Russow v Reid and Another ([2011] 3 All SA 106 (GSJ)) [2011] ZAGPJHC 4; 50730/2007 (8 February 2011)

Russow v Reid and Another ([2011] 3 All SA 106 (GSJ)) [2011] ZAGPJHC 4; 50730/2007 (8 February 2011)

The court held that the applicant's right to recover the tax paid on the pension interest assigned to the first respondent arises ex lege under section 2B of the Second Schedule to the Income Tax Act 58 of 1962, and is not based on contract. The settlement agreement did not contemplate or waive this statutory right, nor did it preclude recovery of tax paid as a result of the first respondent's election to withdraw her assigned pension interest. The tax liability accrued to the applicant's account upon payment of the lump sum pension, and section 2B expressly permits recovery of such tax from the former spouse. The court found that the applicant is entitled to recover the amount of R135...

Citation
[2011] ZAGPJHC 4
Parties
Applicant: Nicolaas Louw Russow; Respondent: Engela (Louw) Reid; Respondent: Sasol Pension Fund
Court
South Gauteng High Court, Johannesburg
Jurisdiction
South Africa
Judgment Date
8 February 2011
Case Number
50730/2007
Procedural Posture
Civil Application / Final Judgment
Outcome
Application granted. The first respondent is ordered to pay the applicant the tax amount deducted from his pension interest, and to pay the applicant's costs.
Judges
Mokgoatlheng
Legal Topics
Divorce Pension Interest, Tax Liability on Pension, Settlement Agreement Interpretation, Section 2b Income Tax Act, Section 37d Pension Funds Act
Family and Children Tax Law Civil Procedure Divorce Pension Interest Tax Liability on Pension Settlement Agreement Interpretation Section 2b Income Tax Act Section 37d Pension Funds Act

Case Brief

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Parties

Nicolaas Louw Russow

Applicant

Engela (Louw) Reid

Respondent

Sasol Pension Fund

Respondent

Procedural Posture

Civil Application / Final Judgment

Legal Issues

  1. 1 Whether the applicant is entitled to recover from the first respondent the tax paid on the pension interest assigned to her following divorce.
  2. 2 Whether the settlement agreement between the parties precludes the applicant from recovering the tax liability from the first respondent.
  3. 3 Whether section 2B of the Second Schedule to the Income Tax Act 58 of 1962 creates an ex lege right of recovery for the applicant.

Ratio Decidendi

The court held that the applicant's right to recover the tax paid on the pension interest assigned to the first respondent arises ex lege under section 2B of the Second Schedule to the Income Tax Act 58 of 1962, and is not based on contract. The settlement agreement did not contemplate or waive this statutory right, nor did it preclude recovery of tax paid as a result of the first respondent's election to withdraw her assigned pension interest. The tax liability accrued to the applicant's account upon payment of the lump sum pension, and section 2B expressly permits recovery of such tax from the former spouse. The court found that the applicant is entitled to recover the amount of R135...

Court Disposition

Application granted. The first respondent is ordered to pay the applicant the tax amount deducted from his pension interest, and to pay the applicant's costs.

Orders

  • The first respondent is ordered to pay to the second respondent the amount of R135 614.27 to be credited to the applicant's pension interest in the second respondent.
  • The first respondent is ordered to pay the applicant's costs.