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Captain Of A Sinking Ship As a rule-of-law institution, SARS failed many years ago. It is glaringly deficient, constitutionally, legally, forensically.
It cannot cope with human resources, systems or public relations. It cooks its books. Can such a rotten outfit survive as an institution?
MONTHLY LISTING Latest Legislation & Legislative Material To Emerge Or To Be Found Since Issue #214
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2020 Budget 26 February 2020: W2—structure of the government accounts. See the Monthly Notebook.
Tax court case 20 October 2020: SARSTC 0035/2018 (ADM) [2020] (Cape Town) (see 214 TSH 2021). Costs ordered against SARS, the nominal victor, & on a punitive basis, but the taxpayer deprived of any relief whatsoever! A disastrous, heavily biased judgment, now fully covered in 8 TAW 2021.*
High Court case 05 November 2020: Rappa Resources (Pty) Ltd v CSARS (20/18875) [2020] ZAGPPHC (see 214 TSH 2021). SARS completely in the wrong, withholding a huge refund & gratuitously defaming the taxpayer, without presenting a shred of evidence, but the taxpayer gets hammered! Again, costs awarded against SARS, while the taxpayer wins no relief. See ‘When bullshit baffles brains’ 7 TAW 2021: ‘With justice like this, we shall all be ruined.’*
Concourt case 19 November 2020: Mahlangu and Another v Minister of Labour and Others (CCT306/19) [2020] ZACC 24; 2021 (1) BCLR 1 (CC) ; [2021] 2 BLLR 123 (CC); (2021) 42 ILJ 269 (CC). Per Victor AJ for the majority (footnotes suppressed):
Domestic workers are the unsung heroines in this country and globally. They are a powerful group of women whose profession enables all economically active members of society to prosper and pursue their careers. Given the nature of their work, their relationships with their own children and family members are compromised, while we pursue our career goals with peace of mind, knowing that our children, our elderly family members and our households are well taken care of.
Many domestic workers are breadwinners in their families who put children through school and food on the table through their hard work. In some cases, they are responsible for the upbringing of children in multiple families and may be the only loving figure in the lives of a number of children. Their salaries are often too low to maintain a decent living standard but by exceptional, if not inexplicable effort, they succeed. Sadly, despite these herculean efforts, domestic work as a profession is undervalued and unrecognized; even though they play a central role in our society.
At issue here is social security for domestic workers. The cornerstone of any young democracy is a comprehensive social security system, particularly for the most vulnerable members of society. Although passed before the advent of our constitutional democracy, the Compensation for Occupational Injuries and Diseases Act (COIDA) partially contributes to our country’s social security system. Unfortunately, 26 years into our democracy and despite the constitutional promise and aspirational expectations, in the event of injury, disablement, or death at the workplace, domestic workers do not enjoy the protection under COIDA. By stark contrast, all other employees are.§
Tax court case 26 November 2020: SARSTC VAT 1940 (VAT) [2020] (Cape Town). A significant VAT matter, heard by Sievers AJ & won by the taxpayer, a (excuse the four-letter word) bank (my sympathies immediately prepare to realign, in the blink of an
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eye, &, without yet reading the judgment, I am already certain that SARS should appeal). The bank runs a sort of insurance scheme, backed by real insurance, with an actual insurer (probably what we used to call a group policy), on behalf of its loan customers, undertaking to settle their loans upon retrenchment or death. As usual, the court (meaning the legal representatives on both sides) did not understand the relationship between an ‘enterprise’ & a ‘taxable supply’. Nor did it understand that an ‘enterprise’ is an all-in endeavour—a vendor indulges in separate activities, not separate enterprises. The decision is undoubtedly wrong, SARS having botched the case, even more than did the bank. At the very least apportionment should have been applied. And someone, anyone, ought to have taken a look at the Long-Term Insurance Act.*
Joint publication December 2020: 2020 tax statistics. Concourt case 28 December 2020: Moko v Acting Principal of Malusi Secondary School and
Others (CCT297/20) [2020] ZACC 30. Khampepe J was compelled not to speculate, but nothing constrains me. When an acting principal bars a child from a matric exam for not attending ‘extra lessons’, I am enough of an African to know what is going on:
The people shall have power, & they shall monetize it!§ LSSA release 07 January 2021: Law society welcomes the appointment of the legal services
ombud: The Law Society of South Africa (LSSA) welcomes the Legal Services Ombud’s appointment, retired Cape Town High Court Judge Siraj Desai.
High Court case 08 January 2021: Engelbrecht NO v Master of the High Court, Kimberly and Others (432/2020) [2021] ZANCHC 11. About an explicit habitatio created in a will & the rights flowing from such a thing, heard by Lever AJ. Fed up with constant disputes over the habitatio, the executor approached the court for a declaratory order. Cleverly, he asked that costs be awarded against the estate, unless the application should be opposed. The other side stumbled arrogantly & disrespectfully right into the trap:
Then the opposing respondents make a number of contentions in interpreting clause B(i) of the will. Firstly, they contended that the right of habitatio has been defined in an ante-nuptial contract which was executed in 1985 and it was therefore not necessary for the testator to repeat such definition. Secondly, they contend that the surrounding circumstances explain what clause B(i) means. Finally, they contend that there is a ‘latent ambiguity’ in the provisions of clause B(i) of the relevant will. That such latent ambiguity emerges when one considers certain evidence external to the relevant will.
In support of their arguments the opposing respondents annex to their answering affidavit an opinion of a Senior Counsel which appears to have been dated at Bloemfontein on the 23 June 2011. The said opinion deals with the very questions that are before me for decision. This is the first time that I have ever come across such practice and it is certainly not a practice that should be encouraged.
Certainly, the opposing respondents would have been free to argue the views espoused in the relevant opinion when they argued the matter before this court, and I would then have considered such views on their merits. However, to insert such opinion into the record and by implication intimate that its source must somehow sway my views is at least inappropriate.
To make matters worse, there are certain passages that are clearly missing from the said opinion. Further, the opinion is based on the instructions given to such Senior Counsel in a letter to him from the then instructing attorney. This letter does not form part of the record. In such circumstances the factual basis upon which the opinion was given is not fully disclosed. The applicant has indicated that he has the same complaints. Accordingly, I shall simply ignore the said opinion.
High Court case 14 January 2021: Leysath v Legal Practitioners Fidelity Fund Board of Control (51027/19) [2021] ZAGPPHC 7. Before Van Nieuwenhuizen AJ. An advocate gets his lines crossed in trying to recover monies due to him by an attorney. A nice restatement of the law governing the relationship between client, attorney & counsel, deserving space in a future issue.
High Court case 19 January 2021: Wenco International Mining Systems Ltd and Another v CSARS (59922/2019) [2021] ZAGPPHC 70. A review of a SARS ruling under s 41B of the Value-Added Tax Act. I don’t recall that being attempted before. Heard by Fourie J. The taxpayer lost; deservedly so. The VAT ruling was spot on.
High Court case 21 January 2021: Scharrighuisen NO and Others v Scharrighuisen and Others (6837/2020) [2021] ZAWCHC 19. I thought the facts sounded awfully familiar (trustees deservedly thrashed in divorce proceedings). SAFLII has decided in its
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wisdom to report this case twice, the first time as RS NO and Others v CMS and Others; In re: CMS v RS and Others (6837/2020) [2021] ZAWCHC 6 (21 January 2021) (see 214 TSH 2021).
Tax court case 27 January 2021: Black Mountain Mining (Pty) Ltd v CSARS (IT 24578) [2021] ZATC 2. Heard by Collis J. Ouch! Talk about a mishandled dispute! Very late in the day, the taxpayer attempted to introduce an additional ground of appeal & reclassify its expenditure. Collis J would have none of it. The case has jumped the very long queue at TAW (it is dealt with in detail in 9 TAW 2021), but the following passage deserves an early airing:
In the present instance the applicant as mentioned relied on advice received in a report prepared by KPMG to conclude that it would not persist with the section 11(a)-issue as a ground of appeal. This abandonment and waiver was not only conveyed to the respondent but it was also acted upon by the applicant, as it was not included in its Rule 32 Statement delivered to the respondent on 20 November 2018.
Furthermore, at all material times throughout engagement with the respondent (as far back as 2017) the applicant was represented by the same legal team as it is today, and its affidavit is evidently silent as to why its legal representatives acted on this 'incorrect legal conclusion' made by KPMG, that resulted in the section 11(a)-issue not being persisted with. What is also conspicuously absent from the application, is an explanation by its very legal representative to elucidate much further why a report previously accepted and acted upon all of a sudden now became a report containing advice which ought to be discarded and rejected.
The applicant's failure to take this court into its confidence and to provide a reasonable explanation, as to why the admission was previously made, conveyed to the respondent, and its removal now sought to be withdrawn, places this court in a position where it finds it difficult to come to the assistance of the applicant. Differently put, the applicant has failed to explain the circumstances under which it was made and the reasons as to why it sought to withdraw it.
A commendable performance from SARS, against the supposed big ’uns. Well done! Except that SARS missed a trick, rule 32(3) (9 TAW 2021).
ZAeconomist 27 January 2021: To be grateful for not-so-small mercies (my hyphens). By Brian Kantor:
Such improved prospects will be completely reversed by an additional wealth tax. It will not be expected to be a once off event. It will mean more SA risk and demand higher returns on the cash firms invest, meaning still less capex. It will reduce the value of SA companies so that they can meet such higher required risk adjusted returns for investors and immediately reduce the rewards for saving and the value of pensions. It will encourage the export of the savings of tax paying wealth owners and the emigration of skilled taxpayers. Tighter controls on capital flows would inevitably have to follow that would undermine the depth of our capital markets. Have those who advise wealth tax increases estimated how much collateral damage will be done to tax revenues over the longer run?
The sensible way to fund an unavoidable increase in government spending is to call further on the R160 b of Treasury cash held at the Reserve Bank. And to raise a temporary overdraft from the Reserve Bank to supplement this cash balance, should this become at all necessary. Adding more money to the wealth portfolios of South Africans, including to their deposits at the banks, created this way, would further stimulate spending, income growth and tax revenues. It would be growth enhancing and therefore risk reducing.§
GN 34 GG 44113 28 January 2021: International trade administration commission of SA—certificate issued in terms of schedule 1, paragraph 8 of the Value Added Tax Act, rebate item 412.11/00.00/01.00 (see 214 TSH 2021). The SARS website says the certificate was granted specifically to SARS. President Ramaphosa might not be pleased.*
GN 64 GG 44125 29 January 2021: Commencement of the Political Party Funding Act. In 9 TSH 2004, I was already disappointed that we did not have such a law. In those days we perhaps thought that the ANC might care.§
IRBA report February 2021 (undated): Public inspections report on audit quality.§ NERSA website February 2021: The new website doesn’t work too well.§ the dtic website February 2021: The website has been converted to the new governmental
format. Grotty but functional.§ DE&L release 01 February 2021: UIF launches e-compliance certificate system. SARS website 01 February 2021: Foreign employment income exemption:
New subheading has been added to the webpage, Foreign Employment Income Exemption:
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Temporary relief in respect of the 2020 and 2021 years of assessment.* SARS website 01 February 2021: Estates:
New subheading has been added to the webpage, Estates: Update of the Estate’s Representative Taxpayer details.*
GN R 65 GG 44126 01 February 2021: Invitation to submit applications for a DALRRD quota import permit in terms of the rebate item 460.03/0207.14.9/01.07 for rebate of the full anti-dumping duty on bone-in-cuts of the species gallus domesticus, frozen, classifiable in tariff subheading 0207.14.9 imported from or originating in the USA. Dr Red Rob—that was his name! My eyes mist over when I read this sort of material, nowadays entirely lacking the race-based & bizarrely comic terms the good doctor knew were the right-red way to divvy these things out.
PSC release 02 February 2021: Public service commission congratulates Dr Somadoda Fikeni on his new appointment:
The Public Service Commission (PSC) welcomes the appointment of Dr Somadoda Fikeni as Commissioner in the PSC for a five-year term with effect from 01 February 2021.
Treasury report 02 February 2021: 2019/20 National treasury annual report vote 7.§ SARS website 02 February 2021: Tax directives:
Update on Trade Testing SARS is in the process of enhancing the Tax Directives process and trade testing for Independent Software Vendor (ISV) submissions. To prepare for the implementation of these enhancements, trade testing will start on 22 March 2021 until 22 April 2021, in line with our intention to go-live within the first quarter of the 2021/22 financial year.*
Dear stakeholder 02 February 2021: Tax directives: trade testing.* High Court case 02 February 2021: Pricewaterhousecoopers Inc and Another v Minister of
Finance and Another (25705/2019) [2021] ZAGPPHC 51. A constitutional matter, on VAT, heard by Kollapen J, which PWC lost. About the remission of interest under s 39(7) of the Value-Added Tax Act, which has been awaiting oblivion, interest-wise, for nine years. Related parties botched their paperwork in passing credit notes, ending up paying a heavy price, thanks to a change in the applicable law. I get the heebie-jeebies when judges ‘explain’ the VAT law, & froth at the mouth when they mention Metcash. On that basis alone, even without studying the judgment at all, I would recommend an appeal.*
High Court case 02 February 2021: Pricewaterhousecoopers Inc and Another v Minister of Finance and Another (25705/2019) [2021] ZAGPPHC 38. The same case.
NA release 03 February 2021: SCOPA to prioritize oversight of ailing state-owned entities: SCOPA takes seriously the regression in these audit outcomes. The committee will schedule meetings with the Department of Public Enterprises and other line function departments under which these entities fall. Thereafter, the committee will schedule hearings with the affected entities in order to map a plan to assist them, in so far as SCOPA’s mandate allows.
Being a public representative might look easy to hoi polloi but few know how much our MPs are dedicated to being on top of things, nor how innovative is their thinking. No sooner had they spotted the SOE thingee than they came up with the idea of having a meeting! It’s tough, but that’s what it takes to be a legislator.
