AB Trust vs The Commissioner of SARS ITC 13254 - 22 Jan 2014
03 March 2014
Posted by: Author: SAIT Technical
Author: SAIT Technical
This matter is an appeal against the decision taken by the Commissioner. The Commissioner refused to approve AB Trust's application as a PBO. The Trust objected to the Commissioner’s decision to refuse its application and upon disallowance of its objection lodged an appeal with the court.
The appellant ("the Trust”) is an inter vivos trust established in terms of a deed of trust ("the Trust Deed”) concluded on 15 March 2010. The appellant was registered with the Master of the High Court, Cape Town on 7 September 2010 under the Master’s reference number IT XXX /2010.
The respondent is the Commissioner for the South African Revenue Service ("the Commissioner”) and, among other offices it has countrywide, has offices at 11 Buitengracht Street, Cape Town.
On 24 December 2010 the Trust lodged an application with the Commissioner seeking approval as a public benefit organisation in terms of section 30(3) as well as approval in terms of section 18A of the Income Tax Act, 58 of 1962 ("the Income Tax Act”) to issue tax deductible receipts to donors.
In order to qualify for the exemption from income tax on certain receipts and accruals in terms of section 10(1)(cN) of the Income Tax Act, the Trust had to be approved by the Commissioner in terms of section 30(3), read with the 9th Schedule to the Income Tax Act. The Trust’s application for approval was refused by the Commissioner on 13 December 2011.
Section 10(1)(cN) of the Income Tax Act provides for a partial exemption from normal tax of certain receipts and accruals of any public benefit organisation approved by the Commissioner in terms of section 30(3) of the Income Tax Act. To be approved as a public benefit organisation as contemplated in section 30 of the Income Tax Act, the organisation, in the first instance, must fall within the definition of a public benefit organisation as defined in section 30(1) of the Income Tax Act; it should have as its sole or principal objective the carrying on of one or more approved public benefit activities listed in Part I of the 9th Schedule to the Income Tax Act; and must comply with the formal requirements set out in section 30(3) of the Income Tax Act.
In its application for approval as a public benefit organisation, the Trust stated the following activities as the basis upon which it applied for approval as a public benefit organisation; provision of poverty relief; community development for poor and needy persons and anti-poverty initiatives; the advancement, promotion or preservation of the arts, culture or customs; and conservation, environment and animal welfare.
- The decision of the Commissioner not to approve the Trust’s application for approval as a public benefit organisation in terms of section 30 of the Income Tax Act, and a subsequent disallowance of the Trust’s objection, was overruled and set aside.
- The appeal by the Trust against the refusal by the Commissioner to approve the Trust’s application for approval as a public benefit organisation was upheld.
- The appeal relating to the authority sought to issue tax deductible receipts in terms of section 18A of the Income Tax Act was dismissed.
- Further the judge ordered that each party shall pay its own costs.
This article first appeared sars.gov.za.