Retrospective legislation : do taxpayers have any recourse?

• Jurisdiction: South Africa
• Author: Liesl Kruger
• DOI: 10.10520/EJC173412
• Published date: 01 March 2014
• Date: 01 March 2014
• Pages: 15-20
• Published By: Siber Ink

15

© SIBER INK

Retrospective Legislation:

DO TAXPAYERS HAVE ANY RECOURSE?

LIESL KRUGER1

ABSTRACT

This article explores the seemingly ever-increasing use of retrospective legisla-

tion by the National Treasury and SARS. It explores the South African prec-

edent that may apply to limit the ability of the revenue authorities to enact

retrospective legislation. While the article recognises that the possibility of

successfully opposing the adoption of retrospective legislation on consti-

tutional grounds is limited, it argues that there are circumstances where

taxpayers could mount a successful constitutional challenge. The article

concludes that, while taxpayers will not automatically be able to rely on the

perceived unconstitutionality of retrospective legislation, they should never-

theless consider whether the facts of their particular case find application in

the limited situations where a constitutional challenge may be successful.

Introduction

The imposition of retroactive legislation by the National Treasury and the

South African Revenue Service (‘SARS’) has become increasingly prevalent

in recent years, often resulting in unintended consequences for taxpayers

who have entered into transactions that were implemented and completed

by the time the retrospective legislation was introduced.

South African law distinguishes between two main types of ‘retro-

spective legislation’, namely retroactive and retrospective legislation.

Legislation is retroactive if it changes the law from what it was at a date in

the past, typically if it provides that from a past date the new law will be

deemed to have been in operation. Legislation is retrospective if it imposes

new results in respect of a past event, that is, if it operates forwards but

looks backwards in that it attaches new consequences for the future of an

event that took place before the legislation was imposed.2

The primary rule against retrospective legislation is an interpretative

one. It is an ‘important legal rule forming part of what may be described

as our legal culture ... that no statute is to be construed as having retro-

spective operation (in the sense of taking away or impairing a vested right

acquired under existing laws) unless the Legislature clearly intended the

statute to have that effect’.3

1

Consultant, Edward Nathan Sonnenbergs, Cape Town.

2

Unitrans Passenger (Pty) Ltd t/a Greyhound Coach Lines v Chairman, National Transport

Commission and Others 1999 (4) SA 1 (SCA) at 7C.

3

National Director of Public Prosecutions v Carolus and Others, 2000 (1) SA 1127 SCA at 31.