SA Has Stolen Itself Stupid - BSP Seminars · —An irreverent newsletter designed to keep you up to date— taxpayer by what I call the ‘originating auditor’, who gets off scot

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SA Has Stolen Itself Stupid Is the ANC still cheap at the price (106 TSH 2012, 143 TSH 2015)? Remove them from office and find out.

The Nationalists retired gracefully, to oblivion and the private sector. Don’t expect to be so lucky the next time. Hooligans preening as the massively privileged elite are safer than hooligans on the streets.

MONTHLY LISTING Latest Legislation & Legislative Material To Emerge Or To Be Found Since Issue #208

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 each, 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 (2020 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, all trust cases, all estate cases from 2005 to date, all thresholds listed in this section. Visit our website.

Franzen November 1968: First report of the commission of enquiry into fiscal & Commission monetary policy in SA. The only commission of enquiry that has ever done a

decent job in the history of this benighted country. My thanks go to Duncan McAllister for laboriously scanning this document.

Margo Commission 20 November 1986: Report of the commission of inquiry into the tax structure of the RSA. I am indebted again to Duncan McAllister.

AD case 18 May 1990: CIR v First National Industrial Bank Ltd (38188) [1990] ZASCA 49, 1990 (3) SA 641 (AD) [1990] 2 All SA 327 (A). The taxpayer, having under protest paid SARS stamp duty that was not due was unsuccessful in claiming mora interest. See the Monthly Notebook.

Katz Commission 18 November 1994: Interim report of the commission of inquiry into certain aspects of the tax structure of SA. Courtesy of Duncan McAllister.

Katz Commission 28 June 1995: Second interim report of the commission of inquiry into certain aspects of the tax structure of SA. Ditto.

Katz Commission 28 November 1995: Third Interim report of the commission of inquiry into certain aspects of the tax structure of SA. Again, my thanks to Duncan McAllister for scanning this document. I have solemnly promised myself to read it as soon as the final ‘holistic’ report makes its appearance.

GN 1573 GG 42887 06 December 2019: Agreement between the government of the RSA & the government of the Commonwealth of Dominica for the exchange of information with respect to taxes & tax matters.

High Court case 23 January 2018: Ntayiya v SARS (3613/16) [2018] ZAECMHC 1 (179, 180, 186 TSH 2018). Dealt with in detail also in 40 TAW 2018.*

High Court case 12 February 2020: Peresoft Software and Support (Pty) Ltd v Minister of Science and Innovation (NO) and Another (11372/19) [2020] ZAGPPHC 430. The minister loses a review application under one of the most complex & troublesome deductions in the book—s 11D of the Income Tax Act on qualifying R&D. The refusal of the taxpayer’s application for qualification under s 11D reviewed & set aside under PAJA, the matter being referred back for ‘adjudication in terms of the Act’. The administrative-law aspect is for TAW.

SARS updated guide 26 February 2020: Guide for employers in respect of fringe benefits PAYE–GEN–01–G02 revision 9.*

High Court case 27 February 2020: Msiza v Motau NO and Another (78587/2018) [2020] ZAGPPHC 366. Mamphe Daniel Msiza didn’t like what was said about him in 'The great bank heist’ commissioned by the SARB. Tlhapi J agreed that it was prejudicial & unconstitutional. The remarks concerned were reviewed & set aside. Read on.

Tax court case 27 March 2020: SARSTC 13720 (ADM) [2020] (Johannesburg). A blatantly unlawful (if not criminal) attack upon the (ultimately hugely successful)

Issue: 209 Tax Shock Horror Database—22 177 items (6,97 GB)—2 929 subscribers August 2020

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209 Tax Shock, Horror 2020—August—2

—An irreverent newsletter designed to keep you up to date—

taxpayer by what I call the ‘originating auditor’, who gets off scot free before a complaisant judge, Dippenaar J, despite taxing every credit he could find in the taxpayer’s bank statements, knowing full well that not all of them constituted ‘gross income’. Covered in detail in 32, 33, 34 TAW 2020.*

Tax court case 29 April 2020: SARSTC VAT 1712 (VAT) [2020] (Johannesburg) (Fringe Benefit). Windell J finds in favour of the taxpayer, awarding costs against SARS:

As stated earlier, the aggregate of the fringe benefit amounts to R601,09 and the ratio of fringe benefit output VAT to the total amount of the refund was 0,0006%. This fraction does not satisfy the materiality test that the Legislature included in section 45 of the VAT Act. In the premises the attempt to rely on the fringe benefit errors is a transparent attempt for SARS to ex post facto wriggle out of its obligations vis-à-vis ABC.

But—Hey!—hear both sides: SARS’s contention is the following: ABC’s failure to declare the fringe benefit amounted to noncompliance with the provisions of section 18(3) of the Act and constitutes an ‘error’. The ‘error’ is material to SARS and non-compliance with the relevant provisions of the tax Acts could simply not be condoned. The Commissioner is tasked with collecting all the taxes due to the fiscus, regardless of how ‘immaterial’ they may seem to be. If the ‘error’ was so immaterial, this could have easily prompted ABC to declare the output tax before it was caught by SARS.*

Tax court case 29 April 2020: SARSTC VAT 1712 (VAT) [2020] (Johannesburg) (Supply). Same case, separate judgment, same SARS, same outcome—SARS loses, with costs. The taxpayer casts & sells gold bars (Hmmm, might we guess its caprine identity?). Despite the taxpayer’s hugely impressive internal controls, SARS decided that two of its suppliers did not exist, but if they did, their tax invoices were invalid, but, if they weren’t, no supplies were made. It’s pure SARS genius! Windell J (what a safe pair of hands) concluded (footnotes suppressed):

ABC Trading bears the onus, to show on a preponderance of probability, that the decision of SARS against which it appealed was wrong. In CIR v Middleman, the court held that the onus is discharged where the court has no reason to disbelieve the taxpayer and his evidence is not contradicted by the objective facts. In our view, ABC Trading has met the onus required to establish that supplies were made by X Gold and Z Gold during the VAT period and that it traded with these two entities.

This is a significant finding about the discharge of the onus, deserving treatment in a future issue. As for the wretched details of administrative tax law, these will have to await the blandishments of TAW.*

Brenthurst 28 June 2020: It’s time that Ramaphosa owned the wasted 26 years. By Ray Foundation Hartley & Greg Mills:

But who is to blame for this lingering inequality? The problem with this latest framing of the economic problem is that the state of

the present is blamed on events that occurred prior to 1994 and on those since the advent of Covid-19. The intervening 26 years during which the ANC has governed as a super majority are left out of the reckoning as if they did not exist.

There has frequently been talk of the ‘nine wasted years’ of the Jacob Zuma presidency. No fewer than 13 Ministers from Zuma’s cabinet are still in office under Ramaphosa and, unsurprisingly, with a few notable exceptions, they have continued to deliver failure.

Perhaps it is time to talk about the 26 wasted years under a succession of five post-apartheid governments.

During these 26 years, the ANC was not a spectator watching in horror as others shaped South Africa’s destiny. It was the government. It appointed five consecutive ANC presidents who appointed all members of the Cabinet, all senior servants and set policy in all fields from foreign affairs to finance and policing.

ANC presidents appointed finance ministers and these finance ministers set all policy on state spending, revenue and borrowing.

They crafted 26 consecutive budgets, allocating trillions of Rands in spending and collecting trillions in taxes in today’s money.

Parliaments dominated by ANC members examined, amended and passed these budgets and thousands of pieces of legislation shaping the society in which we live.

The reality is that the South African state is, a quarter of a century later, wholly a creation of the ANC, its leadership and its policies. The ANC needs to own the fact that if the state is failing the country, it is because its leaders have made poor decisions and have made bad policy during this time, the result of which has been an ineffective state.§

SCA case 06 July 2020: Van Zyl NO v Getz NO (548-19) [2020] ZASCA 84. The appeal of the



curatrix ad litem dismissed, & the Registrar directed to forward a copy of the judgment to the Judicial Service Commission to investigate the conduct of Acting Judge Kose. The underlying question whether the estate of a deceased grandparent has a duty to support a grandchild seems pretty frivolous when the ability of the child’s mother to do so was untested. In the course of a hugely informative judgment on the duty of support, which he refused to develop, Zondo JA said:

In other words, the structure of the common-law rule as it currently exists, recognizes the special role and responsibility that parents have in raising children in South African law. It also recognizes that the role and responsibilities which attach first to the relationship between parents and their child may only be passed on to other family members, and to the larger community, where parents are unable to fulfil them.

High Court case 21 July 2020: BP Southern Africa (Pty) Ltd v CSARS (19955/2020, 22772/2020) [2020] ZAGPPHC 331. The taxpayer failed with two urgent applications before the Motion Court, the judgment being delivered by Mothle J. It was unable to produce some required acquittals, about fuel exported to Zimbabwe, & failed to follow the rules for urgent proceedings. SARS had executed, pretty smartly, on a debt-management certified statement made under the Customs & Excise Act. The inevitable sequel will probably not play out in court. The SARS action sounds absurd, & it seems to have treated what must surely be one of its major customers very shabbily.

Brenthurst 22 July 2020: Don’t scrap the army—fix it. By Greg Mills: Foundation Of the regular force of 76 000 men and women, some 10% are medically fit enough

to be deployable. Given the need for rotation and training, this means around 2 000 are effectively available. With critical shortages in doctors, naval engineers, pilots, and aircraft technicians, just one of the now 11C–130 transport aircraft is flying, as are five each of the Gripen fighter-jets (of 26 supplied in the infamous arms deal) and Hawk trainers (of 24), and less than one-third of the 35 Oryx helicopters. The Navy is hardly better off. Just one (of three) German Type 209 submarines is fully operational, and one of the four Meko-class corvettes.§

Mphela 22 July 2020: Review of recent case law dealing with the maxim of res ipsa & Associates loquitur [the thing speaks for itself] in the context of medical negligence. By

Adv Ivor Heyman. I must update the Monthly Notebook on this issue, which goes to the question of evidence, & so has a possible tax dimension, especially since SARS hides its internal processes under the guise of the law.§

OECD survey 31 July 2020: OECD economic surveys—South Africa—July 2020—overview.§ Draft bill 31 July 2020: Draft Rates & Monetary Amounts & Amendment of Revenue

Laws Bill.* GN 405 GG 43571 31 July 2020: Dried fruit industry—application for the continuation of statutory

measures. Inclusive of a levy.§ GN 406 GG 43571 31 July 2020: Rate of interest on government loans. Under s 80(1)(a) & (b) of

the Public Finance Management Act, the Standard Interest Rate is fixed at 7,25% as from 1 July 2020. See Lost & Found.

GN 407 GG 43571 31 July 2020: Rate of interest on government loans. Under s 80(1)(a) & (b) of the Public Finance Management Act, the Standard Interest Rate is fixed at 7,75% as from 1 May 2020. See Lost & Found.

GN 826 GG 43571 31 July 2020: Establishment of statutory measure: records & returns by abattoirs & other role–players in the red meat industry. Including provision for the all-important levy.§

GN 827 GG 43571 31 July 2020: Establishment of statutory measure: registration of role-players in the red meat industry.§

GN 828 GG 43571 31 July 2020: Establishment of levy & determination of guideline prices: levy on cattle, sheep, goats, red meat, red meat products, processed pork.§

Standard Interest 01 August 2020: Standard interest rate to be levied on debts owing to the Rate State—all interest rates: s 26(6) of the Exchequer Act, & s 80(1)(a) & (1)(b) of

the Public Finance Management Act. See Lost & Found. SARS updated guide 01 August 2020: Comprehensive guide to the ITR 12 income tax return for

individuals IT–AE–36–G05 revision 22.* SARS updated guide 01 August 2020: Guide to the individual ITR 12 return for deceased & insolvent

estates IT–GEN–06–G01 revision 4.* SARS updated guide 01 August 2020: Comprehensive guide to the income tax return for trusts IT–

AE–36–G02 revision 13.* SARS updated guide 01 August 2020: Step by step guide to complete your ITR 12T via eFiling IT–AE–

37–G02 revision 6 (trust return).*



SARS updated guide 01 August 2020: How to submit your individual income tax return via eFiling IT-AE–36–G06 revision 15.*

SARS updated guide 01 August 2020: Guide to help-you-eFile. GEN–ELEC–06–G01 revision 10* SARS updated guide 01 August 2020: Guide to the SARS MobiApp IT–AE–40–G02 revision 11.* Bloomberg 01 August 2020: SA lockdown tax loss exceeds value of two virus loans.§ Daily Maverick 02 August 2020: Editorial: Stealing from your own people is a crime; stealing

during the pandemic is a crime against humanity.§ High Court case 04 August 2020: Phillips and Others v National Director of Public Prosecutions

(2000/27885) [2020] ZAGPJHC 181. Leave to appeal the costs-aspect of the order against the NDPP made by Vally J in National Director of Public Prosecutions v Phillips and Others, In Re: Phillips and Others v National Director of Public Prosecutions (2000/27885) [2020] ZAGPJHC 99 (18 May 2020) (206 TSH 2020) crashes & burns.§

High Court case 04 August 2020: Tsebe v Absa Trust Limited and Others (18079-2020) [2020] ZAGPPHC 399. This is the best trust judgment I have ever seen. It was delivered by Fabricius J. I reproduce it in full, apart from the order terminating the trust:

The applicant herein, a major male, seeks an order terminating a trust that was established after he succeeded with a claim for damages against the Road Accident Fund. He was the sole beneficiary of such Trust.

