Tax Cases

Tax Cases

Tax Case 13238 & 13164 (also reported as DS v CSARS)

This is an ex tempore judgment. From the Latin, meaning ‘on the spur of the moment, without premeditation’ and are those given without preparation (contrast reserved judgments).

VAT case 1005

In this instance the vendor levied output tax at the rate of zero per cent in respect of the rectification of houses constructed between 1994 and April 2002, the rehabilitation of damaged houses and the building of completely new houses by the vendor on behalf of another entity.

Case No 13132

In this case, that came before the tax court, the taxpayer argued that grapes delivered to a Co-op no longer constituted produce of the taxpayer. The argument was that the grapes had been crushed, pressed, mixed with the grapes of other farmers and had chemicals added to them so that they were no longer identifiable as the grapes of the taxpayer. The court considered the meaning of the words "produce held and not disposed of” as used in the First Schedule to the Income Tax Act.

VAT case 1132

The dispute in this case related to additional tax imposed by SARS. The vendor couldn’t provide supporting documentation for input tax deducted or explanations in respect of the differences in the reconciliations between the input tax in the VAT control account and the VAT201 returns.

Case NO: VAT 1015

The dispute in this appeal is whether the provision of hostel accommodation and catering services obtained by a vendor for limited duration contract employees at an entity where they stayed, constitute "entertainment”.

Case 12984

The dispute between the taxpayer and SARS arose because SARS assessed the taxpayer for the period 1 March 2003 to 29 February 2008 in an amount of R11, 5 million on the premises that the amounts allocated to the company motor vehicle scheme or "sacrificed portion” of the total package constituted remuneration which accrued to the employees and are, as such, gross income in terms of the provisions of paragraph (c) of "gross income” as defined in section 1(1) of the Income Tax Act. The judge rules against the taxpayer and refused to remit the penalties.

VAT case 1069 – AD CC v CSARS

In this case an appeal against the imposition by SARS of 200% additional tax in terms of section 60(1)(a) of the Value Added Tax Act, 1991. The defence of the member of the CC was that he was not aware that he had to pay the tax collected by the CC to SARS was rejected by the court, but the penalty was reduced to 100%.

Case 13410

In this tax court case (decision handed down on 13 August 2014) the interaction between section 23F and 24M is explored. It deals with the meaning of trading stock in the context of mining and relates to a year of assessment prior to the introduction of section 15A. In the case Judge Victor discusses the meaning of the word ‘acquisition’ that is used in section 23F.

Tax case 13356

In a very interesting development in a dispute between SARS and a taxpayer the tax court was called on to interpret an order given by the Supreme Court of Appeal (in CSARS v South African Custodial Services (Pty) Ltd (131/11) [2011] ZASCA 233 (30 November 2011)). At issue, amongst others, was whether it meant that SARS could disallow a deduction of some R64 million described as 'further costs' claimed by the taxpayer.

Tax case: 12466

The taxpayer disposed of an asset and adopted the market value at 1 October 2001 as its valuation date value. SARS refused to accept this value and the valuation method was extensively evaluated by the Judge during the course of the case. It makes interesting reading. The fact of the matter is that the taxpayer bears the onus to prove the amount of a valuation used and this case is evidence thereof that SARS challenges valuations.

Medox Limited v CSARS

The taxpayer in this case failed to object to assessments within the three year period. The taxpayer approached to the High Court seeking an order declaring all income tax assessments that were issued in respect of the years of assessment following its 1997 year of assessment, null and void.

Tax case on legal privilege

This case concerns a claim by the applicants to legal professional privilege; legal advice privilege in particular. We report the case with minor changes, but have left the foot notes out.

Tax case No: 13 254

In order to qualify for the exemption from normal tax on certain receipts and accruals in terms of section 10(1)(cN) of the Income Tax Act an entity must be approved by SARS in terms of section 30(3), read with the Ninth Schedule to the Income Tax Act.

VAT Case 872

In this instance the court had to deal with the value-added tax relevant to barter transactions. The vendor organised a festival and obtained sponsorship from a number of third parties for this event. In turn the vendor supplied essentially an advertising service to the sponsors. The vendor did not declare the output tax relevant to the advertising services supplied to the sponsors. In defence they argued that they were entitled to make a deduction of the tax which otherwise would have been charged by the sponsors for the supply of goods and services rendered to it by the sponsors.

The problem faced by the vendor was that it did not have the documents to support the input tax deduction as the sponsors refused to provide them with tax invoices. They were not successful in meeting the onus of proof that a deduction can be made and the Judge confirmed SARS’s assessments.

It confirms the principle that a deduction of input tax can only be made if supported by the required documentary proof. Th

Case No. 13002 (CSARS v ABC (Proprietary) Limited)

In this matter, it had to be established whether, or not, the proceeds on the disposal of a plantation were subject to the provisions of section 26(1) of the Income Tax Act, No. 58 of 1962 and if the proceeds therefore have to be included in "gross income” as defined in section 1 of that Act.

A (PTY) LTD V CSARS (2013)

The main issue in this Tax Court case is whether the receipts from the disposal of shares are "gross income” and more specifically if the proceeds can be regarded as "capital in nature” therefore not "gross income”. As in previous court cases the intention of the shareholders play a vital role. A secondary issue in this court case, depending on the outcome of the main issue, is whether expenditure incurred is deductible in terms of the general deduction formula in section 11(a) of the Income Tax Act. The transactions in question are of a highly technical nature.” .

CASE No. VAT 899

The importance of documentation issued and not issued in the context of VAT can never be underestimated. In the case VAT 899 where documentation issued by a vendor which did not reflect the true intention of the parties involved resulted in significant unintended VAT consequences, this was again clearly illustrated.

IT Case No: 12524

This case is a sorry tale that started with advise that was probably wrongly implemented (or understood by the taxpayer) and then the taxpayers objecting to assessments issued by SARS and taking on appeal a case which they really had no chance of winning.

VAT case No. 789

This case report was marked "not reportable”, but as it was made available in the public domain we are reporting on it. In this instance the matter before the tax court whether a vendor can deduct input tax without having the required tax invoices.

Case No: 12860 (In the Tax Court - South Gauteng)
(2 Comments - Last one made: Tuesday, August 21, 2012 02:52 PM)

This is the first reported case where the definition of a "small business corporation" (for purposes of section 12E was considered. The report of the case became available on 25 June 2012 and was reported on the Tax Suite on 26 June 2012. We did not repeat the name of the taxpayer and will refer only to "the taxpayer" in our report.

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