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Why Stop At Tom Moyane? Forget the small fry. Go for the man who set SARS back by at least twenty years.

And also for the group of rotters, of indeterminate number, who tarnish the name and reputation of the hard-working, ethical few.

MONTHLY LISTING Latest Legislation & Legislative Material To Emerge Or To Be Found Since Issue #181

This is a free publication devoted to unearthing what is going on in the SA tax field. If it isn’t here, it never happened.

Unless otherwise indicated (‘§’), every document listed is cumulatively included in the Tax Shock, Horror Database, which is available monthly, quarterly or even individually, on DVDs, by post, for R260 a month inclusive of VAT at 15%.

This is perhaps the only newsletter in the world with its own stylebook (also free), by Costa Divaris & Duncan McAllister (2015 ed). Bsp Seminars® publications—tax and tax-related acts, books, databases and newsletters by and compiled by Costa Divaris.

All past issues from 2009 to date. All cases listed in this section from 2006 to date. Visit our website.

Act 30 September 1996: Revenue Laws Amendment Act 46 of 1996. Act 04 October 1996: General Law Amendment Act 49 of 1996. Act 22 November 1996: Abolition of Restrictions on the Jurisdiction of Courts

Act 88 of 1996. Act 27 July 2001: Revenue Laws Amendment Act 19 of 2001. Act 22 December 2003: Revenue Laws Amendment Act 45 of 2003. Act 08 January 2008: Revenue Laws Amendment Act 35 of 2007. Act 08 January 2009: Revenue Laws Amendment Act 60 of 2008. Act 16 April 2009: Money Bills Amendment Procedure & Related Matters Act 9 of

2009. Act 21 April 2009: Reform of Customary Law of Succession & Regulation of

Related Matters Act 11 of 2009. On these items 21 April 2009: Acts in the Tax Shock, Horror Database improved. High Court case 04 April 2012: Meijer NO and Another v Firstrand Bank Ltd (formerly known as

First National Bank of Southern Africa) and Another, In re: Firstrand Bank Ltd (formerly known as First National Bank of Southern Africa) and Another v Meijer and Others (2123/2010) [2012] ZAWCHC 23. A successful application for rescission of a judgment, the setting aside of a warrant for execution, & an interdicted sale of immovable property. About the disputed resignation of trustees, under s 21 of the Trust Property Control Act, & the authority to act of the remaining trustee. But the real issue was the lack of capacity of the remaining trustee to act on her own. No need for the discursion on trust law, learned as it was.

GN 588 GG 35550 03 August 2012: Unemployment Insurance Act—Increase of the scale of benefits. Under s 12(3)(a).

High Court case 30 November 2012: Sasol Oil (Pty) Ltd v CSARS (17583/2012) [2012] ZAGPPHC 312. SARS tried to add a second ground to its ‘rule 10’ statement, in the hope of circumventing the old s 79 (additional assessments) of the Income Tax Act. Said Phatudi J:

The constitutional principle of legality requires the public power to be exercised in accordance with the law. Considering all evidence before me herein, I am of the view that the inclusion of the second grounds in the Rule 10 statement outside the powers given to the respondent in terms of the relevant statutory provisions is contrary to the law and the principle of legality.

Today’s rules cater specifically for such run-arounds (19,20, 21 TAW 2018). Act 22 January 2013: Judicial Matters Amendment Act 42 of 2013. High Court case 14 October 2013: Van Greune NO and Another v Van Greune In re: Van Greune

v Van Greune and Others (57674/2012) [2013] ZAGPPHC 291. How not to attack a trust upon your divorce, especially when you are one of the trustees.

Issue: 182 Tax Shock Horror Database—18 798 items (5,68 GB)—3 280 subscribers May 2018

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182 Tax Shock, Horror 2018—May—2


High Court case 05 June 2015: SARS v Van Wyk (A145/2014) [2015] ZAFSHC 118. SARS won this appeal against the judgment of the magistrate in Kroonstad granting rescission of judgment & setting aside a warrant of execution. The taxpayer failed to study the Tax Administration Act carefully enough, & was caught out in what looked like a fib about delivery.

Tax court case 22 February 2017: Case no IT 13193. A hugely complicated case, on the taxability, under additional assessments, of dividend rights ceded to the taxpayer. The taxpayer won. Having long considered the issue of contingent interests, a form of property, I find my sympathies in this matter lying with SARS. Very few understand the central concept of an ‘amount’.*

Tax court case 01 March 2017: Case no IT 13492. An STC case, which SARS lost, on the basis that the relevant assessment was out of time. Some of those involved realized that the issue is covered by s 79(1), despite its repeal:

During argument it was pointed out by counsel for the Commissioner that in the statement of grounds of appeal section 79 was not relied upon, only section 99. It was argued that it was common cause that loans had been advanced to related companies.

In the tax court, a judge, I say, is free to apply the correct provision but then must send the matter back to the Commissioner for assessment (s 129(2) of the Tax Administration Act). Jansen J achieved the correct resolution & immediate finalization of the matter by alternative means. I look forward to adding this case to the current series on the ‘rules’ in TAW.*

SARS website 01 August 2017: Contact SARS by email/fax or post. Latest iteration.* High Court case 23 August 2017: A Way to Explore v CSARS (23896/17) [2017] ZAGPPHC 541. A

highly unusual unopposed application under PAJA. Astonishingly, it was for the setting aside of VAT assessments & the payment of a refund. The application was refused, & the matter referred back to SARS. Said Khumalo J:

Notwithstanding my aforesaid sentiments, I find it iniquitous and excessive that whilst the process of objection is still pending, the Respondent proceeded to effect a set-off payment, especially under circumstances where the Applicant was not alerted or afforded an opportunity to make submissions to Respondent’s intention to implement a corrective payment after the assessment. It would therefore be just and curb any prejudice on the Applicant if the effect of the decision to set-off is suspended pending the outcome of the process of objection and for the Applicant to be afforded an opportunity to comment or make submissions on the set-off.

High Court case 19 September 2017: Pioneer Foods (Pty) Ltd v Minister of Finance and Others (15797/17) [2017] ZAWCHC 110. Reasons delivered by Sher AJ for refusing an application for an order compelling the MOF to Gazette an adjustment to the import duty tariff on wheat to R379,34 per ton.

High Court case 16 October 2017: Twine and Another v Naidoo and Another (38940/14) [2017] ZAGPJHC 288; [2018] 1 All SA 297 (GJ). A will signed in the absence of the supposed witnesses found to be invalid, under s 2(1)(a)(ii) of the Wills Act. Vally J included a comprehensive treatment of the ‘role, duties & functions of an expert witness as well as the role & functions of the court’. As an interested layman, I found it illuminating.

High Court case 20 October 2017: Karani v Karani NO and Others (02266/2014) [2017] ZAGPJHC 318; [2018] 1 All SA 156 (GJ). A wills case. Per Monama J:

In my view, the Plaintiff discharged the burden of proof that the signature on the Contested Will is forgery. The Defendants have failed to prove that the Contested Will does comply with the requirements of the Wills Act.§

Tax court case 30 November 2017: Case no IT 13863. Another ‘contract mining’ case, which the taxpayer lost. Per Weiner J:

The appellant has not succeeded in demonstrating that it derived its income from mining operations. This question is somewhat vexed having regard to the definition, which seems to include the appellant’s business, and the comments made in the Margo Report and the Davis Tax Commission, which demonstrate why the appellant’s business is excluded from the definition and the permissible deduction. If one takes a purposive view of the Legislation, the latter comments must come to the fore in dealing with the interpretation to be placed on such legislation.

However, the question then arises whether, if the appellant had demonstrated that the income was derived from mining operations, has there been compliance with the relevant subsections of section 37 of the Act. There clearly has not and in the circumstances, the deductions claimed could not be allowed.*

High Court case 16 February 2018: Van Zyl and Another v Van Zyl and Others (30163/2017) [2018] ZAGPPHC 17. This was supposed to be about the removal of trustees, but



they wanted out, in any event. So it became a case about costs. These ended up lying where they fell.§

High Court case 16 February 2018: Matthews NO and Others v Thyne NO and Others (20714/17) [2018] ZAGPPHC 30. An ugly fight over a family trust. A trustee & beneficiary, having been accused of dipping into the funds, but foolishly offering to replace a meagre portion of the alleged misappropriation, sought security for costs in an upcoming trial. He came horribly short. No doubt it seemed like a good idea at the time, & his lawyers had no complaint.§

High Court case 22 February 2018: Friedman NO and Another v Moolman (821/2017) [2018] ZAECPEHC 5. Trustees of a trust enter into an agreement to buy fixed property, & pay for it. The details cannot be ironed out, so they ask for their money back, to no avail. Hence this case, which they won, on the basis that the agreement was of no force or effect, since it did not comply with s 2(1) of the Alienation of Land Act. (It was also in breach of s 3 of the Subdivision of Agricultural Land Act.)§

High Court case 02 March 2018: Porritt v S (SS40/2006) [2018] ZAGPJHC 45. Garry Porritt refused bail. Per Monama J:

Accordingly, the Respondent’s point in limine is good in law. The application on the so-called new facts is an attempt to get the order of Judge Spilg reviewed by me through the back door.…

High Court case 09 March 2018: Porritt v S (08389/2018) [2018] ZAGPJHC 68. Although presented otherwise, this urgent application bore ‘all the hallmarks of a bail matter, in particular a bail appeal’ (per Wepener J). It was dismissed.

Tax court case 09 March 2018: Case no IT 14218. I must try & stay calm. The employer is a resident. Allie J seemed to believe that the employee was excluded from the definition of a ‘resident’ by s 1(b) of the Income Tax Act. There is no such provision. There is nevertheless an intrinsic exclusion for ‘treaty nonresidents’. So the employee is, I gather, on that basis, a resident of the USA, & therefore entitled to treaty relief. Was his remuneration gross income? That is an issue of source. Article 15 of the relevant treaty depends, in the first instance, upon the place where the employment is exercised, not quite the same thing. Since the treaty prevails, there is no need to link or conflate the two issues, as Allie J seems to have believed. An employment contract is by no means one of reciprocal performance, not in the technical sense, such as is, for example, a lease. The judgment is in my opinion wrong, & should be appealed against:

The source of the remuneration received by the appellant during the 62 days that he rendered services for his employer outside SA is the same source from which remuneration was derived in the remaining days that he rendered services for his employer inside SA.

Nevertheless, the situation is one in which the private sector needs to exercise great care, ensuring that remuneration for work done outside the RSA by a nonresident is commensurate with the work concerned. A time-based apportionment will not necessarily yield the correct outcome. But just try & explain the principle to recklessly greedy executives!*

High Court case 13 March 2018: CSARS v Huang and Others (43511/2014) [2018] ZAGPPHC 101. SARS obtained confirmation of a provisional preservation order granted under s 163(4) of the Tax Administration Act against the first three respondents, which was already final against the others. (See the Monthly Notebook.)

LSSA presentation 24 March 2018: Section 35—Fees in respect of legal services.§ High Court case 28 March 2018: Public Protector v South African Reserve Bank (52883/2017)

[2018] ZAGPPHC 175. The Public Protector refused leave to appeal against the de bonis propriis cost order awarded against her, in Absa Bank Limited and Others v Public Protector and Others (48123/2017; 52883/2017; 46255/2017) [2018] ZAGPPHC 2 (16 February 2018) (179 TSH 2018).

