ENS Tax In Brief

Below, please find issue 140 of ENS' Tax in brief, a snapshot of the latest tax developments in South Africa.

case law

• The Commissioner for the South African Revenue Service ("SARS") issued additional assessments for the 2009, 2012, and 2013 tax years against the Trust. The attorneys, acting on behalf of the Trust, objected and lodged an appeal despite claiming that the Trust had ceased to exist in 2017.
  • The court held that the attorneys (i) contradicted themselves by asserting the Trust no longer existed while continuing to litigate on its behalf, (ii) failed to properly challenge SARS' assessments by seeking a High Court declaratory order, and (iii) their actions caused unnecessary legal costs for SARS.
  • The court confirmed the assessments and granted default judgment against the Trust. A punitive cost order was imposed on the attorneys for improperly pursuing the case.
  • Find a link to the judgment here.
• Tax Court | Taxpayer Trust v CSARS (IT76795)
  • A South African trust incurred raising fees when securing various loans from Sanlam for property acquisitions and refinancing. SARS disallowed the income tax deduction of these fees, arguing they were not "interest or similar finance charges" under section 24J of the Income Tax Act 58 of 1962 ("ITA") and were capital in nature. The taxpayer challenged this decision in the Tax Court.
  • The court distinguished "similar" from "identical", ruling that the fees bore resemblance to interest. The fees were not purely capital in nature since they facilitated access to credit. The court therefore held that the raising fees qualified as "interest or similar finance charges" under section 24J and were deductible.
  • The taxpayer's appeal was upheld.
  • Find a link to the judgment here.
• Tax Court | EB Taxpayer v CSARS (IT46098)
  • The taxpayer sought a default judgment against SARS, arguing that SARS failed to file its rule 31 statement grounds of assessment within the required 45-day period. SARS opposed the application, claiming that litigation was suspended by agreement to pursue settlement negotiations. SARS also applied for condonation for the late filing of its statement.
  • The court found that there was indeed an agreement to suspend litigation, evidenced by emails from the taxpayer indicating ongoing settlement discussions, and therefore SARS was not in default, making the taxpayer's application for default judgment premature. Even if SARS had been in default, it showed good cause for its delay, including internal governance processes and continued engagement with the taxpayer.
  • The taxpayer's application for default judgment was struck from the roll and SARS was granted condonation for the late filing of its rule 31 statement.
  • Find a link of the judgment here.
• Supreme Court of Appeal |Sishen Iron Ore Company (Pty) Ltd v C: SARS (550/2023) [2025] ZASCA 16
• The Supreme Court of Appeal has provided critical guidance on the deductibility of mining-related expenses under the ITA. The court held the following in relation to expenditure incurred:
  • Relocation costs were held to be deductible under section 36(11)(e), as they were essential to fulfilling the taxpayer's mining rights obligations and operational efficiency. The court also suggested that such costs might qualify under section 11(a).
  • Legal costs were disallowed as deductions under section 11(c), as they did not directly relate to the taxpayer's income-producing activities.
  • Power line relocation costs were held to be deductible under section 36(11)(a). The court also found that the costs would be deductible under section 11(a) on the basis that it constituted mine equipment.
  • Understatement penalties were set aside, and interest charges were referred back to SARS for reconsideration.
• This judgment reaffirms that mining-related expenditures tied to statutory obligations may be deductible if they support compliance and operational continuity.
• Find a link to the judgment here.
• Tax Court | Pear (Pty) Ltd v Commissioner for the South African Revenue Service (IT 46080) o The taxpayer, a citrus farming company, lodged a dispute regarding whether:
  • The incurral of an insurance premium in the amount of c. R10 million (which significantly exceeded prior year insurance premium deductions) was deductible in terms of section 11(a), read with section 23L(2) of the ITA; and
  • SARS was permitted to reopen the taxpayer's 2017 assessment in terms of section 99(1)(a) of the Tax Administration Act, 2011 ("TAA") due to misrepresentation.
• Although the taxpayer could not prove that the premium was an expense for IFRS purposes, which is necessary to substantiate a deduction therefor under section 23L(2) of the ITA, the court concluded that SARS did not discharge its onus in proving that the 2017 assessment involved a misrepresentation and therefore SARS could not reopen the 2017 assessment. Thus, even though the taxpayer would have failed to prove its entitlement to a deduction as it did not comply with section 23L(2) of the ITA, the 2017 assessment was held to have prescribed.
• The appeal was therefore upheld, allowing the deduction of the insurance premium for the 2017 assessment.
• Find a link to the judgment here.
• High Court | Greyvenstein v Commissioner for the South African Revenue Service and Others (case no: B2495/2023)
  • The applicant contested the constitutionality of sections 180, 184(2), and 186(3) of the TAA relating to the recovery of tax liabilities and repatriation of foreign assets.
  • The applicant averred that section 180 read with section 184(2) of the TAA violates his right to access to court under section 34 of the Constitution of the Republic of South Africa, 1996 ("Constitution"), on the basis that the sections allow SARS to resort to self-help thus undermining his access to court.+
  • The court found that the provisions do not infringe on the applicant's right to access to court under section 34 of the Constitution.
  • The applicant similarly claimed during oral argument that those sections amount to unfair discrimination under section 9(3) of the Constitution. The court did not rule this point on the basis that it was not in the papers before it.
  • Held that sections 180, 184(2), and 186(3) of the TAA are constitutionally valid and the application was dismissed with costs.
  • Find a link to the judgment here.

