The retrospective operation of statutory amendments to taxation laws : interpreting the amendments to section 8EA of the TLAA, 2016

• Pages: 21-29
• Published date: 01 March 2017
• DOI: 10.10520/EJC-629d5d7ff
• Author: Milton Seligson
• Date: 01 March 2017
• Record Number: btclq_v8_n1_a4

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© SIBER INK

The Retrospective Operation

of Statutory Amendments to

Taxation Laws:

INTERPRETING THE AMENDMENTS TO SECTION

8EA OF THE TLAA, 2016

MILTON SELIGSON SC*

ABSTRACT

Statutory amendments of the tax laws in the annual Taxation Law Amendment

Acts (‘TLAA’) now often provide for an effective date for the coming into

operation of the amendment that precedes the promulgation date of the

TLAA. There is usually also a provision that the amendment is to apply in

respect of years of assessment that completely or partially fall into a prior year

of assessment.

This can lead to diff‌icult issues of interpretation as to the retrospective

operation of the amendment and may raise questions of constitutionality if

the existing rights and expectations of taxpayers are retroactively affected in a

manner that runs counter to established notions of fairness and equity.

The article discusses the various language formulations used in the TLAA

2016 as to the effective or operative date of the amendment. It shows that

where the amendment is to operate from a date that clearly falls into a

previous tax year that has already elapsed, the formulation customarily used

is that the amendment is deemed to have come into operation on that prior

date and that it applies in respect of years of assessment commencing on that

date. On the other hand, where the amendment is to come into effect more

or less contemporaneously with the promulgation of the TLAA, it is provided

simply that it comes into operation on the date in question and applies in

respect of years of assessment ending on or after that date. There is in that

case no deeming provision.

The rules relating to the interpretation of retrospective statutory provisions

are explored, including the important 2007 decision of the Constitutional

Court in Veldman v Director of Public Prosecutions, Witwatersrand Local Division.

The article concludes that, in the light of this decision, even though it related

to the retrospective application of a penal statute, retroactive amendments

may well be unconstitutional if they do not meet the standards of certainty

and accessibility and conform to notions of fairness and justice that underlie

the rule of law. Even where a retrospective amendment passes constitutional

muster, it must be restrictively interpreted and will not affect completed

actions or transactions, according to established precedent.

The article discusses the problem of retrospectivity in the context of the

application of the amendments to section 8EA of the Income Tax Act, as

contained in the 2016 TLAA promulgated on 19 June 2017. These amend-

ments expanded the ambit of section 8EA to include third-party backed

*Senior Counsel, Cape Bar.