Respondent was appointed as the sole Trustee. It obviously acts through an employee, who need not be joined in these proceedings, contrary to Respondent’s contention.

According to cl 5.1 of the Trust Deed applicant will have immediate vested rights in the trust fund.

It is difficult to discern on which basis Respondent opposed this application. There is no or insufficient evidence that Applicant cannot deal with the trust monies on the basis of mental incapacity. In Respondents’ heads of argument it is stated that respondent will abide by the decision of the court.

There is no need to deal with collateral issues such as whether or not the Respondent diligently dealt with applicant’s monies to his satisfaction or not.

It is not its concern how applicant now wishes to deal with his monies. According to the provisions of s 13 of the Trust Property Control Act 57 of 1988 a court has a discretion to terminate a Trust if certain circumstances arise or are present. I am satisfied that Applicant also has the constitutional rights that he refers to in par 4 of his Replying Affidavit.

In my humble opinion, the only reason why you would take such a matter to court would be because you thought it was cheaper than launching a vindicatory action against a benighted & uncooperative ‘trustee’. To a trustee who is merely ignorant, not obstructive, I usually recommend laughing off the ‘trust’, but, were the victim to approach me, I would advise investigation into a possible delictual claim, for poor administration during an irregular ‘agency’.

GN 412 GG 43579 05 August 2020: Notice & order of forfeiture. Lunathi Mantanga loses R29 889,43 & $450 under the EXCON regulations.

GN 413 GG 43583 05 August 2020: Notice & order of forfeiture. Ben Merchant PLC (Pty) Ltd loses R65 406,29 & R821 171,78.

Treasury release 06 August 2020: Publication of amended regulations in terms of the Financial Sector Regulation Act.

SAGNA release 06 August 2020: National Treasury halts emergency procurement of PPE: National Treasury Director-General Dondo Mogajane says an instruction will be issued to government departments across all spheres to halt the emergency procurement of personal protective equipment (PPE) as the State tightens the lid against corruption.

Fat lot of use when all the funds have already been dissipated! GN 415 GG 43586 06 August 2020: Notice & order of forfeiture. Sarles Freight CC loses

R16 617,95 under the EXCON regulations. SARS website 06 August 2020: Small business:

Tax Clearance Information—If you require a Tax Clearance Status (TCS) or ‘Tax Clearance Certificate’ see our simplified process to apply online in all languages.*

SARS updated list 06 August 2020: List of approved venture capital companies (‘VCC’): One new approval and three name changes.*

SARS FAQs 06 August 2020: Frequently asked questions—deceased estates. On income tax & estate duty. Speaking of which, what the hell are ‘leveraged legal products’?*

SARS website 06 August 2020: 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, in order to give notice that the safeguard duties imposed through Notice Nos R 829, R 830 and R 831 of Government Gazette no 41038 dated 11 August 2017, are hereby extended up to and including 10 August 2021 at the current rate of 8%;

Part 1 of Schedule No 1, by the insertion of tariff subheadings 9903.00.10, 9903.00.30 and 9903.00.50 to give effect to the Budget proposal, to implement the carbon emissions tax as announced by the Minister of Finance on 20 February 2019;

Part 3F of Schedule No 1 by the insertion of Notes as well as items under heading 157.00/9903.00 to give effect to the Budget proposal, to implement the carbon emissions tax as announced by the Minister of Finance on 20 February 2019;

Part 3F of Schedule No 1 by the substitution of items under heading 157.00/9903.00 to increase the rate of environmental levy on carbon emissions from R120/t CO2 emissions to R127/t CO2 emissions;

Part 6 of Schedule No 6 by the insertion of Notes and various items to give effect to the Budget proposal, to implement the carbon emissions tax as announced by the Minister of Finance on 20 February 2019; and

Schedule No 8 by the insertion of item 805.26 to give effect to the Budget proposal, to implement the carbon emissions tax as announced by the Minister of Finance on 20 February 2019.*§

Daily Maverick 06 August 2020: Johann Kriegler: Will we be silent as John Hlophe presides over an unethical charade?§

SARB release 07 August 2020: MFMA exemption notice: The Minister of Finance issued a Ministerial Exemption in terms of section 177(1)(b) of the MFMA on 05 August 2020, exempting municipalities and municipal entities from submitting their annual financial statements and related reports for auditing at the end of August 2020. The notice allows for a two-month delay in the submission of Annual Financial Statements, Annual Reports, Audit opinions, and oversight reports.

As if it will make the slightest bit of difference. SARB release 07 August 2020: Meeting between the SARB & the shareholders’ forum of

VBS Mutual Bank (in liquidation). GN 421 GG 43591 07 August 2020: Withdrawal of authorization granted in terms of s 18A of the

Banks Act to conduct the business of a bank by means of a branch in the Republic of South Africa—Canara Bank.§

GN 422 GG 43591 07 August 2020: Withdrawal of authorization granted in terms of s 18A of the Banks Act to conduct the business of a bank by means of a branch in the Republic of South Africa—Bank of Baroda.§

GN 423 GG 43591 07 August 2020: Withdrawal of authorization granted in terms of s 18A of the Banks Act to conduct the business of a bank by means of a branch in the Republic of South Africa—Bank of India.§

GN R 858 GG 43592 07 August 2020: Amendment of the rules of the SCA. Under s 6 of the Rules Board for Courts of Law Act. Inaccessible file, the only one this month.

GN R 864 GG 43592 07 August 2020: Amendment of rules. Under ss 24 & 120 of the Customs & Excise Act. Read on.

SARS website 07 August 2020: Customs & Excise Act: Publication details for the following tariff amendment notices are now available: R 859, R 860, R 861, R 862 and R 863 as published in Government

Gazette 43592 of 7 August 2020. R 866, as published in Government Gazette 43597 of 7 August 2020.*§

SARS website 07 August 2020: Customs & Excise Act: Rule amendment notice R 864 in Government Gazette 43592 of 7 August 2020, under sections 24 and 120—Ships’ stores consumed in the Republic 70707070 (DAR 202) (above).*

SARS new scam 07 August 2020: Credit acknowledgement.*§ SARS website 07 August 2020: Excise: environmental levy:

Carbon tax webpage updated with new tariff amendments.* SARS website 07 August 2020: Customs & Excise Act:

Draft rules amendments under sections 59A, 60 and 120—Rules 59A.01A and 60.10(1)—Calendar day grace period.

Due date for public comment: 21 August 2020.*§ SARS BCR 072 07 August 2020: Deductibility of employment-related expenditure, incurred as

part of a B-BBEE ownership transaction & the PAYE treatment of interest-free loan to a share trust:

This ruling determines the deductibility of contributions by employer companies (class



members) to fund an employees’ trust to enable the trust to participate as a part shareholder of a newly established black-owned and controlled property entity (B-BBEE company). The ruling also confirms that the advance of an interest-free loan by the listed holding company (listco) of the applicant and class members to a managers’ trust destined to hold a percentage of the B-BBEE company, would not constitute a taxable benefit, with the effect that no PAYE withholding obligation would arise in respect thereof.

Includes what seems to be an arbitrary apportionment of expenditure, but I’m not wasting any time in studying it in detail.*

SARS website 07 August 2020: SMS from SARS on auto-assessment: If you have received an SMS that tells you that you have been auto-assessed by SARS, and you are unsure if this message is genuine, please log into your eFiling or MobiApp to verify the auto-assessment notification. Where the tax amount on the SMS and the tax amount on the auto-assessment is not the same, the SMS is still valid.

Please note: SARS will never request your banking or personal details in any correspondence that you receive via post, email or SMS. SARS will not send you hyperlinks to other websites—even those of banks.

SARS will publish info on current notifications on the SMSs, emails and surveys webpage in case you need to verify the SMS wording. Also see our FAQs on auto assessment.

SMSs from SARS represent an unlawful form of communication with taxpayers. This webpage itself demonstrates their unsuitability.*§

SARS release 07 August 2020: Update on the filing season (PIT). Currently. these releases (in the Commissioner’s own hand, I am sure) can be quite florid. Did I see the word ‘commitment’? No, I’m not even checking.*

SARS website 07 August 2020: Customs & Excise Act: The rule amendment notice, scheduled for publication in the Government Gazette on Tuesday, 11 August 2020, is intended to provide for further deferral period in respect of payment of excise duties on certain products (DAR 201) (below).*

SARS website 08 August 2020: SMS from SARS on auto-assessment: If your auto-assessment SMS shows a minus (−R amount) it means that SARS owes you a refund. If there is not a minus, it means you need to make a payment to SARS. If you have a travel allowance and can claim against the allowance, then you need to edit your auto-assessment, complete the outstanding information, and then file your return. If you are eligible for a medical expense rebate but you do not see it on the auto-assessment, please remember that it is already included in the ‘rebate’ part of the auto-assessment.

SMSs from SARS represent an unlawful means of communication.*§ SARS website 09 August 2020: SMS from SARS on auto-assessment:

Difference between SMS amount & SIM 01: If you received a SMS auto-assessment notice from SARS and the amount in the SMS is not exactly the same as the amount shown in your proposed auto-assessment on eFiling or SARS MobiApp, then it is possible that fresh 3rd party data arrived at SARS in-between the time that we populated the SMS and the time that you logged into eFiling or MobiApp and viewed your proposed auto-assessment. The amount shown on the proposed auto-assessment on your return is the correct amount at the time that you logged into eFiling or MobiApp and viewed your proposed auto-assessment.

SMSs from SARS represent an unlawful means of communication.*§ GN R 876 GG 43608 11 August 2020: Amendment of rules. Under ss 19A & 120 of the Customs &

Excise Act. Read on. SARS new scam 11 August 2020: Online funds redemption.*§ SARS website 11 August 2020: Customs & Excise Act/covid-19:

Publication details for rule amendment notice R 876, as published in Government Gazette 43608 of 11 August 2020, are now available. The notice provides for further deferral period in respect of payment of excise duties on certain products (DAR 201) (above).*

Daily Maverick 11 August 2020: I am not an ‘illicit tobacco kingpin’ & am opposed to the illicit tobacco trade. By Adriano Mazzotti. Donations to the ANC, a donation to the EFF, but, sadly, nary a word on that donation (see Lost & Found):

I understand that since the start of the lockdown millions of cigarettes have been smuggled through the borders, which probably constitutes the majority of the cigarettes that are being sold illegally.…

Perhaps begs the question where they came from in the first place.§ SARB release 12 August 2020: Prudential authority to appeal judgement. The case

concerned turns out to be Msiza v Motau NO and Another (78587/2018)



[2020] ZAGPPHC 366 (27 February 2020) (above). SARB speech 12 August 2020: In the shadow of COVID: lessons from 20 years of inflation

targeting. By the Governor. As usual, a splendid speech from the cleverest man in government (I mean it as a compliment). Excerpts follow (footnotes suppressed):

—Would it make sense to add growth or employment to the mandate of the SARB, alongside the price stability mandate? I doubt this would change policy much. After all, we already include growth in our models and decision making—through the output gap, a comprehensive measure of economic slack6 The problem is that formally adding an extra mandate, in the context of our propensity to stagflation, could encourage policy mistakes and weaken credibility. —Examples like this make it crystal-clear that low inflation is not just a worldwide fact that countries can have ‘for free’. If individual countries don’t make an effort, they can easily get stuck with high inflation. —More recently, critics of monetary policy here in South Africa have flipped by 180 degrees. The SARB was originally accused of wrongly importing a first-world policy to South Africa. But now we are told to follow major advanced economies and launch a big Quantitative Easing (QE) programme. So much for the claim that rich-country policies don’t work in developing countries! —As I explained in a recent speech at Wits University, QE will become appropriate when interest rates are at the zero lower bound and there is deflation risk. While inflation has eased and created space for lower rates, I am not aware of any professional analyst who projects deflation in South Africa. Our own SARB forecasts are in line with this consensus. —In the current circumstances, however, we think that a QE programme doesn’t make much sense for South Africa. Some advocates of QE argue that it is a free way of financing government deficits. This is not true. The funds created to buy bonds would flow into the interbank money market, lowering the cost of funding. This cost of funding is in fact the repurchase rate (repo rate), which is our main monetary policy tool. To ensure that the repo rate stays where the MPC wants it, despite the extra funds in the system, we would have to borrow those funds back ourselves, which could be costly. To repeat: QE would not be ‘free money’. —Given all the challenges facing South Africa, we should recognise that monetary policy is the last place where we should consider risky changes. We have a well-established inflation-targeting framework, which is delivering low interest rates and low inflation. This is the most functional part of the macroeconomic framework.