Treasury factsheet 03 February 2021: Fact sheet on indemnification issues. Fending off some criticism about delaying the rollout of vaccines. (Lots of competition in that department.)
SAGNA release 04 February 2021: Military health service to account for Heberon procurement. R260,59 m spent; all rules broken; contract fails to mention quantity ordered; contract signed only upon delivery; 40% of consignment possibly lost through failure to maintain the cold chain. It’s all so mystifying, until you learn from Google that the stuff comes from our own, very special chum, Cuba.
SARS release 04 February 2021: SARS customs make a massive rhino horn bust worth R53 million. It was the dog what done it. And no one says: ‘Poor rhinos!’*
SARS website 04 February 2021: Customs & Excise Act: The tariff amendment notices, scheduled for publication in the Government Gazette, relate to the amendments to— Part 1 of Schedule No 3, by the insertion of rebate item 311.40/00.00/01.04, in
order to create a rebate facility for yarns and textiles for use in the manufacture of apparel—ITAC Report no 641;
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Part 2 of Schedule No 4, by the insertion of various items under rebate item 460.15, in order to create a rebate facility for the importation on tinplate—ITAC Report no 640; and
Part 1 of Schedule No 1, by the substitution of Note 5 in Chapter 98 of Section XXII, in order to implement the policy directive for the inclusion of semi-knocked down vehicles kits as eligible products under the automotive production and development programme—ITAC Minute M03/2020.
You seldom see so much evidence of failed policy interventions in a single such notice. Someday someone must explain to me all the ways the ANC differs from Apartheid administrations. I am sure it will not take long.*
High Court case 04 February 2021: Le Grange v Barkhuizen and Others (2620/2020) [2021] ZAFSHC 12. Heard by Mathebula J. Which of two wills was the last will? On s 4A(2) of the Wills Act. The applicant confirmed both as beneficiary & executrix.
CIPC notice 7/2021 05 February 2021: Clarification on requirement for letter of no objection from the department of public works on company & close corporation re-instatements (form COR 40.5).
SAGNA release 05 February 2021: Criminal charges laid against state officials: A total 6 140 government officials face criminal liability after investigations found that they had dipped into the Unemployment Insurance Fund’s Temporary Employment Relief Scheme (TERS) to the tune of R41 million.
SARB working paper 05 February 2021: Working paper—WP/21/02: taxpayer responsiveness to taxation: evidence from bunching at kink points of the South African income tax schedule:
I apply the bunching methodology to South African administrative tax data over the period from 2011 to 2017 to investigate the responsiveness of individual taxpayers to changes in marginal personal income tax rates. I find significant evidence of bunching among the self-employed but no evidence of bunching among wage earners. Among the self-employed, bunching is greatest at the highest kink in the income tax schedule and smallest at the lowest kink. Female self-employed exhibit greater bunching behaviour than male self-employed, and responsiveness appears to decrease with age. The responsiveness of the self-employed appears to be due to tax avoidance by shifting income into future periods through retirement fund deductions, as well as a real labour supply response. Despite the significant excess bunching observed, the implied elasticities of taxable income—under the assumption of a uniform heterogeneity distribution around the kink—are not very large.§
SARS website 05 February 2021: Other fermented beverages: Updated policy - Other Fermented Beverages Two new paragraphs 2.12.1(d) and (e) have been inserted to make provision for
a licensed manufacturer of goods contemplated in Rebate Item 620.24.*§ SARS website 05 February 2021: Malt beer policy:
Updated Malt Beer Policy: Two new paragraphs 2.12.1(e) and (f) have been inserted to make provision for
a licensed manufacturer of goods contemplated in Rebate Item 619.03.*§ SARS website 05 February 2021: TCS guide:
Update to Tax Compliance Status guide: Compliance Request form (TCR01) has been changed from Flex form to web-based form.*
GN 49 GG 44173 05 February 2021: Non-governmental organization—leaf services—inspection procedures & inspection fees for grains & grain products: invitation for comments.
SARS release 08 February 2021: Online filers have one week to meet deadline.* SARS website 08 February 2021: Reminders for auto-assessment:
Dear ABC MAKEKE 091XXXXXXX, during the 2020 Filing Season, you were selected to participate in SARS Auto-Assessment initiative. We notice that you have not yet elected to accept SARS auto assessment or file your tax return for the 2020 tax year. You still have an opportunity to do so until SARS makes an estimated assessment. We urge you to make use of this opportunity. Should you not do so, SARS will be making an estimated assessment, based on the data at our disposal, on 19 February 2021. Should you file a return after this date, you would be subject to a penalty for the late submission of your return. Regards, SARS
Has SARS management gone completely, frigging mad? Or does my copy of the Tax Administration Act differ from theirs? After all, I compile it myself.*
GN 76 GG 44136 08 February 2021: National Minimum Wage Act. Schedules 1 & 2 amended, with effect as from 1 March 2021. Inaccessible file.
GN 77 GG 44137 08 February 2021: Determination: earnings threshold. Under s 6(3) of the
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Basic Conditions of Employment Act, set at R211 596,30 (R205 433,30) as from 1 March 2021. Inaccessible file. TSH ‘Schedule of statutory thresholds’ updated accordingly.
CIPC notice 8/2021 09 February 2021: CIPC new automated processes. DE&L release 09 February 2021: Employment & labour minister TW Nxesi announces
minimum wage increases. A joined-up government it is not. SAGNA release 09 February 2021: Probe into wasteful expenditure on Kusile housing project:
This follows a report on the initial budget of R160 million planned for the construction of the accommodation for ESKOM employees. The project was halted when expenditure reached R840 million.
According to the report, the project was abandoned and remains unfinished, while ESKOM is alleged to have spent billions on rental accommodation and transportation for its employees. The 336 units were to be developed in the Wilge residential development project.
SARS updated IN 47 09 February 2021: Interpretation note 47 (issue 5)—wear-&-tear or depreciation allowance. Issue 4 archived.*
SARS updated BGR 7 09 February 2021: Binding general ruling (income tax) 7 (issue 4)—wear-and-tear or depreciation allowance.*
SARS website 09 February 2021: Customs & Excise Act: Draft rule and schedule amendments, and related forms—Diesel Refund Scheme Due date for public comment: 24 March 2021.*§
SARS report 09 February 2021: Annual report—South African Revenue Service 2019/20.* fin24 09 February 2021: AG takes Mboweni's treasury to task for 'fruitless & wasteful'
expenditure.§ SAGNA release 10 February 2021: Call on NYDA to support 15 000 start-ups:
Small Business Development Minister Khumbudzo Ntshavheni, has called on the National Youth Development Agency (NYDA) to support at least 15 000 start-ups by 2024.
We must now support young people who are in businesses that we call ‘high-risk businesses’ such as the technology innovation, digital businesses and other avenues, where young people are moving barriers with little support because our support tends to be risk averse’, Ntshavheni said.
Equivalent to an instruction to give the money away, or steal it yourself, which is the same thing. What I would call on the NYDA to do is disclose what happened to R2 billion demutualization levy given into the care of the Umsobomvu Youth Fund, which was then absorbed by the NYDA (91 TSH 2010).
Dear trader/agent 10 February 2021: Subject: 13th deferment payment at the end of the 2020/21 financial year. Oops! Too late! I should have told you—it’s confidential.*
SARS website 10 February 2021: Due to ongoing maintenance, eFiling may be unavailable on Saturday, 11 February 2021, from 18h00 to 22h00. Our apologies for the inconvenience. ‘I wonder’, asks Eric Milner, ‘if they are completely mad?’, pointing out that Monday 13 February 2021 ‘is the deadline for submission of tax returns’. If you gotta go, you gotta go.§
the doj&cd release 11 February 2021: Advocate Mashabane appointed as the new director general of the department of justice & constitutional development.
IFWG release 11 February 2021: Project Khokha 2 launched to explore the policy & regulatory implications of tokenization in financial markets. Debentures & Blockchain.
SAGNA release 11 February 2021: President Ramaphosa outlines interventions for ESKOM: ‘A recent analysis suggests that easing the licensing requirements for new embedded generation projects could unlock up to 5 000 megawatts of additional capacity and help to ease the impact of load shedding’, he said.
SAGNA release 11 February 2021: Government embarking on centralized SOE model: President Cyril Ramaphosa has announced that government would in 2021 implement a centralized model for the country’s embattled state-owned [enterprises] (SOEs). While delivering the 2021 State of the Nation Address on Thursday, the President said the centralized SOE model would ensure a standardized governance, financial management and operational performance framework for all SOEs.
‘To support our reform process, the Presidential State Owned Enterprises Council has outlined a clear set of reforms that will enable these vital public companies to fulfil their mandate for growth and development’, he said.
SAGNA release 11 February 2021: Advisory council to tackle corruption: In an effort to deal with corruption, government will shortly appoint members of a National Anti-Corruption Advisory Council to oversee the initial implementation of the
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National Anti-Corruption Strategy. ‘We have started implementation of the National Anti-Corruption Strategy, which
lays the basis for a comprehensive and integrated society-wide response to corruption’, President Cyril Ramaphosa said.
SARS website 11 February 2021: Customs & Excise Act: The tariff amendment notices, scheduled for publication in the Government Gazette, relate to the amendments to— Part 1 of Schedule No 1, by the substitution of tariff subheadings 1001.91 and
1001.99 as well as 1101.00.10, 1101.00.20, 1101.00.30 and 1101.00.90, to reduce the rate of customs duty on wheat and wheaten flour from 54,42c/kg and 81,63c/kg to 10,27c/kg and 15,41c/kg respectively, in terms of the existing variable tariff formula—Minute 08/2020;
Part 1 of Schedule No 1, by the insertion of tariff subheadings 3002.20.11; 3002.20.19 and 3002.20.90, in order to provide for vaccines for human medicine for inoculation against Coronavirus and its variants as well as other vaccines; and
Schedule No 1, to implement the revised Tariff Rate Quota in terms of the Economic Partnership Agreement (EPA) (with retrospective effect from 1 September 2020 up to and including 31 December 2020).*§
GN R 80 GG 44144 11 February 2021: International trade administration commission of SA. Automotive production & development programme post 2020 regulations. APDP phase 2 (APDP 2) regulations 1 July 2021.
High Court case 11 February 2021: Gigaba v Minister of Police and Others (43469/2020) [2021] ZAGPPHC 55. Per Sardiwalla J:
I am satisfied that the evidence before me demonstrates that the fourth and fifth respondents acted with malice, in that their actions appeared to have been motivated by an abuse of power by a former minister and member if the Executive. There is no evidence that an investigation was conducted regarding a conspiracy to commit murder of Mr Gigaba and the respondents have failed to give any evidence to gainsay the applicant’s version.
Based on the evidence as tendered, the applicant has discharged the onus resting upon her to establish that despite the execution of warrant of arrest by the fourth and fifth respondents was wrongful and unlawful and that they set in motion her prosecution.
The fourth & fifth respondents were captain KM Mavuso & sergeant Norton Ndabami. The applicant’s husband is ‘national leader of the ruling party & a former Minister of Home Affairs, Public Enterprises & Finance’, & therefore royalty, of the old, old sort.§
Daily Maverick 11 February 2021: The judiciary in democratic South Africa forced to play a sole honourable role, says Judge Johann Kriegler. By Zukiswa Pikoli.§
SARS website 12 February 2021: Customs & Excise: Publication details for tariff amendment notices R 87, R 88 and R 89, as published in Government Gazettes 44151, 44152 and 44153 of 12 February 2021, are now available.*§
SARS website 12 February 2021: SARS MobiApp enhancements: Updated guide to include the new SARS MobiApp look and feel. Furthermore, you can now access the SARS Online Query System (SOQS) via the MobiApp. On the SOQS you can: Request your Tax Reference Number, Submit supporting documents, Report a new Estate case, Request your Tax Compliance Status, Submit a payment allocation via the Account Query functionality, Update your registered tax representative.*
SARS updated guide 12 February 2021: Guide to the SARS MobiApp IT–AE–40–G02 revision 13.* GN R 91 GG 44157 12 February 2021: Broad-Based Black Economic Empowerment Act:
regulations: publication of exemption. For the department of mineral resources & energy. The king is not expected to obey his own laws.§
SARS new scam 13 February 2021: SARS scam—SMS with letter of demand link.§ CIPC notice 10/2021 15 February 2021: Name reservation e-service process. High Court case 15 February 2021: Medtronic International Trading SARL v CSARS
(33400/2019) [2020] ZAGPPHC. Not yet reported by SAFLII. An interesting application for review on the voluntary disclosure programme, heard by Hughes J, which the taxpayer won. Strangely (above), the dispute was again about s 39(7) of the Value-Added Tax Act, the question being whether, despite
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going for the VDP, you can still apply for remission of interest. Things understandably went wrong for the taxpayer when it suffered an embezzlement amounting to R537 236 176, based upon false VAT returns. Let’s hear it for internal controls! I really like Hughes J’s refreshing approach to statutory exegesis, & hope to look at the judgment more closely in TAW.*
CIPC notice 11/2021 16 February 2021: New e-service: new company registration (short standard profit (COR 15.1a) & non profit company without members (COR 15.1c).
IRBA release 16 February 2021: IRBA updates the market on governance steps taken by caretaker board.
NA release 16 February 2021: SCOPA to seek legal advice on how chief procurement office can be supported:
SCOPA has noticed a concerning trend in which departments and entities’ disregard the Public Finance Management Act (PFMA) and National Treasury regulations, which stipulate that all deviations and expansions have to be approved by National Treasury before they take place. Today’s briefing by the Chief Procurement Office revealed that some departments and entities proceed with deviations and expansions even though they are not supported or conditionally supported by National Treasury.
