Page 787 - SAIT Compendium 2016 Volume1

CASE DIGEST 2014-2015
Core reasoning
Although Australian tax collection cannot be enforced by way of South Africa common law, the question was whether Article 25A of the South African/Australian Tax Treaty could be invoked with the key point of contention being the effective date. Because the disputed Australian tax debt arose in respect of income, gains and pro ts arising before the 1 July 2009 effective date, the taxpayer argued that no basis existed for applying the tax treaty.
Judge Maya (with all sitting judges concurring) held that no retrospectivity exists. Application of Article 25A is not retrospective merely because a part of the requisites for its action is drawn from the period before the Article’s passage. When article 25A entered into force, it applied to all revenue claims outstanding even if the tax years under dispute pre- dated the Article’s entry into force.
In terms of assets held in trust, the taxpayers alternatively argued that the claim should be discharged because SARS pursued these proceedings in disregard of Mr Krock’s lack of bene cial interest in the assets in question (which had allegedly passed to Jucool Enterprises, Inc). In reviewing the case, the court applied South African legal principles (as opposed to British Virgin Island principles) because the assets at issue were situated in South Africa. The court rejected the claim and held South African ownership remained due to failures associated with changes in registration and delivery under South African law.
2. Gainsford NO v Murray NO 2015 JDR 1736 (GP) (Gavin Cecil Gainsford NO & Two Others (Joint Trustees of Tannenbaum, BD Estate) v Cloete Murray NO & SARS; GNP HC Case No: 55517/2014 (26 August 2015) (SARS Website)
Issue
Rule 45 of the Uniform Rules of Court: Whether a sheriff attachment in respect of an insolvent estate was properly conducted so as to override a subsequent SARS provisional order under section 163 of the Tax Administration Act.
Posture of case
The High Court was sitting in the rst instance. The trustees of an insolvent estate were making an application against SARS in respect of SARS’s attachment of third-party assets that were allegedly already attached pursuant to a prior 2011 order.
Facts
On the 6 August 2014, SARS was granted a provisional order by the North Gauteng Division in terms of section 163 of the Tax Administration Act for the preservation of assets belonging to Dean Rees and Doggered Investments (Pty) Ltd. In making this assertion, SARS stated that Doggered Investments (Pty) Ltd was Rees’s alter ego with the assets to be preserved in order to secure tax debt of approximately R194 million. This order includes the attachment of shares in another corporation called Promac Paints (Pty) Ltd.
The joint trustees of the insolvent estate of B.D. Tannenbaum instituted an action for an order excluding the shares of Prompac Paints (Pty) Ltd from the provisional order granted to SARS on the basis that the sheriff had already attached the shares in 2011. This prior attachment occurred in terms of a court order that the trustees of the insolvent estate instituted in their private capacity against Dean Rees and Doggered Investments (Pty) Ltd.
Outcome
The application by the insolvent trustees was dismissed. The court held that the sheriff order for the protection of the insolvent estate lacked possession and control as required by Rule 45 of the Uniform Rules of Court.
Core reasoning
Mainly at issue was whether a proper attachment order was obtained in 2011 under Rule 45(8). SARS contended that the attachment of the shares failed to properly occur at the situs (ie the place where the shares existed or originated) and that the sheriff also failed to take the certi cates into the sheriff’s possession or entry into the share registry. The court agreed with SARS that a proper attachment was never made because the sheriff failed to take proper possession a control.
3. Mr X v Commissioner for SARS; FB HC (Tax Court) Case No: VAT 867 (26 June 2015) (SARS Website)
Issue
Section 102 of the Tax Administration Act: At issue was the claim for VAT input credits in terms of factual proof. Posture of case
The Tax Court was sitting as the court of rst instance with the taxpayer making the application.
Facts
At issue was the total value-added tax owed by the taxpayer. SARS conceded at the outset that the taxpayer should not have been assessed for output tax. On the other hand, most of input tax credits claimed in respect of the expenses relating to certain contracts as well as personal expenses unrelated to the taxpayer’s telecommunication phone business were
SAIT CompendIum oF TAx LegISLATIon VoLume 1 779
CASE DIGEST 2014-2015