‘Who Shopped Christo Wiese?’ · ‘Who Shopped Christo Wiese?’ —What’s the world coming...

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—An irreverent newsletter designed to keep you up to date—

His Excellency, Comrade the rev Dr Francois ‘Papa Doc’ Duvalier-Leckett, spokesperson in the Office of Costa Divaris:

‘Who Shopped Christo Wiese?’

—What’s the world coming to when a man can’t save a few bob in bank charges by doing things for himself?

In this issue: Listing Notebook Cases Briefing Davey’s Locker Evidence corner Shortcut keys in Word

MONTHLY LISTING Latest Legislation & Legislative Material To Emerge Or To Be Found Since Issue # 92

This is a free publication devoted to unearthing what is going on in the SA tax field. If it isn’t here, it never happened. Unless otherwise indicated, every document listed is cumulatively included in the Tax Shock, Horror Database, which is

available monthly, quarterly or even individually on DVD by post for R161 per month inclusive of VAT at 14%. With both the newsletter & database (currently 8 162 public-access documents, 1,62 GB), you save time & bandwidth.

SARB form 09 September 2010: Form DTP 001 ‘General information on licence agreements &

guidelines applied by the Department of Trade & Industry when considering the rec-ommendation of these agreements to the Financial Surveillance Department of the South African Reserve Bank’. Long-form title on request.

SARB panel 14 September 2010: Terms of reference of the panel established under s 4 of the South African Reserve Bank Act.

SCA case 28 September 2010: Cuninghame v First Ready Development 249 (238/08) [2009] ZASCA 120. Unlawful trading in s 21 company. see the Monthly Notebook.

The Economist 09 October 2010: Strangely, I don’t recall the local press mentioning that Mauritius was the ‘runaway winner’ of Mo Ibrahim’s African latest governance league table.

MOF speech 27 October 2010: Medium-term budget policy statement. Tax court case 28 October 2010: Case no 12441. Well-known, even famous people tackle this case

on behalf of the taxpayer or give it ‘equivocal’ opinions, & it goes to court, on the most absurd of grounds. Justly, it loses, but it gets off s 89quat interest. The facts? A business is sold including some R105 k in trading stock, which is not itemized as being part of the merx. Good grief! Since when has it taken a court longer than a split second to apportion a total purchase price among it component parts? Yet the buyer claimed the controversial s 22(4) deduction, on account of acquiring trading stock for no consideration! I check & recheck the names of those who acted for the taxpayer, rubbing my eyes in disbelief. Admittedly, more than thirty years ago I en-couraged a similar s 22(4) ploy, but in those days it could be seen as a test case. Al-together properly, it failed, yet the taxpayer’s legal representatives took it on appeal, only to lose again! Some things never change: my hopeless cause is your fee.*

SARB VDP 02 November 2010: List of authorized dealers in forex. GN 1001 GG 33710 05 November 2010: Application for the increase of the current statutory levies in the

wine industry under the Marketing of Agricultural Products Act. Perhaps it is time to bring this act under the forthcoming Tax Administration Act.

GN R 1030 GG 33740 08 November 2010: Regulations under the Skills Development Act to limit the cost of administering the National Skills Fund. Who really cares?

IRBA statement 09 November 2010: Registered auditors & the VDP. What to do about reportable irregularities. Yet more pussyfooting. This amnesty has very little chance of success.

SARB excon circ 15 November 2010: Circular 42/2010 on the exchange control VDP & amendment of the excon regulations.

GN R 1090 GG 33775 19 November 2010: Dispensing fee for pharmacists under the Medicines & Related

December 2010

0 0 9 3 8 1 6 2 6 5 7 2 Tax Shock, Horror newsletter by Costa Divaris Issue # 93 Database items: 8 162 Subscribers: 6 572.

93 Tax Shock, Horror 2010—December—2


Substances Act. Ask not for whom the bell tolls…. Proc 70 GG 33800 26 November 2010: Remuneration of Constitutional Court judges & judges. The

cash component is 72,24% of the total remuneration package. The ‘non-cash com-ponent’ of 27,76% ‘includes motor allowance & employer medical contribution’. Pen-sion benefits are separately dealt with under the Judges’ Remuneration & Condi-tions of Employment Act. A judge of the High Court makes at least R1 385 013.