Some of these parliamentary committees are really sharp. They miss nothing. SCOPA’s main concern is the lack of powers this procurement office has in such instances. Their only recourse in such circumstances is to wait for the Auditor-General to declare such expenditure irregular and, in instances where criminality is found, to wait for consequence management to take place. SCOPA believes there should be a mechanism that empowers this office to deter departments and entities from disregarding National Treasury’s decisions on their applications.
So the treasury’s great procurement initiative has gone for a ball of chalk, like everything else it touches. Without Maria Ramos it is nothing.
NERSA release 16 February 2021: The High Court of South Africa (Gauteng division) order of 16 February 2021:
The National Energy Regulator of South Africa (NERSA) announced today that the High Court of South Africa (Gauteng Division) has ordered that an amount of R10 billion be added to Eskom’s allowable revenue to be recovered from tariff customers in the 2021/22 financial year. This consent order follows ESKOM’s application in terms of section 18(3) of the Superior Courts Act, 2013, that ESKOM should be permitted to recover R23 billion in the financial year 2021/22 as per the 28 July 2020 Court judgement.
SARS website 16 February 2021: SARS offices will open on 17 February 2021: SARS will open its branch offices from tomorrow, 17 February 2021 to serve the public.
As part of SARS’s commitment to all members of the public, please take note of the following: Bookings can only be made via the SARS website or the SARS MobiApp. All virtual bookings via the SARS site will continue to be honoured via a virtual
engagement (MS Teams or telephonic engagement) The SARS Contact Centre will continue to service any queries from members of
the public. All South African Ports of Entry manned by SARS customs officials will continue to
operate during this lockdown period. Please note that strict social distance measures will apply, and all members of the public are required to wear masks at all times when entering any SARS building or engaging with any customs officials. No access will be allowed without the wearing of a mask. These measures are being undertaken with the wellbeing of employees and all South African citizens in mind and we appeal to all taxpayers to take this call to adherence very seriously. With co-operation from everyone we will be able to overcome this disease.*
High Court case 16 February 2021: Maximum Profit Recovery (Pty) Ltd v Inxubu Yethemba Local Municipality and Others (1712/2020) [2021] ZAECGHC 11. A dispute over a tender for…wait for it…’VAT recovery services’. What the hell are those, I wonder? In the context of a municipality?§
Daily Maverick 16 February 2021: Bain & Company—the KGB of consulting. By Open Secrets: Bain & Company is one of several powerful multinational corporations at the centre of corruption and State Capture in South Africa. Bain enabled the wrecking of the South African Revenue Service, contributing to economic hardship for all South Africans. Placing profit over principle, Bain remains unaccountable and continues to dodge responsibility for serious economic crimes.§
Business Day 16 February 2021: IRBA CEO Jenitha John quits over ‘negative perception’.§
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Business Day 16 February 2021: Solicitor-general embarks on revamp of state attorney’s office—the fragmented office lacks central co-ordination & has been implicated in widespread corruption.§
NA release 17 February 2021: Committee on PSA concerned about high number of government employees doing business with government:
The Committee Chairperson, Mr Tyotyo James, reiterated what President Cyril Ramaphosa outlined in his State of the Nation Address that ‘we must build a capable, ethical and developmental state’. The committee applauded the PSC for receiving 98% or 9 782 of the financial disclosure forms in May 2020.
You’re asking the fox how many hens he ate? You’re applauding something that took place eight months ago? And you’re canvassing 10 000 governmental employees? Out of almost 2 million?
SAGNA release 17 February 2021: AstraZeneca vaccine doses offered to AU: Health Minister, Dr Zweli Mkhize, says government has offered the African Union the AstraZeneca vaccine doses that South Africa procured from the Serum Institute in India.
Then what? The AU will actually pay, or just be invoiced? SARS GN 16 17 February 2021: The ancient ‘General Note GN 16 (issue 2)—retirement— withdrawn commutation of small annuities’ withdrawn.* Daily Maverick 17 February 2021: Business confidence is not as low as the average monthly
BCI suggests. By Roelof Botha.§ Business Day 17 February 2021: Peter Bruce: bend the knee & smite your rivals for an easy
ride—SA is protecting too many businesses that are badly run—all they have to do is play the right cards.§
Daily Maverick 17 February 2021: SA needs a free trade deal with China, not the Belt & Road Initiative. By Mat Cuthbert.§
Office of the JP 18 February 2021: Judge President’s practice directive 1 of 2021. A very welcome tightening of the rules governing case management, trial allocation, & enrolment-of-trial matters. Let’s hope these will be applied, both to plaintiffs & defendants. Altogether unexpectedly, the judiciary’s suspicion of out-of-court settlements (214 TSH 2021) has been translated into new rules:
52. No Settlement/Consent draft Order shall be considered by a Judge unless this chapter of the directive has been fully complied with. 53. Every Settlement/Consent draft Order presented shall be interrogated by a Judge who is requested to make the settlement/consent Order to determine whether or not the circumstances upon which order is premised are justified in relation to the law, the facts, and the expert reports upon which they are based. 54. Because no evidence is adduced under Oath, as might have been presented on the trial, the Court may further require that the submissions relied upon should be confirmed by affidavit or oral evidence as more fully stipulated hereunder.
And there’s more, quite a bit more. While I doubt that the hoped-for benefits of such an approach will materialize, it’s hard to fault the intention behind it. I anticipate that some of it will be useful against SARS. Litigators please note.
Treasury release 18 February 2021: Invitation to South African institutions of higher learning to participate in the 2021 budget outreach initiative.
GN 44 GG 44163 18 February 2021: Notice & order of forfeiture. Nomhlengi Emmacculate Luchele loses R242 962,79 under the EXCON regulations.
GN 100 GG 44170 18 February 2021: Extension of deadline to file country by country returns in terms of s 25(7) of the Tax Administration Act. To 30 June 2021 & 30 July 2021. But read on.
Business Day 18 February 2021: ANC is fundamental cause of continual looting & SA’s decline. By Leon Schreiber:
State capture was not some unhappy accident. State capture has always been the explicitly stated goal of the ANC. The sooner we recognize that the ANC and its ideology is the problem, the sooner we can hold everyone from Zuma to Ramaphosa accountable for their mutually reinforcing roles in state capture, and the sooner we can begin the hard work of freeing the state from their poisonous tentacles.§
Business Day 18 February 2021: Gareth Ackerman: deaf to business, government is crippling retail trade, especially in liquor Limits imposed on weekend sales are causing job losses, a drop in GDP & increasing the social burden.§
Daily Maverick 18 February 2021: Malusi Gigaba: when power puts the Hawks in your pocket as a personal score-settling service. By Stephen Grootes.§
Business Day 18 February 2021: TFG calls for cut in import duties on yarn for textiles—clothing retailer says tariffs on yarn are keeping local textile industry from growing.§
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FIC draft PCC 19 February 2021: Draft public compliance communication draft 112 (draft PCC112) on the identification of money laundering & terrorist financing risks & associated customer due diligence for clients of authorized users of an exchange in terms of the Financial Intelligence Centre Act.
SARB C&E docs 19 February 2021: Currency & exchanges manual for authorized dealers. SARB C&E docs 19 February 2021: Currency & exchanges manual for authorized dealers in
foreign exchange with limited authority. SARB C&E docs 19 February 2021: Currency & exchanges guidelines for business entities. SARB C&E docs 19 February 2021: Currency & exchanges guidelines for individuals. On these items 19 February 2021: Once again, I cannot find the blasted exchange control
circulars on the SARB’s wretched new website. So there is no telling what amendments have been made.
MOF’s shame 19 February 2021: Minister of finance’s opposing affidavit, in his struggle with governmental workers before the Constitutional Court. Make your side of the story more accessible, by all means, but then extend the same courtesy to your opponents, lest you be seen as abusing your bully pulpit, bully.§
SARS website 19 February 2021: Customs & Excise Act: Publication details for the following tariff amendment notices, as published in Government Gazette 44169 of 5 February 2021, are now available: R 99, Part 1 of Schedule No 3, by the insertion of rebate item
311.40/00.00/01.04, in order to create a rebate facility for yarns and textiles for use in the manufacture of apparel—ITAC Report no 641
R 98, Part 2 of Schedule No 4, by the insertion of various items under rebate item 460.15, in order to create a rebate facility for the importation on tinplate—ITAC Report No 640
R 97, Part 1 of Schedule No 1, by the substitution of Note 5 in Chapter 98 of Section XXII, in order to implement the policy directive for the inclusion of semi-knocked down vehicles kits as eligible products under the automotive production and development programme—ITAC Minute M03/2020.*§
SARS guide 19 February 2021: Estate duty implications of key man policies GEN–ED–01–G02.*
Dear RCBS 19 February 2021: Estimated assessments: As you are aware SARS indicated at the commencement of the 2020 Filing Season the process that will be followed when persons do not accept or amend their ‘Auto Assessment’ that was provided to them. SARS has issued reminder [SMSs] in the last 10 days to those who had not accepted their auto assessment.
As the 2020 filing season is behind us, SARS will this weekend commence the issuing of estimated assessments to persons who fall in this category.
Could there be anything more irrational outside of a madhouse? On what basis will SARS amend an ‘auto assessment’ just because it was not accepted or amended? What law supports SARS? Does non-acceptance & non-amendment indicate that SARS’s own auto-assessment is incorrect? And what law allows SARS to communicate with taxpayers via SMSs? The victims of this wholly unlawful attack will be slapped with estimated assessments, & not one of them or their supposed advisers will have the faintest idea how to respond. In fact, the way this scam will probably go down, there might well be no way to avoid finality of the assessment, short of litigation, in the event of which, I would recommend an approach not to the tax court but to the High Court, but, puleeze, only if your legal representatives know what they are doing. Check, by asking them to tell you which was the case most recently covered in TAW.§
GN 48 GG 44168 19 February 2021: Notice & order of forfeiture. Kwezi Ventures (Pty) Ltd loses R65 637,90 under the EXCON regulations.
GN 101 GG 44171 19 February 2021: Extension of deadline to file country by country returns in terms of s 25(7) of the Tax Administration Act. To 30 June 2021 & 30 July 2021.*
GN R 102 GG 44172 19 February 2021: Broad-Based Black Economic Empowerment Act: exemption: Tourism Equity Fund.§
Business Day 21 February 2021: Textiles rebate could lead to more decent jobs & grow local sector—surely even determined critics must be able to agree that the rebate is better than the zero-sum game of a decades-long deadlock. By Simon Eppel. In an interventionist state, especially a fascist one, I say, there are so many distorting factors that reality is no longer discernible, & there remains no choice but to add to the ever-growing pile of self-contradictory rules & regulations.§
CIPC release 22 February 2021: CIPC new e-services transactional website. DE&L release 22 February 2021: Minister Nxesi responds to the outcry in relation to national
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minimum wage: The minimum wage is a tool to ensure that vulnerable workers do not fall below the poverty line and it is designed to reduce inequality and huge disparities in income in the national labour market.
‘As we have pointed out before, the minimum wage is really what it says it is. But it is not based on thumb suck but a well thought out process that allows all the interested parties to have a voice. I have noted with concern the objections from some stakeholders on the adjustment of the NMW and recognize the reality that the Covid-19 pandemic has had a harsh impact on most employers.
‘The NMW Act however accordingly permits employers that are genuinely unable to pay the proposed adjustment to utilise the exemptions procedures in order to be exempted from the NMW’, said Minister Thulas Nxesi[.]
Business Day 22 February 2021: Legal fraternity up in arms over ‘chaotic’ backlog at Master’s offices—of the 15 Master’s offices nationally, Johannesburg, Pretoria & Cape Town are the hardest hit by bottlenecks in the system.§
Business Day 22 February 2021: Letter: as long as Ebrahim Patel remains minister, enterprise cannot be set free—the worst kind of punishment has been meted out to the scrap metal industry in the form of the price preference system. By Mat Cuthbert. That is precisely the point: freedom is hated by many.§
GN 57 GG 44179 23 February 2021: Proposed levies on medical schemes issued in terms of s 3(a) of the Council for Medical Schemes Levies Act.
Daily Maverick 23 February 2021: Our SOEs have been stripped by ruthless looting & destruction—this is how we will begin the recovery. By Pravin Gordhan. I didn’t bother to read it, but, please, feel free.§
Budget speech 24 February 2021: Budget 2021—budget. Sheer fantasy. Budget presentation 24 February 2021: Budget 2021—renewing the economy & restoring public
finances. You & how many fairies? Budget review 24 February 2021: Chapter 1—renewing the economy & restoring the public
finances. Budget review 24 February 2021: Chapter 2—economic outlook:
The National Treasury projects real economic growth of 3,3 per cent in 2021, from a low base of −7,2 per cent in 2020. Growth is forecast to moderate to 2,2 per cent in 2022.
Budget review 24 February 2021: Chapter 3—fiscal policy: The consolidated deficit is projected to narrow from 14 per cent of GDP in the current year to 6,3 per cent in 2023/24. Gross national debt is projected to stabilize at a lower level of 88,9 per cent of GDP in 2025/26.
Budget review 24 February 2021: Chapter 4—revenue trends & taxation proposals: Gross tax revenue for 2020/21 is expected to be 10,6 per cent lower than in the previous fiscal year and R213,2 billion lower than projected in the 2020 Budget, but higher than estimated in the October 2020 MTBPS.
Budget review 24 February 2021: Chapter 7—government debt & contingent liabilities: Government’s response to the covid‐19 pandemic resulted in the gross borrowing requirement increasing by R237,6 billion to R670,3 billion in 2020/21. The borrowing requirement is expected to decline to R541,7 billion in 2023/24. Contingent liabilities are expected to increase from R1,11 trillion in 2020/21 to R1,23 trillion by 2023/24.
