Grundlingh v Commissioner for the South African Revenue Services (A33/2008) [2009] ZAFSHC 88; 72 SATC 1 (17 September 2009)

Grundlingh v Commissioner for the South African Revenue Services (A33/2008) [2009] ZAFSHC 88; 72 SATC 1 (17 September 2009)

The court held that Webber Newdigate, as a partnership, is not a taxable entity in Lesotho; only the individual partners are liable for tax on their share of partnership income. Article 7(1) of the Double Taxation Agreement between South Africa and Lesotho does not apply to exclude the appellant's partnership income from South African tax, as the partnership itself is not liable for tax in Lesotho. South African law taxes residents on worldwide income, including foreign partnership profits, unless specifically excluded by the DTA. The appellant is therefore liable for South African tax on his share of the profits, subject to a credit for taxes paid in Lesotho under Article 22(2) of the...

Citation
[2009] ZAFSHC 88
Parties
Appellant: J J Grundlingh; Respondent: The Commissioner for the South African Revenue Service
Court
Free State High Court, Bloemfontein
Jurisdiction
South Africa
Judgment Date
17 September 2009
Case Number
A33/2008
Procedural Posture
Civil Appeal / Full Bench Appeal From Tax Court
Outcome
Appeal dismissed; assessments confirmed.
Judges
J Y Claasen, S Ebrahim, A F Jordaan
Legal Topics
Double Taxation Agreement, Taxation of Partnerships, Residence Based Taxation, Income Tax Act, Foreign Income, Tax Credit Mechanism
Tax Law Commercial and Corporate Double Taxation Agreement Taxation of Partnerships Residence Based Taxation Income Tax Act Foreign Income Tax Credit Mechanism

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 4 Authorities cited 3 Party arguments 2
Sign in to unlock

Parties

J J Grundlingh

Appellant

The Commissioner for the South African Revenue Service

Respondent

Procedural Posture

Civil Appeal / Full Bench Appeal From Tax Court

Legal Issues

  1. 1 Is the appellant's share of profits from a Lesotho partnership taxable only in Lesotho or also in South Africa under the Double Taxation Agreement (DTA)?
  2. 2 Does Article 7(1) of the DTA exclude the appellant's partnership income from South African tax?
  3. 3 Is Webber Newdigate a taxable entity in Lesotho for purposes of the DTA?

Ratio Decidendi

The court held that Webber Newdigate, as a partnership, is not a taxable entity in Lesotho; only the individual partners are liable for tax on their share of partnership income. Article 7(1) of the Double Taxation Agreement between South Africa and Lesotho does not apply to exclude the appellant's partnership income from South African tax, as the partnership itself is not liable for tax in Lesotho. South African law taxes residents on worldwide income, including foreign partnership profits, unless specifically excluded by the DTA. The appellant is therefore liable for South African tax on his share of the profits, subject to a credit for taxes paid in Lesotho under Article 22(2) of the...

Court Disposition

Appeal dismissed; assessments confirmed.

Orders

  • The appeal is dismissed.
  • The tax assessments issued by the respondent are confirmed.