legislation and draft legislation

• Income Tax Act, 1962 | The following income tax notices, as published in Government Gazette 52199 of 28 February 2025, relate to –
  • determination of the daily amount in respect of meals and incidental costs for purposes of section 8(1)(c)(ii) (overnight allowance), please find the notice here;
  • determination of the daily amount in respect of meals and incidental costs for purposes of section 8(1)(a)(ii) (daily allowance), please find the notice here; and
  • fixing the rate per kilometre in respect of motor vehicles – section 8(1)(b)(ii) and (iii), please find the notice here.

SARS publications

• Donations Tax Declaration form (IT144) to be enhanced.
  • SARS has noted that taxpayers are experiencing challenges when completing the current IT144 form and will be enhancing the form.
  • SARS has published the previous PDF version of the form to be used until the enhancements have been made.
  • Read more here.
• Guides
  • VAT Reference Guide – Foreign Donor Funded Projects ("FDFPs") (Issue 3)
  • The reference guide provides information and guidelines regarding the value-added tax (VAT) treatment of FDFPs.
  • Find a copy of the guide here
• High Court | Greyvenstein v Commissioner for the South African Revenue Service and Others (case no: B2495/2023)
  • The applicant contested the constitutionality of sections 180, 184(2), and 186(3) of the TAA relating to the recovery of tax liabilities and repatriation of foreign assets.
  • The applicant averred that section 180 read with section 184(2) of the TAA violates his right to access to court under section 34 of the Constitution of the Republic of South Africa, 1996 ("Constitution"), on the basis that the sections allow SARS to resort to self-help thus undermining his access to court.
  • The court found that the provisions do not infringe on the applicant's right to access to court under section 34 of the Constitution.
  • The applicant similarly claimed during oral argument that those sections amount to unfair discrimination under section 9(3) of the Constitution. The court did not rule this point on the basis that it was not in the papers before it.
  • Held that sections 180, 184(2), and 186(3) of the TAA are constitutionally valid and the application was dismissed with costs.
  • Find a link to the judgment here.

legislation and draft legislation

• Income Tax Act, 1962 | The following income tax notices, as published in Government Gazette 52199 of 28 February 2025, relate to –
  • determination of the daily amount in respect of meals and incidental costs for purposes of section 8(1)(c)(ii) (overnight allowance), please find the notice here;
  • determination of the daily amount in respect of meals and incidental costs for purposes of section 8(1)(a)(ii) (daily allowance), please find the notice here; and
  • fixing the rate per kilometre in respect of motor vehicles – section 8(1)(b)(ii) and (iii), please find the notice here.