High Court case 29 March 2018: CSARS v Logikal Consulting (Pty) Ltd and Others (96768/2016) [2018] ZAGPPHC 159. SARS successful in an application for the rescission of a judgment, granted in its absence, sanctioning an offer of compromise under the Companies Act. It also secured the provisional winding-up of the taxpayer. Did they really think that they would get away with it?

High Court case 03 April 2018: Maree and Another v Bobroff and Another (2016/32219) [2018] ZAGPJHC 79. An unsuccessful application for confirmation of a provisional sequestration order, on account of inappropriate misjoinder.

Business Day 03 April 2018: Tax-hungry state plays chicken with poor. Even Mike Schussler believes in VAT zero-ratings, & thus that costs determine prices.§

Business Day 03 April 2018: Inability to decide social cost shows there is no good basis for



carbon tax. By Philip Lloyd, who says: ‘We do not need a carbon tax.’§ Business Day 06 April 2018: Financial & Fiscal Commission—CEO aims to deepen SA’s fiscal

relations. On new CEO Kay Brown.§ Business Times 08 April 2018: Treasury rallies to aid of a recovering SARS.§ Bill 13 April 2018: Prevention & Combating of Hate Crimes & Hate Speech Bill,

2018. What the hell might it mean to demonstrate a clear intention ‘to be harmful or to incite harm’ (clause 4(1)(a)(i))?§

Business Times 15 April 2018: ‘Treasury flaw’ puts brakes on building the economy. Neresh Pather (Consulting Engineers SA) says that much of the R300 billion a year spent by the government on infrastructure is ‘being wasted because of bad planning & a flawed procurement system’.§

Business Day 18 April 2018: Tax reports incomplete. Letter to the editor by Judge Dennis Davis, CM of the Davis Tax Committee. The Moving finger…having writ….§

Business Day 19 April 2018: FFC takes steps to clean up & fix corruption. That’s the Financial & Fiscal Commission.§

High Court case 20 April 2018: Freedom Under Law (RF) NPC v Vlok Symmington and Another (60723/2017) [2018] ZAGPPHC 232. Freedom Under Law refused an order admitting it as amicus curiae in the proceedings instituted by Vlok Symington against SARS. (These subsequently dropped.)

Business Day 24 April 2018: Treasury plans to redo procurement laws.§ Business Day 24 April 2018: Makwetu decision sinks audit firm. Nkonki, that is.§ Concourt case 25 April 2018: Marshall and Others v CSARS [2018] ZACC 11. This incredibly

botched VAT matter has gone from bad to worse. The bumbler involved is the South African Red Cross Air Mercy Service Trust. It won a declaratory order in a confused judgment of the High Court (146 TSH 2015). This was reversed by the SCA (163 TSH 2016; see also ‘VAT: the extraordinarily wrong view taken in the Marshall case’ 164 TSH 2016). Astonishingly, it missed the deadline to apply for leave to appeal, thanks to its ‘financial situation & change of legal representation’. There being no prejudice to SARS, condonation was granted, but the application was refused. Per Froneman J (footnote suppressed):

Nevertheless, the application for leave to appeal must be refused. As indicated the prospects of success are not good and it is not normally in the interests of justice to grant leave. In the end the application was made to advance the Trust’s interests, which are ultimately directed to the public good. The interpretive issue was, despite the refusal of leave to appeal, worthy of this Court’s attention. Biowatch accordingly applies. There will be no costs order in this Court.

Biowatch goes to costs on a constitutional issue. How might the prospects for success have seemed so poor, when the SARS case was such rubbish?

ZAeconomist 25 April 2018: A new optimistic message from the Reserve Bank. By Brian Kantor. A comprehensive critique of SARB policy:

A successful monetary policy is one that delivers low inflation in a way that encourages rather than inhibits the growth of an economy. An inflation targeting monetary policy regime should recognize that unpredictable supply side shocks that lead prices and inflation higher call for lower, not higher interest rates to help the better economy absorb the shock to prices and to the demands for goods and services produced domestically.

…. I further question the notion, that inflationary expectations are self-fulfilling, much

relied upon by the Reserve Bank over the years to justify its interest rate settings, that is the more inflation expected the more inflation realized, regardless of the slack in the economy. And that higher interest rates increases are required to prevent these so called second round effects from driving up prices whatever the initial cause of higher prices because higher prices mean more inflation expected and in turn more inflation realized.

…. Finally I would question the notion that deficits of the current account of the

balance of payments represent danger rather than opportunity for the SA economy as the MPR appears to regard them. By definition the current account deficit is equivalent to the capital flows an economy is able to attract from abroad. Faster growth will mean larger current account deficits and larger capital inflows. Growth leads and foreign capital can follow the prospective faster growth and make it possible. I would argue that the opportunity to grow faster by attracting more capital should not be frustrated by higher interest rates for fear that capital flows can reverse when the news deteriorates.

NERSA draft paper 26 April 2018: Draft consultation paper—Rules for registration of small-scale



embedded generation. Keeping ESKOM afloat, at whatever cost. (On hold.) Sunday Times 29 April 2018: Lawyers snub SARS over bills. Alleged nonpayment of fees.§ Concourt website May 2018: This has been vastly upgraded, & the link changed.§ IRBA report May (undated): Public inspection report 2017.§ Fair Play May (undated): Issue 8. From the Office of the Tax Ombud. SAICA website May: Full-on facelift. Business Day 02 May 2018: A fearsome intellect led our fiscal discipline model. Obituary on

Derek Keys, onetime Minister of Finance, responsible, I’ve always believed, for some intriguing amendments affecting the taxation of dividends.

SARS website 03 May 2018: Customs & Excise Act: The Tariff Amendment Notice, scheduled for publication in the Government Gazette, relates to the amendment to— Part 1 of Schedule No 2, by the deletion of items 215.02/7318.15.39/01.08;

215.02/7318.15.39/02.08 and 215.02/7318.15.39/03.08 to terminate anti-dumping duties on fully threaded screws with hexagon heads originating in orimported from the People’s Republic of China—ITAC Report 573.*§

IRBA release 04 May 2018: A few bad auditors have cost many good people their reputations. IRBA takes steps to mitigate collateral damage.

GN 221 GG 41604 04 May 2018: Notice & order of forfeiture. Angelo Japphat Moonsamy loses R1 031 400 under the EXCON regulations. (All of these files are inaccessible.)

GN 222 GG 41604 04 May 2018: Notice & order of forfeiture. Loverboy Jacob Tshabalala loses R469 250.

GN 223 GG 41604 04 May 2018: Notice & order of forfeiture. Mohammed Riyaad Ismail loses R897 200.

High Court case 04 May 2018: CSARS v Louis Pasteur Investments (Pty) Ltd and Others (12194/2017) [2018] ZAGPPHC 287. SARS wins a round in its battle to stop taxpayers in default sheltering behind business rescue, securing an order uplifting the moratorium on legal proceedings, as well as an order providing for the citation collectively of & service by email on the ‘affected parties’. The business practitioner involved, Etienne Jacques Naudé, earned these judicial economiums (per Pienaar AJ):

It should be kept in mind that Second Respondent in his capacity as a senior business rescue practitioner of First Respondent is an officer of the Court in terms of section 140(3)(a) of the Companies Act, besides the fact that he is a duly admitted attorney and as such also an officer of the Court. As such Second Respondent is obliged to be of assistance, not only to the Court, but to all affected parties, whereby is included a party, such as Applicant to whom R197 269 662,76 was allegedly due and owing on 22 November 2016, and who intends to approach the Court to have the business rescue proceedings converted to liquidation proceedings. The business rescue practitioner is required to be objective and impartial in his conduct. Any attempt to frustrate and/or prevent an affected party in its endeavours to proceed to obtain such an order would be improper, and depending on the circumstances pertaining in each case, may even be unethical and unprofessional. This obligation with which the business rescue practitioner is burdened applies even though an Applicant intends proceeding with an application to have such business rescue practitioner removed in terms of section 139(1) or (2) of the Companies Act.

Having regard to the conduct of Second Respondent and the submissions made on Second and Fourth Respondent’s behalf, the conduct of Second Respondent is, to say the least, objectionable leaving much to be desired and failing to meet the high standards required in the conduct of a business rescue practitioner as an officer of the Court.

The court found that the practitioner’s conduct was ‘obstructive’ & aimed at frustrating SARS from proceeding with Part B of its application. The whole point of business rescue in such circumstances is to thwart SARS, & earn big fees.

SARS website 04 May 2018: Customs & Excise Act: Publication details for Tariff Amendment Notice R 470, as published in Government Gazette 41605, are now available.*§

Business Day 04 May 2018: Focus shifts to Steinhoff Austria’s tenfold value hike. By Ann Crotty. A corporate restructuring exercise under the Income Tax Act allegedly used to boost profits. I can see how the tax side of it might have worked.§

Sunday Times 06 May 2018: Showdown—suspended SARS boss Tom Moyane heads for a bruising court duel with President Cyril Ramaphosa.§

Business Times 06 May 2018: Moyane to answer for SARS decay.§ Business Times 06 May 2018: Board [IRBA] outlines path to health of SA auditing.§ Business Times 06 May 2018: Nene urges ‘good men & women’ to step forward & fix auditing



industry.§ SARB ECC 8/2018 07 May 2018: Exchange Control Circular no 8/2018—Authorized dealer in

foreign exchange with limited authority. Say hello to Hello Paisa (Pty) Limited, elevated to Category Four.

SARB ECC 9/2018 07 May 2018: Exchange Control Circular no 9/2018—Amendments to the Currency & exchanges manual for authorized dealers. To say the least (below).

SARS table updated 07 May 2018: Interest rates—Table 1: Interest rates—in respect of the various acts administered by SARS.*

SARS table updated 07 May 2018: Interest rates—Table 2: Interest rates payable on credit amounts (overpayment of provisional tax) under s 89quat(4) of the Income Tax Act.*

Daily Maverick 07 May 2018: Analysis: charges against Tom Moyane—serious, detailed, devastating.§

Business Day 07 May 2018: Charge sheet claims Moyane tried to thwart investigation.§ Business Day 07 May 2018: PIC’s wobbly investment decisions hit taxpayers, not pensioners,

below the belt. Stuart Theobald points out that public servants belong to defined-benefit retirement funds, & so couldn’t care less whether the PIC lost money on Steinhoff.§

SARB speech 08 May 2018: Recent developments in SA: has the country turned for the better? By the Governor. Once I see someone mention the NDP, or the Tooth Fairy, I switch off. Read it yourself, if you like.

GN 474 GG 41615 08 May 2018: License fees payable by licensed generators of electricity. Under s 5(b) of the Electricity Act. They mean s 5B (I always check these references).

High Court case 08 May 2018: Crookes Brothers Limited v CSARS (14179/2017) [2018] ZAGPPHC 311. SARS refused to make reduced assessments, under s 93(1)(d)(ii) (undisputed error by taxpayer) of the Tax Administration Act. This was an application to review & set aside its decisions. The application failed, on the merits, s 31 of the Income Tax Act, on transfer pricing, applying.

dti presentation 09 May 2018: Industrial policy action plan 2018/19–2020/2021. Grab your wallet, Dr Red Rob remains at large.§

Treasury speech 09 May 2018: Keynote address—at the Office of the Accountant-General’s public finance management conference. By Dondo Mogajane, National Treasury DG. A nice speech but I continue to believe that the Treasury has failed abysmally in its oversight role. Yet it blithely continues to spew out laws & regulations that will never be enforced & promises it cannot possibly keep.