SARS guide 12 August 2020: SARS online query system GEN–GEN–51–G01 revision 0.* SARS updated table 12 August 2020: Interest rates—Table 1. Interest rates in respect of the various

acts administered by SARS. See Lost & Found.* SARS updated table 12 August 2020: Interest rates—Table 2. Interest rates payable on credit

amounts (overpayment of provisional tax) under s 89quat(4) of the ITA.* Daily Maverick 12 August 2020: This is how SA became a criminal state. By Helen Zille:

To get to the root of the problem, we must face the fact that Broad-Based Black Economic Empowerment (B-BBEE), as conceptualized and implemented by the ANC, made corruption legal and morally acceptable. Anyone who saw through it, and called it for what it is, was automatically dismissed as ‘racist’.

In over 100 laws mandating B-BBEE and racial ‘representivity’ throughout the public and private sector, the ANC created a useful camouflage to cover its deployment committee’s work in setting up this looting machine. Cadres were deployed to all institutions of state, controlling multi-billion budgets, dispensing funds and managing procurement systems, with the primary aim of enriching the ANC cadres in business and securing significant ‘kickbacks’ for the party and its network.

Inevitably, before long, competing networks arose. The factions in the ANC are not driven primarily by political or ideological differences, but by intense contestation for control over these funding sources. After 26 years, the South African state has become a web of competing criminal syndicates posing as a government.§

DALRRD release 13 August 2020: Minister Didiza announces improved operations of deeds offices. Bullshit! A meeting was held, that’s all. The idle thought is not to be conflated with the deed, even in a deeds office.

SAGNA release 13 August 2020: Public Service Commission DG placed on suspension: Public Service Commission (PSC) Director-General, Dr Dovhani Mamphiswana, has been placed on precautionary suspension, the Presidency announced on Wednesday.

SARB ECC 6/2020 13 August 2020: Amendments to the currency & exchanges manual for authorized dealers & authorized dealers in foreign exchange with limited authority.



SARB ECC 7/2020 13 August 2020: Transactions with Common Monetary Area residents. SARB ECC 8/2020 13 August 2020: Amendments to the currency & exchanges manual for

authorized dealers. SARB ECC 9/2020 13 August 2020: Amendments to the currency & exchanges manual for

authorized dealers. SARB C&E docs 13 August 2020: Currency & exchanges manual for authorized dealers. SARB C&E docs 13 August 2020: Currency & exchanges manual for authorized dealers in

foreign exchange with limited authority. SARB C&E docs 13 August 2020:Currency & exchanges guidelines for business entities. SARB C&E docs 13 August 2020:Currency & exchanges guidelines for individuals. GN R 878 GG 43611 13 August 2020: Covid-19 temporary employee/employer relief scheme (C19

TERS) direction, 2020. High Court case 13 August 2020: Pearlstock (Pty) Ltd v CSARS (83481/18) [2020] ZAGPPHC 393.

A customs classification case involving PVC panels heard by Collis J, which SARS lost, with costs.

SARS website 13 August 2020: Customs & Excise Act: The tariff amendment notices, scheduled for publication in the Government Gazette, relate to the amendments to— Part 1 of Schedule No 2, by the substitution of anti-dumping item

213.02/6809.11/06.06 in order to maintain anti-dumping duties on gypsum plasterboard originating in or imported from Thailand and Indonesia (excluding that manufactured by PT Siam-Indo Gypsum Industry)—ITAC Report 624; and

Part 1 of Schedule No 2, by the insertion of anti-dumping items 213.03/7005.29.17/07.08; 213.03/7005.29.23/07.08; 213.03/7005.29.25/06.08 and 7005.29.35/07.08 in order to impose anti-dumping duties on clear float glass of a thickness of 3 mm to 6mm originating in or imported from Egypt and manufactured by Guardian Egypt—Egyptian Glass Company SAE—ITAC Report 623.*§

SARS website 13 August 2020: Estate duty: All updated content can now be accessed in one place.*

Dear RCBS 13 August 2020: Dear Stakeholder: SARS has enhanced the Online Query System to assist taxpayers to complete online forms and submit the data to SARS for processing without going into a SARS Branch Office.

Financial Mail 13 August 2020: Ace’s ANC eulogy. ANC secretary-general Ace Magashule: Tell me of one leader of the ANC who has not done business with government.§

GN 434 GG 43613 14 August 2020: Product control for agriculture (Prokon)—Agricultural Product Standards Act—comments for proposed inspection fees. All regulated fresh fruit & vegetables. (Prokon is an NPC. Are all of these tax-collecting agents NPCs?)

GN 437 GG 43613 14 August 2020: The South African Legal Practice Council—request for comment: language policy. Waffle, waffle, waffle. But, in the circumstances, what else would you expect from pie-in-the-sky legislation other than an expression of good intentions? At least, in government, quangos inclusive, you are never at risk of being prosecuted for violations of a statute.

GN R 884 GG 43614 14 August 2020: Deeds Registries Act: amendment of regulations. SARS website 14 August 2020: Tax-free investments:

Updated example of how Tax Free Investments work.* SARS updated c/list 14 August 2020: Income tax exemption application checklist:

A Valid email address must be completed on the EI 1 application form. In addition to the CIPC MOI a detailed supplementary MOI will be acceptable. NB: MOI must be signed by the directors and dated. Amended requirement for submission of financial statement. Bank statement can be used for both, as proof of bank details and proof of

physical address.* SARS website 14 August 2020: Customs & Excise Act:

Publication details for tariff amendment notices R 887 and R 888, as published in Government Gazette 43614 of 14 August 2020, are now available.*§

SARS new scam 14 August 2020: New SMS audit scam pretending to be from SARS.*§ Treasury framework 16 August 2020: 2021 medium-term expenditure framework. GCIS release 16 August 2020: Government remembers Marikana tragedy. How nice of it to

go to the trouble of composing a release. It’s a caring government. Treasury release 17 August 2020: Memorandum of agreement: DBSA’s mandate to establish &

manage the infrastructure fund: The obligations of the DBSA towards the MOA will be to establish the Infrastructure Fund through a dedicated implementation unit housed in the DBSA and to manage



and administer the Fund. The important responsibility of the DBSA will be to facilitate the financial structuring, procurement and implementation of priority blended-finance projects and programmes, as identified by ISA.

Yet another (sub-)quango, salaries, perks, regulation, accompanied by zip oversight & double-zip outcome. The Treasury is a paper tiger, lots of paper. And the fund is imaginary.

GN 439 GG 43619 17 August 2020: Legal Practice Council—legal practitioners fidelity fund board elections: call for nominations.

SARS website 17 August 20920: Notifications from SARS to see the progress of your verification process:

SARS will now send you, step-by-step progress notification of your Personal Income Tax (PIT), Value Added Tax (VAT), Company Income Tax (CIT) and Trust verification process. These can be viewed via eFiling or the SARS MobiApp (PIT Only). You are now able to view at which stage your verification process is eg supporting documents received, case allocation, case finalization etc.

Additionally, SARS will issue real time automated SMS and email notification updates, as your verification process moves from one step to the next.

SARS encourages Individual Taxpayers, Tax Practitioners, Registered Traders and Vendors to use our digital channels for improved communication and efficient service delivery. This will also avoid you having to hold the line for our Contact Centre or visit a SARS branch.

SMSs from SARS represent an unlawful means of communication.*§ SARS new scam 17 August 2020: SARS letter notification.*§ SARB release 18 August 2020: Joint release—regulatory proposals on payroll deductions:

The South African Payroll Association (SAPA) is conducting a survey on behalf of the National Treasury, South African Reserve Bank, Financial Sector Conduct Authority, National Credit Regulator, Department of Public Service and Administration, Department of Trade, Industry and Competition, and the Department of Employment and Labour to obtain insights into South Africa’s payroll deductions landscape. The survey results will assist to accelerate the process of finalizing an informed, robust and comprehensive regulatory position on payroll deductions in South Africa.

Now that sounds like a good idea. Why not fold PAYE into the system? High Court case 18 August 2020: Bester NO and Others v Quintado 120 (Pty) Ltd (15274/2019)

[2020] ZAWCHC 80. The applicants were the joint trustees of the insolvent estate of Petrus Serdyn Louw, a chartered accountant, & his wife. Many details here, including of a VDP application under the Tax Administration Act, might conceivably be of interest to the relevant professional body, if not other authorities.§

SARS website 18 August 2020: Customs & Excise: The correction notice, scheduled for publication in the Government Gazette of Friday, 28 August 2020, relates to the substitution of the word ‘extended’ with the word ‘maintained’ where it appears in Notice R 866 of Government Gazette 43597 of 7 August 2020, with retrospective effect from 7 August 2020.*§

Business Day 18 August 2020: State must enforce existing alcohol regulations, not create new ones. By Michael Fridjhon:

It is clear that if law enforcement officers in SA did their job there would be no illegal trade, no underage drinking and no visibly intoxicated patrons leaving licensed premises. If the traffic police did their share of work, breathalysing extensively and prosecuting infringements (rather than using roadblocks as a rent-seeking opportunity) alcohol-related trauma would be significantly reduced.

Prof Charles Parry and his associates from the Medical Research Council and the Southern African Alcohol Policy Alliance constantly recommend ever stricter measures—which is music to the ears of Cele and his police officers.

First, this appears to exonerate them from their manifold failures to apply the law; second, and this is the great danger of the proposed zero blood alcohol recommendation for drivers, it opens a vastly increased opportunity to shake down motorists and consumers.§

GN 424 GG 43591 19 August 2020: Notice & order of forfeiture. Phoenix WTE (Pty) Ltd loses R313 254,06 under the EXCON regulations.

GN 425 GG 43591 19 August 2020: Ditto. KPE SA (Pty) Ltd loses R202 191,79. GN 426 GG 43591 19 August 2020: Ditto. Phoenix WTE (Pty) Ltd loses R313 254,06. What,

again? GN 442 GG 43625 19 August 2020: Ditto. Jianhua Yan loses R16 791,91. GN 443 GG 43626 19 August 2020: Financial Services Board Act—levies on financial institutions. High Court case 19 August 2020 WPD Fleetmas CC V CSARS and Another case no 31339/2020).



The SARS collections department issues an unlawful notice of third-party appointment to Impala Platinum Ltd, which, as meekly as a craven bank, pays R6 284 915,88 to SARS instead of to the taxpayer, one of its service-providers, despite knowing that this would render the taxpayer unable to pay its staff or maintain the support of its own service-providers. The notice was invalid for lack of lawful delivery to the taxpayer, with Fourie J considering, hypothetically, every possible reason why SARS’s eFiling records did not agree with those of the taxpayer’s—except fraudulent manipulation by SARS. Congratulations to the taxpayer & its legal team for winning this matter upon an urgent basis, in inauspicious circumstances, Neukircher J having previously refused to regard the matter as being urgent. Covered in detail in 35 TAW 2020.

SARS new scam 19 August 2020: SARS eFiling statement of account has been issued.*§ Daily Maverick 19 August 2020: Enemies of the nation: how the ‘war on drugs’ has failed SA.

By Edwin Cameron: And there is a class dimension to all of this. Sandton or Constantia cocaine users, inside their gated communities, are seldom if ever targeted. Nor are the kingpins who profit from artificial margins that only prohibition can create—enough to buy allies in law enforcement and at the borders, who ensure ready continuing supply.§

ZAeconomist 19 August 2020: The Reserve Bank can put its reputation for inflation fighting to good use—reviving our economy after lockdown. By Brian Kantor:

The argument made is that bond purchases (or for that matter increases in Foreign Assets held by the Reserve Bank or declines in their government deposits liabilities) adds to the supply of cash in the system and would have to be fully sterilized by equivalent sales of securities by the Reserve Bank.

However there is never any compulsion to sterilize all such purchases nor any logic in doing so. The object of any bond buying would be to add to the money base by some well-designed amount to encourage the private banks to lend more. The banks might prefer to hold more cash supplied to them in reserve and if so would not have to borrow from the Reserve Bank making the repo rate possibly irrelevant. But this might call for still more cash to be injected and for interest rates to go to zero -helpfully in the circumstances of depressed demand.

Ideally the extra cash supplied to the banks would better be used to fund additional lending to the private and public sectors to encourage spending. The much fuller adoption of the loan guarantee scheme (potentially R200 bn of extra bank lending) would reduce any potential demand from our banks for excess cash reserves. The scheme should provide the extra capital and as important the confidence to reboot the SA economy. It urgently needs a champion in the Reserve Bank.§

Treasury release 20 August 2020: Local government revenue & expenditure: fourth quarter local government s 71 report (preliminary results) for the period: 1 July 2019–30 June 2020. With annexure (§).

