Print Page   |   Report Abuse
News & Press: Corporate Tax

Eveready Case: s22(4) Trading stock - whether acquired for "no consideration"

05 April 2012   (0 Comments)
Posted by: SAIT Technical
Share |

Eveready v The Commissioner for the SARS (195/11) [2012] ZASCA 36 (29 MARCH 2012)


Tax – Income Tax Act 58 of 1962 – s 22(4) – trading stock – whether acquired for ‘no consideration’.

Section 22 determines the value to be attributed to trading stock when it is taken into account in determining taxable income. The value to be attributed to closing stock is dealt with in s 22(1). In broad terms its value is to be the cost price of the stock, less any allowance that the Commissioner might consider to be just and reasonable for any diminution in its value.

Section 22(2) determines the value to be attributed to opening stock. If it was held as closing stock in the previous year, it is to be the value that was attributed to the stock in determining taxable income for that year. If it was not held as closing stock for the previous year then its value is to be its cost price. The manner in which the cost price of stock is to be determined for the purpose of those sections is specified in some detail in s 22(3).

The appeal centres on s 22(4), which determines the value to be placed on trading stock that was acquired ‘for no consideration’. It provides that the cost price of such stock for purposes of s 22(3) – and hence for determining its cost price where applicable in the earlier subsections – is deemed to be its current market price at the date of acquisition.

To access the case, click here


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.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

Membership Management Software Powered by®  ::  Legal