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Retirement benefits: Gross income and the meaning of "amount payable" (XYZ v CSARS case)

18 November 2011   (0 Comments)
Posted by: SAIT Technical
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Case number 2011/12895: XYZ v CSARS

Juta Tax Law

Where no ambiguity exists, the meaning of the legislature should be found in the words used.

The facts of the case were briefly that a dispute arose whether the pre 1 March 1998 benefits still apply after the introduction on 29 June 1998 of para (eA)(ii) of the definition of ‘gross income’. Under the above-mentioned paragraph two-thirds of an amount from a pension fund is included in gross income. The taxpayer argued that despite the use by the legislature of the word ‘amount payable’ in para (eA)(ii) it was never the intention to include benefits that were exempt prior to 29 June 1998 in gross income. This is made clear in the Explanatory Memorandum issued with the Bill that introduced para (eA) to the gross income definition. To hold otherwise would mean that para (eA) has retrospective application. SARS, on the other hand, argued that where the intention of the legislature is clear, no room exists to seek the intention of the legislature in, for example, the explanatory memorandum. The court looked at previous recent judgments in which a so-called purposive approach was followed and held that in the absence of ambiguity no room exists to find the intention of the legislature other than in the words used by it. As a result, the taxpayer was not entitled to exclude from the withdrawal benefit, benefits that were exempt from tax prior to 1 March 1998.

To access the case, click here


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