Treasury release 20 August 2020: Meeting with the Banking Association of South Africa on measures to support the economy.

GN 444 GG 43627 20 August 2020: Notice & order of forfeiture. Cotia Roots (Pty) Ltd loses $48 252,54 under the EXCON regulations.

LSSA release 20 August 2020: Law Society welcomes parliamentary decision on RABS Bill: The Law Society of South Africa (LSSA) welcomes the decision by the Parliamentary Portfolio Committee on Transport not to proceed with the Road Accident Benefit Scheme (RABS) and to propose to rather amend the Road Accident Fund Act.

Treasury release 21 August 2020: Special budget forum meeting. Who really gives a fig? BN 96 GG 43632 21 August 2020: Proposed amendments to the code of professional conduct

for registered auditors. Yet you cannot legislate for morality. GN 447 GG 43636 21 August 2020: International Trade Administration Commission—guidelines &

conditions relating to extension of safeguard measures. SARS release 21 August 2020: Update on SARS filing season (PIT).* SARS updated guide 21 August 2020: Tax guide for small businesses (2019/20).* SARS new scam 21 August 2020: Transfer stop order.*§ Business Day 21 August 2020: SAICA withdraws Anoj Singh’s membership due to

misconduct.§ The President 23 August 2020: A letter to ANC members:

Today, the ANC and its leaders stand accused of corruption. The ANC may not stand alone in the dock, but it does stand as Accused No 1. This is the stark reality that we must now confront.…§

PPSA release 23 August 2020: High court rules against attorney, in favour of the public protector:

The Gauteng Division of the High Court in Pretoria has dismissed, with costs, attorney



Anthony Mostert’s application for leave to appeal the court’s earlier decision in which the court granted costs in favour of the Public Protector in a matter Mr Mostert brought against the office on an urgent basis in 2019.

Business Day 23 August 2020: SARS asks for more resources to strengthen its investigative capacity—Commissioner plans to strengthen capability of revenue service to tackle tax evasion related to covid-19. SARS does not train its already considerable staff, refuses to discipline them, relies almost entirely upon dumb algorithms, & hires according to a quota system. What on earth would it do with ‘more resources’ other than squander their cost & aggrandize the Commissioner?§

SAGNA release 24 August 2020: President Ramaphosa reprimands Minister Mboweni: President Cyril Ramaphosa has strongly reprimanded Finance Minister Tito Mboweni following comments made by the Minister on social media regarding the removal of Zambia’s Central Bank Governor by President Edgar Lungu.

SARS website 24 August 2020: Book an appointment at a branch: Taxpayers and Tax Practitioners are now able to book a slot 60 days in advance, instead of 7 days.*§

SARS website 24 August 2020: New email addresses to contact SARS: To make it easier for taxpayers to email SARS, one mailbox was created ie [email protected]. For Tax Practitioners, also only one mailbox ie [email protected]. The mails flow into our systems and will return a case number.

Trust SARS to have no concern whatsoever for the ‘addresses’ regulation, or for the ‘rules’ under the Tax Administration Act.*§

Treasury release 25 August 2020: Minister of finance speaking notes for parliamentary debate on Disaster Management Tax Relief Bill & Disaster Management Tax Relief Administration Bill.

Bill 25 August 2020: Disaster Management Tax Relief Bill, 2020 [B 11B—2020]. As amended by the SCOF.*

Bill 25 August 2020: Disaster Management Tax Relief Administration Bill, 2020 [B 12B—2020]. As amended by the SCOF. Together with the following:*

Memorandum 25 August 2020: Memorandum of objects of the Disaster Management Tax Relief Administration Bill, 2020.*

SARB release 25 August 2020: Interchange determination project: review of the interchange determination process. To do with the ‘payments industry’.

Notice of motion 25 August 2020: I have been wondering for years why no one has done it before—apply for the winding-up of the RAF, which, by the National Treasury’s repeated, written admissions, has been trading recklessly for decades. Let’s see how Maponya (Johannesburg) (Pty) Ltd v The Road Accident Fund and The Minister of Transport turns out, & what are the consequences.§

High Court case 25 August 2020: Purveyors South Africa Mine Services (Pty) Ltd v CSARS (61689-2019) [2020] ZAGPPHC 409. The taxpayer lost this case, heard by Fabricius J. A botched VDP application on account of the importation of an aircraft without the payment of so-called import VAT. The application was not ‘voluntary’. The details must a wait a future issue of TAW.

High Court case 25 August 2020: Absa Bank Limited and Another v CSARS (21825/19) [2020] ZAGPPHC 414. ABSA & United Towers (Pty) Ltd won this case, in which judgment was delivered by Fabricius J. To my gobsmacked astonishment, this ‘preliminary skirmish’, on the papers, leads to a future ‘main battleground’ involving—you are not going to believe this—Part llA of the Income Tax Act, on impermissible tax avoidance arrangements! It’s designed to fail, man! The applicants sought & obtained leave to amend their notice of motion & allow for the consequences to follow. Fabricius J found SARS’s view to be ‘overly formalistic’. The details are a job for TAW.*

SARS BCR 073 25 August 2020: Dividends: when the ‘qualifying purpose’ definition must be satisfied. Under s 8EA of the Income Tax Act (third-party-backed shares). I wonder if this went off to the applicants’ satisfaction.*

SARS BCR 074 25 August 2020: Treaty relief—authorized contractual scheme: This ruling determines that UK investors in an authorized contractual scheme are entitled to claim treaty relief on income from SA equity and debt instruments.*

SARS BPR 349 25 August 2020: Acquisition of equity shares in nonresident REIT.* Dear RCBS 25 August 2020: SARS—change of email address:

The following email addresses will cease to exist from 24 August: [email protected]; [email protected]; [email protected]; and [email protected].

The new email address that need to be used from 24 August is:



[email protected]. If you use an old email address, an auto created mailbox response will be directing

you to the new mailbox. When you send an email to the new mailboxes, you will receive an automated reply with a case number assigned.

For ease of use, this number will be quoted in related correspondence on the progress of the case. Please adhere to the email size limit of 10 MB. You will be informed by an automated response if your email exceeds the size limit and requested to resubmit.

What on earth is PCC? My spell-check recognizes & formats it, so I must know. I hear from another source, fearing that I have been ‘blacklisted’ (it so happens, I’ll have you know, that the professional organization kind enough to accept me as a member is the most proactive of the lot in keeping its members up to date), that ‘PCC’ is for tax practitioners, & the address to be used by taxpayers is [email protected], but, alas, that would be an unlawful address, not consonant with the applicable regulation. As if SARS would give a damn. Then I see also a series of special email addresses, none of which is mentioned in regulations. Even so, I’ll carry on in my merry way, sticking to the actual law.

Business Day 25 August 2020: Treasury to keep a closer eye on municipal funds. Hilarious, & it’s not even a cartoon.§

SAGNA release 26 August 2020: UIF resumes payments for covid-19 TERS benefits. Treasury release 26 August 2020: African tax administration forum discusses taxation in

digitalized economy. Wow! A MEETING! How were the canapés, I wonder? High Court case 26 August 2020: LW v CW and Others (12866/2014) [2020] ZAWCHC 86. One

of the issues that Salie-Hlophe J had to decide upon was whether assets registered in the husband’s trust formed part of his estate for the purposes of calculating the accrual that had taken place in his estate. This might deserve mention in a future issue.

SARS website 26 August 2020: Turnover tax: Updated explanation on how to pay for Turnover Tax.*

SARS BPR 350 26 August 2020: Vesting of a capital gain in a trust beneficiary & deferral of its payment. Validating ‘magical clauses’ making s 7C go away (179 TSH 2018). The SARS rulings division demonstrates utter ignorance about trust law, vitiating entirely the application of s 7C in the process. Alternatively, it has at last taken my advice & is accepting bribes. Opportunistic or equally ignorant professionals from one side of the country to the other must be celebrating. Sadly, one of them, with whom I had a fallout over the issue (179 TSH 2018), otherwise rock-solid, has passed; a great loss to his profession. I expect this dumb ruling, which ignores the nudum praeceptum rule, among other howlers, to be withdrawn pretty smartly.*

SARS website 26 August 2020: Auto-assessment: New FAQs for auto-assessment on how to interpret error codes when trying to submit the ITR 12 on eFiling.*

SARS website 27 August 2020: Book an appointment at a SARS branch: Enhancements are made to the eBooking system: You may now request an appointment to be booked on your behalf, by a SARS agent, via a new toll free number 0800 11 7277.*§

SARS presentation 27 August 2020: Carbon tax Implementation in SA.* SARS release 27 August 2020: New developments in next phase of individual filing

season.* IOL 27 August 2020: Elderly couple out on R100 k bail each for allegedly

defrauding SARS of R53 m.§ FIC release 28 August 2020: FIC head appointed to global leadership position:

South Africa’s footprint in the fight against money laundering and terrorist financing has been given global standing with the appointment of Director of the Financial Intelligence Centre, Adv Xolisile Khanyile, as one of two deputy vice-chairs to the Egmont Group of Financial Intelligence Units.

SARS BPR 351 28 August 2020: Waiver of an intra-group loan to, & subsequent liquidation distribution by a subsidiary. Not a word said about donations tax.*

SARS website 28 August 2020: Customs & Excise Act: Publication details for correction notice R 939, as published in Government Gazette 43661 of 28 August 2020, relating to the substitution of the word ‘extended’ with the word ‘maintained’ where it appears in Notice R 866 of Government Gazette 43597 of 7 August 2020, are now available.*§

SARS website 28 August 2020: Extension of covid-19 PAYE deferral relief: Although the amended Disaster Management Tax Relief Administration Bill to extend



the deferral of the payment of employees tax liability for tax compliant small to medium sized businesses with one month until 31 August 2020 has not been published yet, it is confirmed that the amended Bill was passed by the National Assembly on 25 August 2020.

The amendment specifically refers to the— deferral being applicable to amounts deducted or withheld during the period

commencing on 1 April 2020 and ending on 31 August 2020 with same requirements as previously, and

require the payment of the deferred amounts to be paid in six equal monthly instalments, commencing on 7 October 2020 and ending on 5 March 2021.

The amended Bill should soon become available. Under the circumstances, SARS had no alternative to the approach followed with the

covid-19 Tax Relief measures to date, which is to implement the pending legislation before it is passed. The Statement of Account (EPMSA) will be amended during September 2020 to include detail of the deferred payments. This will enable qualifying employers to remain compliant.*§

SARS website 28 August 2020: Filing season 2020 campaign: SARS will be calling taxpayers.

As a matter of law & professional principle, I never accept calls from SARS, unless, & only very rarely, it is someone I know very well.*§

Dear RCBS 28 August 2020: SARS-covid-19 deferral relief in respect of provisional tax payments due today:

There have been a few queries regarding the Provisional Tax Covid relief. The taxpayers must pay according to the Covidi19 Provisional Relief rules ie 15% of

the first period’s liability is payable. When a statement of account is requested again tomorrow, one of two results will

be applicable: 1. The payment made today will not yet be processed and the relief will not be

displayed on the provisional account until today’s payment is processed. 2. The payment made today is processed and the relief is displayed on the

provisional account. You are reminded that in order to qualify for the relief the Turnover figure must be completed on the IRP 6.

SAGNA release 31 August 2020: Fixing capacity shortcomings required to build capable State: If South Africa is to build a capable State, government will have to seriously and urgently address the shortcomings in the organization and capacity of the public service, says President Cyril Ramaphosa.

He’s the President, so he must know what he’s talking about, unless he, too, were to suffer from a ‘capacity shortcoming’. But what if what is required were to entail hiring competent people in the first place & not merely pretending to ‘train’ the incumbent miscreants, perhaps untrainable for their lofty positions?

SARS website 31 August 2020: Further enhancements to the eBooking system: There are now two options for booking an appointment with SARS: Book an appointment via our eBooking online system:

Video and voice appointments may be booked. No physical walk-in appointments may be booked through this option.

Book an appointment by calling us on 0800 11 7277 (toll-free): Video and voice appointments may be booked. You may also request a physical walk-in appointment through the

0800 11 7277 number.*§ SARS website 31 August 2020: Further enhancements to the eBooking system:

You may now also request assistance with your tax return (ITR 12) by selecting the voice appointment method via the online form or via 0800 11 7277.*

SARS release 31 August 2020: Trade statistics for July 2020 (surplus of R37,42 billion). SAGNA release 01 September 2020: Government launches mechanism to improve exports:

The Department of Trade, Industry and Competition (DTIC) has launched the Export Barriers Monitoring Mechanism (EBMM) that will provide the support needed to continuously improve the country’s export environment.

SARB release 01 September 2020: Invitation to comment on a discussion document on the deposit-insurance funding model & the implications for banks.

SARB discussion doc 01 September 2020: The deposit-insurance funding model & the implications for banks.