Tax court case 09 May 2018: Case no IT 14264. On the deductibility, under s 11(a) of the Income Tax Act, of a contribution by a group’s chief operating company to its employee management share-incentive scheme. Under s 23H, the deduction was spread over seven years. SARS relied on Solaglass. What a blast from the past! I have never understood why this has been regarded as an important decision. Warner Lambert also referred to, of Sullivan Code fame! I feel the present slipping away. SARS lost. Sloppily, it deviated from its rule 31 statement.

Draft GN 09 May 2018: Returns to be submitted by a person in terms of s 25 of the Tax Administration Act. This is the annual notice to render normal tax returns, for the 2018 year. We’ve never before had a draft. Why now?*

Business Day 09 May 2018: Steinhoff accounting boggles the mind. By Ann Crotty. More on that corporate restructuring.§

NERSA release 10 May 2018: NERSA consultation paper on small-scale embedded generation: It is important to indicate that this is not Regulations but a Notice to repeal the current Schedule II of the Electricity Regulation Act. The Minister is empowered by section 36(4) of the ERA to amend Schedule II. NERSA is bound by the gazetted Notice and is required to ensure its implementation, hence the draft Rules. The Rules will be processed following due regulatory process which includes stakeholders’ comments and inputs.

This, it would appear, is a climb-down. SARB speech 10 May 2018: At the annual financial markets department cocktail function. By

Daniel Mminele. Treasury release 10 May 2018: Public financial management conference underway:

The National Treasury, in partnership with the European Union (EU) and the British High Commission, today hosted the second of the three-day annual Public Financial Management (PFM) Conference for 2018. Topics under discussion include financial management, procurement, budgeting and transformation.

Treasury release 10 May 2018: Call for submissions—the independent panel of experts to review the current list of VAT zero-rated items. Here’s my submission:

Don’t be bleeding stupid. Costs don’t determine prices. High Court case 10 May 2018: Richter NO and Others v Richter and Others (1988/2017)



[2018] ZAFSHC 45. The trustees of three trusts are busy suing the previous trustees ‘for losses suffered by the Trusts as a result of improper and/or unlawful conduct on the part of the defendants during their tenure as the trustees of the Trusts’. The defendants failed in their exception to the particulars of claim. Naidoo J said:

…. In my view, the issue of the authority of the trustees to act only after authorized to do so by the Master, and whether they would attract any liability for such acts prior to being authorized by the Master, can only be properly dealt with by the trial court, after considering all the evidence. Such an exercise may very well call for an interpretation of the law in relation to Trusts, which falls outside the scope of the matter before this court.…

High court case 10 May 2018: Vermeulen NO v Rammile and Others (A260/2017) [2018] ZAFSHC 59. It doesn’t get sadder than this—a seventeen-year fight over a very modest bequest of property, with bad behaviour on both sides but especially by the executrix, an attorney, who lost two cases in a row.§

GN 480 GG 41621 11 May 2018: Incidences of noncompliance by a person in terms of s 210(2) of the Tax Administration Act that are subject to a fixed amount penalty in accordance with ss 210(1) & 211. Sanctioning a failure to submit CbC reports timeously.*

GN 245 GG 41625 11 May 2018: Notice & order of forfeiture. AAK Attorneys (Pty) Limited loses $200 000 under the EXCON regulations.

SARS website 11 May 2018: Customs & Excise Act: Draft rules under section 38—SACU unique consignment reference (UCR).*§

SARS release 12 May 2018: Currency worth close to R2 million seized at Cape Town International Airport.*

Business Day 14 May 2018: Municipalities want to claim SARS refunds. It’ll be easier, I promise, to collect from your deadbeat ratepayers.§

Stats SA release 15 May 2018: Quarterly labour force survey—QLFS Q1:2018: The South African working-age population increased by 153 000 or 0,4 per cent in the first quarter of 2018 compared to the fourth quarter of 2017. The rise in both employment (up by 206 000) and unemployment (up by 100 000) over the quarter led to a rise in labour force participation rate (from 58,8% to 59,3%). The unemployment rate (26,7%) remained unchanged over the first quarter of 2018 compared to the fourth quarter of 2017.

High Court case 15 May 2018: Tugh NO and Another v Rajbansi and Others (9220/2015) [2018] ZAKZDHC 12. A trustee removed by order of court. Per Koen J:

The First Respondent finds herself in the invidious position of laying claims to the shares as executrix whilst in the proper discharge of her fiduciary duties as trustee she might also be required to pursue those shares on behalf of and for the benefit of the Trust directly. That places her in a position where she has to choose sides. Whether she is correct in having chosen the side of the deceased estate is not the issue. By placing herself in a position where she has to choose sides results in a situation where she cannot remain impartial and non-partisan.

No proof of mala fides or dishonesty is required. Her positions as executrix and as trustee in relation to the transfer of the shares simply involve two positions which are mutually destructive, with conflicting duties.

SARB release 16 May 2018: SARB-IMF high-level workshop on the withdrawal of correspondent banking relationships—working towards solutions.

Treasury release 16 May 2018: Postponement of the fourth quarter presentation to the standing committee on finance (SCOF):

Today the Standing Committee on Finance (SCOF) postponed its meeting to review SAA’s Fourth Quarter results due to lack of agreement on whether the session should be held in committee or in public. This emanates from the application made by the chairperson of the Standing Committee on Finance to have some of the presentations by SAA held in private in order to protect the confidentiality of some of SAA’s strategies.

SAA’s IP on how to go & stay bust must, of course, be protected at all costs. Treasury release 16 May 2018: RSA issues two new bonds in the international capital markets:

On 15 May 2018, the Republic of South Africa successfully placed US$2 billion in notes maturing in 2030 (12-year) and 2048 (30-year) in the international capital markets through an intra-day execution. The breakdown of the total issuance amount consisted of US$1.4 billion on the 12-year tranche and US$600 million on the 30-year tranche.

The 12-year bond priced at a coupon rate of 5,875 per cent (re-offer price 99,992 per cent) which represents a spread of 280,5 basis points above the 10-year



US Treasury benchmark bond. The 30-year bond priced at a coupon rate of 6,300 per cent (re-offer price 99,991 per cent) which represents a spread of 310,1 basis points above the 30-year US Treasury benchmark bond.

The transaction was more than 1,7 times oversubscribed in aggregate with investor demand from across all the major financial centres in the United States, Europe, the United Kingdom, Middle East and Asia.

A glowing tribute to the long-suffering SA taxpayer, or an insane lust for yield? High Court case 16 May 2018: Proxi Smart Services (Pty) Ltd v Law Society of South Africa

(74313/16) [2018] ZAGPPHC 333. Per Matojane J: The court will not grant a declaratory order where the issue raised before it, is hypothetical, abstract and academic, or where the legal position is clearly defined by statute. The applicant states in its founding affidavit that[:]

Proxi’s business model has been approved by senior and junior counsel as meeting all applicable requirements of legality and professional propriety.

Applicant seeks legal advice from the court about the permissibility of its proposed business model under circumstances where the model is an abstract hypothetical intended entry into the conveyancing industry which is not set out and is liable to change.

The applicant does not comply with the first requirement to obtain declaratory relief. Failing in that regard, there is no basis why the court must determine whether the present case is one in which the courts discretion is to be exercised in determining the application. Accordingly, the applicant’s application stands to be dismissed.§

Trevor Manuel 16 May 2018: The second Archbishop Thabo Makgoba Development Trust lecture:

I make no apologies for sharing my view that the Presidency of Jacob Zuma was a total disaster for South Africa. Many are aware that I served in his Cabinet until May 2014, charged with the responsibility to draft the National Development Plan. Granted, President Zuma did not interfere with the work of the Planning Commission, nor did he seek to amend any of the recommendations. He did not even attempt to soften our recommendations in a whole chapter devoted to ‘Fighting Corruption’ or the very critical chapter on ‘Building a Capable and Developmental State’. Many would argue that he merely ignored the NDP, whilst paying lip service to having initiated the process. It’s clear his attention and priorities lie elsewhere.

Business Day 16 May 2018: Ramaphosa rejects all of Moyane’s demands.§ SCA case 17 May 2018: Osborne v Cockin NO & Others (549/2017) [2018] ZASCA 58.

Someone, now deceased, by his own hand, owes you money. Fraud is involved. Would you try to sequestrate his trust, on the basis that it was a sham? Hope you said No. Per Lewis JA:

As the court a quo suggested, the proper procedure that should have been followed by Osborne was to make a claim against the trustees of the insolvent deceased estate, and to insist on enquiries or an investigation in terms of ss 64, 65 and 66 of the Insolvency Act. Proper investigation might establish which of his assets, if any, were on trust property, and whether the trustees of the Cockin Trust were liable to return any a cattle or pay damages.

In the circumstances, the appeal must be dismissed. Osborne did not establish that the Cockin Trust was his debtor and was insolvent or had committed any act of insolvency.

The judge in the lower court was Alkema J, who relied in part on his (by me celebrated) judgment in RP v DP and Others 2014 (6) SA 243 (ECP) (143, 144 TSH 2015, 159, 165 TSH 2016) (I’m still looking for a copyright-free copy), only to be rapped over the knuckles by Lewis JA.

SARS website 17 May 2018: Customs & Excise Act: The Tariff Amendment Notices, scheduled for publication in the Government Gazette, relate to the amendments to— Part 3 of Schedule No 2, by the substitution of safeguard item

260.03/7225.99/01.06 to exclude rebate item 460.15/7225.99/01.06 in order to exclude certain hot-rolled steel plates from being subject to safeguard duty—ITAC Report 575, retrospectively from 18 May 2018 up to and including 10 August 2018;

Part 3 of Schedule No 2, by the substitution of safeguard item 260.03/7225.99/01.06 to exclude rebate item 460.15/7225.99/01.06 in order to exclude certain hot-rolled steel plates from being subject to safeguard duty—ITAC Report 575, with effect from 11 August 2018 up to and including 10 August 2019;

Part 3 of Schedule No 2, by the substitution of safeguard item



260.03/7225.99/01.06 to exclude rebate item 460.15/7225.99/01.06 in order to exclude certain hot-rolled steel plates from being subject to safeguard duty—ITAC Report 575, with effect from 11 August 2019 up to and including 10 August 2020; and

Part 2 of Schedule No 4 by the insertion of rebate item 460.15/7225.99/01.06 inorder to create a rebate facility on certain hot-rolled steel plates—ITACReport 575.*§

LSSA release 18 May 2018: Law Society triumphant in Proxi Smart matter: The Law Society of South Africa (LSSA) welcomes the judgment delivered on 16 May 2018 at the Gauteng Division of the High Court in the matter Proxi Smart Services (Pty) Limited vs the Law Society of South Africa and Others.

The applicant applied for declaratory relief concerning the lawfulness of its business model for performing the administrative and related services pertaining to property transfers that it contended was not by law reserved to conveyancers or legal practitioners.

The court held that the applicant has not made out a case for the relief it sought and dismissed the application with cost.