Budget review 24 February 2021: Annexure A—report of the minister of finance to parliament. annexure B—tax expenditure statement. annexure C—additional tax policy & administrative adjustments. Plenty of highly technical issues to be addressed, & then this:
In 2020, export tax on scrap metals was introduced in the Customs and Excise Act (1964). It was envisaged that this export tax would take effect from 1 March 2021. The export tax on scrap metals was aimed at replacing the current price preference system, which was introduced in 2013. It is proposed that the effective date of the export tax on scrap metals be postponed to 1 August 2021 to allow SARS and taxpayers’ systems to be ready and because the price preference system has been extended to 31 July 2021 or the date on which the export tax is fully implemented at a rate that is higher than 0 per cent, whichever date comes first.
Budget review 24 February 2021: Annexure D—public‐sector infrastructure update (always so difficult to believe; where DOES the money go, if it goes at all?). Annexure E—public‐private partnerships (Gautrain, Chapman’s Peak toll road, SANRAL toll roads—soooo exciting! No wonder we are doing so well.). Annexure G—summary of the budget (a good idea). Annexure W2—structure of the government accounts (see the Monthly Notebook).
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Budget review 24 February 2021: Errata: 2021 Budget Review. Budget tax guide 24 February 2021: Budget tax guide 2021. Treasury release 24 February 2021: Publication of the 2021 draft tax bills & other regulations
for public comment. SARS release 24 February 2021: SARS increases its focus on wealthy individuals & offshore
holdings: In 2016/17, taxpayers were given the opportunity to regularize their tax affairs to account for their offshore holdings through the Special Voluntary Disclosure Programme (SVDP). Taxpayers also had the opportunity to do so through the ongoing Voluntary Disclosure Programme (VDP) under the Tax Administration Act, 2011. Some taxpayers took advantage of this. However, despite the window of opportunity to regularize their tax affairs, some taxpayers chose not to do so. The information that SARS has received comes from 87 jurisdictions across the world, detailing the offshore financial holdings of South African taxpayers. We intend to undertake a careful review of the information and audit it, where necessary.
In the interests of fair and efficient administration of the system, SARS will be writing to affected taxpayers to request information about their offshore holdings. The request is for relevant material for risk assessment purposes that does not signal the commencement of an audit process but may inform future action.
We’ve heard all this before, & given advice accordingly, only to be considered dotty. Let’s see what SARS can do this time, without acting like gangsters. The last paragraph amuses me; in my view you can ask for ‘relevant material’ ONLY in the context of an audit. That’s a bad start.*
SARS release 24 February 2021: SARS welcomes the revised revenue estimate: We are on a journey to build ‘a smart modern SARS, with unquestionable integrity, trusted and admired’. Our focus is on a number of priorities amongst others is to expand the level data of taxpayers through third-party and other sources of information, as well as increase the use of data through machine learning and artificial intelligence. Emphasis is on broadening the tax base, improving tax compliance, an increased focus on wealth tax, and stepping up efforts to respond to the illicit and criminal economy.
Thank you to all South Africans, for your contributions and support. I am rendered, quite literally, slack-jawed.* Draft bill 24 February 2021: Draft Rates & Monetary Amounts & Amendment of Revenue
Laws Bill, 2021.* Draft bill 24 February 2021: Draft Financial Sector Levies Bill, 2021. A new tax, but
payable to the financial sector conduct authority, & so disguised as a user fee. Draft GN 24 February 2021: Determination of the daily amount in respect of meals &
incidental costs for purposes of s 8(1) of the Income Tax Act.* Business Day 24 February 2021: Dawie Roodt: this is why it is remarkably expensive to be
rich in SA—unfortunately, our political leaders treat the wealthy as a perennial & inexhaustible money tree.§
Business Day 24 February 2021: Peter Bruce: a scrap with critics after a call to scrap duties—co-ordinated attack sets me up as a straw man who has only one source.§
CIPC notice 14/2021 25 February 2021: Discontinuation of manual submission of primary co-operatives via [email protected].
IRBA release 25 February 2021: Caretaker board at IRBA issues call for nominations to serve on the board. Should be interesting. Some people will do anything to earn a buck.
The 40 MW solar PV plant will be constructed on the same site as the South Deep Gold Mine and all power generated by the plant will be consumed by the mine.
The application was made on 18 June 2020. Since the national grid is not in any way affected (except to reduce demand for ESKOM’s inferior, unreliable product), it is hard to see why approval was not given that afternoon. Sensitive about the issue, NERSA provides an exculpatory timeline, which looks credible.
SAHRC release 25 February 2021: South African human rights commission denounces recent attacks by public figures on the independence of the judiciary.
the doj&cd release 25 February 2021: State attorney clarifies former Minister Dlamini’s pension claims:
The Office of the Solicitor General has investigated claims widely reported in the media that former Minister of Social Development, Ms Bathabile Dlamini, is being deprived of her pension by virtue of an alleged political instruction to the State Attorney.
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We want to categorically state that such reports are unfortunate, without substance and are devoid of any truth. The information before the Solicitor-General reveals that the instruction to withhold the payment of the former Minister’s pension was received from the South African Social Security Agency (SASSA).
SARS website 25 February 2021: Customs & Excise Act: The tariff amendment notices, scheduled for publication in the Government Gazette, relate to the amendments to— Part 6 of Schedule No 1, by the insertion of Note 4 as well as the substitution of
various items under export tax item 193.00, in order to insert the African Continental Free Trade Agreement (AfCFTA) column and reduce the rate of export duty as promulgated in the Taxation Laws Amendment Act, 2020, on 20 January 2021 to free until 31 July 2021 (with effect from 1 March 2021 up to and including 31 July 2021); and
Part 6 of Schedule No 1, by the substitution of the export tax rates under export tax item 193.00 as promulgated in the Taxation Laws Amendment Act, 2020, on 20 January 2021 (with effect from 1 August 2021).*§
Business Day 25 February 2021: Climate change: solutions might be worse than the problem. By Bjorn Lomborg, author of False alarm: how climate change panic costs us trillions, hurts the poor, & fails to fix the planet.§
Moneyweb 25 February 2021: SARS gets large injection to improve technology infrastructure—also starts legal processes to recover unwarranted expenditure.§
Business Day 25 February 2021: Treasury defends growth forecasts MPs say are too optimistic—the treasury has forecast growth of 3,3% this year, after negative growth of 7,2% for 2020. By Linda Ensor:
ANC MP Dipuo Peters noted that the Treasury’s growth projections over the past few years have been very optimistic, raising doubts about its growth models. DA MP Dion George also said the GDP forecasts seemed to be ‘unrealistic’ and distorted revenue projections.§
SARS updated guide 26 February 2021: An employers guide to the third party appointment process EMP–ELEC–02–G03 revision 4.*
SARS website 26 February 2021: Customs & Excise Act: Publication details for tariff amendment notices R 147 and R 150, as published in Government Gazettes 44194 and 44198 of 26 February 2021, are now available.*§
SARS GNs w/drawn 26 February 2021: The following general notes have been withdrawn: General Note 9—Purchase of annuities and transfer to retirement annuity fund at
retirement General Note 9A—Purchase of annuities and transfer to retirement annuity fund
at retirement General Note 12—Retirement from employment General Note 18 (Issue 2)—Providing Annuities on Retirement from Employment
Decision General Note 18A (Issue 2)—Providing Annuities on Retirement from
Employment Decision.* SARS draft updated IN 26 February 2021: Draft interpretation note 59 (issue 2)—tax treatment of the
receipt or accrual of government grants: Due date for public comment: 30 April 2021.*
SARS website 26 February 2021: Customs & Excise Act: Draft schedule and notes to the draft schedule–Harmonized System (HS) 2022 Due date for public comment: 30 April 2021.*§
SARS website 26 February 2021: Customs & Excise Act: New page created–HS 2022.*§
SARS website 26 February 2021: Tax Administration Act: In order to safeguard taxpayers and to combat fraudulent activities, the Special Power of Attorney (SPPOA) Form, appointing any taxpayer or taxpayer representative other than a tax practitioner, to act on a taxpayer's behalf, must be [accompanied] by a— certified copy of the taxpayer's identity document; a certified copy of representative taxpayer's identity document; and an affidavit from the taxpayer authorizing the representative taxpayer to act on
his/her behalf. The affidavit to, at a minimum, include the identity number of the representative and the tax number of the taxpayer
I haven’t the faintest idea what this means. How I would appreciate some reference to the applicable law (principle of legality, you know). Since this
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supposed direction doesn’t apply to a tax practitioner, can a tax practitioner lodge an objection on a different POA? The costs of a dispute just keep climbing. In a time of covid, affidavits & certified copies are very difficult to arrange, safely. I am overdue some weeks already to supply a confirmatory affidavit needed in a matter, as I look for an attorney working from home nearby.*
SARS release 26 February 2021: SARS releases trade statistics for January 2021 (surplus of R11,83 billion).*
Draft notice 26 February 2021: Fixing of rate per kilometre in respect of motor vehicles for the purposes of s 8(1)(b)(ii) & (iii) of the Income Tax Act.*
Draft notice 26 February 2021: Income Tax Act: publication of proposed notice made in terms of para (b)(x)(cc) of proviso to definition of ‘retirement annuity fund’ in s 1: R15 000 (lump-sum benefit of withdrawal cashable only if it is below this threshold) *
Draft notice 26 February 2021: Unemployment Insurance Contributions Act: publication of determination of limit on amount of remuneration for purposes of determination of contribution in terms of s 6. Monthly inapplicability threshold set at R17 712 (R14 872.). Replaces draft of 24 February 2021.*
Business Day 26 February 2021: Letter: with consumer financed levies, the end-user pays—why are SA consumers paying levies on locally produced & consumed, & even imported, staple foods? By Craig Dennis Wilson. I should also like to know.§
Business Day 26 February 2021: Moody’s sceptical of SA’s debt targets—the fiscal consolidation outlined in the budget is unlikely to prevent the government’s debt burden rising in the coming years, the ratings agency said.§
Business Day 27 February 2021: Editorial: solicitor-general can save the state billions—turnaround of the office is beginning to take shape, though it remains a big task. (I hear that he is not too good at responding to emails.)§
SARS updated guide 01 March 2021: Guide to the tax compliance status functionality on eFiling GEN–ELEC–08–G01 revision 16.*
SARS website 01 March 2021: Government will be modernizing the foreign exchange control system:
As outlined in Annexure E of the 2020 Budget Review, Government will be modernizing the foreign exchange control system. The Foreign Exchange Control changes, together with the amendments in the Taxation Laws Amendment Act, 2020, will impact the TCS requests for FIA and Emigration as well as the withdrawal of retirement funds as follows: The concept of ‘emigration’ and the South African Reserve Bank’s approval
process via the MP 336(b) form will be terminated. Thereafter, for tax purposes, only the event of an individual ‘ceasing to be a resident for tax purposes’ in South Africa, will be relevant.
All applications, where the applicant had their MP 336(b) attested by an Authorized Dealer on or before 28 February 2021, will still be able to apply for a Tax Compliance Status (TCS) in respect of ‘Emigration’, during the period until 28 February 2022, in terms of the current procedure dealing with emigration for exchange control purposes.
All applications for TCSs for individuals ceasing to be a tax resident, from Monday, 1 March 2021 onwards, other than those under the previous bullet, will be processed by SARS based on a new dispensation where SARS will confirm that the taxpayer has ceased to be a resident for tax purposes. An MP 336(b) will no longer be required as part of the TCS application process. The taxpayer must still apply via the SARS TCR 01 ‘Emigration’ Application.
From 1 March 2021 onwards, taxpayers will be able to access their applicable retirement benefits if they can prove, to the fund, that they have been non-resident for tax purposes for an uninterrupted period of three years and an applicable Tax Directive is issued to the fund by SARS. Taxpayers must provide the applicable Tax Compliance Status (TCS) to the Authorized Dealers, as well as documentation from the fund that indicates or confirms the final amount paid to the taxpayer, before any transfers can be effected.
The current process of controlling or blocking an emigrant’s remaining assets in a special ‘blocked funds account’ will fall away and all transfers from these will be handled as normal fund transfers in line with any other FIA transfer.
A TCS in respect of FIA will be required for all transfers of listed securities from a securities register in South Africa to a securities register outside South Africa (The effective date of this will be communicated by the South African Reserve Bank).*
* Found or to be found on the SARS website. Concurrently on the SARS ‘What’s new’ page. § Not included in Tax Shock, Horror Database.
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LOST & FOUND
TSHD This month 105 items were added to the Tax Shock, Horror Database. Land subdivision Since 16 September 1998, the President has failed to proclaim the Subdivision
of Agricultural Land Act Repeal Act 64 of 1998. Smuts Ngonyama November 2004: ‘I did not join the struggle to be poor.’ Kgalema Motlanthe 2007: ‘This rot is across the board. It is not confined to any level or any area of
the country. Almost every project is conceived because it offers opportunities for certain people to make money.’
Jacob Zuma 09 October 2015: ‘I always say to business people, if you support the ANC, you are investing very wisely. If you don’t invest in the ANC, your business is in danger.’
Michael Hellens 05 November 2017: I await, indefinitely, if necessary, confirmation of the ‘Mazzotte donation’ or a denial from acting judge Adv Hellens.
Ace Magashule 13 August 2020: ‘Tell me of one leader of the ANC who has not done business with government.’
SARS release 11 November 2020: SARS wins court case involving illegal fuel imports (see 212 TSH 2020). I have been unable to find this supposed judgment of the Pretoria High Court, reportedly involving Drontech Engineering (Pty) Ltd. It was also the subject-matter of a report in The Citizen of 12 November 2020.
Court judgments I decided to ensure that all of these appearing in the Tax Shock, Horror Database were compressed. To my surprise, I found that several files were restricted in non-obvious ways, yet no match for A–PDF Remover (free). The task is ongoing.
Take on the month The enduring mystery of South Africa—so sophisticated in so many ways & yet always in such a mess.
MONTHLY NOTEBOOK All past entries from 2007 to date, or contents only. All words & phrases from 2009 to date.
