Anglo Platinum Management Services v SARS (20725/2014) [2015] ZASCA 180; 2016 (3) SA 406 (SCA); 78 SATC 73 (30 November 2015)

Anglo Platinum Management Services v SARS (20725/2014) [2015] ZASCA 180; 2016 (3) SA 406 (SCA); 78 SATC 73 (30 November 2015)

The Supreme Court of Appeal found that the salary sacrifice scheme implemented by Anglo Platinum Management Services (Pty) Ltd was valid and binding for tax purposes. The employees unconditionally forewent a portion of their remuneration in exchange for the use of company-owned motor vehicles, and the sacrificed amount was not received or accrued for services rendered. The notional accounts and the right to claim credits were contingent and did not undermine the divestment of remuneration. The employer assumed liability for insurance premiums and all costs associated with the vehicles, which were paid from the sacrificed salary portion. The scheme was properly designed and implemented,...

Citation
[2015] ZASCA 180
Parties
Appellant: Anglo Platinum Management Services (Pty) Ltd; Respondent: The Commissioner for the South African Revenue Service
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
30 November 2015
Case Number
20725/2014
Procedural Posture
Civil Appeal / Appeal From Tax Court, Johannesburg
Outcome
Appeal upheld. Tax Court order set aside and replaced with an order allowing the appeal.
Judges
Cachalia, Leach, Tshiqi, Pillay, Mbha
Legal Topics
Salary Sacrifice, Taxable Benefit, Income Tax Act, Remuneration Definition
Tax Law Commercial and Corporate Salary Sacrifice Taxable Benefit Income Tax Act Remuneration Definition

Case Brief

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Parties

Anglo Platinum Management Services (Pty) Ltd

Appellant

The Commissioner for the South African Revenue Service

Respondent

Procedural Posture

Civil Appeal / Appeal From Tax Court, Johannesburg

Legal Issues

  1. 1 Whether the salary sacrifice scheme implemented by the taxpayer constituted a valid and binding arrangement for tax purposes.
  2. 2 Whether the use of company-owned motor vehicles by employees should be taxed as a taxable benefit under paragraph (i) of the definition of 'gross income' in section 1 of the Income Tax Act, read with the Seventh Schedule, or under paragraph (c) of the definition.
  3. 3 Whether the employees unconditionally divested themselves of the right to the sacrificed portion of their remuneration.

Ratio Decidendi

The Supreme Court of Appeal found that the salary sacrifice scheme implemented by Anglo Platinum Management Services (Pty) Ltd was valid and binding for tax purposes. The employees unconditionally forewent a portion of their remuneration in exchange for the use of company-owned motor vehicles, and the sacrificed amount was not received or accrued for services rendered. The notional accounts and the right to claim credits were contingent and did not undermine the divestment of remuneration. The employer assumed liability for insurance premiums and all costs associated with the vehicles, which were paid from the sacrificed salary portion. The scheme was properly designed and implemented,...

Court Disposition

Appeal upheld. Tax Court order set aside and replaced with an order allowing the appeal.

Orders

  • The appeal is upheld with costs, including the costs of two counsel.
  • The order of the Tax Court is set aside and replaced with: 'The appeal is allowed.'