The age of guilds never actually ended, except that the old craft-types produced quality, enduring work, as will be evidenced by a visit to any antiques store. Imagine being publicly ‘triumphant’ at preserving your monopoly rights!

GN 499 GG 41632 18 May 2018: Amendment of GN 469 of 23 June 2017 (different categories of debt for interest rate applicable to debts owing to state) (171 TSH 2017) in terms of s 80(2) of the Public Finance Management Act.

GN 259 GG 41635 18 May 2018: Notice & order of forfeiture. Juan-Paul Schroeder loses R1 100 000 under the EXCON regulations.

SARS website 18 May 2018: Customs & Excise Act: Publication details for Tariff Amendment Notices R 506, R 507, R 508 and R 509, as published in Government Gazette 41633, are now available.*§

Business Day 18 May 2018: Judges’ access to archive restored. The state has allegedly settled Juta’s bill. Did the lack of legal materials affect judgments? I think so.

Treasury report 21 May 2018: The state of local government finances & financial management—as at 30 June 2017:

It is envisaged that municipalities will utilize the information in this report for their benefit and will seek ways of mitigating financial risk.

SARS website 21 May 2018: Customs & Excise Act: The Tariff Amendment Notice, scheduled for publication in the Government Gazette, relates to the amendment to— Part 1 of Schedule No 1, by the substitution of tariff subheadings 1001.91 and

1001.99 as well as 1101.00.10 and 1101.00.90 to reduce the rate of customsduty on wheat and wheaten flour from 39,49c/kg and 59.23c/kg to 29,38c/kgand 44,06c/kg respectively, in terms of the existing variable tariff formula—Minute 03/2018.*§

SARS website 21 May 2018: Customs & Excise Act: Publication details for Tariff Amendment Notice R 512, as published in Government Gazette 41641, are now available.*§

SARS draft guide 21 May 2018: Draft guide on mutual agreement procedures: This is a general guidance on the Mutual Agreement Procedure (MAP) which allows competent authorities from the governments of contracting jurisdictions to interact with the intent to resolve international tax disputes.*

LSNP release 21 May 2018: Master’s office: Pretoria. Various tsatskes. Daily Maverick 21 May 2018: ‘The UK must ensure that no contracts are awarded to Hogan

Lovells’—Hogan Lovells turned a blind eye to the looting of the tax agency. They took a fat fee & ignored the truth. Speech by Lord Hain.§

Daily Maverick 21 May 2018: Targeting Treasury, SA’s crown jewel—how prediction in the Project Spider Web report came to pass.§

Business Day 21 May 2018: Nene revisits probe into PIC boss.§ Treasury speech 22 May 2018: 2018 Budget vote: National Treasury—opening address. By this

week’s MOF: The payment of suppliers within 30 days is a key performance indicator that is being monitored closely. A number of entities have corrective action plans in place to timeously resolve audit findings, which National Treasury continues to monitor closely. National Treasury will continue to require entities to exercise moderation in the awarding of future salary increases.

News24 22 May 2018: Ramaphosa appoints new presiding officer for Tom Moyane disciplinary inquiry. O’Regan J out, Azhar Bham SC in.§



NA release 23 May 2018: SCOPA says National Treasury should develop systems to prevent corruption:

The Standing Committee on Public Accounts (SCOPA) has told the National Treasury to develop systems that will prevent national and provincial departments, municipalities and entities to continue committing corruption through deviations and expansions. SCOPA wants the National Treasury to firmly establish a process of handling approvals so that there are collective agreements for the decisions that are taken.

Based on the report presented by the National Treasury today, SCOPA has noticed that there is a lot of corruption that is taking place in departments, municipalities and entities through deviations and expansions and there is no consequence management that takes place. SCOPA wants government to start instituting charges against officials who try to find ways of cheating the system by defrauding the system.

SCOPA supported the centralization of government procurement precisely because it wanted corruption through supply chain management to be a thing of the past but it seems as if even though there is a central chief procurement office, there is a lot of corruption that is happening through irregular tenders. SCOPA has noted that the top three entities and departments in deviations for quarter 3 and 4 of 2017/18 is the Department of Defence at R734 million, ESKOM at R553 million and the State Information Technology Agency (SITA) at R288 million. The top three entities and departments for expansions for quarter 3 and 4 of 2017/18 is Eskom R11,3 billion, the South African Revenue Service (SARS) at R917 million and South African Post Office (SAPO) at R313 million.

Presidency 23 May 2018: President Ramaphosa establishes commission of inquiry into tax administration & governance of SARS:

The Commission will be chaired by retired Justice Robert Nugent, with assistance from Prof Michael Katz, Adv Mabongi Masilo and Mr Vuyo Kahla. Given the critical role played by SARS and the urgency to ensure that it meets all its revenue targets as announced in the Budget, it is envisaged that the Commission delivers an interim report as soon as possible and no later than 30 September 2018 and a final report by 30 November 2018.

I worry that this new task will detract from the completion of the final, ‘holistic’ report of the Katz Commission.

Business Day 23 May 2018: Construction groups under pressure as projects dwindle. Chris Gilmour says that talk by government of R800 bn spent on infrastructure fails to register in order books, and, if true, ‘casual observers would be aware of pervasive construction activity’. It’s an enduring puzzle.§

Business Day 23 May 2018: Hawks in fresh Moyane probe.§ Business Day 23 May 2018: Public-sector wage bill out of control—Dlodlo.§ Business Day 23 May 2018: Nene’s plan to defeat the inequalities of apartheid.§ MPC statement 24 May 2018: Statement of the monetary policy committee. Unchanged:

At these levels, the MPC still assesses the stance of monetary policy to be accommodative and appropriate given the forecast inflation trajectory and the current state of the economy. However, with risks and uncertainties at high levels, the MPC will maintain its vigilance to ensure that inflation remains well within the inflation target range, and will adjust the policy stance should the need arise.

The implied path of policy rates generated by the SARB’s Quarterly Projection Model reflects one increase of 25 basis points during the final quarter of this year and a similar increase in mid-2019. Two further increases are indicated in 2020. The generated path remains a broad policy guide, and the extent to which the MPC follows it will be determined by, among other things, the MPC’s assessment of the balance of risks to the forecast.

MPC assumptions 24 May 2018: Summary of assumptions. MPC forecasts 24 May 2018: Summary of selected forecast results. MPC forecast 24 May 2018: Interest rate forecast. SARS release 24 May 2018: Customs requirements for SA travellers:

In terms of Customs legislation, South African residents travelling abroad are not required to declare their personal effects when leaving the country, nor upon return. ‘Personal effects’ is defined in legislation as including items such as personal laptops, iPads, cell phones, golf clubs, cameras and/or other high value items forming part of the traveller’s possessions when leaving the country.

Based on these provisions, no traveller can be penalized for not declaring or registering their personal effects upon leaving the country. However, upon return to South Africa, the traveller may be challenged by a Customs officer to provide proof of local purchase or ownership. It is within the mandate of the Customs Officer to establish whether the goods fit the description of ‘New or Used goods acquired whilst



abroad’ which would have a duty implication and, if not declared, also a penalty implication. The proof referred to above may be in the form of an invoice, an insurance record, in the case of a laptop even the content on the laptop, and any other means through which the officer can use his discretionary powers to satisfy that proof.

The alternative to providing such proof is a process created within the policy framework called ‘Registration for Re-importation’. This is not on a DA 65 as many media articles have referred to lately. The DA 65 was phased out for travellers many years ago and today it is only used within the commercial cargo environment, for example where goods are temporarily exported for repair abroad.

A more user-friendly and secure process has been created where the traveller completes a TC-01 (Traveller Card) notifying his or her intent to register goods for re-importation. This is presented to the Customs Officer who will then capture this online on a Traveller declaration system (TRD 1). The traveller authenticates the declaration by signing on a digital signature pad. A copy is printed for the traveller to retain as proof of registration.

Following this process saves the traveller the burden of having to be questioned on their personal effects when they return. If the traveller is a frequent traveller, this process remains valid for six months.

With C&E, It’s never so simple. See the (still unfinished, I think) series ‘C&E: travellers’ in 129 TSH 2013, 130, 133, 134 TSH 2014.*

SARS website 24 May 2018: Customs & Excise Act: The Tariff Amendment Notice, scheduled for publication in the Government Gazette, relates to the amendment to— Amendment in Part 1 of Schedule No 1, by the substitution of tariff heading

1205.10 and insertion of tariff subheading 1205.10.20 and 1205.10.90 to makeprovision for the reduction of the rate of customs duty on canola seed—ITACReport 574.

Amendment in Part 1D of Schedule No 6, by the insertion of various items underrebate item 621.08 in order to make provision of a rebate of full duty in respect ofethyl alcohol by-product that has been used for industrial purposes or for themanufacture of other non-liquor products.

Amendment of Schedule No 8 by the substitution of items 820.05 and 820.10 inorder to extend the validity period for licenses for pot stills.

Amendment in Part 1 of Schedule No 1, by the substitution of tariff subheadings1001.91 and 1001.99 as well as 1101.00.10 and 1101.00.90 to increase therate of customs duty on wheat and wheaten flour from 29,38c/kg and 44,06c/kgto 43,72c/kg and 65,59c/kg respectively, in terms of the existing variable tariffformula—Minute 04/2018.*§

BizNews 24 May 2018: Read Hogan Lovells’ SARS–Makwakwa report: it’s more daming than expected.§

Fin24 24 May 2018: SARS to re-establish teams to probe illict tobacco trade.§ Fin24 24 May 2018: Tax inquiry to probe is SARS officials were coerced to quit.§ Daily Maverick 24 May 2018: KPMG & Hogan Lovells still have much SARSplaining to do. They

had appeared before the National Assembly’s SCOF.§ Business Day 24 May 2018: SARS exodus hobbles fight against illicit flows.§ Business Day 24 May 2018: Treasury report—departments, SOEs ‘cheat the tender process’.

No! Can you really be sure?§ SAHRC release 25 May 2018: SAHRC deeply concerned by the Auditor-General’s report showing

a deterioration in audit outcomes: The South African Human Rights Commission (SAHRC or Commission) is deeply concerned by the The State of Local Government and Financial Management 2017 report, released on Wednesday 23 May 2018, by Auditor-General, Kimi Makwetu. In the view of the Commission, there is a direct link between billions being lost through irregular, fruitless and wasteful expenditure by those tasked with managing the finances of municipalities and the lack of service delivery which in turn inhibits and infringes on rights of access to socio-economic rights of many South Africans, and has ignited so many violent and destructive protests.

The Commission shares in the Auditor-General’s frustration as a majority of municipalities continue in failing to pay heed to the advice and caution of his office and thus showed a deterioration in audit outcomes.

SCA case 25 May 2018: Douglasdale Dairy & others v Bragge & another (731/2017) [2018] ZASCA 68. Imagine going to the SCA for a lesson in elementary property law, in this instance, the question being who owns a property when the fiduciary owner dies. In addition, the unsuccessful appellants were



misinformed about the classification of the fixed property concerned. It was not agricultural land. But then, as Davis AJA said:

A family feud can often defy all laws of rationality. Invariably the warring parties consider that if they are able to mass superior legal forces to those of their family rivals they will emerge victorious. Sadly, litigation of this kind invariably ends in costly trench warfare and with no sensible resolution in sight.§

(See the Monthly Notebook.) SCA case 25 May 2018: CSARS v Daikin Air Conditioning (185/2017) [2018] ZASCA 66.