SARS publications

• Donations Tax Declaration form (IT144) to be enhanced
  • SARS has noted that taxpayers are experiencing challenges when completing the current IT144 form and will be enhancing the form.
  • SARS has published the previous PDF version of the form to be used until the enhancements have been made.
  • Read more here.
• Guides
  • VAT Reference Guide – Foreign Donor Funded Projects ("FDFPs") (Issue 3)
  • The reference guide provides information and guidelines regarding the value-added tax (VAT) treatment of FDFPs.
  • Find a copy of the guide here.
• The Donations Tax Guide has been updated to align with legal technical requirements and processes
  • The purpose of the external guide is to provide guidelines regarding the completion of the Donations Tax declaration form (IT144).
  • Find a copy of the guide here.
• Tax Practitioner Connect Issue 60 (February 2025)
  • In this issue, SARS provides information about steps taken by SARS to keep taxpayers information safe through biometrics, the release of a new version of e@syFile, preparation for the upcoming Employer filing season and submission of the February provisional tax payments.
  • Upcoming developments relating to the digital submission of suspension of payment arrangements for Trusts and the criteria for taking out a selfie when submitting supporting documents to SARS are also covered.
  • Read the latest issue here.

exchange control

• Exchange Control Circular No. 1/2025 | Securities Control – Authorised Dealer branches appointed as Authorised Banks.
  • The name of Mercantile Bank Limited and the three associated branches that have been appointed as Authorised Banks in section G.(A)(iii)(k) of the Authorised Dealer Manual have been deleted.
  • In addition, the name of Capitec Bank Limited with its associated branch appointed as an Authorised Bank, Sandton Campus, have been added to section G.(A)(iii)(k) of the Authorised Dealer Manual.
  • Find the circular here.

customs and excise

• Registration, licencing and accreditation
  • The facility codes used in Box 30 of Goods Declaration have been updated to include the details of the newly approved
  • Transit Shed – Bidfreight Port Operations (Pty) Ltd
  • Find the code list here.
• Prohibited and Restricted Imports and Exports list
• The following tariff headings require export permits
  • 7403.12 - Wire-bars
  • 7403.13 - Billets
  • 7403.19 - Other
  • 7403.21 - Copper-zinc base alloys (brass)
  • 7403.22 - Copper-tin base alloys (bronze
  • 7403.29 - Other copper alloys (excluding master alloys of heading 74.05)
• Find the entire list here.
• Customs and Excise Act, 1964 | Amendment to rules under section 58A in relation to anti-forestalling
  • Section 58A and the rules thereto provide for anti-forestalling measures in respect of anticipated increases in excise duties.
  • The proposed amendments are a result of the postponement of Budget 2025.
  • Please find the Draft amendment to the rules here.
• Prohibited and Restricted Imports and Exports list
• Tariff headings 8422.90 and 8471.49.90 do not require a Letter of Authority.
• Find the list here.

International

• Organisation for Economic Co-Operation and Development ("OECD") | Inclusive Framework on BEPS shows progress in making dispute resolution more effective.
• The OECD released the latest BEPS Action 14 Mutual Agreement Procedure ("MAP") peer review results, showing continued progress in improving the effectiveness and timelines of dispute resolution for treaty-related disputes.
• A new simplified peer review process has been introduced for jurisdictions with low MAP experience, while jurisdictions with meaningful MAP experience continue under a full peer review process.
• Highlights include the signing and ratification of the Multilateral Instrument by Burkina Faso, Iceland, Peru, and Senegal, the development of MAP frameworks by several jurisdictions, and the issuance of updated MAP guidance by Iceland, Peru, and Samoa.
• Find more detail here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.