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The full bench of the Western Cape High court recently delivered judgment (Cloete J dissenting) in a favour of a taxpayer who, according to the Tax Court, was simply abusing process. When studying the judgment of the Tax Court, it is difficult to see how the taxpayer’s approach was anything more than an abuse of process which begs the question: Why was the taxpayer successful on appeal to the full bench of the High Court?
The Constitutional Court clarified that businesses registered as taxpayers would benefit from temporary tax relief when claiming future costs from current income received under contracts that are inextricably linked. The Future Expenditure Tax Allowance essentially grants a business temporary relief by reducing its tax payable to SARS if the income received upfront will be wholly or partially used to fund future costs.
The Supreme Court of Appeal (SCA) delivered a judgment on 6 September 2019 that handed SARS, what could be considered, one of their most influential wins in recent times. The SARS Commissioner did not pull any punches and took BMW South Africa to task on tax services performed for their expatriates, by their top tier advisors KPMG and PwC.
For those who have been subjected to a SARS audit, it may be hard to imagine a reality where this experience can be any more agonising. If this resonates with you, perhaps consider a world where SARS makes you pay for the resources it had to expend in putting you through this ordeal. The truth is, it can.
In addition to the tax payable, SARS can impose penalties on a taxpayer for an 'understatement'. In a standard case, and depending on the taxpayer’s behaviour, penalties can range from 10% for a 'substantial understatement' to 150% for 'intentional tax evasion'.
There have been a number of binding private rulings providing for the deductibility of contributions made by employer companies to share incentive trusts for the purpose of acquiring shares in the former.