Interpretation Note 91 (IN 91)

Draft SARS Interpretation Note (2025-42) outlining how section 7C of the South African Income Tax Act applies to loans, advances, or credit provided by a connected natural person to a trust, including definitions, application rules, and anti-avoidance measures to prevent tax-free wealth transfers via low or interest-free loans.

This judgment highlights the binding nature of tax settlement agreements, affirming that SARS must honour lawfully concluded agreements as final and enforceable. It reinforces certainty, fairness, and trust in tax dispute resolution by preventing SARS from deviating from agreed terms after compliance by the taxpayer.

Binding Private Ruling 424 examines whether interest on a loan used to redeem preference shares and settle related dividends is deductible under section 24J of the Income Tax Act.

BASF South Africa (Pty) Ltd v CSARS confirms that SARS may not amend a Rule 31 statement to introduce a new legal or factual case, while a taxpayer may raise fresh Rule 32 appeal grounds where they relate to the same disputed assessment amount already objected to.

SARS’ interpretation note 142 purports to be a note explaining what constitutes “similar finance charges” for the purposes of section 24J when really, it appears rather to be aimed mainly at contradicting a tax court judgment handed down a year earlier in favour of a taxpayer. In essence, the question is whether raising fees are deductible. The court says it is, SARS says its not. Who is right?

This judgment underscores the procedural limits in tax litigation, clarifying that taxpayers may not introduce entirely new grounds of appeal that effectively constitute new objections to previously undisputed aspects of an assessment. It reinforces the principles of finality, fairness, and procedural integrity in the objection and appeal process under the Tax Administration Act.