The shortest customs tariff-classification judgment I can remember, resulting in a rare split 3–2 decision, in favour of CSARS.

GN 265 GG 41650 25 May 2018: Macadamia industry—application for continuation of statutory measures. Includes an increase in the levy, under the Marketing of Agricultural Products Act. A departure from the usual convention governing nomenclature.§

GN 276 GG 41650 25 May 2018: Notice & order of forfeiture. Christopher Letlotlo loses R997 856 under the EXCON regulations.

GN 278 GG 41650 25 May 2018: Notice & order of forfeiture. Adam Commodities Distributors (Pty) Limited loses R1 954 223,72.

GN 541 GG 41655 25 May 2018: Appointment of a restricted authorized dealer in foreign exchange. African Bank Ltd appointed, under the EXCON regulations. An inaccessible file. Can the SARB not kick the GPW in the arse?

Treasury release 25 May 2018: Government’s response to the rating action of S&P’s Global Ratings (S&P):

Government notes S&P’s decision to affirm South Africa’s long term foreign and local currency debt ratings at ‘BB’ and ‘BB+’ respectively, and to maintain the stable outlook.

The rest is too embarrassing to reproduce, even in this bullshit-laden issue. Treasury release 25 May 2018: Local government revenue & expenditure: third quarter local

government s 71 report for the period: 1 July 2017–31 March 2018. SARS website 25 May 2018: Customs & Excise Act:

Publication details for Tariff Amendment Notices R 537, R 538, R 539 and R 540, as published in Government Gazette 41651, are now available.*§

fin24 25 May 2018: KPMG ‘rogue unit’ probe only focused on brothel, not SARS 4 as in service agreement.§

dti release 28 May 2018: Sugar value-chain task team has been established to address the challenges facing the industry. The threat posed by cheaper imports—being the possibility that the poor might buy cheaper sugar. No mention of the sugary beverages levy but, I am sure, the state will find a way both to support & injure this industry. Ain’t government wonderful?

SAICA release 28 May 2018: SARS inquiry terms of reference: The South African Institute of Chartered Accountants (SAICA) welcomes the South African Revenue Services (SARS) Inquiry Terms of Reference, which inquiry will be led by retired Judge Robert Nugent.

‘However, we are disappointed that substantially the whole of the terms of reference refers to matters which are currently being investigated by a myriad of other agencies, including the Hawks, National Treasury, The Commission of Inquiry into State Capture and even SARS itself’, says Pieter Faber, SAICA Senior Executive: Tax. Thus the terms of reference are substantially historical rather than forward looking, as confirmed by the time period scoped of 1 April 2014 to 31 March 2018.

The Institute reiterates its views that the success of the Inquiry in restoring public trust is not only vested in finding and addressing culpability at SARS, but also addressing structural and systemic problems that precede 2014 which are the causes of the symptoms listed in the terms of reference.…

That’s a first—some wisdom from SAICA. But where are the actual terms? SAICA release 28 May 2018: Ntsebeza inquiry wrapping up. (The KPMG issue.) SARB ECC 10/2018 28 May 2018: Exchange Control Circular no 10/2018—Restricted authorized

dealer in foreign exchange. The appointment of African Bank. SARB C&E docs 28 May 2018: Currency & exchanges manual for authorized dealers. Updated. SARB C&E docs 28 May 2018: Currency & exchanges manual for authorized dealers in foreign

exchange with limited authority. Updated. SARB C&E docs 28 May 2018: Currency & exchanges guidelines for business entities. Updated. SARB C&E docs 28 May 2018: Currency & exchanges guidelines for individuals. Updated. News24 28 May 2018: ‘We will hear on Friday’—Moyane laughs off ‘ninja kick’ assault

allegations.§ SARB release 29 May 2018: SARB publishes bank supervision annual report:

In the period under review, administrative sanctions imposed by BSD for anti-money



laundering and combating the financing of terrorism (AML/CFT) non-compliance totalled R77,5 million.…

Wowee! And, er, VSB went mechula, but no need to mention that, really. SARB presentation 29 May 2018: Bank supervision department annual report 2017.§ GN 289 GG 41659 29 May 2018: Notice of intent to introduce a private member’s bill & invitation

for comment on the draft Fiscal Responsibility Bill, 2018. Courtesy of David Maynier MP.

Bill 29 May 2018: National Minimum Wage Bill, 2017 [B 31B—2017]. Workers on expanded public works programmes are to receive a substantially smaller amount. No explanation is given in the accompanying memorandum, but governments are wont to exempt themselves from their own regulations.§

Treasury release 29 May 2018: Amendment to the terms of reference for the independent panel of experts for the review of current list of VAT zero-rated food items.

Treasury review 29 May 2018: Terms of reference for the independent panel of experts for the review of current list of VAT zero-rated food items.

SARS FAQs 29 May 2018: FAQs: increase in the VAT rate (issue 5).* SARS BPR 115 29 May 2018: Binding private ruling: BPR 115— Incentive rewards paid to

independent sales persons. Now carries this note: Policy guidance on the subject provided in Interpretation Note 76 The tax treatment of tips for recipients, employers and patrons.*

NA release 30 May 2018: Parliament contributes to gear SA for the 4th industrial revolution: Parliament is hosting a Round Table discussion on the Fourth Industrial Revolution which is aimed at affirming the centrality of Parliament in ensuring that the vast majority of people benefit from the fast-growing role of technological innovations and convergence in South Africa.

GN R 542 GG 41663 30 May 2018: Publication of the regulations to the National Minimum Wage Bill, 2017.§

GCIS release 31 May 2018: Brand South Africa congratulates Minister Nhlanhla Nene on his appointment at New Development Bank. Chairman of the board of governors. Wouldn’t he have been appointed, I wonder, by virtue of his ministership? Finance, isn’t it? But there’s more you need to know:

South Africa’s membership of the BRICS has become a vital element of its global economic strategy and is viewed as a catalyst and enabling tool for the pursuit and achievement of South Africa’s foreign policy priorities, including the promotion of the African Agenda, sustainable development, global governance reform and South-South cooperation.

GN R 557 GG 41669 31 May 2018: Deed Registries Act: amendment of regulations. Under s 10. Partially inaccessible.

SARS release 31 May 2018: Trade statistics for April 2018 (surplus of R1,14 billion). SARS website 31 May 2018: Customs & Excise Act:

The Tariff Amendment Notice, scheduled for publication in the Government Gazette, relates to the amendments to— Amendment to Part 1 of Schedule No 4, by the substitution of rebate items

405.04/00.00/01.00 and 405.04/00.00/02.00 in order to review the wordingproviding for goods for disabled persons or for the upliftment of indigent persons—ITAC Minute M15/2017.*§

Business Day 31 May 2018: Reserve Bank defends Capitec model. The deputy governor sticks his neck out.§

GN 307 GG 41667 01 June 2018: Notice & order of forfeiture. Alcari 209 (Pty) Limited loses R152 043,48, R13 592,02, R237 066,79, R817 896,07, R1 579 467,53, $93 850 & R10 000 under the EXCON regulations.

GN 308 GG 41667 01 June 2018: Notice & order of forfeiture. Future Ready Shipping (Pty) Limited loses $40 650 & R386 920,04.

GN 309 GG 41667 01 June 2018: Notice & order of forfeiture. Chinese Business Community Primary Co-operative Limited loses R132 330,40 under the EXCON regulations.

GN 310 GG 41667 01 June 2018: Notice & order of forfeiture. Muhammed Aamir loses R550 000. GN 554 GG 41667 01 June 2018: Water research levy 2017/18—rates & charges: increase of

6,79%. Under s 11 of the Water Research Act. BN 73GG 41667 01 June 2018: Proposed revised & restructured code of professional conduct

for registered auditors.§ SARS website 01 June 2018: Customs & Excise Act:

Publication details for Tariff Amendment Notice R 556, as published in Government Gazette 41668, are now available.*§

IOL 01 June 2018: Tom Moyane won’t be prosecuted for alleged assault.§ * Found or to be found on the SARS website. Concurrently on the SARS ‘What’s new’ page. § Not included in Tax Shock, Horror Database.



LOST & FOUND TSHD This month 137 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. Michael Hellens 05 November 2017: I await, indefinitely, if necessary, confirmation of the

‘Mazzotte donation’ or a denial from acting judge Adv Hellens. Under the Value-Added Tax Act, a ‘consideration’ includes payments & acts of forbearance ‘whether or not voluntary’, & so would include even an alleged remuneratory donation (126 TSH 2013).

Repo rate 29 March 2018: Reduced to 6,5%—MPC (180 TSH 2018). Official rate 01 April 2018: Reduced to 7,5%—ITA (repo plus 1%)) (181 TSH 2018). Standard Rate 01 May 2018: Reduced to 10%—PFMA (repo plus 3,5%) (181 TSH 2018). Prescribed rate 01 May 2018: Reduced to 10—TAA (= SIR) (181 TSH 2018). Missing notice 2017: The annual notice to furnish normal tax returns for 2017 (181 TSH 2018)

is far from missing, as two SARS officials were quick to point out. In fact, it has safely been included in the Tax Shock, Horror Database since the month in which it was promulgated, as GN 547 GG 40898, of 9 June 2017.

Take on the month Do our rulers & those imagining they occupy positions of authority really believe that we believe the unmitigated bullshit they dish out on a daily basis?

MONTHLY NOTEBOOK All past entries from 2007 to date. All words & phrases from 2009 to date.

Normal tax: what, really, is ‘gross income’? In a disturbing trend, which I hope in time to document, SARS, having long been coy about the true extent of the burden of proof resting upon it, especially since the advent of the pathetic Tax Administration Act, is currently finessing the issue on an ever-expanding scale. Its brazenness is remarkable, but is encouraged by widespread lack of appreciation of what it means, in a constitutional democracy, for the tax Acts to indulge, even if only to a limited extent, a reverse onus—guilty unless proved innocent. (Imagine what Mr Zuma would say!)

Unless you understand how shocking such a state of affairs is, and tolerate it only insofar as it makes the collection of taxes practicable, and not a millimetre more, you will help to deliver an entire population further into the hands of a bunch of ruthless gangsters.

‘Amounts’ and the normal tax—SARS Among taxpayers and, sadly, the great majority of their advisers, there are very few who know, for example, that, while it is for the taxpayer to prove why an amount is not taxable or should attract the imposition of one particular tax rather than another, it is for SARS to prove the existence of an amount.

How the gangsters at SARS get around this little obstacle is—to refer to just one of several such matters I am familiar with, and have been working on, on and off, for at least four years—to descend upon a taxpayer with no trade, and no assets, other than a bare piece of land, carry out an ‘audit’, and emerge with assessments for R100 million—and more.

How do they do it? They simply go through the cash books and journals and assess every credit entry they find, while ignoring every debit entry. If related parties are involved, they then go to the counterparty and ‘audit’ and assess the

credits corresponding to the debits in the first victim’s books.

So, for example, if your shareholder lends you money, that is a credit in your books, and is taxed, even if, the next week, you repay it, which will give rise to a credit in the shareholder’s books, which is then also taxed.

Undoubtedly, in each instance, there is an amount. Under the law, it is for you to prove that it is not taxable.

