South Africa Case Law

S G Taxpayer v Commissioner for the South African Revenue Service (IT14264)

S G Taxpayer v Commissioner for the South African Revenue Service (IT14264) [2018] ZATC 1; 81 SATC 308 (9 May 2018)

Court

Tax Court

Case number

IT14264

Judges

J I Cloete, B R Hilliard, T Pasiwe

The court found that the taxpayer's dominant purpose in making the R48 million contribution to the Trust was to incentivise and retain key management staff, thereby enhancing the taxpayer's income-producing capacity. The scheme was structured so that employees benefited from the growth in the holding company's shares, and the contribution was not repaid to the taxpayer. The evidence established a sufficiently close causal link between the expenditure and the taxpayer's income-producing operations. The court distinguished the present case from Solaglass, as the expenditure was not for the bene…

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• Income Tax Deduction
• Employee Share Incentive Scheme
• Production Of Income
• Section 11a Income Tax Act
• Group Company Expenditure

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

X Group (Pty) Ltd v Commissioner for the South African Revenue Service (13671)

X Group (Pty) Ltd v Commissioner for the South African Revenue Service (13671) [2017] ZATC 18 (20 April 2017)

Court

Tax Court

Case number

13671

Judge

Allie

The Tax Court held that a R90 million settlement paid to ABC was not deductible under section 11(a) because it was not incurred in producing income.

• Income Tax Deduction
• Contingent Liability
• Production Of Income
• Settlement Agreement
• Interest On Tax
• Costs Order

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