SARB working paper 01 September 2020: Is the Phillips curve framework still useful for understanding inflation dynamics in SA? By Byron Botha, Lauren Kuhn & Daan Steenkamp.§



SARS website 01 September 2020: Customs & Excise: Draft Schedule Amendment—Part 1 of Schedule No 1 to implement the 2021

Economic Partnership Agreement (EPA) phase-downs with effect from 1 January 2021.

Due date for public comment: 1 October 2020.*§ SARS updated guide 01 September 2020: Book an appointment at a SARS branch GEN–BO–09–G01

revision 3.* SARS website 01 September 2020: Q&As for employers on covid-19 tax relief.* Dear RCBS 01 September 2020: Power of attorney (POA) for tax type transfer on eFiling.

Letter from Mark Kingon: As you are aware, earlier this year, SARS enhanced the Tax Type Transfer Process for Personal Income Tax to ensure greater security while at the same time preventing Practitioners from failing to release a profile when a new practitioner is appointed.

The enhancement was to enable ease of transfer of tax types between taxpayers, tax practitioners and registered representatives (ie Guardians or Executors) on eFiling.

With this enhancement, the approval lies directly with the Taxpayer or the appointed Registered Representative (not the previous Tax Practitioner), to transfer the tax type to the requestor. An online POA must be presented and must be Accepted or Declined in order to complete the transfer request.

Please note, only the online POA approved by the taxpayer or their registered representative will be considered a valid consent for this process.

Dear RCBS 01 September 2020: Branch eBooking system. Letter from Mark Kingon: The SARS branch eBooking system enables taxpayers/tax practitioners/representatives to schedule an appointment at a SARS branch for services that are not available on the electronic platform.

SARS has now enhanced this functionality to enable taxpayers/tax practitioners/representatives: To make voice and/or video appointments with SARS representative; Although not for use by Practitioners, to schedule an appointment for assistance

with the completion of ITR 12 Return via voice. Practitioners will only be able to book a virtual voice or virtual video booking through the SARS website and can then be assisted online. Only in the rare instance where a practitioner query cannot be solved through this virtual process will a Service Agent be able to make a ‘walk-in’ booking for the Practitioner to visit the Branch.

The letter is marked Confidential’, but I trust you. SARB directive 02 September 2020: Directive issued in terms of s 6(6) of the Banks Act—

prudent valuation adjustments framework.§ GN 465 GG 43673 02 September 2020: Notice & order of forfeiture. Rapid Bo (Pty) Ltd loses

$233 407,72 under the EXCON regulations. GN R 952 GG 43677 02 September 2020: Amendment of policy directive issued in terms of s 5 &

notice in terms of s 6 of the International Trade Administration Act on the exportation of ferrous & non-ferrous waste & scrap metal. Centuries of mercantilism, & where has it got us?

SCA case 02 September 2020: Breetzke and Others NNO v Alexander NO and Others (232-2019) [2020] ZASCA 97. Among the property holdings of the Sleepy Hollow Trust was a commercial building let to SARS. Thereby hangs a murky tale. When the trust decided to sell the portfolio, one of the trustees, Robert Edward Alexander, offered to buy it. He nominated as purchaser a company owned & controlled by him. Within six months his company resold the SARS property at a significant profit. The St Francis Trust & the June Alexander Family Trust were the beneficiaries of Sleepy Hollow. Per Wallis JA:

One final point is relevant and it is well illustrated by the present case. If a person who aids, enables or facilitates the execution of a breach of trust with knowledge that the transaction involves a breach of fiduciary duty can escape liability for their involvement it will render it relatively easy for those who owe fiduciary duties to escape the consequences of their wrongdoing. The use of corporate vehicles to execute business transactions is commonplace. Here Mr Alexander is alleged to have offered to purchase the properties through a nominee. Ziningi, a company owned or controlled by him and in which he is alleged to have a financial interest, was the nominee. In the passage from the high court’s judgment quoted in para 9 it was said that Ziningi was in effect an innocent bystander—a person overhearing something in a coffee shop. That was incorrect. It was Mr Alexander’s chosen corporate vehicle to purchase the properties. If the allegations regarding his connection to Ziningi are established, I fail to see on what basis it can be said that Ziningi was in the position



of an innocent bystander. His knowledge would clearly be attributed to Ziningi. It is against the legal convictions of the community for people to assist others to breach their fiduciary duty. The law should not make it easier for them to do so.

In the language of Gross v Pentz, this was a ‘direct action’ by a beneficiary. The judgment is a primer if not a vade mecum on the nature of a fiduciary duty, & will feature in a future issue.

SAGNA release 02 September 2020: UIF Commissioner suspended: The Minister of Employment and Labour, Thulas Nxesi, on Wednesday suspended the Unemployment Insurance Fund (UIF) Commissioner Teboho Maruping.

The suspension follows the Auditor General’s audit on the covid-19 temporary employee/employer relief scheme (TERS). The benefit scheme was expected to provide much-needed relief to employees, who have been laid off work or unable to earn an income due to the covid-19 pandemic.

SARS website 02 September 2020: Customs & Excise Act: Draft rules amendments under sections 59A, 60 and 120—Rules 59A.01A

and 60.10(1)—Calendar day grace period and implementation date. Due date for public comment: 9 September 2020.*§

SARS updated guide 02 September 2020: Manage value added tax on imported services. Revision 3:

Imported services may be supplied to a recipient who is registered as a vendor, and the VAT liability is declared on the VAT 201 return. In instances where a recipient is not registered as a VAT vendor, the VAT liability is declared on the VAT 215 record. The payment thereof is done on eFiling or through a prescribed method for exceptional cases.*

Business Day 02 September 2020: Minister Nxesi confirms suspension of UIF commissioner & senior management.§

SARS website 03 September 2020: 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, 1101.00.20, 1101.00.30 and 1101.00.90, to increase the rate of customs duty on wheat and wheaten flour from 51,66c/kg and 77,49c/kg to 83,21c/kg and 124,81c/kg respectively, in terms of the existing variable tariff formula—Minute 16/2019.*§

NA release 03 September 2020: PSA committee concerned about increasing number of public servants doing business with government.

SARB working paper 04 September 2020: Commodity prices & policy stabilization in SA. By Byron Botha & Eric Schaling.§

SARB MoU 04 September 2020: Memorandum of understanding (MoU) between the Prudential Authority (PA) & the Financial Sector Conduct Authority (FSCA), with addendum.§

GN 469 GG 43684 04 September 2020: Notice & order of forfeiture. Monase Granny Morojele loses R27 000 under the EXCON regulations.

GN 488 GG 43686 04 September 2020: Notice & order of forfeiture. Full Swing Trading 177 CC loses R169 321,19.

SARS updated table 04 September 2020: Table A—Average exchange rates for a year of assessment.*

SARS letter to trade 04 September 2020: Escalation procedures for customs matters.* SARS website 04 September 2020: Customs & Excise Act:

Publication details for tariff amendment notice R 955, as published in Government Gazette 43683 of 4 September 2020, are now available.*§

SARS updated table 04 September 2020: Table B— Average monthly exchange rates.* SARS release 04 September 2020: SARS victory against noncompliance: Carte Blanche

matter: The South African Revenue Service (SARS) warmly welcomes the court’s decision of 31 August 2020, which ruled in its favour in the matter involving Carte Blanche. SARS has over the years witnessed an increase in the number of administrative challenges to its actions. Such a legal challenge on an administrative matter delays the progress of an audit, sometimes for years, which is often the purpose of such an administrative or collateral challenge.

Say what? You’re losing such cases almost weekly, on account of your utter lack of respect for the rule of law & the growing appreciation by the legal community of the significance of tax administrative law. Just take even a quick look at my The Tax Administration Weekly Litigation Casebook Launch ed (2020) ver 2.



This landmark decision, following a similar judgment in the Eastern Cape High in 2016, represents a major victory for SARS. It communicates a clear and unequivocal message that SARS will not be deterred in taking lawful actions that are derived from and are consistent with the relevant legislation.

Furthermore, it conveys an unambiguous message that SARS has the capacity to detect and make it costly for non-compliant taxpayers who opt to use our courts to frustrate and delay legitimate and lawful action. Despite years of determined efforts to denude the organization of its capacity to combat illicit and unlawful activities, SARS is committed to leave no stone unturned in seeking and punishing those that wilfully transgress the law and engage in criminal malfeasance to deprive the fiscus of legitimate resources.

The Commissioner (who seemingly writes these things himself) is living in a dream world. While citing a 2016 case, does he read the administrative cases he loses with such stunning regularity? Could the case referred to be Brown (158 TSH 2016)?*

SARS release 04 September 2020: Importation of a second-hand vehicle: After much deliberation, SARS has opted to approach the Supreme Court of Appeal to note the leave to appeal this judgment. SARS wishes to remedy any misconception of the legal requirements when a second hand vehicle is imported into South Africa.…

And this must be a reference to CSARS and Another v Alves (A194/2019) [2020] ZAFSHC 123 (27 July 2020) (208 TSH 2020). What is actually required is for the SCA to override the High Court’s refusal of leave to appeal.*

* 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 148 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. Repo rate (1) 15 April 2020: Decreased to 4,25% (5,25%)—MPC (205 TSH 2020). Official rate of int 01 May 2020: Decreased to 5,25% (6,25%)—ITA (repo plus 1%)). (SARS table 3.) Standard Int Rate 01 May 2020: (Uniform interest rate.) Decreased to 7,75% (8,75%)—PFMA (repo

plus 3,5%). (First day of the second month after repo rate change.) (see the Monthly Listing.) Can this be right? It looks like a mistake, by someone else for a change.

Prescribed rate 01 July 2020: Decreased to 7,75% (8,75%)—ITA, TAA (= SIR). (First day of second month after standard rate change.) (SARS Table 1.)

Prescribed rate 01 June 2020: Decreased to 7,75% (8,75%)—PROIA (repo plus 3,5%). (First day of the second month after repo rate change.)

Repo rate (2) 21 May 2020: Decreased to 3,75% (4,25%)—MPC (206 TSH 2020). Official rate of int 01 June 2020: Decreased to 4,75% (5,25%)—ITA (repo plus 1%)). (SARS table 3.) Standard Int Rate 01 July 2020: (Uniform interest rate.) Decreased to 7,25% (7,75%)—PFMA (repo

plus 3,5%). (First day of the second month after repo rate change.) (See the Monthly Listing.)

Prescribed rate 01 September 2020: Decreased to 7,25% (7,75%)—ITA, TAA (= SIR). (First day of second month after standard rate change.) (SARS Table 1.)

Prescribed rate 01 July 2020: Decreased to 7,25% (7,75%)—PROIA (repo plus 3,5%). (First day of the second month after repo rate change.)

Repo rate (3) 23 July 2020: Decreased to 3,50% (3,75%)—MPC (208 TSH 2020). Official rate of int 01 August 2020: Decreased to 4,50% (4,75%)—ITA (repo plus 1%). (SARS

table 3.) Standard Int Rate 01 September 2020: (Uniform interest rate.) Decreased to 7% (7,25%)—PFMA

(repo plus 3,5%). (First day of the second month after repo rate change.) Prescribed rate 01 November 2020: Decreased to 7% (7,25%)—ITA, TAA (= SIR). (First day of

second month after standard rate change.) Prescribed rate 01 September 2020: Decreased to 7% (7,5%)—PROIA (repo plus 3,5%). (First

day of the second month after repo rate change.) On these items How official interest works—see 158 TSH 2016. Wish I understood it. No matter

how hard I check, mistakes creep in. Take on the month In 2007, Kgalema Motlanthe is widely & often reported to have said:

This rot is across the board. It is not confined to any level or any area of the country. Almost every project is conceived because it offers opportunities for certain people to make money.

Take 2 All the SARS press releases now at last make it into the What’s New page. They include the longest releases in the land, & the only ones that do not word-wrap.



It would appear that updated SARS publications now also at last make the grade, although perhaps not yet all of them.

MONTHLY NOTEBOOK All past entries from 2007 to date, or contents only. All words & phrases from 2009 to date.

The courts: architects of their own demise? The current pandemic has served only to highlight the state of confusion of our courts, with any litigating attorney being able to reel off endless tales of woe. I still maintain that our judges will eventually save us from ourselves (despite some questionable admissions to the bench, who, I maintain, unlike their many brothers and sisters, have yet to absorb the wonders of our Roman-Dutch system, coupled as it is to a constitutional dispensation). To an extent this is not even a prediction, since the courts are probably already more responsible for the actual running of the country than the supposed government, in all its panoplied tiers of cant, incompetence and dishonesty. For this

part of their job, the courts are wont to deliver a speedy and reliable service.

At the same time, as a fervent believer in freedom (seemingly, a simple philosophy of respecting fellow inhabitants of this planet), I can see a market opportunity when it is staring me in the face, even if I am gravely suspicious of claims about the supposed benefits of mediation as a dispute-resolution mechanism, the subject-matter of Rule 41A of the Rules of the High Court.

But, if the courts cannot or will not deliver what the market wants, then let a thousand mediations bloom, although, it seems, you might need the courts to compel mediation!