Unsighted ‘amounts’—tax entrepreneurs At the same time, to look at another bunch of gangsters, there are purveyors of tax products who undertake to process amounts on behalf of their clients, claiming that these, once so processed, do not fit anywhere in the tax Acts and so are tax free.

How do they do it? Unconsciously, I am sure (for, despite their warm self-regard, they are usually abysmally ignorant of the law), they rely upon the maxim generalia specialibus non derogant—universal things do not detract from specific things. It is applied as a tool of interpretation both within a particular statute and as between statutes (162 TSH 2016).

Thus you could search every special provision of, say, the Income Tax Act, not finding anything that specifically catches the amount generated by your product, and proclaim, like a couple of other fools: ‘Mission accomplished!’

Undoubtedly, in each instance, the amount might escape the particular provision concerned, but there will always be an amount, and, under the generalia of the Income Tax Act, there lies in wait the structure of the normal tax, and its dependence upon ‘gross income’.

It all depends upon ‘gross income’ A fresh look at the definition is overdue.

http://www.bspseminars.co.za/newsletters/monthly-notebook/

http://wp.me/P74yrA-bJ



VAT: shenanigans with SARS statements of account Email 25 May 2018 I submitted my VAT returns for the period 201804, for VAT that is due and payable today, Friday 25 May 2018. Attached is the SARS Statement of Account I downloaded today. It is dated 31 May 2018, and includes a 10% penalty, dated Saturday 26 May 2018—on the return I submitted today, Friday 25 May 2018. How can the penalty be raised before the return was populated and uploaded?

And why did I immediately, today, receive a ‘Verification of value-added tax declaration

(VAT 201)’ letter, dated 31 May 2018? Just an example on how transactions are

created beforehand.

Email 26 May 2018 And the SARS magic happened again! The transactions of yesterday just disappeared. No journals or corrections. At least I do not owe them the penalties.

Emails from a new subscriber.

Trusts: general powers clauses are invalid In my view, the provisions in the trust deed have to be read against what one may call the common-law background, viz that a trustee has no power (absent a provision to that effect in the trust deed) to expose the trust assets to business or farming risks: see IA Essack Family Trust v Soni and Others 1973 (3) SA 625 (D) at 627G–H and Honoré South African Law of Trusts 5th ed para 181. A trustee who contends that such a power is necessary to preserve the value of the trust property must apply to Court for the necessary power: Honoré (loc cit). In the present case it is important to note that the testator conferred a whole raft of powers on the trustee including the power to conduct a business and to deal with the properties but significant in its absence from the powers so conferred was the power to stand surety.

It appears from the summary given above of the reasons given by the Judge in the Court a quo that he said at one point that the power to stand surety was reasonably incidental to the power to make advances. At another point he

said that the provision of a deed of suretyship was reasonably necessary to render the making of an advance meaningful. As far as his statement that the provision of a deed of suretyship is reasonably incidental to the making of an advance is concerned it is clear that the wrong test was applied. In interpreting a will (and the same principle must apply where a trust deed incorporated in a will is to be interpreted) it is clear words can only be read in by necessary implication. This has been repeatedly laid down by the Courts. For present purposes it is sufficient to refer to Heymans v Van Tonder 1985 (3) SA 864 (A) at 877C–E.

The principles to be applied in implying a provision in a will are the same as those to be applied when tacit terms are sought to be implied in a contract: see Commissioner for Inland Revenue and Others v Sive’s Estate 1955 (1) SA 249 (A) at 260C–D.

Per Farlam JA in Liebenberg NO v MGK Bedryfsmaatskappy (Pty) Ltd 2003 (2) SA 224 (SCA)

VAT: Nuts! I erred I last looked at the VAT treatment of nuts in 125 TSH 2013, the issue being whether or not they are zero-rated under Item 13 of Part B of Schedule 2 to the Value-Added Tax Act:

Item 13 Fruit, not cooked or treated in any manner except for the purposes of preserving such fruit in its natural state, but excluding dehydrated, dried, canned or bottled fruit and nuts.

‘Nuts’ are ‘fruit’, but excluding peanuts and other legumes. The way Item 13 is written, it is ambiguous, first, because of its specific mention of both ‘fruit’ and ‘nuts’, and, secondly, because its exclusionary clause might imply an exclusion from the Item 13 zero-rated category itself or an exclusion from allowed treatments.

A simple rewrite would resolve all difficulties but, after all these years, is unlikely to eventuate.

In 125 TSH 2013 I agreed with Peter Franck,

writing in 50 TSH 2007, that nuts were zero-rated, on the basis that (a) as a species of fresh fruit, it would be unreasonable to exclude them; (b) they were specifically mentioned because most of us are unaware that they are a fruit; and (c) if they were meant to be excluded, more forceful language would have been used.

Asked the very same question recently, I came to the opposite conclusion.

It is customary not to separate two items joined by ‘and’ by a comma but, in fact, good English writers know instinctively when to introduce such a comma. In Item 13 it is necessary to read a comma in between ‘bottled fruit’ and ‘nuts’. Nuts being a fruit, the intention is to exclude nuts from the set ‘fruits’, the reason being that, albeit under an illiterate understanding of economics, the zero-rating is meant to make food cheaper for poorer people. (Actually, it adds to the bottom line of food retailers, often very well-off people.) But poor



people are not understood to be buyers of nuts—an expensive, luxury item. Hence the exclusion of nuts, outright, from the zero-rating.

Imports of nuts and domestic supplies therefore all involve standard-rated supplies,

although exports of nuts would be another matter, being subject to other zero-ratings.

I reckon that it is the prodigious rise in the cost of nuts over the years that changed my mind, not just the logic of the thing.

Property law: when a fiduciary dies Per Davis AJA in Douglasdale Dairy & others v Bragge & another (731/2017) [2018] ZASCA 68 (see the Monthly Listing):

In British South Africa Company v Bulawayo Municipality 1919 AD 84 at 95, this court laid down the key principles pertaining to fiduciary and fideicommissary interests. Innes CJ said as follows: ‘a direction to an heir to hand over the inheritance to another upon the happening of a condition is sufficient to constitute a fideicommissum; if and when the condition happens the final beneficiary acquires a real right in the inheritance.’

Following upon this principle, the court in Eksteen and another v Pienaar and another 1969 (1) SA 17 (O), dealt more fully with the question of ownership when the fideicommissum matures, upon the death of the fiduciary. Smit JP laid down certain key principles in particular at 19D: ‘The owners in the case of a fideicommissum which has matured, are without a doubt the fideicommissaries themselves and not the fiduciary’s estate. They obtained a real right on the death of the deceased fiduciary.’ Smit JP cited with approval at 19H a work by Tambyah Nadaraja, The Roman-Dutch Law of Fideicommissa as applied in Ceylon and South Africa (1949): ‘In the modern law, it would seem that in all cases the transfer of ownership takes place automatically at the time

prescribed by the testator for the vesting of the fideicommissary’s interest, and the fideicommissary is entitled from that time to the use and enjoyment of the property and to enforce his claims to the property against the fiduciary, his representatives, or other possessor.’

Dealing with the position upon the death of the fiduciary where the property is registered in his name, the court confirmed that upon his death, ownership of the property was acquired by the fideicommissaries. Accordingly as owners, it is the erstwhile fideicommissaries who were the only ones who could claim the ejection of the lessee (at 20 A–D).

This approach was followed in Ex parte Puppli 1975 (3) SA 461 (D) at 464 and Ex parte Menzies et Uxor 1993 (3) SA 799 (C) at 805. Corbett, Hofmeyr and Kahn The Law of Succession in South Africa 2 ed(2001) at 322 summarize the position thus:

Inasmuch as the rights of the fiduciary terminate automatically upon fulfilments of the condition, ownership of the property could hardly continue to reside in the fiduciary or the fiduciary’s estate. Moreover, this view is consistent with the fideicommissary being accorded a rei vindicatio for the recovery of the property from third parties.

TAA: preservation orders Per Satchwell J, in CSARS v Huang and Others (43511/2014) [2018] ZAGPPHC 101 (13 March 2018) (see the Monthly Listing):

The test for the granting of a preservation order in terms of section 163 [of the Tax Administration Act] is that the court must be satisfied that such order ‘is required to secure the collection of the tax’. It seems to be accepted that ‘necessity’ does not have to be shown (Clutchco (Pty) Ltd v Davis 2005 (3) SA 486 SCA in the context of ‘required’ and particularly Commissioner for the South African Revenue Service v Van der Merwe WCC case NO 13048/13 dated February 2014 when dealing with section 163(3)).

Rogers J married the language used in earlier cases in his comment in CSARS v Tradex 2015 (3) SA 596 WCC at paragraph [32] that ‘…preservation of assets could be said to be “required to secure the collection of tax” if preservation would confer a substantial advantage in the collection of the tax. I venture to suggest that, once one has concluded that “a substantial advantage” has been shown, one could simultaneously conclude that there was “an element of need” sufficient to meet “the

required” (ie “reasonably required”) test’. The very purpose of section 163 is to allow for

the granting of a ‘preservation order’. To my mind, the focus must therefore be to ensure, insofar as is possible, that assets are preserved so as to be available for payment of taxes. Such assets are either realizable assets already seized by SARS or as may be specified in the order or ‘all realizable assets held by the person’ or ‘all assets which after transfer would become realizable[’] (subsections 163(3)(a, b, c or d).

Whereas the common law anti-dissipation order requires prima facie proof that respondents will dissipate assets with the intention of defeating applicant’s claim, the very enactment of section 163 of the TAA suggests that SARS need not meet the standards of the common law. No proof of intention on the part of the taxpayer is required in section 163.

But such a preservation order is not simply to be had for the asking. In meeting the standard of persuading the court that such a preservation order is ‘required’ for the purposes of the section (ensuring availability of assets for payment of tax which assets would otherwise go walkabout), SARS



should cover…a canvas which ranges from the existence of material risk that assets will be

diminished through to the practical advantage of a preservation order.

TAA: where have all the tax court judgments gone? Section 132 of the Tax Administration Act requires all judgments of the tax court dealing with appeals under Chapter 9 of the act (Dispute resolution) to be published for general information.

The responsibility to perform this duty is not specifically allotted to any particular person but the structure of the act as a whole shows that it is the Commissioner who is required to discharge this duty or, at worst, SARS, as a legal entity (I have never understood the supposed distinction).

As taxpayers, we pay for the running of our courts, and are thus entitled to access to the fruits of their deliberations. Reportedly, access to the tax courts is not speedy, so they must be busy, yet only a trickle of judgments appears, some on the SARS website, some in SAFLII, some in SATC, and from the ether.

SARS enjoys the reputation in some circles of suppressing decisions going against it but, currently, I see no signs of such behaviour, although it is not always comprehensive in its coverage, on its website, regardless of the outcome in a particular matter. SAFLII seems starved of access to tax court judgments, and thus carries very few. SATC is notoriously unreliable in publishing judgments timeously—and not just those of the tax court—but the number of reported tax court judgments in each

year is consistently small. Which leaves the judges concerned. The time

between hearings and judgments never appears to be excessive, so, if they are responsible for the bottleneck, they are either too few in number or taking their judgments home.

