Editorial

• Jurisdiction: South Africa
• Author: Milton Seligson
• DOI: 10.10520/EJC-b6a0b88d9
• Published date: 01 December 2017
• Date: 01 December 2017
• Record Number: btclq_v8_n4_a1
• Pages: v-vi
• Published By: Siber Ink

v

© SIBER INK

Editorial

MILTON SELIGSON SC

The articles in this issue of the BTCLQ provide varied and topical content

which should be of assistance to tax advisors and others engaged in nego-

tiating and attempting to master the growing complexity of South African

tax laws. Des Kruger’s contribution is a ground-breaking article on the

tricky subject of ‘VAT and Partnerships’ by an acknowledged expert on the

difficult topic of VAT; Michael Rudnicki discusses the impact of section

20A of the Income Tax Act in considering whether or not the ring-fencing

of assessed losses under that provision would preclude their being set

off against capital gains for the purpose of establishing taxable income;

while Ed Liptak’s critical analysis of a recent judgment in the Gauteng Tax

Court in which the ‘substance-over-form’ rule was applied, shows that the

doctrine continues to be applied by the courts in a manner at odds with the

clear exposition of its scope and meaning by the Supreme Court of Appeal

in the cases of Roshcon (Pty) Ltd v Anchor Auto Body Builders CC and Others1

and Commissioner, South African Revenue Service v Bosch and Another.2

***

In his article, Des Kruger considers the arguments for and against the treat-

ment of a partnership as a separate person for VAT purposes. The author

concludes that the answer may well be that while a partnership is in fact

treated as a person separate from its members where the partnership carries

on an enterprise as defined, in all other cases the partnership is transparent,

i e it is the partners who are taxed (as is the case under the Income Tax Act).

The article shows the importance of determining whether a partnership is

transparent or must be treated as a separate person. The application of the

zero-rating provisions of section 11(2)(l) of the Value-Added Tax Act where

a partnership has both resident and non-resident partners is considered.

The author observes that the outcome will differ, depending on whether

the recipient of the relevant supplies is the partnership or the individual

partners.

Michael Rudnicki, in his article, adopts the hypothesis that, regardless

of the limitation imposed by the provisions of section 20A of the Income

Tax Act (to which the assessed loss set-off provisions of section 20 are

subject), to restrict the deduction of assessed losses from a particular trade

to income from that trade, it should be possible for the ring-fenced loss to

be set off against capital gains, which are deemed to form part of ‘taxable

income’ in terms of section 26A of the Act. While accepting that the legal

1

2014 (4) SA 319 (SCA).

2

2015 (2) SA 174 (SCA).