Van Heerden and Others v S (A63/08) [2010] ZAWCHC 227; 73 SATC 7 (23 September 2010)

Van Heerden and Others v S (A63/08) [2010] ZAWCHC 227; 73 SATC 7 (23 September 2010)

The court held that the commissions waived by MCC did not form part of its gross income as MCC's entitlement to the commissions was conditional upon transfer of the properties, which had not occurred at the time of waiver. The evidence showed that MCC lawfully divested itself of the right to the commissions before accrual, and did not receive anything in return. The discounts received by related entities were not amounts received in respect of services rendered by MCC within the meaning of paragraph (c)(ii) of the Income Tax Act. The law on deemed accrual was obscure and uncertain at the relevant time, and the State failed to prove beyond reasonable doubt that the appellants acted with...

Citation
[2010] ZAWCHC 227
Parties
Appellant: Gideon Stephanus van Heerden; Appellant: Garth Sterling Le Roux; Appellant: Garth Le Roux Marketing CC; Respondent: The State
Court
Western Cape High Court, Cape Town
Jurisdiction
South Africa
Judgment Date
23 September 2010
Case Number
A63/08
Procedural Posture
Criminal Appeal / Appeal Against Conviction and Sentence; Cross Appeal by State
Outcome
Appeals upheld; convictions and sentences set aside; cross-appeal by the State dismissed; costs awarded to appellants in the cross-appeal.
Judges
Louw, Zondi
Legal Topics
Income Tax Act, Vat Act, Fraud, Mens Rea, Corporate Veil, Commission Income
Tax Law Criminal Law Commercial and Corporate Income Tax Act Vat Act Fraud Mens Rea Corporate Veil +1 more

Case Brief

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Parties

Gideon Stephanus van Heerden

Appellant

Garth Sterling Le Roux

Appellant

Garth Le Roux Marketing CC

Appellant

The State

Respondent

Procedural Posture

Criminal Appeal / Appeal Against Conviction and Sentence; Cross Appeal by State

Legal Issues

  1. 1 Whether commissions waived by MCC formed part of its gross income for tax purposes.
  2. 2 Whether the appellants acted with the requisite mens rea (intention or negligence) in omitting commissions from tax returns.
  3. 3 Whether VAT was payable on the sacrificed commissions.

Ratio Decidendi

The court held that the commissions waived by MCC did not form part of its gross income as MCC's entitlement to the commissions was conditional upon transfer of the properties, which had not occurred at the time of waiver. The evidence showed that MCC lawfully divested itself of the right to the commissions before accrual, and did not receive anything in return. The discounts received by related entities were not amounts received in respect of services rendered by MCC within the meaning of paragraph (c)(ii) of the Income Tax Act. The law on deemed accrual was obscure and uncertain at the relevant time, and the State failed to prove beyond reasonable doubt that the appellants acted with...

Court Disposition

Appeals upheld; convictions and sentences set aside; cross-appeal by the State dismissed; costs awarded to appellants in the cross-appeal.

Orders

  • The appeals by the first, second and third appellants against their convictions are upheld.
  • The first appellant is acquitted on counts 1, 3, 4, 5, 6, 7 and 9; convictions and sentences set aside.