The GAAR’s Objectively Subjective Purpose Requirement

by | Mar 15, 2026 | BTCLQ, BTCLQ V17 I1

The GAAR’s Objectively Subjective Purpose Requirement

Authors: Albertus Marais and Dewald Pieterse

ISSN: 2219-1585
Affiliations: Attorney of the High Court, CA(SA), Certified Tax Advisor (SAIT); LLM (Tax Law) (UCT)
Source: Business Tax & Company Law Quarterly, Volume 17 Issue 1, 2025, p. 22 – 40

Abstract

This article examines whether the ‘sole or main purpose’ requirement of the so-called general anti-avoidance rule (‘the GAAR’) in sections 80A–80L of the Income Tax Act1 is tested subjectively, objectively, or, as some commentators and the recent Tax Court judgment in Mr Taxpayer G2 have suggested, involves a ‘hybrid’ of the two.
The article begins by explaining the distinction between a subjective and an objective approach to the sole or main purpose requirement, before outlining the approach as it previously existed in section 103(1) of the Income Tax Act. It then critically examines the principal arguments advanced in favour of a ‘more objective’ or hybrid test under the new GAAR, after which the arguments in favour of a subjective test are expounded on.
The authors conclude that the sole or main purpose test in the GAAR today must necessarily be binary, meaning it can be either objective or subjective, but cannot be a hybrid of the two. In light of the compelling arguments in favour of such a position, it is ultimately concluded that the test for the sole or main purpose requirement in the new GAAR remains decidedly subjective, and, ironically, that the test applied in Mr Taxpayer G, notwithstanding the Court’s doctrinal endorsement of a ‘more objective’ hybrid test, is in fact the very same subjective purpose test that has applied to the GAAR since its inception.

Equal Treatment of Post-Commencement Creditors in Business Rescue Proceedings: Commentary on Mashwayi Projects v Wescoal and Others

by | Mar 15, 2026 | BTCLQ, BTCLQ V17 I1

Equal Treatment of Post-Commencement Creditors in Business Rescue Proceedings: Commentary on Mashwayi Projects v Wescoal and Others

Author: Siyabonga Nyezi

ISSN: 2219-1585
Affiliations: Legal Advisor, Nedbank
Source: Business Tax & Company Law Quarterly, Volume 17 Issue 1, 2025, p. 41 – 46

Abstract

This case note examines the treatment of post-commencement creditors in business rescue proceedings in South Africa, following the Supreme Court of Appeal ruling in Mashwayi Projects v Wescoal and Others [2025] 2 All SA 57 (SCA). Business rescue, regulated by Chapter 6 of the Companies Act 71 of 2008, aims to rehabilitate financially distressed companies. Attempts at rescuing the company must, in terms of section 7(k) of the Companies Act, also consider the interests of other stakeholders such as creditors. The main issue in Mashwayi was whether post-commencement creditors have voting rights in relation to a proposed business rescue plan in terms of section 152(2) of the Companies Act. Pre-commencement creditors argued for their exclusion, citing the absence of explicit legislative reference to post-commencement creditors. The Supreme Court of Appeal rejected this interpretation, holding that the term ‘creditor’ bears its ordinary meaning — any person to whom a debt is owed — and that the Companies Act does not distinguish between pre- and post-commencement creditors. This article aligns with the court’s view and asserts that equal recognition of creditors not only fosters confidence in the post-commencement credit market but also reinforces the principle of equitable stakeholder treatment.

Section 15(7) of the Companies Act, 2008: Acta Non Sunt Servanda – How Far Does It Go?

by | Jan 10, 2026 | BTCLQ, BTCLQ V16 I4

Section 15(7) of the Companies Act, 2008: Acta Non Sunt Servanda – How Far Does It Go?

Authors: Matthew Blumberg SC and Tumelo Ntsewa

ISSN: 2219-1585
Affiliations: Member, Cape Bar
Source: Business Tax & Company Law Quarterly, Volume 16 Issue 4, 2025, p. 1 – 9

Abstract

Shareholders’ agreements are a common feature of limited liability trading and investing. That was the case under the Companies Act, 1973, and it remains the case under its successor, the Companies Act, 2008. Under the former, shareholders’ agreements generally took precedence over the company’s articles of association in cases of conflict. Under the latter, the position is different. This is captured in section 15(7) of the Companies Act, 2008 which provides that a shareholders’ agreement that is inconsistent with the company’s Memorandum of Incorporation is void to the extent of the inconsistency. A recent Western Cape High Court judgment dealing with section 15(7) provides an opportunity to take stock of the jurisprudence. An analysis of the case law and academic writing reveals the ambit and operation of section 15(7) to be more nuanced and complex than may at first blush appear to be the case. The exact extent to which section 15(7) marks a departure from the previous regime remains, in important respects, yet to be decided on an authoritative basis.

