Income Tax Court 1864 75 SATC 233
04 February 2014
Posted by: Author: SAIT Technical
Author: SAIT Technical
The appellant, an instrument technician and sole trustee of an inter
vivos trust, had raised objections against assessments issued by SARS. SARS
disallowed the objections and the appeal was dismissed by the Tax Court.
The appellant, an instrument
technician, had previously rendered services to clients through a labour broker
and later on changed this arrangement in order to provide the services through a
trust which he had formed. The appellant was the sole trustee and employee of
The appellant worked for certain
divisions of a number of affiliated companies and all income from the rendering
of such services to those companies accrued to the trust. The appellant was not
remunerated for the services he rendered to the trust and no formal agreement
was entered into between the appellant and the trust, with regard to the
services he rendered to the companies. The appellant, however, transferred income from the bank account of the trust to
his own bank account and was not compelled to comply with the trust objectives
when he spent the money from his personal bank account.
held that a series of transactions was entered into, by the appellant, with the
sole purpose of avoiding income tax. The appellant was not compelled to account
to the trust at all, even though he had allowed income received from the
services he rendered to accrue to the trust and this showed an abnormal state
of affairs. The arrangement between the appellant and the trust resulted in
abnormal rights and obligations, that would have not been created between
persons dealing at arm’s length and it was accordingly held that all four elements of s 103(1) were present
in relation to the series of transactions entered into by the appellant.
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