tax liability, in other words, in tax avoidance. If the revenue authorities regard any particular form of tax avoidance as undesirable they are free to amend the Act, as occurs annually, to close anything they regard as a loophole. That is what occurred when section 8C was introduced.’ Thus Wallis JA considered that what he called ‘the revenue authorities’ amend the Act annually, and it is surely not far-fetched to number SARS among the ‘revenue authorities’ referred to by the learned Judge.
In Minister of Health v New Clicks SA (Pty) Ltd & Others 2006 (2) SA 311 (CC) Chaskalson CJ said the following at paragraphs 199 to 201 (footnotes omitted):
‘ The Pharmacies refer to the explanatory memorandum which accompanied the Medicines and Related Substances Control Amendment Bill 72 of 1997, when it was introduced into Parliament, which says that the primary purpose of the Bill was to bring the Medicines Act into line with the National Drug Policy of the Department of Health.  In S v Makwanyane and Another I had occasion to consider whether background material is admissible for the purpose of interpreting the Constitution. I concluded that
“where the background material is clear, is not in dispute, and is relevant to showing why particular provisions were or were not included in the Constitution, it can be taken into account by a Court in interpreting the Constitution”.  Although it is not entirely clear whether the majority of the Court concurred in this finding, none dissented from it. I have no reason to depart from that finding and, in my view, it is applicable to ascertaining “the mischief ” that a statute is aimed at where that would be relevant to its interpretation. This would be consistent with the decisions of the Appellate Division in Attorney-General, Eastern Cape v Blom and Others and Westinghouse Brake & Equipment (Pty) Ltd v Bilger Engineering (Pty) Ltd and the cases from other jurisdictions referred to in Makwanyane’s case.’ (Emphasis supplied) It has since become fairly common for both parties and courts to take into account the content of an Explanatory Memorandum when construing the meaning of legislation, but the question needs to be asked whether this is a legitimate process when it comes to tax litigation, where one of the parties to the dispute may well have had a hand in drafting the legislation and in commenting on its purpose and/or effect in the relevant Explanatory Memorandum.
Use of the content of an Explanatory Memorandum may be seen to sit comfortably within what was said by Wallis JA in Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) at paragraph 18:
‘Interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument, or contract, having regard to the context provided by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence. Whatever the nature of the document, consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production. Where more than one meaning is possible each possibility must be weighed in the light of all these factors. The process is objective, not subjective. A sensible meaning is to be preferred to one that leads to insensible or unbusinesslike results or undermines the apparent purpose of the document. Judges must be alert to, and guard against, the temptation to substitute what they regard as reasonable, sensible or businesslike for the words actually used. To do so in regard to a statute or statutory enactment is to cross the divide between interpretation and legislation; in a contractual context it is to make a contract for the parties other than the one they in fact made. The ‘inevitable point of departure is the language of the provision itself ’, read in context and having regard to the purpose of the provision and the background to the preparation and production of the document.’ (Emphasis supplied) This approach received the imprimatur of the
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