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Commissioner, SARS v Van Kets [2012] JOL 28416 (WCC)

21 May 2012   (0 Comments)
Posted by: SAIT Technical
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In March 2009, SARS received a request from the Australian Tax Office ("ATO”) for information of a person residing in South Africa in terms of the double tax agreement ("DTA”) between South Africa and Australia.


SARS acted in terms of the obligations of the DTA attempted to furnish the information in terms of ss 74A and 74B of the Income Tax Act.

SARS sought an order in the Western Cape High Court declaring that ss 74A and 74B of the Act may be invoked by it for the purpose of obtaining information from a taxpayer and any other person in the Republic of South Africa in respect of an Australian taxpayer in order to comply with its obligations under a double taxation agreement or treaty which had been concluded between South Africa and Australia and which contained a provision for the exchange of information.


The taxpayer refused the request for information on the basis that it was confidential. It appeared to be common cause that the taxpayer possessed the information which ATO had requested from SARS and that such information could hence not be obtained.

The issue to be determined by the court was whether the words "any taxpayer,” used in s74A and s74B of the Act, can be interpreted to include a person who is not a "taxpayer” as defined in section 1 of the Act, but who, in terms of a DTA, has been identified as someone who can provide the information pursuant to the request made by the ATO.

Accordingly, SARS sought an order declaring that section 74A and 74B of the Income Tax Act 58 of 1962 may be invoked by it for the purpose of obtaining information from Mr Kets in order to comply with its obligations under the DTA which contained a provision for the exchange of information.


The court held that the provisions contained in a DTA, become part of South African domestic income tax laws.  Secion 231 of the Constitution has the effect that the provision of a DTA becomes law in South Africa once it has been Gazetted.  Davis, J made the point that the provisions of a DTA and the Act should, where possible, be reconciled and read as one coherent whole.

The court pointed out that the purpose of the exchange of information clause contained in the DTA is to ensure that a resident of Australia does not escape Australian tax, which may be imposed in respect of income accruing to that resident from a source located in South Africa. If the DTA did not provide for an exchange of information, the ATO would be unable to obtain information about such income, and subject that to tax in Australia.

Davis, J reached the conclusion that where the DTA is read, together with the provisions of the Act, it implies that the word "taxpayer” should include not only those persons who fall within the provisions of the Act, but also those dealt with in the DTA.

The application accordingly succeeded.




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.

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