Broomberg On Tax Strategy 5th Edition – Peter Dachs

One interesting dissent, however, is to be found in ITC 984, 25 SATC 59. The court allowed the deduction of a commission paid by a lessor to an agent as a reward for securing a tenant, even though this occurred prior to the completion of the building. This decision makes obvious sense. The theory underlying the disallowance of “pre-production” expenditure is that the expenditure is more closely linked to the creation or the enhancement of the income-earning structure than to the operation of that structure.

According to this line of reasoning, if a building is complete and ready for letting, but the lessor is simply unable to find a tenant, then his expenditure should rank for deduction in full. This, indeed, was the finding of the court, for example, in ITC 777, 19 SATC 320, where a genuine endeavour to let shops throughout the year, even though the efforts proved fruitless, was held to constitute trading, and the lessor was able to build up an assessed loss against the day that rents rolled in.

It might be thought that a lessor who ceased letting the property for a relatively short period, in order, for example, to carry out renovations to the property, ought not to be debarred from deducting his running costs, such as assessment rates, interest on bond and so forth, while the repairs are under way, but the courts have held otherwise (ITC 318, 8 SATC 174; ITC 490, 12 SATC 72; ITC 697, 17 SATC 93).

In ITC 318 the break in letting was as short as six months, but the court still refused to allow the deduction of the running expenditure. Where letting has ceased altogether, any further expenditure incurred in connection with the property can no longer be said to be incurred in the production of income, or for the purpose of trade, and such expenditure will be disallowed as a deduction.

Some planning solutions for these particular problems are outlined in 7.2. When a lessor pays interest under a mortgage bond securing a loan raised by the lessor to acquire or develop the leased property, the interest is, in practice, allowed as a deduction. However, in ITC 882, 23 SATC 239, the taxpayer had paid a raising fee in respect of a building loan and the claim to deduct the expenditure was declined.

The reasoning of Kuper J in that case highlights the need for care in tax planning. Counsel for the taxpayer had relied on a statement by Schreiner JA in CIR v Genn & Co (Pty) Ltd (1955 (3) SA 293 (A), 20 SATC 113) to the following effect: “. . . it is not possible in the present case to justify a difference in treatment between the interest on the loans and the commissions (that is, raising fees), the circumstances .

Copyright subsists in this work. No part of this work may be reproduced in any form or by any means without the publisher’s written permission. Any unauthorised reproduction of this work will constitute a copyright infringement and render the doer liable under both civil and criminal law.

Whilst every effort has been made to ensure that the information published in this work is accurate, the editors, publishers and printers take no responsibility for any loss or damage suffered by any person as a result of the reliance upon the information contained therein. Editor: Marjorie Guy Technical Editor: Yagen Naidoo Printed and bound by Interpak Books Pietermaritzburg 1kitap1.com/en Preface to the Fifth Edition The preface to the first edition of this work, published in 1978, merely dealt with certain case referencing issues. As always, Adv. Eddie Broomberg SC left the talking to the text – and what a seminal work it turned out to be.

Not many changes to the tax law (other than the introduction of sales tax) took place between the first and second edition, published in 1983. However, significant legislative changes to the provisions of the Income Tax Act, 1962 (including the introduction of fringe benefits tax and the replacement of sales tax with a value-added tax), necessitated a further update. I was very pleased and privileged to have had the opportunity to work with Eddie on the third edition published in 1998.

Tax law, as we know and experience, never stands still, and the introduction of capital gains tax in 2001 was the major catalyst for a fourth edition published in 2003. Since 2003 we have experienced unprecedented changes to our tax laws, not least the recently introduced revised general anti-avoidance rule (GAAR), and very many seminal judgements that have in certain instances reformed commonly accepted tenets (Brummeria and Founders Hill spring to mind), which clearly necessitated a further update. This edition is based on the law as it stood on 30 September 2012 and accordingly does not incorporate any amendments contained in the Tax Administration Act, 2012 or those proposed by the recently tabled Taxation Laws Amendment Bill, 2012.

To do justice to the changes that have taken place in the last couple of years is beyond the capabilities of any one author, and, as was the case in the past, this update is a product of the collaboration of a number of contributors.

This is a short excerpt from the opening of “” by Unknown, quoted for review and introduction purposes. All rights belong to the copyright holders.

Book Information

• Unique ID: ef023263c8793050
• File Extension: .pdf
• File Size: 2,979,171 bytes (2.841 MB)
• Title: –
• Author: Unknown
• ISBN: 9780409075359
• Pages: 486
• Language: English (en)

Reading & Word Statistics

• Estimated Reading Time: 910.31 minutes
• Total Words: 182,062
• Total Characters: 1,053,738
• Average Words per Page: 374.61
• Average Characters per Page: 2168.19

Most Frequent Words

tax (1396), income (970), satc (893), taxpayer (806), section (729), company (723), amount (571), capital (534), employee (493), itc (474), asset (443), act (422), respect (392), case (390), value (390), court (378), employer (366), trust (363), lease (363), deduction (362), south (359), however (356), expenditure (339), shares (335), one (326), nature (322), year (313), paid (309), business (307), benefit (306), lessee (305), interest (303), payment (295), property (294), terms (286), person (284), contract (275), services (271), cost (268), received (261), held (261), ltd (259), provisions (258), incurred (258), lessor (244), cir (239), agreement (229), assets (228), purposes (226), right (222), sale (215), example (212), taxable (211), africa (202), purpose (201), whether (200), also (195), time (190), use (187), purchase (187), period (185), hands (185), between (183), para (183), therefore (183), price (181), consideration (180), sars (180), made (178), commissioner (175), revenue (173), effect (172), african (172), seller (172), rendered (171), transaction (170), rental (165), fact (165), subject (165), date (159), trade (159), trading (158), cgt (157), loan (157), part (155), basis (155), allowance (152), gross (151), payments (149), loss (147), purchaser (146), result (144), sum (144), apply (143), derived (140), stock (139), circumstances (139), upon (138), share (138), pay (137).

PDF Download