The issue of publication of judgments was broached in the Memorandum on the Objects of the Tax Administration Bill, 2011:

Publication of judgments of tax court (clause 132): All tax court judgments must be published for general information, whether marked reportable or not, in a format that does not reveal the identity of the taxpayer (unless the sitting of the tax court was public under the circumstances referred to in clause 124(2)). The reason for providing that all judgments be published, is essentially to address complaints that currently only SARS has the benefit of access to unreported and unpublished judgments.

In its ‘Short guide to the Tax Administration Act, 2011’, of 10 August 2012 (now updated), SARS described the previous position thusly:

Currently SARS is in possession of all judgments delivered by the tax court, whereas taxpayers are only aware of those decisions which are marked reportable by the judges.

Provisional tax: justifying an estimate I have dealt several times with the Mafiosi at SARS running the provisional tax department, although not in recent issues. It has always seemed clear to me that no one in that department has any access whatsoever to the Income Tax Act or any other legal resources, and that the ‘law’ is taken to be whatever the goodfellas concerned want it to be.

Well, I was wrong, as you will see from this verbatim exposition of provisional tax law by a particular official, dealing with para 19(3) of the Fourth Schedule, the provision authorizing the Commissioner to ask a taxpayer to justify a provisional tax estimate. Although written in 2017, it seems to include a citation dealing with the Tax Administration Bill, 2011.

I have perused your submission, however the Paragraph 19(3) letter send to you had instructions of what is expected of you, ie, to request for correction of your IRP 6 on eFiling, revised the figures as per the letter and make additional payment. That part was done correctly by yourself and the payment was made, nevertheless late.

Paragraph 19(3) is a form of self-assessment, as one commentator has already opined that SARS’s current eFiling process has really become a ‘de

facto self-assessment system’: The ‘self-assessment’ modus operandi is found in section 1 (Definitions) and Chapter 8 (Assessments) of the TAB. ‘Assessment’ is defined in section 1 as ‘the determination of the amount of a tax liability or refund, by way of self-assessment by the taxpayer or assessment by SARS.’ Accordingly, the ‘date of assessment’ definition also covers self-assessment by the taxpayer. ‘Self-assessment’ is defined as ‘the determination of the amount of tax payable under a tax Act by a taxpayer and (a) submitting a return which incorporates the determination of the tax; or (b) if no return is required, making a payment of the tax.’ Where the taxpayer merely submits return information, the Commissioner’s determination constitutes the ‘original assessment’(section 91(1)). Should the return incorporate a determination by the taxpayer, the submission of the self-assessment return constitutes the original assessment (section 91(2)). In relation to objection, section 104(1) provides that ‘a taxpayer who is aggrieved by an assessment made in respect of the taxpayer may object to



the assessment’. It would therefore appear that the current wording in the TAB could hypothetically allow a taxpayer to self-assess (creating an original assessment), and then, subsequently, object to his own ‘determination’. (Presumably, this could happen where a taxpayer initially self-assesses conservatively, only to get subsequent advice, or a judgment, indicating a more advantageous tax position). Whereas the Act merely refers to the ‘notice of assessment’ in the context of the definition of ‘assessment’, the TAB actually prescribes the content of the notice of assessment (section 96(1)). The TAB retains the well-known concepts of additional (section 92), reduced (section 93) and estimated assessments (section 95). According to the Memorandum all three have been refined. The ‘jeopardy assessment’ is new (section 94). Such an assessment is made in advance of the date on which the return would normally be due and will be made where a senior SARS official (defined term) is satisfied that such an assessment is

necessary to secure the collection of tax that would otherwise be at risk. This will typically happen where the taxpayer attempts to dissipate assets once SARS starts an investigation.

In conclusion, the Interest and penalty were as a results of late payment, after SARS allowed you a reasonable time to make payment. Remember Para 19(3) will initiate the reversal upon receiving the payment on time. If payment is made late the Letter send to you did indicate that penalties and interest will be levied. I did supplied you with the Procedures you have to follow which is an established Standard Operating Procedures within SARS to request for waiver of interest and penalty on provisional tax. I still maintain that proper channels have to be followed for interest and penalty committee to sit and decide.

If you do not agree with a penalty charged for late payment and related interest for provisional tax (paragraph 27 penalty and 89bis interest), please complete and submit a request for remission (RFR).

I trust you find the above in order and will follow proper channels.

Estates: what vests upon death? In Greenberg and Others v Estate Greenberg 1955 (3) SA 361 (A) not only was the decision of the majority delivered by the justly celebrated Centlivres CJ but our most famous dissenting judge, Schreiner JA, delivered a concurring judgment:

The position under our modern system of administering deceased estates is that when a testator bequeaths property to a legatee the latter does not acquire the dominium in the property immediately on the death of the testator but what he does acquire is a vested right to claim from the testator’s executors at some future date delivery of the legacy, ie after confirmation of the liquidation and distribution account in the estate of the testator. If, for instance, immovable property is bequeathed to a legatee, he acquires a vested right as at the death of the testator but he does not acquire the dominium in that property until it is transferred to him by the executor. If that property has to be sold in order to pay the debts of the estate, the legatee may never acquire the dominium in that property. See Estate Smith v Estate Follett 1942 AD 364 at p 383 and Commissioner for Inland Revenue v Estate Crewe and Another 1943 AD 656 at pp 669 and 692. It seems to me to be inaccurate to suggest (as was suggested on behalf of the appellants) that in ascertaining whether a legatee has acquired a vested right to his legacy as at the death of the testator one must enquire where the dominium in the property resides immediately after the testator’s death. The futility of such an enquiry can, perhaps, best be illustrated by taking as an example a bequest of a sum of money. When a testator bequeaths, say, £1 000 to A the dominium

in that sum of money does not vest in A as at the death of the testator but A acquires a vested right to claim that sum from the executor at the future date I have indicated, provided that the estate is solvent. The test seems to me to be whether, on a true interpretation of a will, the testator intended that a legatee should acquire as at his death a vested right to his legacy. It may be said that the legatee, if such was the testator’s intention, then acquires the dominium of that right but it cannot be said that he then acquires the dominium in the subject matter of the legacy. The case of Gordon’s Bay Estates v Smuts and Another 1923 AD 160, affords a good illustration of what I mean. In that case a testatrix bequeathed a farm to her son and his wife or the survivor of them for life and free of all rent and then directed that at the death of her son and his wife the farm should be sold and the proceeds divided between two of her children and a grandson. This Court held that the two children and grandson acquired a vested right as at the death of the testatrix. They obviously did not acquire dominium either in the farm or the proceeds as at the death of the testatrix, because the farm was not bequeathed to them and the proceeds were not in existence at that date.

Another way of saying the same thing is to say that, on death, the beneficiaries acquire a contingent interest, in the form of a conditional personal right against the executor, which matures, eventually, into a real right in the property itself.

Strangely, in judgments dealing with insolvent deceased estates, a tradition exists to impute the real right retrospectively to the date of death, although to no discernible effect.

Feature Supplement to 182 Tax Shock Horror 2018

Cases

All past entries from 2006 to date.

May 2018 Winners & Losers In That Other Beautiful Game

Current & Past SATC Case Reports by Julian Ware

© 2018 J Ware ([email protected])

Income tax—recovery KBI & ’n Ander v Williers & Andere

Supreme Court of Appeal (1999)—61 SATC 257 (judgment delivered by Hefer JA; Marais JA, Schutz JA, Plewman JA & Madlanga AJA concurring): A case delivered in Afrikaans, placing me at a huge disadvantage. The proceeds from the sale of the sole asset of a company were recorded against the loan accounts of the directors, on the understanding that they would ‘underwrite’ taxes that might become due by the company. The company was subsequently placed into voluntary liquidation, and the liquidation and distribution account was approved by the Master. The Commissioner sought, unsuccessfully, to recover company taxes from the liquidator and the directors, on the basis of these alternative causes of action: the intentional or negligent failure by the liquidator to perform his legal duties in his capacity as liquidator; the actio Pauliana (intentional defrauding of creditors); the unlawful misappropriation of funds or unjust enrichment.

C&E—rebates Engen Petroleum Ltd & Others v CCE & Another

Supreme Court of Appeal (1998)—61 SATC 268 (judgment delivered by Mahomed CJ; Hefer JA, Oliver JA, Streicher JA & Farlam AJA concurring): A matter dealing with a 1993 retrospective amendment to a rebate of an excise duty and fuel levy, extended to distillate fuel supplied as stores to fishing vessels not recognized as South African national ships under the Merchant Shipping Act. Thanks to the canons of construction, retrospective relief claimed by the taxpayer upon the promulgation of the amendment was upheld, with costs.

C&E—seizure of goods Deacon v Controller of Customs & Excise

South Eastern Cape Local Division (1998 & 1999)—61 SATC 275 (judgment delivered by Horn AJ): The taxpayer took delivery of an imported and used Rolls Royce that he had purchased from a motor dealer. Subsequently, he became suspicious that the dealer’s importation documents were irregular, and that the value may have been under-declared. He reported his concern to Controller of Customs & Excise, and, for his trouble, was served with a notice that the vehicle was liable to forfeiture. To avoid immediate seizure of it, he tendered payment of the duties and penalties to the Controller, which was refused, without explanation. As an innocent owner of the vehicle, he had a right to be heard before a decision was made to seize it. The Controller was directed to reconsider the matter, having regard to all the facts, with due regard to the principles of fairness and the rules of natural justice.

C&E—construction Celrose Ltd v Minister of Trade & Industry & Another

Natal Provincial Division (1998)—61 SATC 291 (judgment delivered by Vahed AJ): In 1990, the Minister of Trade and Industry introduced the General Export Incentive Scheme (GEIS). Its terms were embodied in guidelines published by the Commissioner of Customs & Excise. The court was called upon to interpret specified clauses. Since the language used was clear and unambiguous, the ‘golden rule’ of literal construction applied as much to it as it did to a statutory provision. Consequently, the taxpayer was entitled to disregard import duties when calculating its GEIS claims.

C&E—construction Tosen Enterprises CC v CCE

Durban & Coast Local Division (1999)—61 SATC 302 (judgment delivered by Thirion J): There was no implied term in an agreement reached between the taxpayer and the Commissioner, to the effect that the Commissioner would not detain goods again under another provision of the C&E Act, which was a new cause of action. Under s 114, the taxpayer was caught ‘flat-footed’.

t sh

http://www.bspseminars.co.za/Archive/CasesbyJulianWare.pdf



Davey’s Locker

May 2018 Understatement penalties The SARS guide—II

by Tony Davey © 2018 A H Davey ([email protected] www.daveyvos.co.za)

In 181 TSH 2018, I examined the interpretation of SARS in its ‘Guide’ dated 29 March 2018

of the defence against the imposition of penalties, namely, ‘bona fide inadvertent

error’. Penalties are imposed for

the following behaviours:

Nature of behaviour: Section 223 of the Tax Administration Act

‘Standard case’ (a higher scale applies to other cases)

These behaviours are Standard case—penalty on paid tax

Substantial understatement Reasonable care not taken No reasonable grounds for tax position taken Impermissible avoidance arrangement Gross negligence Intentional tax erosion

10% 25% 50% 75%

100% 150%

The SARS Guide describes these various behaviours, but, in my view there is often a fine line between and overlaps among these behaviours. In fact, there are many cases before the tax board and tax court in which what was disputed was not the capital tax amount but the categorization of the relevant behaviour and the consequent understatement penalty.

