South Africa Case Law

Commissioner for the South African Revenue Service v Clicks Retailers (Pty) Ltd (58/2019)

Commissioner for the South African Revenue Service v Clicks Retailers (Pty) Ltd (58/2019) [2019] ZASCA 187; 2020 (2) SA 72 (SCA); 82 SATC 167 (3 December 2019)

Court

Supreme Court of Appeal

Case number

58/2019

Judges

Wallis, Swain, Mbha, Dlodlo, Hughes

The Supreme Court of Appeal held that Clicks Retailers (Pty) Ltd was not entitled to the allowance under s 24C of the Income Tax Act for expenditure expected to be incurred in honouring loyalty programme vouchers. The income-earning contract was the initial sale contract, while the obligation to award points and vouchers arose from the separate ClubCard contract. The expenditure incurred in redeeming vouchers did not arise from the same contract as the income received. The court rejected the argument that the contracts were sufficiently linked to satisfy the statutory requirement, reaffirming…

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• Income Tax Act
• Future Expenditure Allowance
• Contractual Obligations
• Loyalty Programmes
• Tax Deductions

Commissioner for the South African Revenue Service v Atlas Copco South Africa (Pty) Ltd (834/2018)

Commissioner for the South African Revenue Service v Atlas Copco South Africa (Pty) Ltd (834/2018) [2019] ZASCA 124; [2019] 4 All SA 635 (SCA); 2020 (4) SA 61 (SCA); 82 SATC 116 (27 September 2019)

Court

Supreme Court of Appeal

Case number

834/2018

Judges

Navsa, Ponnan, Zondi, Mocumie, Weiner

The Supreme Court of Appeal held that the taxpayer's method of valuing closing stock by applying fixed percentage write-downs based on aging, as per group policy and accounting standards, did not comply with section 22(1)(a) of the Income Tax Act. The Act requires a factual, retrospective assessment of whether trading stock has actually diminished in value due to specified causes, not a forward-looking or arbitrary policy. The taxpayer failed to provide reliable evidence of actual diminution in value for any of the six categories of stock. The use of NRV, while acceptable for accounting purpo…

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• Valuation Of Trading Stock
• Income Tax Act Section 22
• Net Realizable Value
• Accounting Standards Vs Tax Law
• Diminution Of Value
• Tax Deductions

Commissioner for the South African Revenue Service v Big G Restaurants (Pty) Ltd (157/2018)

Commissioner for the South African Revenue Service v Big G Restaurants (Pty) Ltd (157/2018) [2018] ZASCA 179; 2019 (3) SA 90 (SCA); 81 SATC 185 (3 December 2018)

Court

Supreme Court of Appeal

Case number

157/2018

Judges

Ponnan, Mbha, Mathopo, Schippers, Rogers

The Supreme Court of Appeal held that section 24C requires both the income and the obligation to originate from the same contract. The taxpayer did not receive income under the franchise agreement; rather, income was earned from contracts with patrons. The franchise agreement enabled the taxpayer to operate the business but did not itself create a right to income. Therefore, the taxpayer's claim for a section 24C allowance failed, as the statutory requirements were not met. The appeal was upheld and the order of the Tax Court was set aside.

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• Income Tax Act Section 24c
• Future Expenditure Allowance
• Contractual Obligations
• Tax Deductions

B v Commissioner for the South African Revenue Services (IT14240)

B v Commissioner for the South African Revenue Services (IT14240) [2017] ZATC 3; 80 SATC 223 (3 November 2017)

Court

Tax Court

Case number

IT14240

Judge

J I Cloete

The Tax Court held that franchise income and refurbishment obligations arose under the same contract, allowing a section 24C deduction for future expenditure.

• Income Tax Act Section 24c
• Franchise Agreements
• Future Expenditure Allowance
• Contractual Obligations
• Tax Deductions
• Income-tax-act-section-24c

Peter v Commission for Conciliation Mediation and Arbitration and Others (JR 798/12)

Peter v Commission for Conciliation Mediation and Arbitration and Others (JR 798/12) [2013] ZALCJHB 265 (10 July 2013)

Court

Labour Court Johannesburg

Case number

JR798/12

Judge

Masipa

The court found that the Second Respondent correctly applied the dominant impression test and relevant statutory provisions to determine the true nature of the relationship between the Applicant and the Third Respondent. The evidence established that the Third Respondent was subject to the Applicant's supervision and control, was integrated into the Applicant's organisation, and was economically dependent on the Applicant. The deductions of PAYE, UIF, and SITE tax, issuance of payslips and IRP5 certificates, and operational requirements such as leave and consumables approval all pointed to an…

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• Employee Definition
• Dominant Impression Test
• Jurisdiction Of Ccma
• Review Of Arbitration Award
• Tax Deductions
• Costs Order

Commissioner for South African Revenue Services v Foskor (375/09)

Commissioner for South African Revenue Services v Foskor (375/09) [2010] ZASCA 45; [2010] 3 All SA 594 (SCA); 72 SATC 174 (31 March 2010)

Court

Supreme Court of Appeal

Case number

375/09

Judges

Navsa, Mhlantla, Tshiqi, Majiedt, Saldulker

The Supreme Court of Appeal held that the ore stockpiles acquired by Foskor were intended for use in manufacturing processes that resulted in products significantly different from the raw ore, namely fertilizer and other minerals with a worldwide market. The court found that the processes applied to the ore constituted manufacture for the purposes of the Income Tax Act, and that the stockpiles fell within the definition of 'trading stock'. The distinction between mining and manufacturing was found to be unhelpful in this context, as Foskor did not claim mining allowances and the acquisition a…

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• Income Tax Act
• Trading Stock Definition
• Remittal Of Interest
• Manufacture Vs Mining
• Tax Deductions