Editorial

• Author: Des Kruger
• DOI: 10.10520/EJC-14ce8bb29b
• Date: 01 March 2019
• Record Number: btclq_v10_n1_a1
• Pages: v-vi
• Published date: 01 March 2019

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Editorial

DES KRUGER

This month’s edition kicks off with a timely article by Dr Fareed Moosa

which provides an analysis of the ethos and values espoused by section

195 of South Africa’s Constitution which, together with the Bill of Rights

in Chapter 2 of the Constitution, which Dr Moosa argues must be adopted

and applied by the South African Revenue Service (‘SARS’) in the adminis-

tration of our tax laws. There is a sense that SARS has become a law unto

itself, and Dr Moosa argues that Constitutional supremacy obliges SARS

to respect taxpayers’ constitutional rights, and that its administrative

processes must, so far as it may affect taxpayers, conform to democratic

norms, values and standards. He concludes that in the execution of their

duties SARS off‌icials must promote and maintain a high standard of profes-

sional ethics; promote eff‌icient, economic and effective use of resources; be

development orientated; provide services impartially, fairly, equitably and

without bias; put people’s needs f‌irst (so-called batho pele) by responding

to taxpayers’ needs; encourage them to participate in policy-making; be

accountable; and foster transparency by providing timely, accessible,

accurate information.

The second article, by Michael Rudnicki, examines some of the peculi-

arities of the provisions of section 24C of the Income Tax Act, 1962 — an

allowance for future expenditure on contracts. The primary focus of the

article is to analyse two key aspects of the section: (i) whether the section

is restricted to the receipt of income as opposed to the accrual of income

generated by a contract; and (ii) the necessary correlation between the

contract generating the advance income and the contractual obligations

to incur future expenditure. Michael argues that the words must be given

meaning and accordingly the accrual of income will be suff‌icient to trigger

a section 24C allowance. As regards the second issue noted above, namely

the degree of necessary correlation between the contract generating the

advance income and the contractual obligations to incur future expendi-

ture, he argues that the recent Supreme Court of Appeal (‘SCA’) decision

in CSARS v Big G Restaurants (Pty) Limited1 was perhaps wrongly decided,

whilst that of the Tax Court in ABC (Pty) Limited v the Commissioner for the

South African Revenue Service2 was correctly decided. The former case dealt

with a franchisee who sought to claim a section 24C allowance in respect of

expenditure it was required to incur under the franchise agreement, while

the latter related to a section 24C allowance claimed by a retailer in respect

1

157/2018, ZASCA 179 (3 December 2018).

2

Case 13988, 1 November 2018.