Following the judgement of the Supreme Court of Appeal in the income tax case of Nissan v Commissioner for SARS, much speculation has taken place in the media on the impact of the judgment for both taxpayers and the fiscus.
The judgement was delivered earlier this month and the issues which the court made a finding on are the following:
The Court found in favour of the taxpayer viz. that it is a scheme for the promotion of exports and having regard to the operation of the section, it is not necessary that the scheme requires ministerial approval.
However, there are still other issues which are relevant to the matter on which the Court has not made any finding. One such issue is whether a rebate of excise duty constitutes an accrual. In this regard it was already held in a reported decision of the Transvaal Special Court for hearing income tax appeals, that a rebate did not constitute a receipt or accrual. If there was no receipt or accrual the provisions of section 10(1)(zA) are not applicable.
In order the decide how to deal with this issue, SARS is at present in the process of evaluating the judgement and its effect. This involves inter alia the following:
Once this information has been gathered consideration will be given, in the light of legal opinion obtained, on how to proceed with the matter.
This will also include matters such as late objections and appeals as well as requests for refunds.
Receivers of Revenue has been instructed not to issue revised assessments or make refunds in respect of any claim regarding phase VI schemes until this office gives further instructions in this regard.
ISSUED BY THE DEPUTY COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE