At issue in this appeal is whether the Tax Court of South Africa, Cape Town was correct in setting aside the additional assessments raised by SARS against the taxpayer in respect of the 2002 and 2003 years of assessment for capital gains tax. This requires a determination whether the taxpayer had proved the base cost of the asset disposed of during those years of assessment, namely 4.37% of the shares it had held in Emanzini Leisure Resorts (Pty) Ltd.
The Supreme Court held that the Tax Court was wrong in upholding that valuation. As a result, the taxpayer has failed to discharge its onus of proving the paragraph 29 market value and thus also the aggregate base costs of the relevant shares. The court also held that there was clearly considerable value attached to Emanzini Leisure Resorts (Pty) Ltd sole asset, the casino licence therefore the value of the shares cannot be nil.
Further, it was not seriously disputed that a casino licence which grants the holder exclusive rights in respect of the specified area for a period of 15 years has considerable value and it is in the interests of justice that a proper valuation be calculated. Thefore matter is remitted to SARS for further investigation and assessment.
Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.