B v Commissioner for the South African Revenue Service (13395) [2021] ZATC 5; 83 SATC 545 (23 April 2021)

B v Commissioner for the South African Revenue Service (13395) [2021] ZATC 5; 83 SATC 545 (23 April 2021)

The court found that the taxpayer disposed of his shares in both the South African and offshore companies in 2009, and that the proceeds from the sale accrued to him at that time. The base cost of the shares was determined by reference to the value declared in the Exchange Control Amnesty application, pro-rated to reflect the actual shareholding disposed of. The court held that the taxpayer failed to disclose the disposal and was liable for CGT on the net capital gain, calculated as the difference between the proceeds and the base cost, less the annual exclusion. The assessment was ordered to be altered to reflect the correct capital gain. The court found no justification for the...

Citation
[2021] ZATC 5
Parties
Appellant: B; Respondent: Commissioner for the South African Revenue Services
Court
Tax Court
Jurisdiction
South Africa
Judgment Date
23 April 2021
Case Number
13395
Procedural Posture
Tax Appeal / Final Judgment
Outcome
Appellant's appeal against the revised assessment for the 2009 year of assessment is dismissed. The assessment is altered to reflect a capital gain of R3 641 339,58 to be included in taxable income. Additional tax penalty reduced from 200% to 25%. Interest confirmed on the altered assessment. Penalties for late...
Judges
L R Adams, F Venter, I Nkama
Legal Topics
Capital Gains Tax, Base Cost Determination, Exchange Control Amnesty, Assessment Alteration, Additional Tax Penalty, Interest on Underpayment
Tax Law Capital Gains Tax Base Cost Determination Exchange Control Amnesty Assessment Alteration Additional Tax Penalty Interest on Underpayment

Case Brief

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Parties

B

Appellant

Commissioner for the South African Revenue Services

Respondent

Procedural Posture

Tax Appeal / Final Judgment

Legal Issues

  1. 1 Is the taxpayer liable for capital gains tax (CGT) on the disposal of shares in the 2009 tax year.
  2. 2 How should the base cost of the disposed shares be determined for CGT purposes.
  3. 3 Should the assessment be altered to reflect the correct capital gain and related penalties and interest.

Ratio Decidendi

The court found that the taxpayer disposed of his shares in both the South African and offshore companies in 2009, and that the proceeds from the sale accrued to him at that time. The base cost of the shares was determined by reference to the value declared in the Exchange Control Amnesty application, pro-rated to reflect the actual shareholding disposed of. The court held that the taxpayer failed to disclose the disposal and was liable for CGT on the net capital gain, calculated as the difference between the proceeds and the base cost, less the annual exclusion. The assessment was ordered to be altered to reflect the correct capital gain. The court found no justification for the...

Court Disposition

Appellant's appeal against the revised assessment for the 2009 year of assessment is dismissed. The assessment is altered to reflect a capital gain of R3 641 339,58 to be included in taxable income. Additional tax penalty reduced from 200% to 25%. Interest confirmed on the altered assessment. Penalties for late...

Orders

  • The appellant’s appeal against the revised assessment for the 2009 year of assessment is dismissed.
  • The respondent is ordered to alter the 2009 assessment in terms of section 129(2)(b) of the Tax Administration Act, 28 of 2011, to reflect a capital gain to be included in the appellant’s taxable income of R3 641 339,58.