South Africa Case Law

L Taxpayer v Commissioner for the South African Revenue Service (A124/2017)

L Taxpayer v Commissioner for the South African Revenue Service (A124/2017) [2018] ZAWCHC 23; [2018] 2 All SA 478 (WCC); 81 SATC 79 (27 February 2018)

Court

Western Cape High Court, Cape Town

Case number

A124/2017

Judges

R Allie, J Cloete, L Nuku

The court found that the taxpayer's arrangement did not establish a sufficiently close causal connection between the interest expense incurred on the Investec loan and the interest income earned on the Bowmans loan for purposes of section 11(a) of the Income Tax Act. The Investec loan was taken to acquire a residence and functioned as an access facility, not as a means to facilitate the Bowmans loan. The taxpayer could not demand repayment of the Bowmans loan while employed, and distributions from his employer were discretionary and not guaranteed. The interest income accrued to the taxpayer…

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• Income Tax Deduction
• Interest Expense
• Production Of Income
• Tax Administration Act
• Practice Note 31

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 South African Revenue Service v BP South Africa (Pty) Ltd (92/05 , 92/05)

Commissioner for South African Revenue Service v BP South Africa (Pty) Ltd (92/05 , 92/05) [2006] ZASCA 61; [2006] 4 All SA 523 (SCA); 2006 (5) SA 559 (SCA); 68 SATC 229 (25 May 2006)

Court

Supreme Court of Appeal

Case number

92/05

Judges

Howie, Streicher, Nugent, Cloete, Heher

The Supreme Court of Appeal held that interest on a shareholder loan was deductible under section 11(a), but prepaid rental for long leases was capital in nature.

• Income Tax Deduction
• Interest Expense
• Capital Vs Revenue Expenditure
• Prepaid Rental
• Section 11a
• Section 11f

Kommissaris van Binnelandse Inkomste v Van Blommestein (120/97)

Kommissaris van Binnelandse Inkomste v Van Blommestein (120/97) [1998] ZASCA 106; 1999 (2) SA 367 (SCA); [1999] 1 All SA 463 (A) (27 November 1998)

Court

Supreme Court of Appeal

Case number

120/97

Judges

Smalberger, Hoexter, Plewmann, Melunsky, Ngoepe

The majority held that the amounts paid by the respondent to his mother under clause 10.5(a) of the will were not received in a fiduciary capacity but as a personal obligation arising from a modus in the will. Therefore, these amounts formed part of the respondent's gross income and were not deductible. The respondent failed to discharge the burden of proof that the payments were wholly or exclusively for trade purposes as required by section 23(g). However, the interest paid on bonds registered under clauses 10.5(b) and (c) was incurred to acquire income-producing assets and, following the p…

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• Income Tax Deductions
• Testamentary Modus
• Fideicommissum
• Interest Expense
• Gross Income Definition
• Burden Of Proof

Burgess v Commissioner for Inland Revenue (685/91)

Burgess v Commissioner for Inland Revenue (685/91) [1993] ZASCA 88; 1993 (4) SA 161 (AD); [1993] 2 All SA 496 (A) (2 June 1993)

Court

Supreme Court of Appeal

Case number

685/91

Judges

Corbett, E M Grosskopf, Vivier, Kumleben, Nienaber

The court held that interest on money borrowed for a speculative investment was deductible, because the taxpayer was carrying on a trade through a venture.

• Income Tax Deduction
• Interest Expense
• Definition Of Trade
• Venture Speculation
• Capital Nature Expenditure
• Income-tax-deduction

Commissioner For Inland Revenue v Standard Bank of South Africa Ltd. (81/85)

Commissioner For Inland Revenue v Standard Bank of South Africa Ltd. (81/85) [1985] ZASCA 63; [1985] 2 All SA 512 (A) (22 August 1985)

Court

Supreme Court of Appeal

Case number

81/85

Judges

Corbett, Miller, Van Heerden, Hefer, Galgut

The court held that interest on deposit moneys remained deductible even though some funds were used to buy redeemable preference shares generating exempt dividends.

• Income Tax Deductions
• Interest Expense
• Exempt Income
• Redeemable Preference Shares
• Income-tax-deductions
• Interest-expense