When I use a word doc
18 March 2013
Posted by: Stiaan Klue
"When I use a word, it means just what I choose it to mean -
neither more or less." - Humpty Dumpty (1797)
the end of 2012 SARS initiated a national audit strategy to verify the diesel
rebate claims through the VAT system. Since it was the first time the diesel
rebate was audited on such a large scale, farmers and mining companies were
obviously caught off guard as improper records kept by the taxpayers resultedin disallowed claims, additional tax,
and the forfeiture of diesel. With regards to the diesel rebate audit SARS’
audit approach made it clear that it would follow a ‘black-letter’ approach in
applying legal and operational rules.
contrast, tax practitioners are regularly accused of the "wrong” mind set when
they apply the letter of the law when interpreting and applying tax law.This was
illustrated by a recent Global Tax Weekly article in which, Johan
van der Walt, tax partner at DLA CliffeDekkerHofmeyr, states that, "One sometimes gets the
feeling that favouring a ‘black-letter’ approach to the interpretation of tax
statutes is regarded as a tell-tale sign of a tax advisor having the ‘wrong’
In a recent
Summit TV interview, Finance Minister, Pravin Gordhan, commented that:
"Complexity [in tax legislation] comes because you have to introduce
detailed legislative measures in reaction to so-called loopholes that have been
exploited by advisers." If a broad approach was favoured instead, the
Minister warned that there would be a continuous "action and reaction
phenomenon". This would require of SARS to reactively block loopholes as
and when discovered.
Commissioner said much the same at the 2010 E&Y Africa tax conference:
"Too often, tax advisers are quick to bring to our attention instances
when a particular provision of the law creates practical difﬁculties for their
clients. Very few, however, bring it to our attention when they have identiﬁed
a loophole in law, choosing rather to exploit it."
Drawing on the
current context of South African tax law in which the Minister and the
Commissioner made their above statements, Van der Walt concludes that it
appears as though following a "black-letter" approach can either
suit, or oﬀend, a revenue authority depending on whether the end-result is tax
gains or tax leakage.
tax practitioners who have to navigate through the contested terrain of tax
law, the words of Lewis Caroll’s famous characters’ Alice and Humpty Dumpty
ring true: "The question is”, said Alice, "whether you can make words mean
so many different things”.Humpty Dumpty responded angrily: "The question is,
which is to be master - that's all."
the words of tax law can be interpreted in so many different ways, the tax
practitioner, like Humpty Dumpty, should attempt to remain the master of these
words, instead of being mastered by them.