Below, please find issue 120 of ENS' tax in brief, a snapshot of the latest tax developments in South Africa.

case law

  • ZYX Limited v CSARS (IT 24852) [2024] ZATC 3
    • This appeal related to the disallowance of a deduction claimed by the Taxpayer in respect of customs/excise duties and levies that the Taxpayer was precluded from claiming in terms of the relevant customs legislation, as the claims had prescribed. 
    • The Commissioner for the South African Revenue Service ("SARS") argued that the Tax Court did not have the jurisdiction to hear the appeal. 
    • The Court, however, found that it did have jurisdiction to hear and decide the matter as there were no "exceptional circumstances" that would justify deviating from the ordinary provisions of section 105 of the Tax Administration Act, No. 28 of 2011 ("TAA"). 
    • SARS' objection to the Tax Court having jurisdiction was dismissed with costs.
    • Find a copy of the judgment here.
  • JJ (Pty) Ltd v CSARS (VAT 22425) [2024] ZATC 7
    •  The Tax Court was called upon to decide three interlocutory applications as follows:
      • First, an application by the Taxpayer to compel SARS to furnish it with further discovery. 
      • Second, an application by the Taxpayer to compel SARS to furnish it with further particulars.
      • Third, an application by SARS to compel the Taxpayer to furnish SARS with further discovery.
    • The application to compel SARS to furnish the Taxpayer with further discovery was dismissed on the basis that SARS cannot be compelled to disclose all documents relating to an industry-wide investigation. It need only discover those documents which it plans to use to make out its case against the Taxpayer.
    • The application to compel SARS to furnish the Taxpayer with further particulars was dismissed on the basis that the particulars requested were not necessary for the Taxpayer to prepare its case.
    • The application to compel the Taxpayer to furnish SARS with further discovery was upheld on the basis that the information requested was relevant to the central allegation in dispute. 
    • Find a copy of the judgment here.
  • Noah v CSARS (VAT 22498) [2024] ZATC 6
    • This case involved a special plea, as a separate and preliminary point, to introduce a challenge to the Tax Court's jurisdiction. 
    • SARS pleaded that the Tax Court did not have jurisdiction to determine the appeal against the imposition of the standard turnover-based method of apportionment, as opposed to a transaction count methodology. 
    • The Court had to determine whether the ruling fit the description of the type of decision described in section 32(1)(a)(iv) of the VAT Act, No. 89 of 1991 ("VAT Act"). 
    • The Court held that if SARS disagrees with the apportionment method requested by a Taxpayer, and it refuses or declines the request and determines which method is to apply, that decision is subject to objection and appeal to the Tax Court. The 
    • Tax Court may exercise its powers of revision to discard the method imposed by SARS and approve a different method. 
    • The Court accordingly found that the ruling fit the description of the type of decision described in section 32(1)(a)(iv) of the VAT Act and the appeal was dismissed with costs. 
    • Find a copy of the judgment here.
  • CZY (In Liquidation) v CSARS (IT 45997) [2024] ZATC 4
    • The Taxpayer delivered a notice in terms of rule 36(6) of the rules promulgated under section 103 of the TAA calling upon SARS to make further and better discovery. The Taxpayer's notice was not delivered within the envisaged period, being within 10 days of the original discovery.
    • The Court had to determine whether it should condone the late filing of rule 36(6) notice which would result in SARS being obliged to respond to such notice. 
    • The Court found that in order for it to condone the late filing of the rule 36(6) notice, it would need to be satisfied, not that all the documents are relevant and ought to have been discovered from the outset, but rather that there is a prospect, at a prime facie level, that the Taxpayer is entitled to the documents sought and that a Court will in the fullness of time, compel SARS to produce such documents or some of them. 
    • The Court was satisfied that this was the case and granted the condonation. 
    • Find a copy of the judgment here.
  • Taxpayer Boerdery v CSARS (IT 45979) [2024] ZATC 5
    • The Tax Court had to determine whether premiums paid by the Taxpayer to Company XYZ constituted insurance expenses and were therefore deductible in terms of section 11(a) of the Income Tax Act, No. 58 of 1962 ("Income Tax Act"). 
    • In exchange for payment of the annual premium, the Taxpayer obtained the right to a credit of the same amount which stood for its benefit in an experience account. The experience account was refundable at the end of the contract period and generated income in the form of interest. 
    • The Court held that because the annual premium was paid to acquire a capital asset, the payment was of a capital nature. For this reason, the Court held that the annual premium did not qualify for deduction under section 11(a) of the Income Tax Act. 
    • Find a copy of the judgment here.
  • Lueven Metals (Pty) Ltd v CSARS (728/2022) [2023] ZACSA 144
    • The taxpayer, Lueven Metals (Pty) Ltd, sought a declaratory order from the High Court regarding the application of the zero rates under section 11(1)(f) of the VAT Act, and in particular the application of that section to gold bars supplied by the taxpayer that had been subject to a process of melting and refining on its behalf. 
    • The taxpayer's application failed before the High Court and was dismissed with costs. Leave to appeal was granted by the High Court. 
    • The Supreme Court of Appeal upheld the High Court's findings, noting that the dispute turned not only an interpretation of law but also factual matters. In light of the factual disputes, the High Court was correct in dismissing the application for declaratory relief (although the court in principle had jurisdiction to entertain the application for declarator). 
    • Find a copy of the judgment here.

