Stevens v Commissioner for South African Revenue Service (641/05) [2006] ZASCA 117; [2007] 3 All SA 229 (SCA); 2007 (2) SA 554 (SCA); 69 SATC 1 (28 November 2006)

Stevens v Commissioner for South African Revenue Service (641/05) [2006] ZASCA 117; [2007] 3 All SA 229 (SCA); 2007 (2) SA 554 (SCA); 69 SATC 1 (28 November 2006)

The Supreme Court of Appeal held that the ex gratia payment received by the appellant was made to employees (or ex-employees or the estate of a deceased employee) who had enjoyed a benefit directly linked to their employment and had lost that benefit due to the special dividend declaration. The board's decision to make the payment was motivated by the same quality of service that led to the grant of the option in the first place. The payment was made as employer to employee, and the employment relationship remained the dominant causative factor. Therefore, the payment constituted 'gross income' in terms of paragraph (c) of the definition in the Income Tax Act.

Citation
[2006] ZASCA 117
Parties
Appellant: Charles Douglas Newman Stevens; Respondent: Commissioner for the SA Revenue Service
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
28 November 2006
Case Number
641/05
Procedural Posture
Civil Appeal / Appeal From Tax Court Decision
Outcome
Appeal dismissed with costs.
Judges
Howie, Mthiyane, Brand, Maya, Combrinck
Legal Topics
Income Tax Act, Gross Income Definition, Ex Gratia Payments, Employment Benefits
Tax Law Income Tax Act Gross Income Definition Ex Gratia Payments Employment Benefits

Case Brief

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Parties

Charles Douglas Newman Stevens

Appellant

Commissioner for the SA Revenue Service

Respondent

Procedural Posture

Civil Appeal / Appeal From Tax Court Decision

Legal Issues

  1. 1 Whether the ex gratia payment received by the appellant constituted 'gross income' in terms of paragraph (c) of the definition in the Income Tax Act.
  2. 2 Whether the payment was received in respect of services rendered or employment.

Ratio Decidendi

The Supreme Court of Appeal held that the ex gratia payment received by the appellant was made to employees (or ex-employees or the estate of a deceased employee) who had enjoyed a benefit directly linked to their employment and had lost that benefit due to the special dividend declaration. The board's decision to make the payment was motivated by the same quality of service that led to the grant of the option in the first place. The payment was made as employer to employee, and the employment relationship remained the dominant causative factor. Therefore, the payment constituted 'gross income' in terms of paragraph (c) of the definition in the Income Tax Act.

Court Disposition

Appeal dismissed with costs.

Orders

  • The appeal is dismissed.
  • The appellant is ordered to pay the costs of the appeal.