ABC Company v Commissioner of the South African Revenue Services (14106) [2019] ZATC 7; 81 SATC 323 (31 January 2019)

ABC Company v Commissioner of the South African Revenue Services (14106) [2019] ZATC 7; 81 SATC 323 (31 January 2019)

The court held that ABC Company does not qualify for approval as a public benefit organisation under section 30(3) of the Income Tax Act. The principal object in ABC's Memorandum of Incorporation refers to providing accommodation to 'low to medium income households', which is a relative and imprecise term and does not equate to the fixed income threshold of R15 000 required by paragraph 3(a) of the Ninth Schedule. The court found that accreditation as a social housing institution under the Social Housing Act does not automatically entitle an entity to PBO status, as the statutory power to approve PBO applications resides with the Commissioner of SARS. The evidence showed that ABC's tenant...

Citation
[2019] ZATC 7
Parties
Appellant: ABC Company; Respondent: Commissioner of the South African Revenue Services
Court
Tax Court
Jurisdiction
South Africa
Judgment Date
31 January 2019
Case Number
14106
Procedural Posture
Tax Appeal / Final Judgment
Outcome
Appeal dismissed; ABC Company is not entitled to approval as a public benefit organisation or to the claimed tax exemption.
Judges
L. Windell
Legal Topics
Public Benefit Organisation Status, Income Tax Exemption, Social Housing Act, Interpretation of Statutes, Memorandum of Incorporation, Constitutional Right to Housing
Tax Law Administrative Law Public Benefit Organisation Status Income Tax Exemption Social Housing Act Interpretation of Statutes Memorandum of Incorporation Constitutional Right to Housing

Case Brief

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Parties

ABC Company

Appellant

Commissioner of the South African Revenue Services

Respondent

Procedural Posture

Tax Appeal / Final Judgment

Legal Issues

  1. 1 Whether ABC Company qualifies as a public benefit organisation (PBO) under section 30(3) of the Income Tax Act.
  2. 2 Whether accreditation as a social housing institution under the Social Housing Act automatically entitles ABC to PBO status.
  3. 3 Whether ABC's Memorandum of Incorporation aligns with the definition of public benefit activity in paragraph 3(a) of the Ninth Schedule to the Income Tax Act.

Ratio Decidendi

The court held that ABC Company does not qualify for approval as a public benefit organisation under section 30(3) of the Income Tax Act. The principal object in ABC's Memorandum of Incorporation refers to providing accommodation to 'low to medium income households', which is a relative and imprecise term and does not equate to the fixed income threshold of R15 000 required by paragraph 3(a) of the Ninth Schedule. The court found that accreditation as a social housing institution under the Social Housing Act does not automatically entitle an entity to PBO status, as the statutory power to approve PBO applications resides with the Commissioner of SARS. The evidence showed that ABC's tenant...

Court Disposition

Appeal dismissed; ABC Company is not entitled to approval as a public benefit organisation or to the claimed tax exemption.

Orders

  • The appeal is dismissed.
  • No order as to costs.