South Africa Case Law

Commissioner for the South African Revenue Service v Digicall Solutions (Pty) Ltd (927/2017)

Commissioner for the South African Revenue Service v Digicall Solutions (Pty) Ltd (927/2017) [2018] ZASCA 137; [2018] 4 All SA 647 (SCA); 2019 (4) SA 312 (SCA); 81 SATC 97 (28 September 2018)

Court

Supreme Court of Appeal

Case number

927/2017

Judges

Navsa, Majiedt, Swain, Zondi, Mokgohloa

The Supreme Court of Appeal found that the first change in shareholding in the taxpayer company was effected solely or mainly for the purpose of utilising the assessed loss to avoid tax liability. The evidence demonstrated that the assessed loss was a central consideration in the structuring of the transactions, and that the taxpayer failed to discharge the onus of proving that the change was not effected for the prohibited purpose. The Court held that the income received by the taxpayer after the second change in shareholding resulted indirectly from the first change, as the transactions wer…

Source excerpt

• Income Tax Act Section 103
• Assessed Loss Utilisation
• Change In Shareholding
• Tax Avoidance
• Onus Of Proof
• Corporate Structuring

ABC (Pty) Ltd v Commissioner for the South African Revenue Service (IT 13164)

ABC (Pty) Ltd v Commissioner for the South African Revenue Service (IT 13164) [2016] ZATC 13 (7 September 2016)

Court

Tax Court

Case number

IT 13164

Judges

Allie, Karin Hofmeyr, JN Louw

The Tax Court held that section 103(2) of the Income Tax Act did not apply because the share acquisition had genuine commercial substance and the assessed losses could be set off.

• Assessed Loss Set Off
• Section 103 Income Tax Act
• Change Of Shareholding
• Tax Avoidance
• Commercial Substance
• Onus Of Proof

Liquidators of Tradefirm 195 (Pty) Ltd v Kroons Gourmet Chickens (Pty) Ltd (4945/2007)

Liquidators of Tradefirm 195 (Pty) Ltd v Kroons Gourmet Chickens (Pty) Ltd (4945/2007) [2007] ZAGPHC 334 (30 November 2007)

Court

High Courts - Gauteng

Case number

4945/2007

Judge

M J Ramagaga

The court set aside a sham sale of a poultry business, finding it was structured to defeat SARS and that no real price or payment was proved.

• Actio Pauliana
• Insolvency Dispositions
• Preferential Creditor Treatment
• Companies Act Section 228
• Sale Of Business
• Tax Avoidance

Commissioner for Inland Revenue v Conhage (Pty) Ltd (formerly Tycon (Pty) Ltd) (606/97)

Commissioner for Inland Revenue v Conhage (Pty) Ltd (formerly Tycon (Pty) Ltd) (606/97) [1999] ZASCA 64 (17 September 1999)

Court

Supreme Court of Appeal

Case number

606/97

Judges

Mahomed, Hefer, Olivier, Farlam, Madlanga

The court held that Tycon’s sale-and-leaseback transactions were genuine and that section 103 of the Income Tax Act did not apply, so the appeal failed.

• Income Tax Act 58 Of 1962
• Tax Avoidance
• Sale And Leaseback
• Simulated Transactions
• Section 103
• Deductibility Of Rentals

Relier (Pty) Ltd. v Commissioner for Inland Revenue (256/96)

Relier (Pty) Ltd. v Commissioner for Inland Revenue (256/96) [1997] ZASCA 105; ; [1998] 1 All SA 183 (A); (25 November 1997)

Court

Supreme Court of Appeal

Case number

256/96

Judges

Harms, Mahomed, Van Heerden, Vivier, Zulman

The Supreme Court of Appeal held that a tax-driven leasing and subleasing arrangement was simulated, and that building costs were includible in Relier’s gross income.

• Gross Income Definition
• Simulated Transactions
• Tax Avoidance
• Income Tax Act Section 1
• Enforceable Rights
• Substance Over Form

Erf 3183/1 Ladysmith (Pty) Ltd and Another v Commissioner for Inland Revenue (527/94)

Erf 3183/1 Ladysmith (Pty) Ltd and Another v Commissioner for Inland Revenue (527/94) [1996] ZASCA 35; 1996 (3) SA 942 (SCA); (28 March 1996)

Court

Supreme Court of Appeal

Case number

527/94

Judges

Hefer, Nestadt, Howie, Schutz, Plewman

The court found that the agreements between the appellants, Pioneer, and the Fund were not intended to have effect strictly according to their written terms. The structure of the transactions, including the simultaneous signing of interdependent agreements and the presence of anomalies and illusory provisions, indicated a tacit understanding that the appellants would have a right to enforce the erection of buildings on their land. The court held that the written agreements were simulated to conceal the true intention of the parties, which was to confer a right to have improvements effected on…

Source excerpt

• Income Tax Act
• Simulated Transactions
• Accrual Of Income
• Tax Avoidance
• Group Company Structures

Conshu (Pty) Ltd v Commissioner for Inland Revenue (437/92)

Conshu (Pty) Ltd v Commissioner for Inland Revenue (437/92) [1994] ZASCA 104; 1994 (4) SA 603 (AD); [1994] 2 All SA 501 (A) (2 September 1994)

Court

Supreme Court of Appeal

Case number

437/92

Judges

Hoexter, E M Grosskopf, Nestadt, Harms, Olivier

The court held that section 103(2) of the Income Tax Act could be applied in 1986, even though it had not been applied in the year the avoidance agreement was made.

• Income Tax Act 58 Of 1962
• Assessed Loss Set Off
• Tax Avoidance
• Interpretation Of Statutes
• Income-tax
• Assessed-loss

Commissioner for Inland Revenue v Ocean Manufacturing Ltd. (483/88)

Commissioner for Inland Revenue v Ocean Manufacturing Ltd. (483/88) [1990] ZASCA 66; 1990 (3) SA 610 (AD); [1990] 2 All SA 422 (A) (1 June 1990)

Court

Supreme Court of Appeal

Case number

483/88

Judges

Corbett, Botha, Smalberger, Nicholas, Smuts

The court held that a separate transfer agreement, not the broader merger arrangement, was the relevant agreement for section 103(2) and allowed the Commissioner’s appeal.

• Assessed Loss Utilisation
• Tax Avoidance
• Income Tax Act Section 103 2
• Merger Agreement
• Transfer Agreement
• Tax-avoidance