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2024 Volume 73 GENERAL ConCourt Capitec judgment – principle or perceived expedience? ..................................... 86 Conduct unbecoming ................................................................................................................. 1 Deductibility of expenditure relating to dividend income ................................................... 52 Equity about a tax: none, but does it have to be illogical? ................................................... 82 Expenditure relating to dividend income, deductibility ........................................................ 52 Internal remedies .................................................................................................................... 47 Participation rights are counted, not valued ........................................................................... 4 Practice generally prevailing ...................................................................................................... 50 Tax Court – a court of law open to tax practitioners? ......................................................... 81 The good, the bad and the ugly ................................................................................................ 41 Income Tax Process of manufacture, similar process – meaning of plant – prejudice not proved by SARS to justify understatement penalty (Enviroser v Waste Management (Pty) Ltd v CSARS [2023] ZASCA (18 December 2023)) ............................. 29 Value-Added Tax Supply of loan cover by a bank – a taxable supply – deduction in terms of section 16(3)(c) of the VAT Act – apportionment (Capitec Bank Ltd v CSARS [2024] ZACC 1 (12 April 2024)) ............................................ 115 Procedure Assessment – period of limitations – application for reduced assessment more than three years after original assessment – whether limitation not applicable due to court order resolving a dispute in relation to a prior year of assessment (I-CAT Inter national Consulting (Pty) Ltd v CSARS 2023 (6) SA 477 (GP), 86 SATC 101) ................................................................................... 9 Amendment of grounds of appeal – SARS’s duty not to levy tax where tax is not due (CSARS v Free State Development Cor poration [2023] ZASCA 84 (31 May 2023), 2024 (2) SA 282 (SCA)) .............................................. 58 C u m u l a t i v e T a b l e o f C o n t en t s a n d C a s e I n d e x CASE LAW Available from The Taxpayer: P O Box 3191, Cape Town, 8000 Telephone. 021 424 5733 E-mail. info@taxpayer.co.za www.taxpayer.co.za
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18 Keerom Street, Cape Town, 8001 P O Box 3191, Cape Town, 8000 Editorial: Telephone. 021 423 5554 E-mail. cemslie@taxpayer.co.za Administration: Telephone. 021 424 5733 E-mail. info@taxpayer.co.za Volume 73 Nos 8-10, Aug-Oct 2024 www.taxpayer.co.za E d i t o r i a l A N u l l i t y In ITC 1959 85 SATC 35 Bam J delivered a Tax Court judgment in favour of the fiscus. We elected not to report this judgment in The Taxpayer inter alia because we knew that the decision was being taken on appeal to the High Court. The judgment of the High Court was delivered by Adams J, Strydom J concurring, on 9 January 2024, and is published as Unitrans Holdings Limited v Commissioner, South African Revenue Service [2024] ZAGPJHC 3 (9 January 2024). In paragraph 32 of his judgment, Adams J had the following to say: ‘I therefore conclude that there is no merit in the contention by SARS that the case relied upon by the taxpayer was not properly pleaded by it. The Court a quo, in holding otherwise, misdirected itself. Its emphasis on the fact that the taxpayer was not carrying on a trade as a “money lender” obfuscated the requirement in the said section that the interest expenditure should be allowed as a deduction if it derives from “any trade” and the interest expenditure is incurred in the production of such income. The Court a quo’s reliance on Solaglass was misguided. It is so, as contended by the taxpayer, that the Court a quo erred by failing to appreciate that the term “moneylender” has a specialised meaning which is relevant only where a taxpayer seeks to deduct a loss arising from a loan becoming irrecoverable, in which case only a “moneylender” or bank can treat such a loss as being not of a capital nature. In casu, there was no capital versus revenue dispute, but rather the deductibility of expenditure in the form of interest.’ This finding that the Tax Court had misdirected itself was not unrelated to our decision not to report the Tax Court judgment in The Taxpayer. However, this finding is, like the rest of the High Court judgment, a nullity. Why do we say this? Section 133(2)(a) of the Tax Administration Act, 28 of 2012, as amended, (‘the TAA’) provides that an appeal against a decision of the Tax Court lies ‘to the full bench of the Provincial Division of the High Court’ (emphasis supplied). In Commissioner, South African Revenue Service v Candice-Jean Poulter [2024] ZAWCHC 178 (28 June 2024), Binns-Ward J, Nuku J and Slingers J concurring, said the following in footnote 17 to paragraph 27 of his judgment: ‘… The TAA uses the term ‘Full Bench’, which is not specifically defined, see section 133(2)(a). The term is not used in the Superior Courts Act, nor was it in that Act’s predecessor, the Supreme Court Act, 1959. In legal parlance it is often used interchangeably with the term ‘full court’, which is defined in the Superior Courts Act and the statutory predecessor thereto as a bench constituted of three judges. … Appeals from a Tax Court to the High Court are invariably heard by a three-judge bench.’ It follows that a ‘full bench’ of the High Court means a bench comprised of three judges. The bench of the High Court in the Unitrans appeal consisted of Adams J and Strydom J, and was therefore not a ‘full bench’ as contemplated in section 133(2)(a) of the TAA. As a result the 141

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2024

Volume 73

GENERAL

ConCourt Capitec judgment – principle or perceived expedience? ..................................... 86 Conduct unbecoming ................................................................................................................. 1 Deductibility of expenditure relating to dividend income ................................................... 52 Equity about a tax: none, but does it have to be illogical? ................................................... 82 Expenditure relating to dividend income, deductibility ........................................................ 52 Internal remedies .................................................................................................................... 47 Participation rights are counted, not valued ........................................................................... 4 Practice generally prevailing ...................................................................................................... 50 Tax Court – a court of law open to tax practitioners? ......................................................... 81 The good, the bad and the ugly ................................................................................................ 41

Income Tax Process of manufacture, similar process – meaning of plant – prejudice not proved by SARS to justify understatement penalty (Enviroser v Waste Management (Pty) Ltd v CSARS [2023] ZASCA (18 December 2023)) ............................. 29 Value-Added Tax Supply of loan cover by a bank – a taxable supply – deduction in terms of section 16(3)(c) of the VAT Act – apportionment (Capitec Bank Ltd v CSARS [2024] ZACC 1 (12 April 2024)) ............................................ 115 Procedure Assessment – period of limitations – application for reduced assessment more than three years after original assessment – whether limitation not applicable due to court order resolving a dispute in relation to a prior year of assessment (I-CAT Inter national Consulting (Pty) Ltd v CSARS 2023 (6) SA 477 (GP), 86 SATC 101) ................................................................................... 9 Amendment of grounds of appeal – SARS’s duty not to levy tax where tax is not due (CSARS v Free State Development Cor poration [2023] ZASCA 84 (31 May 2023), 2024 (2) SA 282 (SCA)) .............................................. 58 C u m u l a t i v e T a b l e o f C o n t en t s a n d C a s e I n d e x

CASE LAW

Available from

The Taxpayer: P O Box 3191, Cape Town, 8000

Telephone. 021 424 5733 E-mail. info@taxpayer.co.za www.taxpayer.co.za

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