Reversing Leave to Appeal: Navigating Procedural Uncertainty in South African Tax Dispute Resolution

by | Jan 10, 2026 | BTCLQ, BTCLQ V16 I4

Reversing Leave to Appeal: Navigating Procedural Uncertainty in South African Tax Dispute Resolution

Authors: Bradely Khethwa and Des Kruger

ISSN: 2219-1585
Affiliations: Associate, Webber Wentzel Attorneys
Source: Business Tax & Company Law Quarterly, Volume 16 Issue 4, 2025, p. 10 – 15

Abstract

It is well established that the Tax Administration Act 28 of 2011 provides several avenues through which an aggrieved taxpayer may seek recourse before the tax court. However, a complex jurisdictional dilemma arises when SARS, having initially granted a taxpayer leave to appeal, subsequently contends that the Tax Court lacks jurisdiction to adjudicate the matter. This reversal not only undermines procedural certainty but also raises critical questions about the scope of the tax court’s authority and the integrity of the dispute resolution process under the Tax Administration Act. This article explores this legal uncertainty, examining its implications for taxpayers and the broader tax adjudication framework. This question will be explored in detail with a specific focus on the recent judgment delivered by the Supreme Court of Appeal in Commissioner for the South African Revenue Service v African Bank Limited (242/2024) [2025] ZASCA 101.

The Commercial Realities of Financial Assistance

by | Jan 10, 2026 | BTCLQ, BTCLQ V16 I4

The Commercial Realities of Financial Assistance

Author: Joseph R Tettey

ISSN: 2219-1585
Affiliations: LLB (Wits), LLM (Wits), MM (Wits); MCom (Taxation) and LLM (UJ); Principal Lead Counsel, ABSA Bank
Source: Business Tax & Company Law Quarterly, Volume 16 Issue 4, 2025, p. 16 – 30

Abstract

This article explores the concept of financial assistance under the Companies Act, focusing on sections 44 and 45, which aim to prevent abuse of control and protect minority shareholders and creditors. It traces the historical rationale for these provisions, rooted in public policy concerns, and examines their evolution from strict prohibitions to a more permissive framework subject to solvency, liquidity, and fairness requirements. The article incorporates economic principles such as information asymmetry and moral hazard, analyses judicial interpretations including the impoverishment test, and highlights recent legislative developments such as the carve-out for subsidiaries. The article concludes that determining whether financial assistance has been provided is a substantive legal inquiry guided by commercial realities, legislative intent, and case law, with non-compliance rendering transactions void and exposing directors to personal liability.

Navigating the VAT Maze: Input Tax Deductibility for Holding Companies and Private Equity Structures in the Post-Woolworths Era

by | Oct 18, 2025 | BTCLQ, BTCLQ V16 I3

Navigating the VAT Maze: Input Tax Deductibility for Holding Companies and Private Equity Structures in the Post-Woolworths Era

Authors: Joon Chong and Des Kruger

ISSN: 2219-1585
Affiliations: Partner, Webber Wentzel; Consultant, Webber Wentzel
Source: Business Tax & Company Law Quarterly, Volume 16 Issue 3, 2025, p. 1 – 14

Abstract

This article provides a comprehensive analysis of the evolving legal landscape governing value-added tax (VAT) input tax deductibility for holding companies in South Africa, as well as for private equity structures. It examines the seminal judgments in Commissioner for the South African Revenue Service (CSARS) v De Beers Consolidated Mines Ltd, the recent landmark case of CSARS v Woolworths Holdings Limited, and the corroborating Tax Court decision in IT 76795. The analysis reveals a fundamental jurisprudential shift away from the restrictive, transaction-focused approach established in De Beers towards the holistic, purpose-driven framework solidified in Woolworths. This evolution presents both significant opportunities and new compliance imperatives for corporate structures, particularly within the private equity (PE) sector.
The central principle emerging from this body of case law is the critical importance for a holding company to defi ne, structure, and evidence its status as an ‘active investment holding company’. To successfully claim input VAT on acquisition, capital-raising, and other strategic expenses, a holding company must demonstrate that its core enterprise involves the continuous and regular provision of taxable supplies – such as management, financial, or administrative services – to its underlying portfolio companies for a fee. The mere passive holding of shares and receipt of dividends or interest is insufficient to constitute a VAT enterprise for the purposes of deducting input tax on associated costs.
The core thesis of this article is that the test for deductibility has evolved. The question is no longer whether an expense has a ‘direct and immediate link’ to a specific operational transaction, but rather whether it has a clear ‘functional link’ to the company’s overall, continuous enterprise. The Woolworths judgment has affirmed that costs incurred in furtherance of strategic expansion, such as capital-raising fees, are deductible if they serve to enhance and grow an active investment management enterprise.
For the PE industry specifically, this represents a pivotal moment. The strategic imperative is clear: PE holding companies must proactively structure their operations to align with the principles of the Woolworths judgment. This involves establishing formal management service agreements, charging market-related fees, and maintaining meticulous records that evidence active strategic involvement in portfolio companies. By doing so, they can create a defensible basis for claiming input VAT on a wide range of transaction costs, thereby mitigating tax leakage and enhancing overall fund returns.