BMW South Africa (Pty) Ltd v The Commissioner for the South African Revenue Service (1156/2018) [2019] ZASCA 107; 2020 (1) SA 484 (SCA); 82 SATC 1 (6 September 2019)

BMW South Africa (Pty) Ltd v The Commissioner for the South African Revenue Service (1156/2018) [2019] ZASCA 107; 2020 (1) SA 484 (SCA); 82 SATC 1 (6 September 2019)

The Supreme Court of Appeal held that the payments made by BMW South Africa to tax consultants for expatriate employees constituted a taxable benefit or advantage as contemplated by section 1(i) of the Income Tax Act, read with paragraph 2(e) of the Seventh Schedule. The Court found that the services rendered by the tax consultants were for the private or domestic purposes of the expatriate employees, as they related to their individual tax obligations. The fact that BMW South Africa had a tax equalisation policy and may have derived some peripheral benefit from the consultancy services was irrelevant. The primary question was whether an advantage or benefit was granted by the employer to...

Citation
[2019] ZASCA 107
Parties
Appellant: BMW South Africa (Pty) Ltd; Respondent: The Commissioner for the South African Revenue Service
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
6 September 2019
Case Number
1156/2018
Procedural Posture
Civil Appeal / Appeal From the Gauteng Division of the High Court, Pretoria, After Prior Tax Court and Full Bench Decisions
Outcome
Appeal dismissed with costs, including the costs of two counsel.
Judges
Navsa, Leach, Mbha, Van der Merwe, Nicholls
Legal Topics
Income Tax Act, Fringe Benefits, Tax Equalisation, Seventh Schedule Interpretation, Gross Income Definition
Tax Law Civil Procedure Income Tax Act Fringe Benefits Tax Equalisation Seventh Schedule Interpretation Gross Income Definition

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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 From the Gauteng Division of the High Court, Pretoria, After Prior Tax Court and Full Bench Decisions

Legal Issues

  1. 1 Whether payments by BMW South Africa to tax consultants for expatriate employees constitute a taxable benefit or advantage under the Income Tax Act and Seventh Schedule.
  2. 2 Whether such payments fall within the definition of 'gross income' in section 1(i) of the Income Tax Act.
  3. 3 Whether the services rendered by tax consultants are for the private or domestic purposes of the expatriate employees as contemplated by paragraph 2(e) of the Seventh Schedule.

Ratio Decidendi

The Supreme Court of Appeal held that the payments made by BMW South Africa to tax consultants for expatriate employees constituted a taxable benefit or advantage as contemplated by section 1(i) of the Income Tax Act, read with paragraph 2(e) of the Seventh Schedule. The Court found that the services rendered by the tax consultants were for the private or domestic purposes of the expatriate employees, as they related to their individual tax obligations. The fact that BMW South Africa had a tax equalisation policy and may have derived some peripheral benefit from the consultancy services was irrelevant. The primary question was whether an advantage or benefit was granted by the employer to...

Court Disposition

Appeal dismissed with costs, including the costs of two counsel.

Orders

  • The appeal is dismissed with costs, including the costs of two counsel.