South Africa: Investment Strategy

The recent judgment of the Supreme Court of Appeal in Western Platinum Ltd v C:SARS 67 SATC 1 provides a good example of the importance of the distinction between sine qua non and causa causans in the tax context.

Since minister Mandisi Mphalwa's embargoed briefing on the revised Codes of Good Practice under the Broad Based Black economic Empowerment Act (BEE ACT) on 24 June 2005, much has been made in the media of the purported exclusion of so-called "indirect ownership" in those Codes.

The Minister of Finance has had the banking sector in his sights for some time, not only because he believes that banks are enjoying excessive tax benefits, but because, both for themselves and for their clients, they are devising tax-driven investment schemes that erode the tax base. Recent additions to the Income Tax Act give effect to the legislature’s intention of reining in these practices.