SARS publications

  • Media release | Non-profit sector in South Africa assessed for exposure to terrorist financing risk
    • South African government and private sector partners published a report on the terrorist financing risk assessment on the non-profit organisation ("NPO") sector that will result in focused, proportionate, and risk-based measures to mitigate the identified risks. 
    • Find a copy of the full media release here. 
  • Tax Practitioner Connect Newsletter | Issue 51
    • This issue includes information on employee tax compliance, Third-party Data annual submission, enhancement of the SARS Online Query System, important information for small and medium-sized enterprises, deregistration of tax practitioners, outsourcing of debt collections and advancement in requesting the SARS certificate for Third-party Data Submission. 
    • Find a copy here.
  • Government Connect | Issue 17
    • This issue includes information on Employees' tax compliance, Third-party data annual submission, the enhancement of the SARS Online Query system and advancement in requesting a SARS certificate for Third-party data submission. 
    • Find a copy here.
  • Public Notice 4742 | Submission of an income tax return when eligible for automatic assessment
    • Public Notice 4742, as published in Government Gazette 50528 on 19 April 2024 relates to a notice in terms of section 95(6) of the TAA, extending the date by which a taxpayer, eligible for automatic assessment, has to submit an income tax return.
    • Find a copy of the Public Notice here.
  • SARS Online Query System ("SOQS") | RLA status and Customs codes can now be requested on the SOQS
    • You can now request your RLA status and Customs code from the SOQS.
    • Find a link to the SOQS here.
  • Automation of the Trust dispute process | Guide to submitting a dispute via e-Filing
    • The automated dispute process is now extended to Trusts. A Trust is now able to lodge the relevant dispute (RFR01, RFRE, NOO, or NOA) on e-Filing or at a SARS Branch. The manual ADR1 form for objections is no longer accepted for Trusts from 20 April 2024.
    • Find a copy of the SARS external guide here.
  • Mandatory Disclosure Rules | SARS Third Party Data / e-Filing
    • The Mandatory Disclosure Rules process has been designed to improve compliance within the Common Reporting Standard. The process aims to identify practices of tax avoidance and opaque offshore structures that attempt to circumvent reporting. 
    • Find a link to the new webpage here and a copy of the SARS external guide here. 
  • Employer Annual Reconciliation Period | EMP501
    • The submission period for Employers' Annual Reconciliation Declaration (EMP501) is 1 April to 31 May 2024.
    • Find guidance videos here and here.

exchange control

  • Exchange Control Circular No. 3/2024
    • Appointment of Teeenaar (Pty) Ltd as an Authorised Dealer in foreign exchange with limited authority. 
    • Find a copy of the Exchange Control Circular here.
  • Exchange Control Circular No. 4/2024
    • Cancellation of Tower Bureau de Change (Pty) Limited as an Authorised Dealer in foreign exchange with limited authority.
    • Find a copy of the Exchange Control Circular here.

customs and excise

  • Customs and Excise Act | Amendment Notice R.4725
    • There was an amendment to Part 1 of Schedule No. 1, by the insertion of Additional Note 8 to Chapter 22 to facilitate the correct classification of fermented fruit beverages and mead as the end product of fermentation. 
    • Find a copy of the amendment here. 
    • There was an amendment to Part 2 of Schedule No. 4, by the insertion of rebate item 460.15/8482.99.17/01.08 to provide for a temporary rebate provision for the importation of certain outer rings of journal roller bearings, classifiable in the tariff subheading 8482.99.17 (ITAC Report 660) 
    • Find a copy of the amendment here.
  • Customs and Excise Act | Draft Documents for Public Comment
    • Draft amendments have been proposed to the following rules and forms:
      • Rules under sections 21(1), 60 and 120 – Storage of imported bunker fuel in special customs and excise storage warehouses:
        • DA 185 – Application form – Registration or Licensing of Customs and Excise Clients;
        • DA 185.4B4 – Licensing Client Type 4B4 – Special storage warehouse; and
        • DA 185.4B17 – Licensing Client Type 4B17 – Marine remover of imported bunker fuel. 
    • Draft amendments have been proposed to the Schedule as follows:
      • Additional Note 1(h) to Chapter 27 of Schedule No. 1; and 
      • Note 8 to Schedule No. 5. 
    • Find a copy of the draft amendments here and here.
    • Comments are due on 10 May 2024 and 30 April 2024 respectively.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.