SARS: the sinking ship As from 208 TSH 2020, I seem to have failed to mention that a new, free TSH resource is currently available, in the form of ‘TSH Monthly Notebook Contents’, which is a listing of the titles of all pieces appearing in the Monthly Notebook. Although cumulative, annual collections of the pieces themselves are available on our website (and in the Tax Shock, Horror Database), they have become difficult to search, thanks to their sheer volume and diversity. Since the titles are mostly descriptive enough to form an index, ‘Contents’ yields a quick pointer to what is available on any particular topic, responding to a search for a wide range of obvious keywords.
In updating my Vat Refresher—Theory and Practice, I used it to locate and extract every single piece on VAT, and then, discarding the very few that were no longer relevant, incorporate the lot.
What struck me forcefully is for just how many, many years SARS has been acting unlawfully, to say no more—for now. SARS spits on the Constitution, while becoming ever more hopeless at enforcement. It has become drunk on what is not much more than an extortion racket, victimizing mostly, if not preferentially, the innocent. It lacks any forensic skills whatsoever. Its officials are glaringly untrained (in my view, a human rights issue). It treats due process with contempt, and deadlines as something of exclusive concern to taxpayers. It is disrespectful of the judiciary. It handles court cases (usually) with breath-taking
incompetence, revealing its law-breaking and gross abuse of power without shame, while the current Commissioner crows ignorantly about supposed victories, in his hand-crafted releases.
Lacking competent staff, training and decent systems, SARS increasingly relies upon the most astonishingly perverse and dysfunctional automated systems ever devised, trampling daily on the constitutional rights of hundreds of thousands of people.
It exercises no discipline over its staff, and seems unable to tell anyone to do his or her job properly. What I call ‘originating auditors’ (in reality, not fit to be called even auditing assistants) enjoy a baleful and sinister sway, over everyone, right up to, well, where? How high up? It is impossible to say, but the Commissioner is aloof to (or else responsible for) what is going on upon his watch and in his name.
SARS relies upon production centres, which are clearly judged by their ‘performance’, the most notorious of which I call the ‘provisional tax Mafia’, whose members are indistinguishable from shameless gangsters. SARS is proud of their egregiously unlawful efforts (see its preening media release of 3 April 2018). This SARS Mafia seems to fear no one but me.
SARS is dishonest, vindictive and wholly unconscious of its alienation of taxpayers and devastation of the economy. It runs an unlawful cash set of books, like the Treasury, and rolls its creditors, producing ‘outcomes’ to its taste. By unlawfully withholding refunds, it has for
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decades impeded the proper functioning of the economy.
It thinks nothing of a meritless challenge of a taxpayer, knowing that the amount involved will usually not justify a spirited—and expensive—defence.
Account after account in these pages describes my personal interactions with the SARS juggernaut and carefully checked experiences of others, especially before the courts. Legal outrage is piled upon outrage, and the trend is determinedly downhill.
SARS is getting worse, at an accelerating pace, as it steadily adds fresh scams and defilements of the Constitution to its repertoire. Many of these gross abuses are systemically integrated into SARS’s semi-automated procedures; others are the fruits of rent-seeking efforts of individual officials or groups of them, acting in concert. Thus, to the extent that the SARS management is engaged in its task, it is wholly devoted to malfeasance and abdication from any meaningful supervision of what is done in its name. In other words, SARS is institutionally corrupt, from top to bottom.
Since 2020 the system is unlawfully geared so as to make it almost impossible for taxpayers to access the dispute-resolution machinery provided by law. The simple matter of delivery has been turned into a major, hugely expensive obstacle, designed for what we used to call ‘window-dressing’ purposes—to make SARS look good. The cost of a dispute has been ramped up as a result. The obstructions are so malevolent and perverse, in the context of hugely complex law, especially administration law, that perhaps only a couple of dozen of representatives are competent to handle them, across the land.
And, since 2020, unless you at least
commence court proceedings, you will never resolve a dispute.
Circumspect as I am in this department, even I can no longer be confident that individuals are not personally corrupt, as opposed to institutionally—admittedly, on the basis of circumstantial evidence. Forget the stories I have heard, the suspicions I have harboured, and the strange documents I have seen. In an incident described in these very pages, I have in writing come as close as possible to alleging an apparent shake-down of a taxpayer without making an actual, bald accusation.
But what issue after issue of this newsletter shows is the grim determination with which SARS pursues entirely meritless matters, in which it has acted without regard for the law or due process, or even rationality. There has never been a time when SARS deserved in the slightest the fulsome encomiums of big business and the ignorant chattering class. It has all been an ongoing con, since 1999, a year I call a ‘doleful date’, when Pravin Gordhan took the role of Commissioner, aided and abetted by the present Commissioner, from 2004 to 2009.
And what the latest amendments to the applicable law show is how determined the current Commissioner is to use unconstitutional means, backed up by his (or his immediate predecessor’s) perverse, vicious and dumb algorithms, to persecute taxpayers, even to the point of incarceration, well knowing how able are his officials in framing taxpayers with invalid, unlawful and possibly criminal assessments, and fake entries in statements of account. And how his ruthless debt-management department will pursue imaginary tax debts, even when an assessment is blatantly invalid, and even when there is no assessment at all.
When a bunch of officials have a sit-down, entire industries die Recently, talking to a couple of taxpayers in vastly different industries thinking of lobbying different divisions of government, I have been reminded how SA lost its once impressively anomalous ship-owning and ship-chartering industry. Responsible were a bunch of officials from the department of transport, SARS and the national treasury. Sitting across the table were prominent members of the shipping industry (et moi), most of them hardy survivors of the sanctions era or their immediate successors, all clever, innovative and good at their jobs. It was a time when the ANC measured the success of an intervention by the number of people it consulted in advance, and when egalitarianism counted above all else (BEE had yet to be invented, by white plutocrats).
The problem: a mere allowance in the Income Tax Act, s 14(1A). Ships had to be owned or managed one to a company. We had and still have no group taxation. Believe it or not, s 14(1A), the rest of s 14, and the endless shuffling of ships, companies and flags of
convenience, but, primarily, modest but constant growth kept tiny uncompetitive SA a force to be reckoned with in world shipping markets.
But why should shipping allowances differ from other allowances? (Today we have one for every tool shed, and are at last supposed to have stopped adding to them and in fact to be reducing their number; fat chance.) The industry tried to explain that, in an international environment of freedom from taxation of blue-water shipping, any SA tax at all and anything other than a token commitment to domestic training and crewing would see the industry pull up stakes and move elsewhere.
You could plainly see the officials’ disbelief, so much so that no one dared to belabour the point. They understood the economics of the thing as well as, if not better than, anyone else. Here, palpably, was a real, live industry; an ever-accessible victim freely available for taxation and regulation. It was present and immutable, a fixture of the firmament, almost as if it had been
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invented by the bureaucrats themselves. Whatever the scheming business people said, it was obviously self-interested lying. The officials knew better than they how things would pan out.
The result was that reality failed to be interrogated, and, in an amazingly short time, the industry vanished. The ANC tried various
interventions over the next twenty years, and is still trying, in an effort to magic something into existence, with nothing to show for it, unless it is the enrichment of a couple of miserable carpetbaggers.
For more on this story, see 50 TSH 2007, 67, 68 TSH 2008.
SARS: harassment and ruin of taxpayers now legal? (More) The story so far (214 TSH 2021): On 20 January 2021 truly sinister amendments made to the Tax Administration Act (4, 5, 6 TAW 2021) came into effect, among them a ‘two strikes and you’re out’ provision, allowing a very possibly fatal ‘estimated assessment’ to be made by SARS should you TWICE fail to respond to a request for ‘relevant material’.
Should you in addition fail to handle the ensuing estimated assessment properly and in time, the assessment becomes final, impervious to objection and appeal under Chapter 9 of the Tax Administration Act.
To challenge such an assessment, you would have to approach the High Court, where the presiding judge is almost guaranteed to find you father, mother and uncle of your own misfortune. Judges in general believe that, because they themselves are taxpayers, they understand tax. (This is an important reason to exempt them, entirely, from normal tax. I am being serious. It would also remove a possible conflict of interest, no matter how the law currently pretends to handle the issue.)
You would also have to rely upon the High Court to challenge the context in which SARS is allowed to ask you to supply relevant material. I say that it must, compulsorily, spring from a procedurally correct audit. (You cannot possibly ask for an ACTUAL audit; SARS wouldn’t recognize such a thing if it bit it in the bum.)
And then, mere bagatelle, excuse me for mentioning it, should a court find that you wilfully or merely negligently failed to respond to the request, you can go to jail for up to two years:
…. The types of conduct listed in section 234 [of the Tax Administration Act] relate to non-compliance and they are comparatively less serious and carry a less severe penalty provision (fine or imprisonment not exceeding 2 years). The conduct that section 234 seeks to enforce is, nonetheless, essential for efficient revenue collection.
Please note that the current Commissioner, who is undoubtedly behind this development (it positively reeks of his persecutory personality), thinks that he is incapable of collecting revenue unless you are LESS SEVERELY punished by being incarcerated for TWO YEARS. This in the country of the Marikina slaughter by the police, the abandonment to death of hundreds of thousands during the AIDS epidemic by a president, the daily maiming, rape and slaughter
of men, women, children and small babies by criminals, the persecution and murder of immigrants by citizens, and the unspeakable treatment of citizens and residents in state hospitals by medical workers. The vast majority of these crimes are not even in the slightest inconvenienced by the criminal and delictual justice system.
Request for outstanding information On that very same 20 January 2021, a smart businesswoman and fine accountant, due a refund of around R50 k, received by email from SARS a new, revised part-form-letter headed ‘Request for outstanding information’, asking for specified relevant material and referring to her ‘request’ of 6 December 2020, which in fact was the date SARS sent her one of those idiotic, nonspecific, irrational ‘Verification of income tax return’ form-letters. Was any information truly ‘outstanding’? No, since she responded to the verification letter, as best she could, the very next day, 7 December 2020, via eFiling.
Verification letters The verification letter was the second of three identical such letters she received, the other two on 6 December 2020 and 17 February 2021. The SARS system obviously logs the issue by it of a verification letter as a taxpayer’s ‘request’.
You know the drill; each time you receive one of these verification letters, you are meant to guess what SARS wants each time, and each time to respond, differently. (I am not making this up; at least I am not such a fool as to play the game.) So on 19 February 2021 she phoned the call centre (holding for a mere forty-five minutes; I could never so humiliate myself), only to discover that what SARS really wanted was her response to the potentially deadly relevant-material letter (which was already in its possession; read on).
Relevant-material letters Helpfully, SARS opened a temporary link allowing her to access what turned out to be the identical relevant-material letter of 20 January 2021. And sent her an email, attaching a ‘Re-issue of an existing document’ form-letter, and the same relevant-material letter of 20 January 2021.
How, she says, could she possibly have guessed that the bog-ordinary, invalid and hilariously dumb verification letter of the second iteration was pointing to the relevant-material letter? For that matter, how might the first
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verification letter have referred to a relevant-material letter yet to be conceived (and supposedly authorized by law) and so be logged as ‘outstanding information’?
And how come, she asks, the relevant-material letter was never posted to her eFiling profile, the place where she would most expect to find it?
Had she responded to the relevant-material letter the first time she received it? You bet, on 11 February 2021, to the [email protected] address. Whether by instinct or acumen, her accountants (and mine) had sent me the letter, and, I, having just examined the latest amendments, had a melt-down, insisting on forceful language to be added to her proposed timid text. Gutsily, she sent it in, as amended. And then resubmitted everything required yet again, via eFiling, on 19 February 2021.
The eFiling record So, in law, how many relevant-material requests has she received? One, two, three?
Her eFiling profile shows that she submitted ‘documents for review’ on 7 December 2020 and 20 January 2021. And ‘documents for operations audit’ on 19 February 2021. So,
Snap! Well, more or less. More significantly the putative SARS system clearly thinks an ‘audit’ has commenced, although the due-process actions required by the Tax Administration Act have been utterly disregarded, and the taxpayer left in the dark, audit-wise. (The buggers know an audit is required, so they gippo their system so as to make it look as if one has commenced. Common fraud, if you ask me.)
Three ‘Requirements to submit supporting documents’ are listed, dated respectively, 7 December 2020, 20 January 2021, and 17 February 2021.
Is a trap being set? My take is that the system, after asking for and receiving the relevant material twice, thinks that it has asked and been answered only once. Although the system appears currently to register her as being compliant, the awfully concerning thing is that it utterly ignored her first, timeous response, and then proceeded to interact with her via senseless verification letters. Had she not, with great fortitude, cracked that nut, she would have been logged as noncompliant, and destined to move to Stage II of the four-stage trip to incarceration.
SARS: how to impede delivery by taxpayers, interim sequel I Back to the application for a reduced assessment under s 93(1)(d) of the Tax Administration Act (‘readily apparent undisputed error’ in an assessment), the difficulties of delivering it to SARS, and my entirely unsought interactions with ‘TPS George’, which, it turned out, is not a SARS official with an affectation, moniker-wise, as I had thought, but a SARS branch (214 TSH 2021).
Acting on wise advice from a colleague, I contacted a SARS official I know in the relevant SARS legal department, effectively asking for nothing more than delivery to someone other than SAM, an algorithm (SARS Algorithm Man). But, because SARS had so carefully prevented itself from acknowledging lawful delivery of the correspondence, the poor fellow could do nothing with a mere copy of the taxpayer’s application, including all possible relevant details, save one, which at the time of the application was unavailable—he asked me for the case number.
To my astonishment, I found no fewer than SIX different case numbers in the correspondence. Only one case number was used twice. How the hell does SARS know what it is doing? OK, stupid question; it has no need to.
Still, having supplied the batch of numbers on 5 February 2021, I received a substantive response from SARS on 18 February 2021, in a letter I only now see that was dated 1 February 2021. Either this was backdated (and I see no reason why it might have been) or the SARS system, even while blocking my every effort to secure a response to the application, had
already responded to it, wholly internally and entirely silently. Why? To respond to some future examination by the Tax Ombud, and sod the taxpayer?
