Milnerton Estates Limited v Commissioner for the South African Revenue Service (1159/2017) [2018] ZASCA 155; 2019 (2) SA 386 (SCA); 81 SATC 193 (20 November 2018)

Milnerton Estates Limited v Commissioner for the South African Revenue Service (1159/2017) [2018] ZASCA 155; 2019 (2) SA 386 (SCA); 81 SATC 193 (20 November 2018)

The Supreme Court of Appeal held that section 24(1) of the Income Tax Act applies to both cash and credit sales of immovable property. The provision deems the purchase price to have accrued to the seller on the date the sale agreement is entered into, provided transfer is to be passed upon or after receipt of the purchase price. The Court found that the agreements in question met these requirements, as the purchase price was secured before the end of the 2013 tax year and transfer was to be effected thereafter. The binding precedent of Silverglen Investments was reaffirmed, and the appellant’s arguments for a restrictive interpretation of section 24(1) were rejected. The appeal was...

Citation
[2018] ZASCA 155
Parties
Appellant: Milnerton Estates Limited; Respondent: Commissioner for the South African Revenue Service
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
20 November 2018
Case Number
1159/2017
Procedural Posture
Civil Appeal / Appeal From Tax Court, Cape Town
Outcome
Appeal dismissed with costs, including costs of two counsel.
Judges
NAVSA, WALLIS, MATHOPO, MATOJANE, NICHOLLS
Legal Topics
Income Tax Accrual, Sale of Immovable Property, Section 24 Income Tax Act, Suspensive Conditions, Stare Decisis
Tax Law Land and Property Income Tax Accrual Sale of Immovable Property Section 24 Income Tax Act Suspensive Conditions Stare Decisis

Case Brief

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Parties

Milnerton Estates Limited

Appellant

Commissioner for the South African Revenue Service

Respondent

Procedural Posture

Civil Appeal / Appeal From Tax Court, Cape Town

Legal Issues

  1. 1 Whether the appellant’s right to receive the purchase price under the sale agreements accrued during the 2013 tax year.
  2. 2 Whether section 24(1) of the Income Tax Act deems the purchase price to have accrued to the appellant during the 2013 tax year.

Ratio Decidendi

The Supreme Court of Appeal held that section 24(1) of the Income Tax Act applies to both cash and credit sales of immovable property. The provision deems the purchase price to have accrued to the seller on the date the sale agreement is entered into, provided transfer is to be passed upon or after receipt of the purchase price. The Court found that the agreements in question met these requirements, as the purchase price was secured before the end of the 2013 tax year and transfer was to be effected thereafter. The binding precedent of Silverglen Investments was reaffirmed, and the appellant’s arguments for a restrictive interpretation of section 24(1) were rejected. The appeal was...

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.