The onus of proof is (unlike most other tax matters), under s 102(2) of the Tax Administration Act, on SARS, to justify the identification of

such a behaviour and the resultant penalty percentage. Such a SARS decision regarding behaviour (and concomitant penalty) is subject to objection and appeal.

The percentage penalty is levied on the tax shortfall, this being the difference between the tax actually paid and the increased tax that should have been paid, had there not been an understatement of taxable income.

The table, effective in its current form as from the 19 January 2017, is to be welcomed, inasmuch as it

provides a measure of both objectivity and consistency in the imposition of penalties upon taxpayers in comparable understatement situations.

Previously under the Income Tax Act, SARS had an open discretion to impose up to 200% additional tax.

[In practice, it applied a secret table, which was the precursor

of the table to be found in s 223(1).—Ed]

T S H

http://www.daveyvos.co.za/


\

Shortcut Keys in Word by Duncan S McAllister ©2018

May 2018

Upgrading to fibre Those readers who have not yet switched to fibre might be interested to know what is involved.

My own experience was a tortuous one, which took over nine months. Fibre was first laid in my street in September 2014 but at that stage it cost R999 a month for a 20 Mbps line with a 50 GB daytime cap, which I thought was too expensive. After more affordable options became available, I decided to take the plunge, and placed my order for a 10 Mbps line with my ISP in August 2017. I was told it could take up to six weeks.

Two weeks later I was contacted by a technician from Openserve. The first problem I encountered was that the contractors who laid the cable in 2014 had pulled it into my downstairs lounge, where it terminated behind a plate in the wall. There was no path from behind that plate leading upstairs where my PC was located. The technician just said I would have to run it off WI-FI or get a cabling company to take a CAT 5 Ethernet cable upstairs.

I was not satisfied with either of those options, since taking the cable up the staircase would have looked unsightly, and running my PC off WI-FI would have meant some loss of speed.

Despite my protestations, he installed a small plastic box, about the size of a pack of 20 cigarettes on the wall. This ‘passive box’ is where the cable is spliced. The passive box is connected to the ONT (optical network terminal) by a flimsy glass fibre fly lead, whose biggest enemies are likely to be vacuum cleaners and small children. The ONT is a light, flat square plastic box, which looks like a router, and its purpose is to convert the optic fibre cable to an Ethernet connection, or, put differently, to convert the light stream into data recognizable by your PC.

After testing the line, he said he was unable to get a signal, and that some other technicians

would have to come and test the line. A few more weeks went by before three

technicians arrived one weekend. After testing the line, they determined that there was a break at 20 metres, and said they would have to get the contractor who laid the cable to dig up the hole outside my house and replace the cable.

After that I heard no more until my ADSL was cut off in October. My ISP told me they had been informed by Telkom that my fibre installation was complete!

After reinstating my ADSL, they relogged the call with Telkom. Despite numerous technicians visiting my home between early January and April, nothing happened. Eventually some technicians arrived on 20 April and commenced to dig. However, they informed me that, because of the depth of the hole that was required (1,5 metres), they would need to call in the trenching team.

Another four days went by before I arrived home in the afternoon to find a pile of sand in front of my door. The technician said they had found my cable in the hydraulic manhole five houses away. He told me that the old cable had been twisted underground, which had caused it to break. Since no splicing was allowed, they had to pull a new cable more than 100 metres from the manhole through a big green underground pipe into my house. The new cable was also pulled into my downstairs lounge, despite my protestations.

After looking in the roof, they could not find how the telephone cable was taken upstairs, and said I would need to get a cabling company to take the cable upstairs. They left sufficient cable downstairs to reach upstairs.

After testing the line, they said they could not get signal. It turned out that they had taken out the fibre in the whole street, and that other technicians would have to fix the cable in the manhole.

May 2018


After more delays, two technicians arrived and looked in the roof. I was told that the pipe through which the telephone line ran was too small to also accommodate the fibre cable. They said they needed a hydraulic key to open the manhole ,and would be back but never returned.

Later three technicians arrived in May. They said there was now signal on the line, and that they would take the cable upstairs. They pulled the cable back outside, drilled a hole through the garage wall, ran it up the wall through another hole onto the outside. From there the cable ran inside a plastic sleeve to protect it from the elements until it entered my upstairs lounge, ran along the skirting board and then through a hole into the study.

The technician connected my router to the ONT and said I would have to contact my ISP to have it activated. I contacted the ISP, and, during the day, received my username and password and instructions on how to set up the router. This was a relatively simple procedure, barring some confusion over the router password, which turned out not to be ’admin’ but ‘1234’. I was finally online.

A speed test revealed the following results:

Download speed: 9,8 Mbps Upload speed: 4,5 Mbps Ping: 4 ms Jitter: 1 ms

Conclusion If it were not for the intervention of a manager at my ISP (and here I owe a debt of gratitude to Julian Ware for putting me in touch), I would probably still be waiting for fibre.

The capabilities of the various technicians from Openserve varied greatly. How that company makes a profit is beyond me, given all

the fruitless and duplicated visits. If I had not been lucky enough to eventually get a willing technician, I would have had to pay a cabling company to reroute the cable.

Was it worth the wait? Absolutely. My upload speed is now around 576 KBps compared to 38 KBps, and my download speed is now five times faster. The line is also very stable.

Now that I no longer have ADSL my landline phone is crystal clear. Even though I had ADSL filters on the line, the ADSL router caused interference on the line, and it was difficult to hear callers.

The only downside is that my data has been slashed from a fair-use cap of 300 GB a month to 30 GB during the day and another 30 GB from midnight to 8 am. Of course, the ISP knows full well that it would be very difficult to use 300 GB on a 2 Mbps line, but the principle is clear—the faster the line, the less data you get.

It is also about R100 a month more expensive, but I could do away with my telephone landline and port the number from Telkom to my ISP. That would save about R218 a month on the line rental. I would have to pay for calls, and would no longer have free calls after 7 pm or on weekends, but I seldom use the landline, so that is an option I still need to weigh up.

I would also need to purchase a fibre (VoIP) phone. I understand that persons with the Telkom weekender service (free calls after 7 pm and over weekends) have to pay if they phone a VoIP number, which could make you rather unpopular with that aunty who likes to talk the hind leg off a donkey.

[And I thought I had a horror story to tell, about the installation of my Vuma fibre line!—Ed.]

t sh


May 2018 Evidence Corner—evidence could make a welcome change to tax cases

Evidence: science or art (continued)?

by Andrew Paizes © 2018 A Paizes ([email protected])

So, back to the two situations I raised last month. Is there any defensible way to distinguish the case of X, who kills Y by inadvertently running him over while on his way to Y’s house, where he intends to shoot him, from the case of P? P, remem-ber, kills Q by placing a poisonous pill in Q’s food, which kills Q by sticking in his throat.

Consider first the similarities in the two cases. In each case the accused succeeds in doing what he set out to do—to kill the specific victim, who dies as a result of his conduct. In each case, the accused brings this result about in a manner significantly different from the manner in which he intended the victim to die: in the first case X intends to kill Y by shooting him, and does so by running him over with his motor car; in the second, P intends to kill Q by means of poison, and ends up doing so by asphyxiation. And in neither case did the accused even foresee that the victim would end his life in the way that he did.

Since intention to kill, in the criminal law, is present if there is either desire to kill or foresight of the real possibility that the act in question might cause the death of the victim, it is plain to see that neither X nor P had such ‘intention’ in respect of the manner in which he caused death. Is this enough

to negate intention so as to absolve X or P from liability for murder?

Before I answer this question, consider now the differences between the two cases. It is striking that P’s mental state contained an ingredient that was not present to the mind of X. P had the intention to kill Q by placing the poisonous pill in Q’s food. He foresaw and even desired that this specific act would kill Q, and it did. So the act that killed Q was, in fact, the act by which P ‘intended’ to kill Q. It is true that this act killed Q in a manner quite different from the desired or even foreseen manner, but should this quirk absolve P? P, after all, did all he set out to do, converting his ‘abstract’ or inchoate intention to kill into concrete conduct which was intended to cause Q’s death and did in fact, cause Q’s death. The case for negating fault is weak: can a gunman escape liability for murdering his victim if a bullet misses and the victim dies of fright? I submit not. P should be convicted of murder.

Now consider X. He sets out from his house in his car, with the gun with which he intends to kill Y in the boot. On the way, he ‘accidentally’ runs over a jogger who, it turns out, is Y. He, too, has not intended to kill Y in the manner that he did. But there is a significant difference

between the mental states of X and P. Whereas P consciously focused his intention to kill on the act which did kill, X did not. His abstract, inchoate intention to kill remained exactly that. He did not intend to kill by the act that did kill or by any act which he actually performed. By never ‘crossing the Rubicon’, as it were, X’s intention to kill never gets fully tested. Would he have calmed down or cooled off once he had Y in his sights? Would remorse, compassion, pity or the fear of the consequences have deterred him from running the full course and shooting Y? We will never know.

The difference between the two cases may be described in this way: whereas P has made a ‘mistake as to the causal sequence’, X has made a ‘mistake as to the causal act’ itself. P’s mental state is more culpable than X’s. It is inappropriate to convict X of murder, but entirely appropriate to convict P.

I wrote about these situations many years ago. There were no fixed ‘rules’ to guide me, and the cases were not very helpful. The leading case decided by the highest court at the time, the Appellate Division (as it was then), had not identified the distinction I have described, and, as a result, in my view, got the law wrong.

However, once one notices how the cases of P and X differ;

May 2018


and turns to the essence of fault (or blameworthiness), it is a distinction that commends itself by force of cold reason, simple logic, and an innate sense of right and wrong.

My views are not yet the law

of the land in this area. They might never be, but I believe that they will, one day, become law. It is not arrogance that fuels my belief. It is a sense that this solution is simply both ‘right’ and ‘out there’ in the

universe in the same way that the Pythagorean theorem is. I was just fortunate to pluck it out of the ether.

But you are free to disagree. t sh

Interest & the tax Acts

All aspects of interest payable and receivable under the sixteen tax Acts

SARS as debtor and creditor.

Interest payable and receivable. Interest-free loans.

Interest and tax avoidance, tax evasion. The exemption, deduction, and taxation of interest.

Presenter

COSTA DIVARIS

This is a deeply neglected topic, with huge potential for both gain and loss.

How to handle every aspect of interest

receivable and payable under the tax Acts.

Some of the issues: What makes interest deductible?

When should you claim mora interest from sars? Does set-off apply under the tax Acts?

What is the secret of borrowing for 'nondeductible' purposes? How do you defend against the anti-avoidance provisions?

Where do we currently stand with the in duplum rule? What is the status of a sars statement of account?

What makes interest due to sars different? Does a sars interest charge require an assessment?

What are the special interest defences under the tax Acts? When will interest-free loans cause problems? How should intra-group finance be handled?

Dates & Venues

DURBAN Tuesday 17 July 2018 Coastlands Hotel (Umhlanga)

CAPE TOWN Thursday 19 July 2018 Garden Court Nelson Mandela Boulevard

PRETORIA Tuesday 24 July 2018 Kleinkaap (Centurion)

JOHANNESBURG Thursday 26 July 2018 Wanderers Golf Club (Illovo)

Documents

15 Years Of Uninterrupted Publication - BSP Seminars · I hope that one day the truth behind this sorry saga will eventually emerge. ... PA. s) of Accounting Officers. ... oath, unavo