In the case of New Adventure Shelf 122 v Commissioner: SARS (310/2016) [2017] ZASCA 29 (28 March 2017), the Supreme Court of Appeal had to deal with the question of whether South African tax law allows for the carry back of capital losses arising from cancellation of an agreement where that agreement was concluded in a prior year and assessed to tax but cancelled in a subsequent year.
A MESSAGE FROM THE SCA
The court deals swiftly with the question and hands down a judgment in favor of SARS but not without leaving taxpayers with a very clear and unambiguous message at par 28:
“In any event, even if in certain instances it may seem ‘unfair’ for a taxpayer to pay a tax which is payable under a statutory obligation to do so, there is nothing unjust about it. Payment of tax is what the law prescribes, and tax laws are not always regarded as ‘fair’. The tax statute must be applied even if in certain circumstances a taxpayer may feel aggrieved at the outcome.”
While the judgment is off course correct, it does tend to leave a bad taste in one’s mouth. It is unfortunate that the taxpayer in this case did not enter into the sale agreement on more tax advantageous terms to prevent this sad, yet inevitable conclusion.
The judgment serves to reestablish the importance of employing a tax professional before a transaction is entered into as opposed to after the fact. Seeking advice after the fact is not always detrimental but why take the risk of having no choice.
Our speciality practice area is tax dispute resolution. Our team is headed by Nico Theron (Chartered Tax Advisor (SA)), author of Lexis Nexis’ Practical Guide to Handling Tax Disputes, Chairman of the South African Institute of Tax Professionals Tax Administration Work Group, guest lecturer on tax dispute resolution at post grad level at UP and WITS, head lecturer on The Tax Faculty’s dispute resolution course and founder of Unicus Tax Academy. If you’re looking for expert tax consultants in South Africa, get in touch.
Unicus Tax Specialists SA, has, at the time of writing, always been able to secure a satisfactory outcome for our clients in their disputes with SARS, thereby saving our clients hundreds of millions of rands in taxes, penalties and interest.
