South Africa: Tax In Brief | Issue 97

Below, please find issue 97 of ENSafrica's tax in brief, a snapshot of the latest tax developments in South Africa.

case law

• Tax Court | Applicant X v Commissioner for The South African Revenue Service (2022/12) [2022] ZATC 11
  • This case relates to an application for a default judgment in terms of rule 56 (2) of the Tax Court Rules ("Rules") promulgated in terms of section 103 of the Tax Administration Act, 2011 (as amended) ("TAA").
  • The applicant filed the application for default judgment following the notices delivered in terms of Rule 56(1)(a) to the South African Revenue Service ("SARS") to address the objections that he had raised.
  • SARS opposed the application on the ground that the application was not properly before the court on the basis that the application was not properly delivered to SARS in terms of the Rules.
  • The court found that the applicant delivered the notice to the Registrar at the email address, RegistrarTaxCourt@sars.gov.za, instead of delivering the notices to the Tax Court Litigation Unit of SARS at the email address taxcourtlitigation@sars.gov.za and on this basis, the notices were not delivered to SARS. It was held that the Registrar, who is appointed in terms of section 121 of the TAA, is not a party to the dispute between the parties but rather is responsible for administering the dispute resolution processes envisaged in the TAA.
  • The court ordered the application be dismissed with costs on the attorney and client scale.
  • Find a copy of the judgment here.
• Tax Court | Taxpayer S v Commissioner For The South African Revenue Service (IT 45997) [2022] ZATC 12
  • This case deals with an interlocutory application in a tax appeal.
  • The relief requested by the applicant in terms of the interlocutory application is that new grounds of assessment be struck out from SARS' rule 31 statement on the basis that it is impermissible.
  • The court held that the inclusion of a new ground in a rule 31 statement is not impermissible unless the impugned portions of the rule 31 statement (i) constitute a novation of the whole of the factual or legal basis of the disputed assessment, or (ii) required the issue of a revised assessment. The applicant was found to not have discharged its onus of proof in this regard.
  • The court ordered the application to be dismissed with costs.
  • Find a copy of the judgment here.
• Tax Court | A v Commissioner for the South African Revenue Service (IT 46206) [2023] ZATC 1
  • The taxpayer appealed against an additional assessment SARS pertaining to her 2018 year of assessment, during which year: ▪ the taxpayer emigrated (for purposes of both exchange control and tax) to the United Kingdom with effect from 3 September 2017; and ▪ the taxpayer "recouped" an amount of ZAR67 995 991 in respect of a foreign partnership trade in aircraft as a result of the deemed disposal of assets under section 9H of the Income Tax Act, 1962 ("ITA").
  • The taxpayer contended that she was entitled to set off her foreign trade income against an assessed loss brought forward in the amount of R62 296 925 arising from that same foreign trade in prior years.
  • The court considered section 20(1) of the ITA, as well as the erstwhile sub-paragraph (n)(ii) of the definition of 'gross income' in section 1 of the ITA (since repealed).
  • The taxpayer's appeal was upheld and the additional assessment set aside. There was no order as to costs.
  • Find a copy of the judgment here

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