to carry forward the assessed loss from 1996.
Procedures governing objections and appeals
Author: Dr Beric Croome (Tax Executive at ENSAfrica) A taxpayer who receives an assessment from the Commissioner of the South African Revenue Service with which they do not agree, is entitled to lodge an objection against that assessment, and Chapter 9 of the Tax Administration Act, No. 28 of 2011 (“TAA”) regulates procedures relating thereto. Taxpayers also need to be mindful of the rules governing objection and appeal promulgated under section 103 of the TAA, which sets out in greater detail the steps to be followed in the objection and appeal process.
Tax Administration – Interpreting statutory provisions
SARS has investigated, and in many cases raised assessments in respect of, share incentive schemes where the employee had accepted an offer to purchase shares at a fixed price prior to 26 October 2004, subject to delivery and payment taking place at a future date. The law relating to these schemes (known as deferred delivery schemes or DDS schemes) was amended with effect from that date. The Supreme Court of Appeal has now delivered its judgment in the matter of C: SARS v Bosch [2014] ZASCA 171 (19 November 2014) and provided clear guidance on the application of the Income Tax Act No. 58 of 1962 (the Act) in relation to deferred delivery share incentive schemes, where the employee had exercised the right to acquire the shares prior to 26 October 2004.