The part-form letter said:
Kindly note that section s 93(1)(d) of the TA Act is not applicable as your per your grounds the case is not seen as a Readily apparent undisputed error.
Fair enough. It’s a point to be disputed before the High Court, if the taxpayer has the stomach for it. In the meantime, it’s a decision open to internal administrative review, under s 9(1) of the Tax Administration Act.
No reason was provided for the delay in approaching SARS to correct the assessment within the allowable 3 years until prescribed (became final).
This is actually true but irrelevant. What happened was that, allowing for the so-called dies non (uncounted days) set aside on account of the lockdown during the first wave of the current pandemic, the tremendously honourable and experienced accountant concerned had delivered the taxpayer’s objection to SARS on Monday 11 May 2020. Had it been delivered on Friday 8 May 2020, it would have been delivered on time, within the three-year statute of limitations governing objections.
Perhaps he miscounted the dies non, always a tricky job, particularly under s 7 of the Disaster Management Tax Relief Administration Act 14 of
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2020, which I find to be ambiguous. Or perhaps he thought there was no real difference between the Friday and Monday dates (both ‘business days’). Or he simply missed the deadline, owing to pressure of work, during a difficult time for everyone.
I am currently engaged in updating my Disputes with SARS’ (a bigger job than anticipated, after two years of amendments since the last edition). This usefully flags s 93(1)(d) as having a THREE-YEAR TIME LIMIT—SEE s 99(2)(d)(iii). This is an entirely different three-year limit, depending, in part (there is a glaring defect in the drafting; it fails to deal with the taxpayer’s position), on SARS’s becoming aware of the error before expiry of the three-year statute of limitations. Said the taxpayer in his application:
The errors for which SARS is responsible were made at the time it made the additional assessment, when all the necessary information was clearly and plainly available to it, both by
way of the taxpayer’s return and by way of information otherwise in its possession.
The error for which the taxpayer is responsible was made at the time he submitted his return.
So this part of the SARS response is a red herring.
The final point made in the SARS part-form letter still has me guessing:
The IRP 5 in question was only submitted to SARS on 2020.05.25.
A blatant lie, and irrelevant. The taxpayer submitted his IRP 5 certificate with his return for the 2016 year of assessment, claiming credit for R179 262,72 PAYE deducted from his remuneration. The 25 May 2020 date means nothing to me, but what I do know is that, in an unlawful and possibly criminal act, SARS purported to ‘disallow’ this credit, on the ground:
PAYE INCORRECTLY STATED.
RAF: the curious matter of double payments I am fascinated by internal controls, perhaps because I was excluded from pursuing an audit career at the very soonest available opportunity—the very day I qualified. (Later I was to self-defenester as a CA(SA), but that is a story I have told far too often, to entirely deaf ears.) So when I heard that the perennially cash-strapped RAF regularly makes double payments to the legal representatives of claimants, my curiosity was aroused.
Take a deep breath and assume, for the sake of argument, that the recipient is honest and unimplicated, and is not being set up in a sting.
You may be unaware of the pressures bearing down on even such a paragon of the law and officer of the court. Maimed and brutalized victims of our violent, blood-soaked roads struggle to survive, waiting, usually for years, for payment by the RAF so as to be able to seek medical treatment and acquire needed equipment and facilities. They and their families besiege their legal representatives, sometimes with plausible threats of violence, and, today, with fake, orchestrated, conspiratorial, rent-seeking complaints to the LPC (a story waiting to be told). The temptation to apply an unofficial, internal (and unlawful) form of set-off, to get the money out to where it is desperately needed (and, no shame in it, recover disbursements and earn a commensurate fee) must be tremendous.
But, no, Paragon contacts the RAF and reports the double payment, offering to repay it, while begging that the proceeds be used in an official settlement of long-overdue, court-ordered payments. No problemo. A banking account number is supplied, and a brief EFT later, all is well.
Or is it? In order to evade its creditors, the RAF changes its banking accounts all the time,
although a recent judgment perhaps reduces the need to do so. In any event, there is no way to know who is actually the beneficiary of the number supplied. Do you get my drift?
I am not saying that the money is stolen; merely that, under a decent system of internal controls, regular double payments should at least raise a red flag.
One last thing; a message to all the otherwise intelligent people, especially judges, who bemoan the sad plight of the RAF and its ravaging by dishonest legal practitioners and even claimants. Please remove your blinkers and look at the relevant facts and applicable law.
In the first place, those poor claimants, utterly neglected and abandoned by society, a pathetic underclass, modern lepers, are BY LAW prohibited from buying road-accident insurance, and compelled to rely upon the RAF. It represents an intervention by the Nanny, Know-it-all State, in response to the supposed failure of individuals actually to buy what used to be compulsory, private-sector cover (the needy could have cheaply been subsidized). And they didn’t step in front of a speeding vehicle in order to enable their legal representatives to make a claim.
The solution currently being pursued to balance the unbalanceable RAF books is to cut back savagely on the RAF cover provided and indulge in magical thinking (which is to say, to lying) about future benefits that the dysfunctional public health system will provide, episodically, to claimants, with the costs being disbursed by—you guessed it—the very outfit that is famous for not paying its bills, the RAF! A double whammy for the victims: they will be brutalized by our public hospitals, although only after waiting for years for the RAF to make the
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upfront payments that will be demanded. It’s a patent con, designed to keep billions of
public funds available for the more noble purposes of facilitating a swollen payroll, a thick procurement pipeline, and who knows how many grotesque scams and frauds.
Secondly, the RAF is certainly plagued by dishonest legal practitioners. Think only of that sleaze-ball, celebrated head of LSSA for ten years, who fled to Australia, and is living there, comfortably untrammelled by his past. But there are two sets of legal representatives, those for the plaintiffs, the victims, and those for the defendant, the RAF. The plaintiff-lot might be individually corrupt. But only the defendant-lot
might be systemically, collectively, conspiratorially, racketeeringly corrupt, since they are appointed by…guess who?
Finally, the point at which the RAF deliberately went wrong was its early failure to set itself up as an insured scheme, effectively relying upon insurance principles and substantially underwritten by reinsurance. The National Treasury was either too ignorant or weak to structure it in a rational, transparent and sustainable fashion. And the Treasury, as in so many aspects of our national life, is complicit in what has been and currently is going on at the RAF, having abdicated entirely its duties and obligations under the PFMA.
SARS: the Commissioner wants YOU…in jail Taken from the Memorandum on the Objects of the Tax Administration Laws Amendment Bill, 2020 (if you want a commentary, see 6 TAW 2021, in fact, I’ll send you a free copy):
Currently, this section requires that a taxpayer must have acted ‘wilfully and without just cause’ in order to be found guilty of having committed an offence. This is a purely subjective test and there can be no reference to what a reasonable person would have done in the circumstances.
Prior to the introduction of the Tax Administration Act, 2011, the tax Acts made a clear distinction between the so-called ‘non-compliance offences’ and those relating to tax evasion that involved an element of misrepresentation. See, for example, sections 58(d) and 59 of the Value-Added Tax Act, 1991, and sections 75 and 104 of the Income Tax Act, 1962. Intent was (and still is) specifically required for the more serious offences of tax evasion.
The provisions in respect of non-compliance offences did not explicitly state whether intent or negligence was required for mens rea for such tax offences. Section 58 of the Value-Added Tax Act, 1991, section 75 and paragraph 30 of the Fourth Schedule to the Income Tax Act, 1962, as they were before the introduction of the Tax Administration Act, 2011, did not mention wilfulness. Where the courts were satisfied that the legislature intended that negligence was the level of mens rea required, prosecutions were conducted and offenders convicted on this basis.
It is imperative to distinguish between the actions listed in section 234 of the Tax Administration Act, 2011, and those listed in section 235 of that Act. The types of conduct listed in section 234 relate to non-compliance and they are comparatively less serious and carry a less severe penalty provision (fine or imprisonment not exceeding 2 years). The conduct that section 234 seeks to enforce is, nonetheless, essential for efficient revenue collection.
By contrast, the actions sanctioned under section 235 relate to the evasion of tax and obtaining undue refunds by fraud or theft. These
differ in substance from the actions sanctioned under section 234. In section 235, each subsection prohibits an element of misrepresentation of information and are arguably more serious.
Negligence would be a suitable fault requirement in respect of the types of conduct addressed by section 234, which provisions relate only to the issue of compliance. In the light of the importance of the duties of a taxpayer vis-à-vis the fiscus enunciated by the Constitutional Court per Kriegler J in Metcash Trading Limited v Commissioner for the South African Revenue Service and Another (CCT3/00) [2000] ZACC 21, it is submitted that taxpayers should be held to an objective standard of reasonable care in carrying out those duties. This is especially so when so much of our fiscal management relies on the bona fides of taxpayers and truthful self-assessment.
The fiscus requires the exercise of reasonable care by taxpayers in complying with those duties imposed on them for the effective management of the tax system. Where the legislature imposes a duty of care, the taxpayer should maintain a standard of reasonable care as would be expected of a reasonable taxpayer in the same circumstances. The corollary is then that the failure to exercise such reasonable care should be matched by culpability in the form of negligence. Accordingly, negligence is the appropriate form of culpability for those offences.
This similarly applies to the issues of non-compliance listed in paragraph 30 of the Fourth Schedule to the Income Tax Act, 1962, and section 58 of the Value-Added Tax Act, 1991.
In an effort to strike a balance between the more and less serious non-compliance offences, a differentiated approach has been adopted in the redraft of paragraph 30 of the Fourth Schedule to the Income Tax Act, 1962, section 58 of the Value-Added Tax Act, 1991, and section 234 of the Tax Administration Act, 2011.
Rather than do away with intent entirely, offences have been categorized into those for which intent or negligence is required and those for which only intent is required.
compliance that strike at key duties that the tax system’s broad application depends on, such as failing to register, submit returns, pay over tax that has been collected from a third party and so on.
The second category will include aspects of non-compliance where the nature of the non-compliance is such that the requirement of intent is implied, such as issuing a false document,
obstructing or hindering a SARS official, assisting another person to dissipate their assets to impede tax collection and so on.
The maximum penalty of a fine or two years imprisonment will remain unchanged and it will be left to the presiding officer to decide what sentence is appropriate on conviction, considering all the aspects of a case.
TAA: common-law refunds of overpayments on assessments Under the tax Acts, there are two types of what I call ‘common-law refunds’ from SARS (196 TSH 2019), a refund of an overpayment on an assessment (self-assessment and notice of assessment), and a refund of an overpayment not associated in any way with an assessment.
The second type is not encompassed by any tax Act and so falls to be dealt with solely under the common law and the Prescribed Rate of Interest Act.
The first type is identified in s 190(1)(b) of the Tax Administration Act:
190. (1) SARS must pay a refund if a person is entitled to a refund, including interest thereon under section 188(3)(a), of— (b) the amount erroneously paid in respect of an
assessment in excess of the amount payable in terms of the assessment.
The Tax Administration Act purports to replicate the hoary VAT forfeiture of such an overpayment if it is not refunded by SARS within three or five years, depending upon the type of assessment (s 190(4); 196 TSH 2019). In my view, the constitutionality of this provision and of its VAT counterpart (s 44(4)(a) of the Value-Added Tax Act) requires to be tested by the courts.
I have previously highlighted interest provisions applying to such a refund:
187. (1) If a tax debt or refund payable by SARS is not paid in full by the effective date, interest
accrues, and is payable, on the amount of the outstanding balance of the tax debt or refund—
This provision is fully in force, and compels, I say, the payment of interest by SARS, even if some of its other aspects are still awaiting their commencement, some nine years after the inception of the Tax Administration Act.
Another interest provision, which is fully in force, throughout, is s 188(3)(a):
(3) Unless otherwise provided under a tax Act— (a) interest on an amount refundable under
section 190 is calculated from the later of the effective date or the date that the excess was received by SARS to the date the refunded tax is paid; and
It may not substantively compel the payment of interest but it strongly reinforces the obligation.
And then—or rather, as from 20 January 2021, now—there is this, s 187(3)(h):
(3) The effective date for purposes of the calculation of interest in relation to— (h) an erroneous payment referred to in
section 190(1)(b), is the date 30 days after the date that the payment was made.
With this second and contemporaneous reinforcement, SARS can hardly be heard to say that interest is not payable. But the purpose of s 187(3)(h) is to expropriate the first month’s interest. Yet another constitutional issue.
National Treasury: the government keeps a cash set of books Recording basis Both the SNA and the GFS recommend that items should be recorded on an accrual basis, which means that all government transactions are included in the accounts. This includes transactions that do not give rise to cash flows, such as changes in inventories, depreciation and accrued interest.
In accrual accounting, the time of recording should coincide with the underlying economic event. The entry does not necessarily coincide with the timing of the resultant cash flow, but rather with the change of ownership or when economic value is created, transformed or extinguished. For example, debt repayment should be recorded when the debt expires, whether or not this coincides with an actual repayment that gives rise to a cash flow.
Government is still committed to the recommendation, first made in the 2001 GFS, to use accrual accounting for government financial statements. This commitment will be fulfilled when the integrated financial management system, which is based on accrual accounting principles, is fully implemented. Until then, budget data continues to be presented on a cash basis. This means that the transaction is recorded when the cash flow occurs, so it does not match the timing of the underlying economic event. In some cases, modified cash principles are applied. These include recording expenditure at the time of recording the transaction in the cash book (when the transaction is processed in the financial system and the payment is issued) and accruing interest on some types of government debt (zero-coupon bonds).
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In strict cash accounting, the time of recording should coincide with the actual cash flow. In South Africa, entries for the national budget data are made during the time period in which financial systems capture transactions. After the financial year-end, books remain open so that all year-end procedures can be finalized, such as reconciling actual bank account balances with revenue and expenditure reported, and correcting item classification. The year-end procedures do not influence revenue and expenditure levels, and consist primarily of:
Late funding requests by government departments to settle obligations relating to the specific financial year.