Credit insurance and the tax Acts It’s a bog-ordinary arrangement, not confined to the agricultural sector or co-ops, but nevertheless a very common experience of farmers, or so I am told. Since the death of a farmer will make the likelihood of repayment of a supplier’s credit uncertain, the supplier will require the farmer to be covered under a so-called credit-life policy administered as an umbrella fund for the benefit of the creditor.

While the policy is owned by the supplier-creditor, the farmer pays the premiums, presumably in terms of the applicable contract of insurance. This is a critical presumption; outcomes might be otherwise be different. I have access to a typical policy but not the agreement with the supplier-creditor.

In the event of the farmer’s death, the policy proceeds go to the discharge of the farmer’s debt owing to the supplier-creditor at that sad time.

Are the premiums deductible for the farmer? Under the so-called general deduction formula, most certainly.

Is there any relevant special deduction or prohibition in the main body of the Income Tax Act stating otherwise? Not if you examine every hit for the string “insurance”. These days, that’s something I very much have to do. Explain it as you will, but you, too, should think about it.

So far, so good. What about the supplier-creditor? Its skin in the game is represented by property in the form of the credit-supply contract with the farmer. This presumably includes a contractual claim against the farmer to make the premium payments to the insurer, upon which the farmer’s enjoyment of credit is contingent. The supplier-creditor also enjoys property in the form of the policy itself, which is a contingent interest, dependant upon the farmer’s continued payments and, ultimately,

the farmer’s death while continuing to pay. Under the assumption I have made, the

premiums are payable by the farmer directly or indirectly, via a collecting agent (probably, the supplier-creditor itself, clocking up the premiums on tick, at interest; every little bit helps, you know).

Any proceeds under the policy appear to be exempted by the near-unintelligible s 10(gI), provided that the proceeds fall into gross income in the first place. It would depend upon whether such policies are trading stock or capital assets as far as the supplier-creditor is concerned. That is a tricky one; I am reminded of the old ‘agency’ cases, which depended upon how many agencies you held.

But, if the policies constitute trading stock, the exemption would still apply (if I understand it correctly; decades have passed since I last had a handle on life policies).

For the supplier-creditor, if the policy is trading stock, it cannot give rise to ‘proceeds’, thanks to the well-hidden para 35(3)(a) of the Eighth Schedule.

If it is a capital asset, para 55(1)(a)(i) would effectively exempt it, as long as it is a qualifying long-term policy.

The supplier-creditor must contractually use the proceeds it enjoys to discharge the deceased farmer’s debt. During the farmer’s lifetime, s 19 (Concession or compromise in respect of a debt) would have applied. But post mortem? It looks like s 25(b) would apply, including the debt benefit in the deceased estate’s income.

And then, estate duty: The proceeds will constitute deemed property under s 3(3)(a) of the Estate Duty Act, as diminished by the deduction there allowed for premiums paid by the beneficiary, plus an interest factor.


https://www.bspseminars.co.za/Archive/NotebookContents.pdf

https://www.bspseminars.co.za/Archive/WordsAndPhrases.pdf



TAA: s 172(1) certified statement v judgment As noted in 208 TSH 2020, these certified statements are not in themselves judgments of a court but, under s 174 of the Tax Administration Act, are to be treated ‘as a civil judgment lawfully given in the relevant court in favour of SARS for the amount specified in the statement’.

What has since come across my desk is a notice of civil judgment from SARS in George, which attaches the actual certified statement (the first I have ever seen, I think), saying:

As a result of your failure to comply, a certified statement setting out the amount of tax payable was filed with the Somerset West Regional Court

and a civil judgement was entered against you on…. A copy of the judgment is enclosed.

Yet only the statement, stamped by the registrar of the court, is attached.

In the light of recent cases, it is to be doubted that such an allegation enjoys any merit; and the document is not a ‘judgment’.

It also suggests that press reports on the same lines refer to nothing more than the statement, not any actual judgment of a court. My usually reliable sources tell me that such admittedly public documents are offered for sale by enterprising officials to interested parties, such as the gutter press.

Words & phrases: the actio Pauliana (the Ameropa case) The last issue, 208 TSH 2020, listed Ameropa Commodities (Pty) Limited v Benchimol NO and Others (D2873-2019) [2020] ZAKZDHC 14 (5 June 2020).

This tremendously instructive case involved the purported sale of fixed property by a company, before its liquidation, to a trust, the VRB Trust.

Ameropa, relying upon the common-law remedy of actio Pauliana, in its capacity as a concurrent creditor of the now-liquidated company, sought the return of the property. The trustees excepted, unsuccessfully, to its amended particulars of claim. Per Steyn J:

I find that the Registrar of Deeds does not have to be joined as a party to these proceedings, since he has no direct and substantial interest in this matter and will not be prejudicially affected by the order sought.

He went on to find that all of the requirements of the actio Pauliana were met. Finally, he said

(footnote suppressed):

Had the defendants considered the actio Pauliana and that it grants a creditor in an insolvent estate a remedy under the common law to recover asset(s) that ought to have been in an insolvent estate, they would never have raised an exception on the ground that the plaintiff [Ameropa] does not have locus standi. The actio Pauliana is still available to creditors even after the liquidation of the debtor. The Insolvency Act does not deprive a concurrent creditor of his/her rights in terms of the common law, as long as the enforcement of such right is not inconsistent with any of the provisions of the Act. The plaintiff as a creditor has locus standi under the actio Pauliana.

In its amended particulars of claim Ameropa alleged that the purchase price of the property, R10 million, was never paid, despite the transfer of the property, and that, at the time of the transfer, the company was insolvent, while owing Ameropa R16 695 887,65.

Trust taxation: s 25B and the withholding taxes There is no accrual, not even a deemed one, to the trustees of amounts received by them in their fiduciary capacity belonging to vested beneficiaries designated in the deed. And there is no receipt by them of amounts directly received by vested beneficiaries.

As for discretionary beneficiaries, any accrual by the trustees in their fiduciary capacity will be extinguished by the operation of s 25B(1), should the trustees properly exercise their distributive powers in the beneficiaries’ favour. Anything left over will have accrued to the trustees in their fiduciary capacity.

What are left are fiduciary receipts by the trustees passing to beneficiaries, of whatever ilk, and those remaining in their fiduciary possession. There is no deeming provision covering either their receipts or their payments.

Thus there can be no denying the fact that such amounts are ‘received by’ and either ‘paid by’ the trustees to the entitled or selected beneficiaries or remain in the trustees’ possession.

The withholding tax on royalties & interest Under s 49E(1) and s 50E(1) of the Income Tax Act, respectively, the payer of a royalty or of interest for the benefit of a ‘foreign person’ must withhold the tax.

‘For the benefit of’ means that there must be an accrual in favour of the recipient. A payer knowing that a vested beneficiary of a trust is a foreign person, must withhold the tax, if making a payment directly to such a beneficiary or if (unlikely event) making a payment to the trustees for the benefit of a specific, named,



vested beneficiary who is a foreign person. Otherwise, payments going to the trustees of

a resident trust cannot be mulcted by way of the withholding taxes. The payer can in the normal course have no way of knowing who might be the vested beneficiaries or where they might be resident. As for discretionary beneficiaries, they are unlikely to have been selected for a distribution by the time the royalty or interest is paid, and the payer is even more unlikely to know about the selection in time to make the withholding.

What of payments made by the trustees? Trustees, in effecting vested and discretionary distributions, indeed make payments, but are these payments of amounts of ‘royalties’ or ‘interest’ or simply payments made in discharge of their contractual duties? In a series of articles in 154 TSH 2016, I expressed the view that they

are not payments of ‘royalties’ or ‘interest’. Even though, under s 25B, ‘income retains its nature’, whether as interest or royalties, that is an ex post appreciation, depending upon an accounting analysis, available only long after the end of a trust’s financial year. I am inclined, in general, to stick with that view.

This is not to say that the beneficiaries concerned escape taxation, since under both withholding taxes, primary liability rests (clumsily) upon the true taxpayer (s 49F and s 50F).

What about a situation in which, in exercising their discretion, the trustees specifically decide that, whatever the trust’s royalty and interest income for the year might be, it is to be distributed to a beneficiary who is a foreign person? Then, I would now say, the trustees become ‘withholding agents’ as defined in the Tax Administration Act.

Trust taxation: s 25B(1) and the CGT It is long past the time that anyone might claim that the capital gains tax is confined to the Eighth Schedule to the Income Tax Act. Already in 2018, as shown in ‘Normal tax: CGT creep’ (181 TSH 2018), the hapless legal draftsperson had rendered the Eighth Schedule useless, except to further bamboozle anyone trying to make sense of the normal tax.

The purpose of a statutory fiscal schedule is to concentrate in it all the provisions dealing with a particular subject-matter, requiring only one provision or at the most two provisions in the main body of the statute to validate the schedule. The idea is that the user engaged with the particular subject-matter concerned need look only in one place in order to ascertain the applicable law. Some of our continental neighbours, although running comparatively ‘primitive’ fiscal systems, appear to have mastered this art, rendering their statutes reasonably accessible even to newbies.

And that is how the nation-wreckers who first drafted the abomination that is the Eighth Schedule started off, their linchpin with the main body of the act being the still-extant s 26A:

26A. There shall be included in the taxable income of a person for a year of assessment the taxable capital gain of that person for that year of assessment, as determined in terms of the Eighth Schedule.

The reason why the CGT works so poorly in a structural sense—why it required, essentially, the redrafting of the entire act, a process far from complete, some nineteen years later—is the failure of the draftsperson to plug it into the main body of the act at the right spot, being the definition of ‘gross income’ in s 1(1):

‘[G]ross income’, in relation to any year or period of assessment, means—

(i) in the case of any resident, the total amount, in cash or otherwise, received by or accrued to or in favour of such resident; or

…, during such year or period of assessment, excluding receipts or accruals of a capital nature…;

The exclusion of amounts of a capital nature is overridden by the Eighth Schedule, but via s 26A, rather than via this seminal definition itself. That fateful decision helped to demolish what was once a reasonably well-organized statute, accessible to the assiduous or even to those merely well trained, as were many SARS ‘assessors’, well worthy of the job-description.

The other thing that cracked the heads of the original drafting team, given an impossible deadline but nevertheless comfortable in the knowledge that they had decades in which to try and fix their horrible mess (largely retroactively, at least over several years), was how to reconcile the CGT’s ‘base cost’ with the myriad deductions allowable under the so-called income tax and so prevent double-dipping.

Whether or not the CGT is a separate tax (it is not), the rules of interpretation are unequivocal; para 80 of the Eighth Schedule deals specifically and in detail with distributions by trusts, within the context of the CGT, and so must, technically, in that context, override s 25B(1):

25B. (1) Any amount received by or accrued to or in favour of any person during any year of assessment in his or her capacity as the trustee of a trust, shall, subject to the provisions of section 7, to the extent to which that amount has been derived for the immediate or future benefit of any ascertained beneficiary who has a vested right to that amount during that year, be deemed to be an amount which has accrued to that beneficiary, and to the extent to which that amount is not so derived, be



deemed to be an amount which has accrued to that trust.

But so what? As shown in 208 TSH 2020, s 25B(1) amounts to nothing more than a crude statement of the common law (contract and property law) pertaining to trusts, their incomings and their outgoings. ‘What is yours is yours, and what is mine is mine’ just about

sums it up. The only other thing s 25B(1) achieves is to

codify the common law on (valid) discretionary distributions made out of contemporaneous amounts derived, which expunges the precursor accrual to the trustees. Big deal.

As a mere statement of the law, then, s 25B(1) cannot but apply for CGT purposes as well. But, again, so what?

Mora interest: tax wrongly paid In CIR v First National Industrial Bank Ltd 1990 (3) SA 641 (A), (38188) [1990] ZASCA 49 (18 May 1990) (see the Monthly Listing), four judges of the then Appellate Division refused to award the taxpayer mora interest on stamp duty it paid to SARS under protest, correctly believing it not to be due, and having successfully recovered the improper payment. The fifth judge largely disagreed. By the time these judgments were delivered, the stamp duty was already obsolete, but the principles involved remain relevant today, as long as you allow for the subsequent introduction of s 2A of the Prescribed Rate of Interest Act (Interest on unliquidated debts), which regulates the essential matter under dispute.

The case is much cited, with even the dissenting judgment scoring a few hits. The dissenter was Nicholas AJA (as he then was):

He agreed with the majority that the Stamp Duty Act itself was inapplicable. The taxpayer had not ‘overpaid’ stamp duty; it had paid duty ‘that was not payable’.

He agreed that the condictio indebiti—a payment not due made by mistake may be recovered—could lie against the Commissioner.

And he agreed that the fiscus is not immune to a claim for mora interest.

These points of agreement were enough to make this a notable and contemporaneously relevant case.

