South Africa Case Law

Taxpayer Boerdery v Commissioner for the South African Revenue Service (IT 45979)

Taxpayer Boerdery v Commissioner for the South African Revenue Service (IT 45979) [2024] ZATC 5 (20 March 2024)

Court

Tax Court

Case number

IT 45979

Judges

Windell, Prof. P. van der Zwan, Adv. A.K. Sithole

The court found that the so-called 'premiums' paid by Taxpayer Boerdery to Company XYZ were not genuine insurance expenses but rather deposits that created a capital asset in the form of the experience account. The taxpayer retained the right to a refund of the balance, which accrued interest and was accessible on notice. The payments were not permanently outlaid in exchange for insurance cover but were refundable and generated a return, making them of a capital nature. As such, the payments did not qualify for deduction under section 11(a) of the Income Tax Act. The taxpayer failed to discha…

Source excerpt

• Income Tax Deductions
• Capital Vs Revenue Expenditure
• Understatement Penalty
• Insurance Contracts
• Interest On Underpayment

Taxpayer A v Commissioner for the South African Revenue Services (IT 25042)

Taxpayer A v Commissioner for the South African Revenue Services (IT 25042) [2022] ZATC 7; 85 SATC 246 (14 July 2022)

Court

Tax Court

Case number

IT 25042

Judges

Molitsoane, Liebenberg, Mathibela

The court found that the finance charges (raising fees, debt origination fees, structuring fees) incurred by the appellant in connection with loans for property development and investment were closely connected to the obtaining of the loans and the production of income. These charges formed part of the total cost of borrowing and were inextricably linked to the interest payable under the loan agreements. The court held that, under section 24J of the Income Tax Act as it stood prior to the 2017 amendment, such finance charges constituted 'related finance charges' and were deductible. The court…

Source excerpt

• Income Tax Deductions
• Interest And Finance Charges
• Understatement Penalty
• Retrospective Application Of Statutes

XYZ (Pty) Ltd v Commissioner for the South African Revenue Service (IT 24790)

XYZ (Pty) Ltd v Commissioner for the South African Revenue Service (IT 24790) [2021] ZATC 23; 84 SATC 432 (15 October 2021)

Court

Tax Court

Case number

IT 24790

Judge

K M Savage

The Tax Court held that accrued leave and bonus pay were deductible only when paid under section 7B, and that notice and severance pay were not deductible under section 11(a).

• Income Tax Deductions
• Variable Remuneration
• Future Expenditure
• Section 11a
• Section 7b
• Section 24c

Black Mountain Mining (Pty) Ltd v Commissioner for the South African Revenue Services (A78/2021)

Black Mountain Mining (Pty) Ltd v Commissioner for the South African Revenue Services (A78/2021) [2021] ZAGPJHC 800 (7 September 2021)

Court

South Gauteng High Court, Johannesburg

Case number

A78/2021

Judges

Weiner, Opperman, Makola

The High Court held that the Tax Court’s refusal to allow an amendment was appealable and granted leave to amend the taxpayer’s Rule 32 statement.

• Income Tax Deductions
• Tax Court Procedure
• Amendment Of Pleadings
• Appealability Of Interlocutory Orders
• Burden Of Proof
• Waiver And Abandonment

ABC Trading v Commissioner for the South African Revenue Services (IT 25242)

ABC Trading v Commissioner for the South African Revenue Services (IT 25242) [2021] ZATC 26 (31 May 2021)

Court

Tax Court

Case number

IT 25242

Judges

Mali, S.C. Nhleko, T. Tsekoa

The Tax Court upheld additional assessments, disallowed depreciation and finance-charge deductions, confirmed a 100% understatement penalty, and ordered costs against the appellant.

• Income Tax Deductions
• Depreciation Allowance
• Connected Person Transactions
• Understatement Penalty
• Burden Of Proof
• Costs Order

ABC Trading v Commissioner for the South African Revenue Service (IT 25242)

ABC Trading v Commissioner for the South African Revenue Service (IT 25242) [2021] ZATC 16 (19 February 2021)

Court

Tax Court

Case number

IT 25242

Judges

Mali, S.C. Nhleko, T. Tsekoa

The Tax Court confirmed additional assessments, disallowed depreciation and finance-charge deductions, upheld a 100% understatement penalty, and awarded costs against the appellant.

• Income Tax Deductions
• Depreciation Allowance
• Connected Person Transactions
• Finance Charge Deduction
• Understatement Penalty
• Burden Of Proof

DEF Mining (Pty) Ltd v Commissioner for the South African Revenue Service (IT 24578)

DEF Mining (Pty) Ltd v Commissioner for the South African Revenue Service (IT 24578) [2021] ZATC 25 (27 January 2021)

Court

Tax Court

Case number

IT 24578

Judge

Collis

The court found that the applicant had previously abandoned and waived the section 11(a) ground by not including it in its Rule 32 Statement and by making admissions that the expenditure was capital in nature. The applicant failed to provide a reasonable explanation for the withdrawal of these admissions or for the delay in seeking the amendment. The introduction of Annexure 'DEF' would require the respondent to address new factual matters not previously presented, causing prejudice. The applicant did not take the court into its confidence regarding the change in legal advice or the reasons f…

Source excerpt

• Income Tax Deductions
• Tax Court Rules
• Amendment Of Pleadings
• Onus Of Amendment
• Capital Vs Revenue Expenditure

Mr X v Commissioner for the South African Revenue Service (13791; 13792)

Mr X v Commissioner for the South African Revenue Service (13791; 13792) [2016] ZATC 15 (13 December 2016)

Court

Tax Court

Case number

13791; 13792

Judge

Yekiso

The Tax Court held that mortgage bond interest was not deductible against interest income earned on an employer loan account, and confirmed the Commissioner’s assessment.

• Income Tax Deductions
• Interest Expense
• Production Of Income
• Practice Note 31
• Onus Of Proof
• Income-tax-deductions

Commissioner for the South African Revenue Service v Mobile Telephone Networks Holdings (Pty) Ltd (966/2012)

Commissioner for the South African Revenue Service v Mobile Telephone Networks Holdings (Pty) Ltd (966/2012) [2014] ZASCA 4; 2014 (5) SA 366 (SCA); 76 SATC 205 (7 March 2014)

Court

Supreme Court of Appeal

Case number

966/2012

Judges

Ponnan, Shongwe, Wallis, Van Zyl, Legodi

The court held that only 10% of the company’s audit fees were deductible and disallowed a disputed KPMG fee entirely for lack of proof.

• Income Tax Deductions
• Apportionment Of Expenditure
• Audit Fees
• Capital Vs Revenue Expenditure
• Income-tax-deductions
• Apportionment-of-expenditure

Mobile Telephone Networks Holdings (Pty) Ltd v Commissioner for the South African Revenue Service (A5033/10)

Mobile Telephone Networks Holdings (Pty) Ltd v Commissioner for the South African Revenue Service (A5033/10) [2011] ZAGPJHC 94; 73 SATC 315 (1 July 2011)

Court

South Gauteng High Court, Johannesburg

Case number

A5033/10

Judges

Victor, Horn, Wepener

High Court tax appeal on whether audit fees and Hyperion training costs were deductible. The court allowed most audit fees and held the training fees deductible.

• Income Tax Deductions
• Apportionment Of Expenditure
• Audit Fees
• Training Expenses
• Capital Vs Revenue Expenditure
• Income-tax-deductions