The surrender of unspent funds by government
departments (funds requested but not used). Corrections to revenue, expenditure or financing
transactions that were, for example, erroneously classified.
Adjustments to expenditure data, for auditing and parliamentary purposes, to show only authorized expenditure for the particular financial year (excluding all unauthorized spending).
You can read this exact statement in every Budget review, under the heading ‘W2—Structure of the government accounts’. The reference to the ‘integrated financial management system’, as if it is imminent is a huge insider’s joke, given the long-standing scandal surrounding that abortive project.
SARS: how to impede delivery by taxpayers, interim sequel II Back to the PAYE matter described in 213 TSH 2020 and further dealt with in 214 TSH 2021, in which SARS, in an additional assessment, is demanding some R580 k on an imaginary fringe benefit. The taxpayer’s required response, as previously noted, is to object, while applying for a suspension of payment.
At my instigation, the accountant I am assisting made an appointment with SARS for a meeting to seek help in getting the SARS putative system to recognize our joint, lawful delivery of the objection and suspension application.
Only long afterwards was I able to figure out what happened. Trying, without success, to access these documents on eFiling, the SARS official triggered the system to log a ‘request’ BY THE TAXPAYER—for remission of a penalty!
So, first, the accountant receives an extraordinary response, not to my application for suspension—as until very recently I thought—but to his supposed ‘request’. Indignantly, I pointed out in my reply that I hold proof positive that SARS is in possession of both the objection and application, utterly wasting my time, since the system has been prevented from ‘seeing’ these documents.
Then I complained about the garbled account of the facts of the matter recorded in the SARS ‘Suspension to pay initial letter’, slowly realizing that I was dealing with a part-form-letter but still oblivious of the fact that it was not a response to my actual application.
So, grumbling, I supplied again things already dealt with in detail in my application. I was even considerate enough formally to recognize the letter as being a form-letter, whose real purpose was to ask about the precise nature of the security I had offered in my application.
Puzzled, since this was an application for suspension, not for payment by instalments, I nevertheless even supplied the taxpayer’s financials, as required.
The too clever by half form-letter itself recorded that no returns were outstanding and no payments due, but I dutifully repeated these
facts. To its enquiry about an intended or actual objection, I declared yet again, and just as fruitlessly, that the objection was indubitably already in SARS’s possession.
But then came the show-stopper:
6. Payment for the undisputed debt needs to be settled as it affects the outcome of the suspension of payment request.
The payment demanded, of PAYE, SDL and UIF, was a staggering R741 976,16. I have no idea how that figure was compiled but it most certainly included the amount under dispute. What the taxpayer was being asked, in order to be granted a suspension of the tax under dispute, was to settle in full that tax, and then some!
Having recently had a similar experience involving provisional tax, what I think SARS is currently saying is that you must be up to date with all your payments, including PAYE and provisional tax, which are, of course, at least from SARS’s point of view, beyond dispute and so must be settled before you can even think about a suspension of payment.
What if that is the very tax under dispute? Well, that is the point of the current SARS system. According to it, THERE IS NO DISPUTE. The taxpayer still has no access to the assessments themselves, which have been delivered only to me personally, at my insistence.
And then, on eFiling, there appeared a ‘Notice of invalid request for remission’, which bamboozled me for more than a week. Still referring to only two out of the twenty-two tax periods involved, and also treating the SARS’s official’s intervention as ‘your Request for Remission (RFR)’ it said:
—Kindly be advised that RFR 01 is for the penalty and interest dispute, if you are objecting to the assessment raised by Audit, please complete correct forms or contact the Auditor handling your case.
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Words & phrases: ‘includes’ The correct sense of ‘includes’ in a statute must be ascertained from the context in which it is used. Debele provides useful guidelines for this determination. If the primary meaning of the term is well known and not in need of definition and the items in the list introduced by ‘includes’ go beyond that primary meaning, the purpose of that list is then usually taken to be to add to the primary meaning so that ‘includes’ is non-exhaustive. If, as in this case, the primary meaning already encompasses all the items in the list, then the purpose of the list is to make the definition more precise. In such a case ‘includes’ is used exhaustively. Between these two situations there is a third, where the drafters have for convenience grouped together
several things in the definition of one term, whose primary meaning—if it is a word in ordinary, non-legal usage—fits some of them better than others. Such a list may also be intended as exhaustive, if only to avoid what was referred to in Debele as ‘’n moeras van onsekerheid’ (a quagmire of uncertainty) in the application of the term.
Per Langa DCJ in De Reuck v Director of Public Prosecutions (Witwatersrand Local Division) and
Others (CCT5/03) [2003] ZACC 19; 2004 (1) SA 406 (CC); 2003 (12) BCLR 1333 (CC) (15 October 2003),
a case dealing with child pornography. See 135 TSH 2014, where Debele’s three usages are extended
to an astonishing six.
SARS: the monetization of forms Over the years SARS has steadily restricted access to forms, a process that has now been electrified by the recent Adobe Flash fiasco (214 TSH 2020).
The law on forms is unclear but SARS has always arrogated to itself the right not only to determine and design them but how they should be completed and the method and modality of their delivery, and to change its mind, on a moment’s notice.
In the course of its pathetic computerization (now retrospectively called its ‘modernization’), it was unable to treat all taxes equally, and so resorted to different forms for different taxes, playing a merry game of ‘Whack the Mole’ with taxpayers, who, using the DISP form would be told they should have used the ADR form, and vice versa. This game continues to this day, even though the issue is settled in one of SARS’s own publications, albeit in the most obscure fashion imaginable.
In a Flash, the old VAT 201 form was recently replaced with an interactive HTML form, which effectively becomes accessible only once you have completed it. This is nasty snare for taxpayers, who should never complete the thing without a preceding, private dummy run. Luckily, SARS still makes the old form available on its website, and we can all thank our lucky stars that there was no time for SARS to fiddle with the various codes, without giving taxpayers notice, as it has done once before.
Interactive forms, if designed by an idiot, can be deadly, such as the SBC button on the corporate normal tax return. Say ‘No’ to that in a distracted moment, and that’s it. The system classifies you as not being a small business corporation, never giving you a chance to reconsider your choices. What follows is nothing less than a drawn out, costly nightmare.
The VDP form is the scariest of the lot, since you would like to see it beforehand so as to be able to advise how to complete it. There is a
specimen form available on which to advise and practice but its is not necessarily current, so I insist on the participation of a trusted colleague familiar with the process to assist the taxpayer, step by step, in completing the actual form.
For some time now, DISP forms have been impossible to complete, since the system, blissfully unaware of the terms of your objection, insists upon pre-populating them with its own conception of the relevant amounts. More recently, I can no longer get to see a completed form before it is submitted to SARS by the taxpayer, and so must simply hope for the best.
In any event, if the system thinks you have no right to object (SARS’s SAM as judge, jury and executioner), there is no easy way to gain access to a DISP form. And that will be only the beginning of your problems.
I used to be able to see a suspension of payment form, completed, before it was submitted by the taxpayer, now, another colleague tells me, that:
After you enter the objection/dispute page for the period you intend disputing, you get an opportunity to fill in a block to substantiate the grounds for your request for SOP. After you click CONTINUE a page opens up which allows you to upload attachments (which would normally be my actual request for SOP). After uploading the attachments you have to submit the SOP request, and only after submission of the request does eFiling provide you with a link to download the already completed disp 01 form, with a heading ‘Request for suspension of payment‘.
SARS thinks it is moving into the electronic age and carefree, convenient online interactions with taxpayers. But what it is really doing is fixing its narrow, biased and usually unlawful conception of the requirements of the law in a straightjacket designed to crush taxpayers’ rights and maximize its apparent success.
215 Tax Shock, Horror 2021—February—24
—An irreverent newsletter designed to keep you up to date—
In respect of the Income Tax Act: ‘unlisted company’ Section 41 of the Income Tax Act, the introduction to the ill-considered corporate reconstruction reliefs, under which the most amazing frauds are perpetrated upon the fiscus almost on a daily basis, defines an ‘unlisted company’ as follows:
‘unlisted company’ means any company which is not a listed company as defined in this subsection.
Sounds reasonable to you? Follow the definitional chain:
‘listed company’ means a company as contemplated in paragraph (a) of the definition of ‘listed company’ in section 1;
Bit of a cheek, you might think, to jump from s 41 back to s 1(1), but at least you now know that:
Unlisted company ≠ Paragraph (a) ‘listed company’.
What is a para (a) of s 1(1) ‘listed company’?
‘listed company’ means a company where its shares or depository receipts in respect of its shares are listed on— (a) an exchange as defined in section 1 of the
Financial Markets Act and licensed under section 9 of that Act; or
Your knowledge-base has been vastly expanded:
Unlisted company ≠ Domestically listed company.
But para (b) of the definition of ‘listed company’ in s 1(1) includes foreign listed companies. Therefore, in terms of sets, both of the following positive statements are true:
Unlisted company = Unlisted domestic company.
Unlisted company = Listed foreign company.
Is the second statement intentional?
Try logic In the first place, using logic to try and determine the purpose, if the mythical draftsperson had wanted to exclude foreign listed companies from the ranks of unlisted companies, he or she would have said:
‘unlisted company’ means any company which is not a listed company as defined in s 1(1).
That would have excluded listed companies on a worldwide basis (but would have included foreign unlisted companies). By eschewing this formulation, did the draftsperson mean to classify a foreign listed company as an ‘unlisted
company’? What if he or she was too clever by half and
failed to see that, mathematically, exclusion from a subset cannot amount to exclusion from the full set? In other words, he or she made a mistake. How might we be sure?
Make up a rule of interpretation The next thing to consider is a fascinating rule of interpretation, which a high-up SARS VAT official once had to make up, since, as far as I know, it does not exist. When a term of art consists of more than a single word, it is impermissible to accord any of the individual words their ordinary meaning. In other words, you cannot claim that ‘unlisted’ in the defined term ‘unlisted company’ means ‘unlisted’, globally.
Even so, you could easily imagine a judge, bending over backwards in pursuit of meaning, declaring that, as a matter of ordinary language, it would be irrational for an ‘unlisted company’ to include a listed company, even if it is a no doubt skelm foreign company. Besides which, the distinction was clearly meant to be made within the context of para (a) of the s 1(1) definition, which conjures solely with domestic companies. Law, after all, is not mathematics.
A purposive, contextual approach There is one last avenue of investigation—the so-called purposive, contextual approach. I am presently too lazy to tackle that properly but willing to take a shortcut:
‘junior mining company’ means any company that is solely carrying on a trade of mining exploration or production which is either an unlisted company as defined in section 41 or listed on the alternative exchange division of the JSE Limited;
‘qualifying company’ means any company if— (a) that company is a resident; (d) the company is an unlisted company as
defined in section 41 or a junior mining company;
(a)(i) in terms of which the equity shares in a company (hereinafter referred to as the ‘unbundled company’), which is a resident that are held by a company (hereinafter referred to as the ‘unbundling company’), which is a resident, (bb) where that unbundled company is an unlisted
company immediately before that distribution, more than 50 per cent of the equity shares of that unbundled company; or
These are all the usages of ‘unlisted company’ both outside of and inside the corporate restructuring reliefs. They clearly indicate that an ‘unlisted company’ is meant to be a domestic ‘company’ that is not listed.
Why, then, not just say so?
Feature Supplement to 215 Tax Shock Horror 2021
Cases
All past entries from 2006 to date.
February 2021
Winners & Losers In That Other Beautiful Game Current & Past SATC Case Reports
Tax deduction—section 24C allowance cSARS v Clicks Retailers (Pty) Ltd
Supreme Court of Appeal (2019)—82 SATC 167 (judgment delivered by Dlodlo JA; Wallis JA, Swain JA, Mbha JA & Hughes AJA concurring; separate concurring judgment delivered by Wallis JA; Swain JA, Mbha JA, Dlodlo JA & Hughes AJA concurring): Overturning the judgment of the tax court (209 TSH 2020). The taxpayer, a retailer operating a customer loyalty programme, failed to convince the court that it was entitled to an allowance under s 24C on the Income Tax Act for future expenditure that it would incur under its loyalty card contract when customers redeemed their points generated under interrelated sale agreements. Since the revenue and future expenditure obligations arose from separate contracts, the outcome was, unsurprisingly, similar to Big G Restaurants, which was quoted extensively.
Tax deduction—share incentive scheme CSARS v Spur Group (Pty) Ltd
Western Cape Division, Cape Town (2019)—82 SATC 180 (judgment delivered by Ndita J; Sher J concurring; dissenting judgment delivered by Salie-Hlophe J): On appeal from the tax court (210 TSH 2020).The taxpayer somehow convinced the court that under s 11(a) of the Income Tax Act it was entitled to deduct the contribution that it made to an executive employees’ share incentive trust. In general, and but for a rather disconcerting discourse on s 99 of the Tax Administration Act, dealing with prescription, I favour the minority outcome. From the facts gleaned, I simply cannot wrap my head around the majority outcome that a legitimate revenue expense was incurred.
Tax administration—suspension of payment Peter v CSARS
Gauteng Local Division, Johannesburg (2019)—82 SATC 207 (judgment delivered by Pillay AJ): Possibly, a temporary victory for the taxpayer. By way of review proceedings, he successfully argued that a decision by the Tier Three Debt Committee to reject his suspension of payment request under s 164 of the Tax Administration Act, pending finalization of his appeal, was not only irregular but unlawful. He rightfully contended that the Committee lacked the necessary authority to decline his request. In fairness, the taxpayer was not faultless, and the matter was referred back to SARS for reconsideration.
Additional medical expenses—tax credit Taxpayer v CSARS
ITC 1927 (Gauteng Tax Court—Case IT 4412 (2019))—82 SATC 218 (judgment delivered by Hack AJ): On appeal from the tax board. The taxpayer abysmally failed to discharge the onus of proof resting upon him that he was entitled to a tax credit under s 6B of the Income Tax Act for additional medical expenses he allegedly incurred.
