Christoffel Hendrik Wiese and Others vs. CSARS

South Africa

12.07.2024

Civil

Tax debt only arose upon notice of assessment

The Commissioner for the South African Revenue Services (SARS) instituted action against the Appellants, in terms of Section 183 of the Tax Administration Act, 2011 (the TAA) for payment of R216.6 million. SARS claimed that, the Appellants caused, or assisted in causing, Energy Africa Propriety Limited, (Energy Africa or the taxpayer) to dissipate its assets in order to obstruct the collection of a tax debt owed by it to SARS. The dissipation was alleged to have occurred by transferring a loan account claim Energy Africa held in Titan Share Dealers Proprietary Limited (TSD) as a dividend in specie to Elandspad Investments Proprietary Limited (Elandspad), its holding company.

The trial proceeded in the high court upon an agreed separation of issues. The high court found that the transcript was admissible. It held that the purpose for which the evidence could be used should be determined by the trial court. The high court also found that the STC and CGT tax assessments constitute tax debts for purposes of Section 183 of the TAA. The appeal, with the leave of the high court, is against these findings.

A ‘tax debt’ must have necessarily existed at the time of the alleged dissipation and the person concerned must have known that the tax debt existed. A tax debt is an amount which is due and payable, as the ordinary meaning of the term suggests. In this instance, the tax debt only arose upon notice of assessment.

The purpose of chapter 5 of the TAA, in which Section 56 occurs, was to facilitate the execution of SARS’ statutory mandate to collect tax. The TAA recognised the fact that SARS stood as a stranger to transactions between taxpayers. SARS was empowered to obtain information, it would otherwise not be able to acquire, in order to perform its statutory functions. Section 56(4) provided specifically that the evidence may be used against another person. Section 69(1) was qualified by Section 69(2) which made provision for the disclosure of a taxpayer’s information under specified circumstances. The confidentiality of such information was therefore not without restriction.

Section 69(2)(a) specifically authorised the disclosure of a taxpayer’s information in a variety of circumstances, including by a SARS official as a witness in civil proceedings. Additionally, Section 56(3) provided for restrictions on the application of Section 69 to the extent necessary, depending upon the circumstances of the case. There was accordingly no contradiction between these sections. As a result, the Supreme Court agreed with the high court and held that the transcripts were indeed admissible. Appeal dismissed.

Tags : Tax Administration Act Tax Debt

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