Mastering Tax Disputes: Insights from Commissioner for the South African Revenue Service v ABSA [2023] ZASCA 115

In the dynamic world of tax law, staying abreast of the latest developments is paramount for CEOs, CFOs, and business leaders. The recent Supreme Court of Appeal judgment of Commissioner for the South African Revenue Service v ABSA [2023] ZASCA 115 provides valuable insights into developments pertaining to tax dispute resolution.

SARS probed into an investment deal entailing Brazilian Government Bonds with Macquarie Securities. This triggered the issuance of notices under section 80J of the Income Tax Act, signalling an intent to assess based on the General Anti-Avoidance Rule (GAAR) provisions.

ABSA, in response, sought the withdrawal of the s 80J notices leveraging section 9(1) of the Tax Administration Act. Section 9(1) allows taxpayers to request the withdrawal of certain tax notices, serving as a powerful tool for addressing tax matters. In this instance, SARS informed ABSA that it would not withdraw the 80J and that any objections they had should be raised in their response to the 80J Notice.

The SCA has underscored that SARS decisions under section 80J of the GAAR are not classified as administrative actions and do not impose adverse effects on taxpayers. Consequently, determinations made under section 9 of the TAA regarding the non-withdrawal of section 80J notices are deemed non-reviewable. This understanding is of paramount importance for executives navigating akin circumstances.

Another crucial aspect of this case centred around the jurisdiction of the High Court in handling tax disputes under section 105 of the Tax Administration Act 28 of 2011. Typically, the Tax Court is designated as the primary venue for tax-related disputes. However, section 105 provides an exception, allowing High Courts to hear tax disputes where the taxpayer obtains such a directive to allow the High Court to hear the matter. Failing to obtain this directive could prove detrimental to the case's proceedings in the High Court. This judgment, drawing on the precedent set by the Rappa Resources case earlier this year, emphasized that while a pure point of law may activate section 105, as soon as a dispute of fact arises, section 105 becomes inapplicable, and standard dispute procedures must be followed.

In conclusion, a deep understanding of tax dispute intricacies is indispensable for business leaders. The Absa judgement provides a valuable lesson in this regard. By familiarizing themselves with these nuances, CEOs and CFOs can navigate their companies within the bounds of tax laws while safeguarding their financial interests.

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The contents of any article published by Pieterse Sellner Erasmus should not be construed as professional legal advice.