But, in tendering payment ‘under protest’, the taxpayer ‘meant with reservation of its right to

institute an action for repayment’, and the Commissioner had to be taken as having agreed to that term. On that basis, he considered the condictio indebiti to apply. The majority’s decision to the contrary has proved far more enduring.

The next issue was whether the taxpayer had made a demand for payment:

The general rule of the Roman-Dutch law is that interest is not payable unless there is an agreement to pay it or there is default or mora on the part of the defendant.… The weight of authority in Roman-Dutch law is in favour of the view that interest is not recoverable under the condictio indebiti as such…. The question is, therefore, whether the Commissioner was placed in mora, and if so from what date.

It is settled and uniform practice that a defendant is regarded as being in mora upon failure to discharge his obligation after receipt of the letter of demand…..

The way Nicholas AJA read the relevant correspondence, despite wrongly couching its demand in terms of the Stamp Duty Act, the taxpayer had, on a particular date, made a demand:

…. Consequently the claim contained all the information which could possibly be required to be contained in a letter of demand.

It is this part of his dissenting judgment that has found favour in some of the many citations of this case.

Words & phrases: ‘the parol evidence rule’ (post-Endumeni) In Tshwane City v Blair Atholl Homeowners Association 2019 (3) SA 398 (SCA) Navsa ADP and Mothle AJA said (footnotes suppressed):

It is fair to say that this court has navigated away from a narrow peering at words in an agreement and has repeatedly stated that words in a document must not be considered in isolation. It has repeatedly been emphatic that a restrictive consideration of words without regard to context has to be avoided. It is also correct that the distinction between context and background circumstances has been jettisoned. This court, in Natal Joint Municipal Pension Fund v Endumeni

Municipality 2012 (4) SA 593 (SCA) ([2012] 2 All SA 262; [2012] ZASCA 13), stated that the purpose of the provision being interpreted is also encompassed in the enquiry. The words have to be interpreted sensibly and not have an unbusinesslike result. These factors have to be considered holistically, akin to the unitary approach.

Since this court’s decision in Endumeni, we are seeing a spate of cases in which evidence is allowed to be led in trial courts beyond the ambit of what is set out in the preceding paragraph. We are increasingly seeing witnesses testifying about the meaning to be attributed to words in



legislation and in written agreements. That is true of the present case in which, in addition, evidence was led about negotiations leading up to the conclusions of the ESA.

Admissibility of evidence in relation to negotiations After an invaluable discussion ‘about the schizoid nature of the South African approach to interpretation of contracts’, they continued:

Insofar as the admissibility of evidence in relation to negotiations is concerned, this court has recently, in Van Aardt v Galway 2012 (2) SA 312 (SCA), para 9, with reference to Van Wyk NO v Rottcher’s Saw Mills (Pty) Ltd 1948 (1) SA 983 (A) at 991, reaffirmed that evidence of the intention of the parties of their prior negotiations is inadmissible. In Delmas Milling Co Ltd v Du Plessis 1955 (3) SA 447 (A) at 454 the court excluded, as a general rule, reference to ‘actual’ negotiations and ‘similar statements’. It is true that at 455A–C there is a suggestion that ‘conceivably’, in contractual cases where, after regard is had to surrounding circumstances, the ambiguity in a written text persisted, one could have regard to what passed between the parties. It must be understood that

this statement followed on what was understood to be admissible in relation to testamentary documents. It is also true that in Coopers & Lybrand and Others v Bryant 1995 (3) SA 761 (A) ([1995] 2 All SA 635; [1995] ZASCA 64) at 768D–E, the passage from Delmas at 455A–C is cited as support for the view that evidence of negotiations could, in the face of enduring ambiguity, be admitted.

In our view, Van Aardt and Van Wyk should be followed. It would be in line with the parol evidence rule which we imported and have maintained and it is consonant with the modern approach to interpretation of contracts in English law, the development of which mirrors developments in our law. Allowing evidence in relation to negotiations will see further extensive evidence being led and will have the effect of minimising the words the parties have chosen to employ. Endumeni rightly emphasizes the significance of the words the parties have chosen to record their agreement, though not above context. Permitting evidence of negotiations will lead to further uncertainty. The words, as an objective measure, are elevated above the partisan positions of parties in negotiations and litigation.

Contract law: unfulfilled suspensive condition Search SALR flynotes for the string “suspensive condition” and your very first hit will be the judgment of Olivier J in Abrinah 7804 (Pty) Ltd v Kapa Koni Investments CC 2018 (3) SA 108 (NCK), which covers this topic in its entirety (footnotes suppressed):

In Swart v Starbuck and Others it was held that ‘[t]he effect of the suspensive condition in each offer was that, if the consent were not obtained, the contracts would be regarded as though they had not been written’, and it was reaffirmed that—

generally speaking, a suspensive condition suspends the operation of all obligations flowing from a contract until the occurrence of a future uncertain event. If the uncertain future event does not occur, the obligations never come into operation.

In Southern Era Resources Ltd v Farndell NO it was held:

Fulfilment of a suspensive condition results in the contract being enforceable. And, normally, if the condition fails and the parties have not agreed otherwise, the contract is rendered void.

The result of the non-fulfilment of a suspensive condition can be compared to the result of the fulfilment of a resolutive condition, where ‘the whole transaction inter partes (is regarded) as if the absolute contract had never existed…’.

Could this consequence of the non-fulfilment of

a suspensive condition be prevented by waiver of the benefit of such a condition or, in the event that the suspensive condition had already failed, in a manner of speaking, be undone by such a waiver?

There is no doubt that it would be possible where such a condition is for the sole benefit of one party and where that party waives it before the expiry date stipulated in the contract.

Even if the part of such a condition that stipulates an expiry date could be argued to have been intended for the partial benefit of the seller, the purchaser would still be entitled to waive the benefit afforded to it by the part of the condition that renders the coming into operation of the contract subject to the purchaser obtaining a loan.

That the protection afforded by such a suspensive condition can in principle be waived is therefore beyond doubt, but the question is whether such right could be exercised after the agreed (or timeously extended) expiry date for the fulfilment of the condition.

In Wax v Goldman and other cases that followed it in that division, it was held that waiver could indeed also take place after such an expiry date.

In Mekwa Nominees v Roberts it was however held, with reference to Phillips v Townsend and Meyer v Barnardo, that a contract that had lapsed due to the non-fulfilment of a suspensive condition could not be revived by waiving the suspensive condition at that stage.

This controversy was effectively settled in Trans-Natal Steenkoolkorporasie Bpk v Lombaard en ’n Ander, where the Phillips and Mekwa judgments, as well as the judgment to the same effect in Meyer v Barnardo, were approved.



Words & phrases: ‘annuity’ In one of the most widely cited tax dicta of all time, in ITC 761 (1952) 19 SATC 103, Price J said:

The main characteristics of an annuity are: (1) that it is an annual payment (this would

probably not be defeated if it were divided into instalments);

(2) that it is repetitive-payable from year to year for, at any rate, some period;

(3) that it is chargeable against some person.

Words & phrases: the actio Pauliana (in fraudem creditorum) Actio Pauliana The requirements for the actio Pauliana were set out in Fenhalls v Ebrahim & others:

The common law on the subject of rescinding alienations made in fraudem creditorum is derived from the civil law. One of the actions by which this relief might be sought was the actio Pauliana, which is recognized in the Roman-Dutch authorities. Pothier on the Pandects, 42.8.2 says:

In order that a transaction may be rescinded under this edict the following factors must be present: 1. That it should be of such a nature that

the debtor’s assets are diminished thereby ….

2. That the person who receives from the debtor does not receive his own property…[.]

3. That there should be the intention to defraud…[.]

4. That the fraud should have its effect.…

(My emphasis). The scholars Van der Merwe and Olivier in Die

onregmatige daad in die Suid-Afrikaanse reg summarized the actio Pauliana and concluded that the remedy is not restricted in its use by the curator bonorum only, but it is available to all creditors.

In Wiener v Estate Mckenzie, the court analysed the authorities in support of the common law remedy, as follows:

…. In Fraudem Creditorum.—Under the Roman-Dutch law whenever a debtor entered into a transaction in fraud of and to the actual detriment of his creditors, it could be set aside by an action at law, and the property disposed of recovered.… In Thurnurn v Stewart…, the Privy Council expressed the view that the Cape Insolvency Act had not repealed the Common Law of Holland.…

The common-law remedy was introduced into the Roman-Dutch law from the Roman law. Hunter (Roman law, 4th edition, p 1412) describes the remedies for fraudulent alienation inter alia as follows: ‘Actio Pauliana. This action may be brought by creditors, but not by the debtor himself or his heirs, against a person cognisant of the fraud, although he has ceased to possess the property (D. 42.8.25. 1); and also against anyone who has in his possession any property of the debtor without valuable consideration, even if

innocent of fraud (D. 42.8.25.2); actio Pauliana in factum: If a person has lost possession of anything fraudulently conveyed to him, or has been fraudulently acquitted of a debt, the remedy is in factum.

In Commissioner of Customs and Excise v Bank of Lisbon International Ltd & another, the full bench held:

There is therefore authority for the view that an actio in factum lies for the recovery of property from a person who has acquired the property gratuitously or without valuable consideration from someone who has alienated the property in fraudem creditorum even though the person who acquired the property was innocent of the fraud.

(My emphasis). The court went on to describe the actio

Pauliana as:

…a personal action of general application which even an individual creditor could invoke to recover from third persons, property which the debtor had alienated in fraudem creditorum and where the third party had received the property with knowledge of the fraud or had not given value for the property.

In Kommissaris van Binnelandse Inkomste en ‘n ander v Willers en andere, the Supreme Court of Appeal (the SCA) confirmed the dictum of this division in Bank of Lisbon above in so far as the court held that a recovery of property in instances where it was acquired gratuitously could be recovered through the actio Pauliana. The SCA also referred to the fact that the actio Pauliana may be used to recover assets even after liquidation.

In Nissan South Africa (Pty) Ltd v Marnitz NO & others (Stand 186 Aeroport (Pty) Ltd Intervening), the SCA approved the approach by Thirion J in Bank of Lisbon and rejected the criticism of the authors Malan and Pretorius in Malan on Bills of Exchange Cheques and Promissory Notes 4th ed, that interdicts can only be granted on the basis of the Mareva-type injunctions.

Per Steyn J: Ameropa Commodities (Pty) Limited v Benchimol NO and Others (D2873-2019) [2020]

ZAKZDHC 14 (5 June 2020) (208 TSH 2020. (Footnotes suppressed.)

Feature Supplement to 209 Tax Shock Horror 2020

Cases

All past entries from 2006 to date.

August 2020

Winners & Losers In That Other Beautiful Game Current & Past SATC Case Reports

by Julian Ware © 2020 J Ware ([email protected])

Tax deduction—section 24C allowance CSARS v Big G Restaurants (Pty) Ltd

Supreme Court of Appeal (2018)—81 SATC 185 (judgment delivered by Schippers JA; Ponnan JA, Mbha JA, Mathopo JA & Rogers AJA concurring): Happily reversing the decision of the tax court (ITC 1905, 201 TSH 2019). The taxpayer, a restaurant franchisee operating a chain of Spur and Panarottis restaurants, was barred from claiming an allowance under s 24C (provision for future expenditure on contracts) of the Income Tax Act. The income generated by serving food to its customers was not inextricably linked to the franchise agreement under which the taxpayer was obliged regularly to refurbish the restaurant. Owing to this outcome, the question concerning the obligation to incur future expenditure under the same contract from which income is derived—which is an absolute requirement—was not adjudicated upon by the SCA. Crazily, the decision was taken on appeal to the Constitutional Court, which recently dismissed the matter, with costs.

Gross income—accrual Milnerton Estates Ltd v CSARS

Supreme Court of Appeal (2018)—81 SATC 193 (judgment delivered by Wallis JA; Navsa ADP, Mathopo JA, Matojane AJA & Nicholls AJA concurring): On appeal from the Tax Court (ITC 1900, 191 TSH 2019), and dealing with the accrual of income from the sale of immovable property held as trading stock. Under s 24 of the ITA, the full purchase price accrued to the taxpayer on the day that the agreements of sale were entered into. Section 24 is not confined to credit agreements. The taxpayer’s argument that the amounts accrued to it only upon transfer of the properties came to nought.

Tax administration—understatement penalties / Purlish Holdings (Pty) Ltd v / CSARS

Supreme Court of Appeal (2018/2019)—81 SATC 204 (judgment delivered by Molemela JA; Ponnan JA & Van Der Merwe JA concurring): Dealing with understatement penalties for value-added tax and income tax under Chapter 16 of the Tax Administration Act. SARS successfully discharged the onus of proof resting upon it under s 102(2). Although s 129(3) empowers a tax court to increase understatement penalties, it was incompetent for the court a quo (ITC 1908, 204 TSH 2020) to do so of its own accord. The issue must first properly be canvassed before it.

Tax deduction—section 24C allowance Taxpayer v CSARS

ITC 1915 (Cape Town Tax Court—Case IT 13988 (2018))—80 SATC 214 (judgment delivered by Nuku J): The taxpayer, a retailer, operated a loyalty programme. It successfully argued that, under s 24C on the Income Tax Act, the loyalty card contract and the future expenditure that it would incur when a customer redeemed the points generated under the interrelated sale agreements were inextricably linked. The outcome was overturned on appeal to the SCA (CSARS v Clicks Retailers Ltd).

Gross income—lease premium Taxpayer v CSARS

ITC 1916 (Johannesburg Tax Court—Case 14189 (2018))—80 SATC 228 (judgment delivered by Mali J): A judgement ostensibly dealing with a lease premium under facts and circumstances that are incomprehensible from the judgment. The taxpayer was unsuccessful in its endeavours. A paradoxical judgment involving a mere R125 million.

Deduction—mining capex Benhaus Mining (Pty) Ltd v CSARS

Supreme Court of Appeal (2019)—81 SATC 241 (judgment delivered by Lewis ADP; Mbha JA, Mocumie JA, Makgoka JA & Davis AJA concurring; & separate judgment point delivered by Mocumie JA,): Overturning the judgment of the Tax Court (204 TSH 2020). A contract miner derives income from mining operations and is entitled to claim qualifying capex.

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The Taxation of Interest

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

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SARS as debtor and creditor.

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Davey’s Locker

August 2020 Proposed restrictions on retirement funds Access upon emigration

by Tony Davey © 2020 AH Davey ([email protected] www.daveyvos.co.za)

2020 draft TLAB National Treasury has issued a draft Explanatory Memorandum on the Draft Taxation Laws Amendment Bill 2020, dated 31 July 2020.

Under para 1.4 of the Explanatory Memorandum, the proposal is made to amend the definitions of a ‘pension preservation fund’, a ‘provident preservation fund’ and a ‘retirement annuity’ in s 1(1) of the Income Tax Act so as purportedly to align them with the new exchange control capital-flow management system coming into effect on 1 March 2021.

EXCON relaxations I canvassed this system in 203 TSH 2020. In essence, the new relaxed system will move from the current general prohibition imposed by the EXCON controls, subject to specific permissions, to an open system, under which EXCON controls are phased out, with certain, limited exceptions.

The concept of emigration

will also be phased out, to be monitored through the tax system rather than the current EXCON system.

Proposed retirement fund access amendments Currently, a lump-sum benefit from the these defined retirement funds can be accessed upon a member’s emigration recognized by the South African Reserve Bank for purposes of exchange control.

The new proposed tax test, to replace the emigration test, will be the cessation of tax-residency, with the further -criterion that the fund member remain non-tax-resident for at least three consecutive years before access is permitted.

Conclusion It seems counterintuitive to the stated intentions of relaxation of the EXCON rules to replace a fixed EXCON event, namely emigration, with a tax event, namely, cessation of tax residency, but then defer access to targeted retirement-

fund benefits for three years. Simply put, the proposed

new system is more penal, in imposing a three-year waiting period.

The proposed restrictions are in addition futile, in that they can be easily circumvented. Under para (c) of the definitions of the preservation funds a once-off lump-sum withdrawal is permitted before retirement at a minimum age of 55; thus a member can access the relevant funds, provided the member acts before emigration or proposed cessation of tax-residency.

Such a withdrawal amount will be taxed under the withdrawal tax tables, which allow R25 000 tax free and then impose rates ranging on a scale from 18% to 36%.Unlike a preservation fund, however, a retirement annuity cannot be accessed before the attainment of the age of 55.

Treasury should reconsider its restrictive proposal.

T S H

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

The Taxation of Trusts

All the statute law on the taxation of trusts their founders, planners and beneficiaries.

Focussing on the practical issues facing those unfortunate enough to have to do professional work for an SA trust

By COSTA DIVARIS

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2020 edition

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All the statute law on the taxation of trusts, their founders, planners and beneficiaries.

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Chapter 1: The trustees’ duties.

Chapter 2: What is a trust? Chapter 3: The trust as taxpayer. Chapter 4: Primary attribution.

Chapter 5: Secondary attribution. Chapter 6: Normal tax issues.

Chapter 7: Other taxes Chapter 8: Offshore trusts.

Chapter 9: Special normal tax trusts. Chapter 10: Trust finance.

Chapter 11 : The trust return.

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Shortcut Keys in Word by Duncan S McAllister ©2020

August 2020

Keeping files safe in Dropbox using the Vault feature I have always been a bit nervous about storing important personal files in Dropbox but was recently given some assurance after I discovered the Vault feature, which is available to Dropbox Plus users. Dropbox Vault lets you create a location in Dropbox with an additional layer of security for your most sensitive files and share it with trusted contacts. This location, or ‘vault’, in your Dropbox account is protected by a six-digit numeric PIN which you must create upon first opening the folder.

At present the feature does not work in File Explorer. By clicking on the Vault folder in File Explorer, you simply open the Dropbox.com website, and you then need to move the files, using your browser. I did not find this option very friendly for a keyboard-only user. By contrast, the Dropbox app on the iPhone is very accessible.

To move a folder into the Vault folder, I followed this procedure:

1. Open File Explorer and copy the file or folder using CTRL + C and paste it into Dropbox using CTRL + V.

2. Open the Dropbox app on the iPhone and tap on the Vault folder to open it and insert your PIN.

3. Navigate back to the file or folder you wish to move to the Vault folder, flick up when on the item and select Drag item.

4. Go back to the Vault folder and open it. 5. If you want to drop a file or folder onto the

main menu, navigate on to any file in the folder, flick up on that file and select Drop onto item. However, if you want to place a file or folder within a folder, flick up on the target folder and select Drop onto item.

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The Taxation of Deceased Estates

Guide to the law for the diligent executor

Up to date with the 2019 taxing acts, with preceding law

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Launch edition (2020) version 2

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The most comprehensive and detailed treatment ever published.

All the taxes.

Every relevant provision of every relevant statute, with all amendments since 2016/2017 recorded,

so as to cater for outstanding estates. Plus case law and further reading,

from the Tax Shock, Horror and Tax Administration Weekly newsletters.

Chapter 1: Final-year authority.

Chapter 2: Final-year patrimonial reality. Chapter 3: Final-year exit tax.

Chapter 4: Final-year tax administration. Chapter 5: Final-year apportionments.

Chapter 6: Final-year inclusions. Chapter 7: The estate as taxpayer.

Chapter 8: Estate tax administration. Chapter 9: The estate as vendor.

Chapter 10: Estate duty. Chapter 11: Estate administration.

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August 2020 Evidence Corner—evidence could make a welcome change to tax cases

The cautionary rules: sexual cases

by Andrew Paizes © 2020 A Paizes ([email protected])

By far the most controversial aspect of the cautionary rules has been their application to criminal cases concerning the evidence of the complainant involving sexual assaults, such as rape. Before 1998, the courts were enjoined to exercise caution in respect of the evidence of such a complainant in much the same way as they did to the evidence of an accomplice.

Although this practice applied as much to the testimony of a male complainant as it did to that of a female complainant, the rule came under severe attack for being discriminatory, on the ground that complainants in sexual cases were predominantly female. It was no surprise, then, that the rule was abolished in this context in S v Jackson 1998 (1) SACR 470 (A).

Since then, however, the courts have stressed that, although Jackson signalled the demise of the general, immutable cautionary rule in sexual cases, this development does not mean that caution should not be exercised if the evidence in a particular case calls for such an approach.

S v Van der Ross 2002 (2) SACR 362 (C) was such a case: the accused and the complainant had lived together as man and wife for three years in a relationship characterized by quarrels and unhappiness;

the medical evidence showed no signs of sexual intercourse or violence; the complainant’s evidence appeared to be suspect and exaggerated; and her evidence was inconsistent in a material respect with a statement made by her to a witness after the alleged incident.

It has been held, moreover, that there is no impediment to the exercise of caution in sexual cases when the complainant is either a single witness or a young child. Other factors that have been held sufficient to warrant the exercise of caution include the fact that the complainant was intoxicated, was an appallingly bad witness or was of diminished intellect.

It is worth bearing in mind the warning issued by Yekiso J in S v K 2008 (1) SACR 84 (C) at [6]: the fact that complainants in sexual cases happen to be the most vulnerable members of our society ‘should not be allowed to be a substitute for proof beyond reasonable doubt or to cloud the threshold requirement of proof beyond a reasonable doubt’, since to do so would be nothing other than a miscarriage of justice.

It is not uncommon for an accused in a sexual case to be asked what possible motive the complainant may have for falsely accusing him or her. If the accused proffers a possible

reason, and that reason turns out to be unfounded, it is wrong to hold this outcome against the accused: see Van der Watt v S [2010] All SA 434 (SCA). In S v BM 2014 (2) SACR 22 (SCA) at [25] the court warned that ‘[t]he approach, that accused persons are necessarily guilty because the complainants have no apparent motive to implicate them falsely and they are unable to suggest one, is fraught with danger’, since the true reason for a prosecution witness’s testimony is ‘often unknown to the accused and sometimes unknowable’, and many factors may influence them in insidious ways: they may wish to curry favour with supervisors; they may need to placate and impress police officers or they may nurse secret ambitions and grudges unknown to the accused.

It is, further, wrong to ask a witness to speculate. If he or she is asked to do so, he or she cannot be blamed if it turns out that the explanation is found to be wanting: see S v Cekwana (unreported, WCC case no A523/15, 30 March 2017) at [34].

Legislative provisions Three legislative provisions have had an impact on this area of the law. Section 60 of the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007

August 2020


provides as follows:

Notwithstanding any other law, a court may not treat the evidence of a complainant in criminal proceedings involving the alleged commission of a sexual offence pending before that court, with caution, on account of the nature of the offence.

This provision is unlikely, in the light of the decision in Jackson, to have much impact on the practice of the courts. The discretionary use of caution in particular cases—as opposed to its mandatory application in all cases—continues to prevail since the provision was enacted in 2007.

The other two provisions, contained in sections 58 and 59 of the same Act, were enacted in response to the practice that had prevailed, before 2007, to consider the failure of a complainant to make a complaint at the first reasonable opportunity, as a factor that might count against the acceptance of the

complainant’s evidence. These provisions read as follows:

Section 58 Evidence relating to previous consistent statements by a complainant shall be admissible in criminal proceedings involving the alleged commission of a sexual offence: Provided that the court may not draw any inference only from the absence of such previous consistent statements.

Section 59 In criminal proceedings involving the alleged commission of a sexual offence, the court may not draw any inference only from the length of any delay between the alleged commission of such offence and the reporting thereof.

The result is that courts are no longer permitted to draw adverse inferences against the complainant from either (i) only the failure of the complainant to make a previous consistent statement or (ii) only the length

of the delay between the making of the statement and the alleged commission of the offence.

These sections, on the face of it, place significant limits on the inferential processes that may legitimately be conducted by the courts. However, since inferential processes are things best left to the courts, the provisions have been criticized, on the ground that it is both artificial and undesirable to curb or to interfere with such exercises: no two cases are alike, and it is impossible to anticipate in advance when a particular fact might become relevant. It is thus a serious error to tie the hands of a court in a situation where a fact which is, by its nature, relevant, is placed outside its reach. This is especially dangerous where the use of that fact might raise a reasonable doubt as to an accused’s guilt.

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MONTHLY CASES

Tax Shock, Horror was launched in September 2003. For Julian Ware’s headnotes to the tax cases, stretching back to 2006,

but including cases going back to 1997, click on past entries.

MONTHLY LISTINGS—CASE LAW

As from 2005, the Monthly Listing section has included brief but always critical accounts of judgments of the courts.

For all of these, click on cases.

MONTHLY LISTINGS—TRUST CASE LAW

From these, for all the cases dealing with trusts, click on trust cases.

MONTHLY LISTINGS—DECEASED ESTATES CASE LAW

For all of the cases dealing with a deceased party or deceased estate, click on estate cases.

MONTHLY NOTEBOOK ARCHIVE

For all the items ever published in the Monthly Notebook section, as from 2007,

click on past entries.

MONTHLY NOTEBOOK CONTENTS

For the titles of all the items ever published in the Monthly Notebook section, as from 2007,

click on contents.

MONTHLY NOTEBOOK—WORDS & PHRASES

For the entries dealing with legal meanings, as from 2009, click on words & phrases.

THRESHOLDS

For a selection of legal numerical or pecuniary thresholds, as from 1998, click on thresholds.

Tax Shock, Horror

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

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https://www.bspseminars.co.za/Archive/TrustCaseLaw.pdf

https://www.bspseminars.co.za/Archive/DeceasedEstatesCaseLaw.pdf


https://www.bspseminars.co.za/Archive/NotebookContents.pdf

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SA Has Stolen Itself Stupid - BSP Seminars · —An irreverent newsletter designed to keep you up to date— taxpayer by what I call the ‘originating auditor’, who gets off scot