BMW South Africa (PTY) LTD v The Commissioner for the South African Revenue Service (A553/16) [2018] ZAGPPHC 780 (28 June 2018)

BMW South Africa (PTY) LTD v The Commissioner for the South African Revenue Service (A553/16) [2018] ZAGPPHC 780 (28 June 2018)

The court held that the professional fees paid by the appellant to consultancy firms for expatriate employees constituted a taxable benefit under paragraph (i) of section 1 of the Income Tax Act read with paragraph 2(e) of the Seventh Schedule. The expatriate employees received a benefit or advantage when the appellant paid for tax services, and these services were rendered wholly for private use. The court found no evidence that the services were partially for the BMW group and partially for the expatriate employees. The benefit thus fell squarely within the meaning of paragraph 2(e) of the Seventh Schedule. The appeal was dismissed with costs, including the costs of two counsel.

Citation
[2018] ZAGPPHC 780
Parties
Appellant: BMW South Africa (PTY) LTD; Respondent: The Commissioner for the South African Revenue Service
Court
North Gauteng High Court, Pretoria
Jurisdiction
South Africa
Judgment Date
28 June 2018
Case Number
A553/16
Procedural Posture
Civil Appeal / Appeal Against Judgment and Order of Keightley J Under Section 138(2) of the Tax Administration Act and Rule 49(2) of the Uniform Rules of Court
Outcome
Appeal dismissed with costs, including costs of two counsel.
Judges
Carelse, Molopa-Sethosa, Bagwa
Legal Topics
Income Tax Act, Taxable Benefits, Seventh Schedule Interpretation, Tax Equalisation, Fringe Benefits
Tax Law Civil Procedure Income Tax Act Taxable Benefits Seventh Schedule Interpretation Tax Equalisation Fringe Benefits

Case Brief

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Parties

BMW South Africa (PTY) LTD

Appellant

The Commissioner for the South African Revenue Service

Respondent

Procedural Posture

Civil Appeal / Appeal Against Judgment and Order of Keightley J Under Section 138(2) of the Tax Administration Act and Rule 49(2) of the Uniform Rules of Court

Legal Issues

  1. 1 Whether professional fees paid by the appellant to tax consultancy firms for expatriate employees constitute taxable benefits under paragraph (i) of section 1 of the Income Tax Act read with paragraph 2(e) of the Seventh Schedule.
  2. 2 Whether the services rendered by the consultancy firms were utilised by expatriate employees for private or domestic purposes as contemplated by paragraph 2(e) of the Seventh Schedule.

Ratio Decidendi

The court held that the professional fees paid by the appellant to consultancy firms for expatriate employees constituted a taxable benefit under paragraph (i) of section 1 of the Income Tax Act read with paragraph 2(e) of the Seventh Schedule. The expatriate employees received a benefit or advantage when the appellant paid for tax services, and these services were rendered wholly for private use. The court found no evidence that the services were partially for the BMW group and partially for the expatriate employees. The benefit thus fell squarely within the meaning of paragraph 2(e) of the Seventh Schedule. The appeal was dismissed with costs, including the costs of two counsel.

Court Disposition

Appeal dismissed with costs, including costs of two counsel.

Orders

  • The appeal is dismissed with costs, such costs to include the costs consequent upon the employment of two counsel.