Income tax—section 24I Telkom SA SOC Limited v CSARS
Supreme Court of Appeal (2020)—82 SATC 225 (judgment delivered by Swain JA; Cachalia JA, Mbha JA, Mokgohloa JA & Koen AJA concurring): A matter dealing with the disposal of foreign-denominated loans, and the interpretation of foreign exchange gains and losses under s 24I of the Income Tax Act, which was decided in favour of SARS. Not being satisfied with the outcome, the taxpayer futilely took the matter on appeal to the Constitutional Court.
Tax administration—personal liability Siphayi & Another v CSARS
Gauteng Local Division, Johannesburg (2019)—82 SATC 248 (judgment delivered by Van Der Linde J): An interim order dealing with the alleged personal liability of the first applicant, a corporation’s representative taxpayer. Pending re-enrolment of the application, SARS was interdicted from extracting money from the applicant. It was also directed to resend its ‘s 184’ notice of intention to hold the applicant personally liable, affording him an opportunity to make representations why he should not be so held liable.
The compulsory annuitization of benefits from a provident fund, despite a laboured birth since 2016, becomes a reality on 1 March 2021. See 212 TSH 2020.
In essence, the harmonization of tax treatment of all retirement funds, whether pension, retirement annuity or provident, vis-à-vis tax deductible contributions (since 1 March 2016), required the compulsory two-thirds annuitization of retirement funds to be applied also to provident funds, with effect as from 1 March 2021.
Exceptions for vested provident fund benefits This annuitization is not retroactive, in that the value of vested benefits of provident fund members as at 1 March 2021, plus investment growth, may still be fully commuted upon, for example, retirement, since the two-thirds annuitization applies only to contributions and investment growth after 1 March 2021.
(Provident fund members who have attained a minimum age of 55 as at 1 March 2021 are granted a further full-
commutation concession, since both existing and future contributions and investment growth remains fully commutable as a lump sum, provided that such a member remains a member of the same provident fund as at 1 March 2021, although I fail to understand the rationale behind the requirement to remain with the same fund.)
Tax treatment of lump sum at retirement The aggregated lump sum comprising the vested benefits plus one-third of the fund-benefit value after 1 March 2021 is included in the member’s gross income upon retirement, under para 2(1)(a) of the Second Schedule to the Income Tax Act.
Deductions are allowed, under para 5, notably of the member’s own contributions to the provident fund, if these did not rank for a deduction under s 11F (enacted on 1 March 2016). (Before 2016 provident fund contributions by a member were not tax deductible, so, in practice, any such contributions were fully funded by the member’s
employer, who could claim the deduction under s 11(l) of the Income Tax Act.)
The net amount, which is generally the full lump sum, since the deductions are usually inapplicable, referred to as the taxable income from lump-sum benefits, is taxed according to a specific table, which is ring-fenced from a taxpayer member’s other taxable income for the year of assessment. (The table aggregates all lump-sum retirement benefits from all retirement funds, plus any employment severance benefits). The tax rates are 0% up to R500 000, and thereafter graded at 18%, 27% and, finally, 36%.
The tax price is a flat 36% once the lump-sum benefit exceeds R1,050 million.
Conclusion I suspect some members may prefer to take voluntary annuitization so as to manage and lower their tax rate, given that, under a living annuity, the annual drawdown amount can be as low as 2,5% of the fund-benefit value.
Setting up Outlook 2019 On the morning of 12 February 2021 my PC suffered a partial crash which I suspect was caused by some reported overnight Windows 10 updates. After several unsuccessful attempts at logging in, I eventually pulled the plug and restarted the PC. When I arrived at the desktop several desktop icons had disappeared, including Outlook. MS Office was still working but seemed to have reset itself, while other programs such as Omnipage Ultimate, Dropbox and GoldWave needed to be reinstalled.
I launched the Run command (WIN + R), typed Outlook and was greeted by a wizard for setting up a mail account. I was required to select IMAP or POP3, insert incoming and outgoing server addresses, port numbers and select or deselect some encryption and authentication check boxes among other settings. I hunted on the web for these settings but all attempts at getting back my mail account failed.
As is usual with these things, the service provider’s instructions were incomplete with regard to the check boxes and encryption settings. I then came across some alternative instructions which suggested that the mail account be set up through Control Panel. After pressing the Windows key and typing ‘control panel’ in the search box, I tabbed until I came to Mail (Microsoft Outlook) and hit ENTER on the link. This took me to a mail set up dialog box. I then hit ENTER on the Email accounts button, and on the next screen selected New. The next screen contained the following information:
Auto Account Setup Outlook can automatically configure many email accounts.
Password: Retype Password: Type the password your Internet service provider has given you.
Manual setup or additional server types < Back Next > Cancel Help
After I completed the fields, and activated the Next button, Outlook retrieved the settings from a server, and my mail account was created automatically.
The fact that this automated process is available for setting up mail accounts is worth remembering the next time you suffer a crash or have to set up a new mail account.
An issue I experienced with Outlook after the crash was that the shortcut keys for sorting email into Date, From and To order no longer worked. After scouring the web for a solution, I found some suggested settings for screen-reader users. Even if you are not such a user, these settings may be useful if you sort email messages from the keyboard.
1. Disable the Reading Pane: ALT + V, P, N, O. 2. Disable the To-do bar: ALT + V, B, O.
After these adjustments, you should be able to use ALT + V, A, B, D to sort in Date order or ALT + V, A, B, F to sort in From order. Other sort options are Subject (J), Importance (I), Type (Y), To (T), Attachments (C), Size (S) and Account (O).
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Fight SARS and win!
Disputes with SARS
Addressing the private sector’s dangerous unfamiliarity
with due process in tax matters
By
COSTA DIVARIS
2020 edition currently being updated.
Available soon. Fully up to date with the 2020 amendments
(20 January 2020).
Purchasers of the 2019 edition during 2020 will receive a free copy.
CONTENTS
Chapter 1: Introduction Chapter 2: Powers of SARS and its officials
Chapter 3: Returns and records Chapter 4: Information gathering Chapter 5: Tax compliance status
What does it mean to find an area of study enriching? It means that you consider yourself substantially ‘richer’ for having studied it; that it has added layers to your understanding of the world, humanity and, above all, yourself; that you have, in some way—difficult though it may be to articulate or measure—become a more substantial person through your exposure to the field of study and a more discerning judge of what it is that your field can do to make the world a little (or a lot) better.
Has evidence done this for me? Undoubtedly. It is a field that offers many riches. It is a fusion of some of the most powerful and influential jurisprudential models the human race has devised. There is, first, the rationalist tradition underpinning the great Anglo-American scholarship in the field, which delivered some of the best minds to have graced the world of legal ideas. These include, among many others, such distinguished thinkers as Lord Chief Baron Gilbert, Jeremy Bentham, Sir James Fitzjames Stephen, Simon Greenleaf, James Bradley Thayer, Charles Chamberlayne, John Henry Wigmore, Edmund Morgan, John Maguire, Charles Mc Cormick and Sir Rupert Cross.
The adherence of our law of
evidence—by statutory imprimatur—to this model, has ensured that we have inherited and built the edifice of our law in this area on the foundation of this tradition. In this way the ideas of these great writers came to be cited and relied upon in our courts. It kept alive, moreover, the particular view of ‘rationality’ derived from English empirical philosophy found in the ideas of Francis Bacon, John Locke and John Stuart Mill. This body of literature has been admired for its conceptual sophistication. But it has been criticized as well, for being both too narrow in its focus and too complacent in its assumptions.
We could have become mired in these safe and calm waters forever, resulting in stagnation and a refusal to engage in more contemporary debates concerning the relation of the law of evidence to both the broader science of proof and the discourse of rights. But we did not. We were awakened from our reverential slumber by a mighty and benign force: the Bill of Rights within a new constitutional dispensation.
This liberating and enormously enriching instrument has placed the law of evidence on an entirely new plane. Gone is the deference to legislative decree and stale precedent. The rules of evidence born out of the
English rationalist tradition still survive, but only to the degree that they encapsulate—or, at least, do not infringe—the fundamental rights set out in Chapter 2 of the Constitution. That chapter is based largely on the highly successful and sophisticated Canadian Charter of Rights and Freedoms, so that the seismic shift in emphasis and style is supported by a huge body of Canadian case law in which these rights have been interpreted and applied.
As a result, entire areas of the law of evidence have been re-shaped, including illegally obtained evidence, the onus of proof in criminal cases, admissions and confessions, all the various privileges including legal advice privilege, litigation privilege, and the privilege against self-incrimination (including the right to silence).
But even more generally, the Constitution has had a profound (and, for the most part, salutary) effect on the way in which the courts look at the entire field of evidence. No more are we compelled to adhere rigidly to technical and outmoded and, even, anomalous rules that bedeviled the law before the enactment of the Bill of Rights. Our courts now subject all such rules to the closest scrutiny in order to determine whether they give proper effect to the ‘spirit, purport and objects of the Bill
February 2021
Feature Supplement to 215 Tax Shock Horror 2021
of Rights’ in terms of s 39(2) and, moreover, whether any curtailment or attenuation of any of the entrenched rights by a particular rule is both reasonable and justified in terms of s 36(1).
The result is a heady environment in which rules are
made to fight for survival in a jungle populated by entrenched rights, and can no longer lay claim to supremacy by reason only of their provenance or form.
What a thrill and privilege it has been, not only to study and observe these developments,
but to have been a part of them by engaging with them as a writer and critic in many books, articles and notes.
How could I not feel myself enriched by this experience?
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The traditional practice of waiving R100 000 of a loan to a trust carries adverse CGT consequences under para 12A of the Eighth Schedule to the Income Tax Act.
The purpose of disposing of an asset to a trust on loan account is to peg the value of the amount to be included in the lender’s estate on death. In theory, the asset should grow in the trust, which is outside the lender’s estate, while the loan will remain fixed or even decrease. When the lender dies, the remaining balance of the loan account will be included in the dutiable value of the lender’s estate for estate duty purposes. Section 7C was introduced to combat the use of low or interest-free loans for this purpose.
Before the 2020 year of assessment, one way in which to reduce the loan was to waive R100 000 of it a year by making use of the donations tax exemption in s 56(2)(b) which reads as follows:
(2) Donations tax shall not be payable in respect of— (a) N/A (b) so much of the sum of the values of all
property disposed of under donations by a donor who is a natural person as does not during any year of assessment exceed R100 000;
I pause at this point to mention that the waiver of a loan is a ‘donation’ as defined in s 55, since it comprises ‘any gratuitous disposal of property including any gratuitous waiver or renunciation of a right’.
Under para 12A(3), the waiver of a loan used to fund the acquisition of an asset results in the reduction in the base cost of the asset. Before the 2020 year of assessment, taxpayers relied on the exemption in para 12A(6)(b), which prevented the base cost reduction when a loan was waived by donation. However, it was substituted by s 77(1)(h) of the Taxation Laws
Amendment Act 23 of 2018 in order to insert the words after subitem (ii). It was deemed to come into operation on 1 January 2019 and applies to years of assessment commencing on or after that date. Put simply, it applies to the 2020 and subsequent years of assessment.
In its amended form It reads as follows:
a person— (a) N/A (b) to the extent that the debt is reduced by way
of— (i) donation as defined in section 55 (1); or (ii) any transaction to which section 58
applies, in respect of which donations tax is payable;
It’s that last line that is the sting in the tail. In order to avoid the base cost reduction, donations tax must be payable on the donation. By using the R100 000 exemption, no donations tax is payable; hence the trust will suffer a base cost reduction.
While there may be a future estate duty saving of 20% on the waived amount, it comes at the cost to the trust, since, ultimately, the trust will pay CGT at the rate of 36% on the higher capital gain when it sells the asset, unless the capital gain is vested in a resident beneficiary, in which event the beneficiary will bear the CGT burden under para 80(2), at a maximum rate of 18%.
The donor could as an alternative donate cash of R100 000 a year to the trust, which the trust could either retain or use to repay the loan account.
SARS has in the past warned that donating cash to a trust and instantly receiving that same amount back by way of a loan repayment could be seen as a disguised loan waiver. It might even be argued that the loan was not genuine in the first place, on the basis that there was no intention to repay it, so some caution needs to be exercised when letting the cash flow.
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Statute law
In the Bsp Seminars® ‘value-added’ style
Once you have used the superb Bsp Seminars® renditions of statutes, you’ll wish all laws were presented this way.
Compiled by
COSTA DIVARIS
The Administration of Estates Act (66 of 1965)
The Diamond Export Levy (Administration) Act (14 of 2007)
The Diamond Export Levy Act (15 of 2007)
The Employment Tax Incentive Act (26 of 2013)
The Estate Duty Act (45 of 1955)
The Local Government: Municipal Property Rates Act (6 of 2004)
The Merchant Shipping (International Oil Pollution Compensation Fund) Administration Act (35 of 2013)
The Merchant Shipping (International Oil Pollution Compensation Fund) Contributions Act (36 of 2013)
The Mineral and Petroleum Resources Royalty (Administration) Act (29 of 2008)
The Mineral and Petroleum Resources Royalty Act (28 of 2008)
The Securities Transfer Tax Act (25 of 2007)
The Securities Transfer Tax Administration Act (26 of 2007)
The Skills Development Levies Act ( of 1999)
The South African Revenue Service Act (34 of 1977)
The Succession Acts
The Tax Administration Act (28 of 2011)
The Transfer Duty Act (40 of 1949)
The Trust Property Control Act (57 of 1988)
The Unemployment Insurance Contributions Act (4 of 2002)
The Value-Added Tax Act (89 of 1991)
Regulations under the Value-Added Tax Act
Dispute Resolution—Gazette Notices
All fully up to date with the 2020 amending acts.
Special offer Buy the lot for R1 150, inclusive of VAT at 15%.
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