South Africa Case Law

Pear (Proprietary) Limited v Commissioner for the South African Revenue Service (IT 46080)

Pear (Proprietary) Limited v Commissioner for the South African Revenue Service (IT 46080) [2024] ZATC 19 (5 December 2024)

Court

Tax Court

Case number

IT 46080

Judges

M W Janisch, L Groener, S Louw

The court held that SARS was not entitled to issue the additional assessment for the 2017 tax year, as the three-year prescription period under section 99(1) of the Tax Administration Act had expired. SARS failed to discharge the onus of proving that any misrepresentation or non-disclosure by the Appellant caused the non-assessment of the full amount of tax within the prescribed period. The Appellant's tax return and subsequent correspondence disclosed the nature of the insurance premium and policy, and SARS's own verification process did not result in an adjustment within the three-year peri…

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• Income Tax Assessment
• Prescription Of Tax Debt
• Insurance Premium Deductibility
• Ifrs Accounting Treatment
• Understatement Penalty

Taxpayer Arrow v Commissioner for the South African Revenue Service (IT 45776)

Taxpayer Arrow v Commissioner for the South African Revenue Service (IT 45776) [2024] ZATC 21 (29 November 2024)

Court

Tax Court

Case number

IT 45776

Judges

L Haskins, M Noge, H Mtegha

The Tax Court held that the taxpayer’s settlement-related rights accrued in 2010 and were taxable, but it remitted understatement penalties and interest.

• Income Tax Act
• General Anti Avoidance Rules
• Substance Over Form
• Restricted Equity Instruments
• Understatement Penalty
• Prescription Of Assessment

HCS v Commissioner for the South African Revenue Service (IT 46591)

HCS v Commissioner for the South African Revenue Service (IT 46591) [2024] ZATC 16 (31 July 2024)

Court

Tax Court

Case number

IT 46591

Judge

Manoim

The Tax Court granted SARS condonation for a late rule 31 statement and dismissed HCS’s default judgment application in a tax appeal over foreign tax credits and penalties.

• Foreign Tax Credits
• Additional Assessment
• Understatement Penalty
• Condonation
• Default Judgment
• Tax-court

Trust Taxpayer v Commissioner for the South African Revenue Service (IT 45673)

Trust Taxpayer v Commissioner for the South African Revenue Service (IT 45673) [2024] ZATC 15 (17 July 2024)

Court

Tax Court

Case number

IT 45673

Judges

Kekana, Eric Mphumbude, Sebueng Mthembu

The Tax Court dismissed a taxpayer trust’s appeal, upholding SARS assessments on rental income, capital gains base cost, penalties, interest, and costs.

• Income Tax Assessment
• Capital Gains Tax
• Understatement Penalty
• Onus Of Proof
• Interest On Tax
• Costs In Tax Appeals

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…

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

CZY (In Liquidation) v Commission for the South African Revenue Service (IT 45997)

CZY (In Liquidation) v Commission for the South African Revenue Service (IT 45997) [2024] ZATC 4; 87 SATC 255 (27 February 2024)

Court

Tax Court

Case number

IT 45997

Judge

Ingrid Opperman

The court found that the applicant provided a reasonable and justified explanation for the delay in delivering the rule 36(6) notice, given the volume and technical nature of the discovered documents and the need to consult with liquidators and former employees. The court held that, on a prima facie basis, at least one category of documents sought was relevant to the issues in dispute, specifically those relating to the decision to impose understatement penalties. The applicant acted bona fide, and there was no evidence of intentional non-compliance or prejudice to SARS. The interests of just…

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• Condonation
• Tax Discovery
• Understatement Penalty
• Section 24c Allowance
• Tax Administration Act
• Interest On Tax

Enviroserv Waste Management (Pty) Ltd v Commissioner for the South African Revenue Service (154/2022)

Enviroserv Waste Management (Pty) Ltd v Commissioner for the South African Revenue Service (154/2022) [2023] ZASCA 180; 87 SATC 1 (18 December 2023)

Court

Supreme Court of Appeal

Case number

154/2022

Judges

Dambuza, Zondi, Nicholls, Gorven, Mali

The Supreme Court of Appeal held that the landfill cells constructed by Enviroserv are used directly in a process similar to manufacture, as they facilitate the decomposition and chemical treatment of hazardous waste, resulting in leachate and non-hazardous waste. This process changes the character of the waste, qualifying the cells as 'plant' under s 12C(1)(a) of the Income Tax Act. The cells are not buildings under s 13 nor waste disposal assets under s 37B, as they are indispensable to the manufacturing process and not merely ancillary. The court further found that the Commissioner failed…

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• Income Tax Act Section 12c
• Depreciation Allowance
• Understatement Penalty
• Tax Administration Act Section 223
• Plant Vs Building
• Environmental Waste Management

Jordi v Commissioner for the South African Revenue Service (A2023-008433)

Jordi v Commissioner for the South African Revenue Service (A2023-008433) [2023] ZAGPJHC 1392; 84 SATC 337 (29 November 2023)

Court

South Gauteng High Court, Johannesburg

Case number

A2023-008433

Judges

Strydom, Mudau, Noko

High Court appeal on whether a R60 million restraint-of-trade payment was gross income or capital, and whether an understatement penalty should stand.

• Restraint Of Trade
• Income Tax Definition
• Capital Vs Revenue
• Understatement Penalty
• Condonation
• Interest On Tax

SAMU v Commissioner for the South African Revenue Service (VAT 1788)

SAMU v Commissioner for the South African Revenue Service (VAT 1788) [2023] ZATC 14; 86 SATC 406 (30 August 2023)

Court

Tax Court

Case number

VAT 1788

Judges

A Makume, B Mathibela, M Mahlare

The court found that the appellant was not entitled to claim input tax on accommodation and meal expenses for project-specific employees, as these constituted entertainment under section 17(2)(a) of the VAT Act and the appellant did not meet the statutory exceptions. The appellant did not charge employees for these expenses, nor was it in the business of supplying entertainment. The precedent set in AB (Pty) Ltd v Commissioner for SARS was applied, confirming that such expenses are entertainment for VAT purposes. However, the court accepted that the appellant's error in claiming input tax was…

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• Input Tax Deductions
• Entertainment Expenses
• Understatement Penalty
• Vat Act Interpretation

Erasmus v Commissioner for the South African Revenue Service (9706/21)

Erasmus v Commissioner for the South African Revenue Service (9706/21) [2023] ZAWCHC 215; [2024] 1 All SA 153 (WCC); 86 SATC 56 (18 August 2023)

Court

Western Cape High Court, Cape Town

Case number

9706/21

Judge

M Sher

The High Court refused to exempt a taxpayer from using SARS objection and appeal remedies in a GAAR dispute, and struck the review from the roll.

• Impermissible Tax Avoidance
• General Anti Avoidance Rule
• Dividends Tax
• Understatement Penalty
• Exhaustion Of Internal Remedies
• Exceptional Circumstances