Page 729 - SAIT Compendium 2016 Volume1

CASE DIGEST 2011–2012
Facts
The principal business of the appellant is that they conduct a charity funding business which provides a service to both donors (called ‘participants’) and charities. They make donation by the participants easier and less complicated and they distribute funds to charities on a regular monthly basis. This facilitates the operation of the charities which are assured of a regular monthly income.
The Registrar of Banks had reason to suspect that the appellants were contravening, and would continue to contravene, s 11(1) of the Act read with Notice 498. Consequently, the Registrar launched the application in court for the relief set out in s 81 of the Act.
Decision
The court held that the Registrar’s decisions to investigate the appellants’ business and institute proceedings against the appellants for an interdict in terms of s 81 of the Act were not administrative actions for the purposes of the Promotion of Administrative Justice Act 3 of 2000 (‘PAJA’) as they did not (as required by the de nition of ‘administrative action’ in s 1 of PAJA) adversely affect the rights of the appellants or have a direct, external legal effect or have that capacity.
8. Whether the administrative decision to withdraw a tax clearance is valid?
[Zikhulise Cleaning Maintenance and Transport CC v CS ARS (HC 28084/2012 NG)]
Background
Zikhulise Cleaning Maintenance and Transport CC is in the business of constructing affordable housing through Government tenders and it relies on a clearance certi cate issued by SARS to be able to conduct its business. SARS issued such a certi cate on 17 January 2012 which was valid for a period of 12 months.
Facts
On 16 March 2012 SARS issued a letter to the holder of the certi cate informing them that the tax clearance certi cate had been cancelled effectively from the date of their letter. Zikhulise Cleaning Maintenance and Transport CC received the letter on 18 March 2012.
On 26 April SARS issued a letter wherein it stated that it was in the process of considering whether to withdraw the certi cate and that, ‘the facts as to why you are not compliant appear from our letter of 16 March 2012’. Zikhulise Cleaning Maintenance and Transport CC was invited to make representations by 11 May if the applicant disputed the fact.
Issue
The issue before the court was whether the taxpayer should have received reasonable notice of SARS’ intention to withdraw the tax clearance.
Decision
The court held in favour of the taxpayer and granted an order that the decision of SARS be of no force and effect.
9. Whether the taxpayer quali ed for all the requirements to be classi ed as a small business corporation?
[TML Consultancy CC v CSARS (ITC 12860) [2012] ZATC 1]
Background
The South Gauteng Tax Court heard the appeal of the taxpayer, TML Consultancy CC, based on the taxpayer’s assertion that it meets all the requirements for classi cation as a small business corporation (‘SBC’) in terms of s 12E of the Income Tax Act 58 of 1962 (‘the Act’).
Section 12E(4) of the Act provides for a bene cial tax dispensation for small business corporations. Such corporations are entitled to be assessed for income tax purposes at preferential rates prescribed by the section. The de nition of an SBC contains a list of requirements to be met in order for a corporate entity to qualify as such. Simultaneously, the de nition contains certain inclusionary and exclusionary criteria.
This landmark case for small businesses reported on 22 June 2012 is the rst reported court decision considering the de nition of a small business corporation for the purposes of s 12E. The Tax Court also interpreted speci c words in the context of s 12E: ‘management’, ‘consulting’, ‘broking’.
Facts
The taxpayer is a close corporation registered in terms of the Close Corporations Act 69 of 1984. It was incorporated in 1995 and has one member, who is also the public of cer of the company. It carries on the business in key account trade marketing, which consists of negotiating the listing and sales of mainly food products, manufactured or imported by its principals, most notably supermarkets and departmental stores, with major retail corporates such as Checkers, Makro and Game. The taxpayer’s business also entails the provision of promotional activities relating to the products of its clients and all related and ancillary activities including, but not limited to:
– advising clients on such issues as pricing, price increases, promotional prices, cycle deals, annual incentives and terms;
– the placement of clients’ products, which involves listings, merchandising, displays, range audits and new store opening negotiations;
– promotions of clients’ products, involving promotional packaging, bulk buys, promotional calendars, preparing trade sponsorships and in-store demonstrations;
– assisting with consumer complaints and providing feedback on consumer demands and requests;
SAIT CompendIum oF TAx LegISLATIon VoLume 1 721
CASE DIGEST 2011-2012