South Africa Case Law

Capstone 556 (Pty) Limited v Commissioner For The South African Revenue Service (A49/14)

Capstone 556 (Pty) Limited v Commissioner For The South African Revenue Service (A49/14) [2014] ZAWCHC 123; 2014 (6) SA 195 (WCC); 77 SATC 1 (26 August 2014)

Court

Western Cape High Court, Cape Town

Case number

A49/14

Judges

Griesel, Yekiso, Baartman

The court found that the JDG shares were acquired and held by the appellant as a capital asset, not as trading stock in pursuit of a profit-making scheme. The evidence demonstrated that the acquisition was part of a strategic rescue operation in the furniture industry, with a long-term commitment and substantial risk, and no short-term intention to sell. The subsequent decision to sell was opportunistic, prompted by external factors and did not constitute a change of intention to convert the asset into trading stock. Accordingly, the proceeds from the disposal of the shares were of a capital…

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• Income Tax Assessment
• Capital Vs Revenue Distinction
• Deductibility Of Expenditure
• Capital Gains Tax
• Borrowing Costs
• Intention Of Taxpayer

Samril Investments (Pty) Ltd v Commissioner for the SA Revenue Service (426/2001)

Samril Investments (Pty) Ltd v Commissioner for the SA Revenue Service (426/2001) [2002] ZASCA 118; 2003 (1) SA 658 (SCA); 65 SATC 1 (25 September 2002)

Court

Supreme Court of Appeal

Case number

426/2001

Judges

Hefer, Schutz, Streicher, Farlam, Lewis

The Supreme Court of Appeal held that receipts from removing and selling building sand were revenue, not capital, and dismissed the taxpayer’s appeal.

• Income Tax
• Capital Vs Revenue Distinction
• Sale Of Assets
• Burden Of Proof
• Interpretation Of Contracts
• Income-tax

Commissioner for Inland Revenue v Nussbaum (337/94)

Commissioner for Inland Revenue v Nussbaum (337/94) [1996] ZASCA 41; 1996 (4) SA 1156 (SCA); (29 March 1996)

Court

Supreme Court of Appeal

Case number

337/94

Judges

Corbett, Nestadt, Nienaber, Howie, Zulman

The Supreme Court of Appeal found that the respondent's share transactions during the relevant tax years were characterised by scale, frequency, and profitability, including significant profits from shares held for five years or less. The respondent actively managed his portfolio, selling shares when dividend yields fell, which was often due to increased market value rather than decreased dividends. The evidence showed that profit was inherent in these sales and that the respondent worked for it through meticulous portfolio management. The retention of some shares and reinvestment in the shar…

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• Capital Vs Revenue Distinction
• Onus Of Proof In Tax Disputes
• Share Dealing For Profit
• Secondary Purpose In Taxation
• Investment Vs Trading
• Forced Disposals Takeovers

Commissioner for Inland Revenue v Guardian Assurance Company South Africa Ltd. (301/1989)

Commissioner for Inland Revenue v Guardian Assurance Company South Africa Ltd. (301/1989) [1991] ZASCA 32; 1991 (3) SA 1 (AD); [1991] 2 All SA 193 (A) (26 March 1991)

Court

Supreme Court of Appeal

Case number

301/1989

Judges

Corbett, Nestadt, Kumleben, Preiss, Krieger

The court held that profits from GASA’s share sales were capital, not income, because the portfolio was a long-term investment managed conservatively for dividends.

• Income Tax Assessment
• Capital Vs Revenue Distinction
• Share Disposals
• Investment Trusts
• Onus Of Proof
• Corporate Restructuring

Commissioner for Inland Revenue v Malcomess Properties (Isando) (Pty) Ltd. (41/89)

Commissioner for Inland Revenue v Malcomess Properties (Isando) (Pty) Ltd. (41/89) [1990] ZASCA 163; 1991 (2) SA 27 (AD); [1991] 4 All SA 145 (AD) (30 November 1990)

Court

Supreme Court of Appeal

Case number

41/89

Judges

Botha, Nestadt, Kumleben, Nicholas, Preiss

The court held that the profit realised from the sale of the Isando property by Malcomess (Isando) (Pty) Ltd was a capital realisation and not subject to income tax. The property was acquired and held as a capital asset, and its character was not altered by the subsequent sale, nor by the involvement of Malbak as the controlling shareholder. The sale was not part of a profit-making scheme but a mere realisation of a capital asset in the course of voluntary liquidation. The intention of Malbak in devising and executing the scheme was irrelevant to the intention of Malcomess (Isando), as the co…

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• Capital Vs Revenue Distinction
• Realisation Of Assets
• Company Control
• Scheme Of Arrangement

Commissioner for Inland Revenue v Nedbank Ltd. (64/86)

Commissioner for Inland Revenue v Nedbank Ltd. (64/86) [1986] ZASCA 63; [1986] 2 All SA 481 (A) (29 May 1986)

Court

Supreme Court of Appeal

Case number

64/86

Judges

Corbett, Van Heerden, Hefer, Galgut, Nestadt

The Supreme Court of Appeal held that Nedbank Limited acquired the Sasol shares as a long-term investment with the dominant intention of obtaining collateral benefits, specifically banking business from Sasol and access to the Afrikaans business community. The evidence, including the testimony of Nedbank's chief executive and contemporaneous documentation, established that the shares were not acquired for resale at a profit. The transaction was extraordinary and not part of Nedbank's ordinary business of dealing in equities. The sale of the shares was a realization of a capital asset, and the…

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• Income Tax
• Capital Vs Revenue Distinction
• Share Transactions
• Intention In Tax
• Realization Of Capital Assets

Plobar Estates (Pty) Ltd. v Commissioner for Inland Revenue (101/83)

Plobar Estates (Pty) Ltd. v Commissioner for Inland Revenue (101/83) [1985] ZASCA 34 (24 May 1985)

Court

Supreme Court of Appeal

Case number

101/83

Judges

Corbett, Miller, Hoexter, Grosskopf, Nicholas, AJA

The court held that Plobar Estates failed to prove land was acquired as a capital asset, so profits from sales of erven were taxable income.

• Capital Vs Revenue Distinction
• Onus Of Proof
• Disposal Of Land
• Taxable Income
• Administration Fees
• Capital-vs-revenue