Proc 71 GG 33800 26 November 2010: Remuneration of magistrates under the Magistrates Act. The pensionable basic salary component comprises 60% of the total package, while the remainder is the ‘flexible portion’. No details are given of the ‘employee’s pension benefit contribution to the…pension fund’. A magistrate makes at least R639 256.

GN 1118 GG 33811 29 November 2010: Manner of submission of certain returns & payments of em-ployees’ tax prescribed under s 65 of the Income Tax Act. Cheque payments of PAYE in excess of R100 000 are purportedly outlawed at SARS offices & by post. Employ-ers likely to pay more than R10 m in PAYE over any twelve-month period are pur-portedly compelled to make PAYE returns & payments electronically. Have I got news for you, Baby Two-shoes! If this notice is constitutional (& I am beginning to think that it is), then, as I have often suggested, all other bumpf published by SARS on payments cannot be. Someone high up has committed a serious booboo.*

SCA case 30 November 2010: The Commissioner for the SA Revenue Service v Saira Essa Productions CC (162/10) [2010] ZASCA 154. An attempt to handle criminal proceed-ings by slotting them into the small business amnesty goes horribly wrong for the taxpayers, who suffer the reversal of their temporary victory in the High Court & get hammered with a punitive costs order. For my unkind remarks about the judgment in the court a quo, see 81 TSH 2009. The SCA judgment, by huge contrast, is most impressive. Well done to the SARS team!*

SCA case 01 December 2010: CSARS v Sprigg Investment 117 CC (36/10) [2010] ZASCA 172. Yet another case increasing my already high respect for the SCA & (especially in the light of the vicarious pleasure I derive when SARS mounts hopeless cases & duly gets its comeuppance) encouraging me once again to congratulate the SARS side. The taxpayer, confused about the role of reasons in tax disputes, mounted what was found to be a mischievous application. Not only did it lose but it had to pay the costs of two counsel, who did a fine job.*

SCA case 01 December 2010: CSARS v NWK (27/10) [2010] ZASCA 168. This is one of the most important tax judgments of all time. It involves what used to be called ‘structured fi-nancing’, which I first came across in Cape Town about thirty-five years ago. Money is sent in a circle, with the object of pretending that the interest involved is, typically, double what it really is. By following the money, you can tell that the transactions are simulated. In consistently advising against these arrangements for more than three decades, in the face of enthusiastic support in their favour from eminent tax counsel (who knew all too well how their opinions were being used & abused—a whore, I often like to say, makes nothing if she says ‘No’), I have usually used a word stronger than ‘simulated’. In one instance, a high street bank assembled (I kid you not) about twenty-two ‘experts’ to try to persuade little old moi to give their scheme the nod. SARS has over the decades lost billions under these schemes, which, for example, built the whole of Sandton commercial district. It’s no coinci-dence that ‘bank’ is a four-letter word. All over the world, to say that integrity & banks are strangers is to overstate their intimacy. It has taken a lifetime but I am hugely pleased, even if substantially poorer as a result, eventually to be proved right on this score. SARS worked long & hard on this case & deserved to triumph.*

Sake24 01 December 2010: Treasury wins its share of the Pioneer fine. To judge by this attempt by the department of economic development to dispose of the proceeds of a Competition Tribunal fine, & the repeated attempts to finance the SABC by way of a 1% tax, many high-ups in government are woefully ignorant of the Constitution.

SARS release 02 December 2010: Preliminary outcome of the 2010 tax season.* Treasury release 02 December 2010: Local government budgets for Q1 of the 2010/11 financial year. Treasury release 02 December 2010: Local government adopted capital & operating expenditure

budgets for the 2010/11 MTREF. Treasury release 02 December 2010: Release of draft 2 of reg 28 applying to pension funds. Draft regulation 02 December 2010: Second draft government notice for public comment on the

proposed amendment of reg 28 of the regulations made under s 36 of the Pension Funds Act. This is about their investment policies.

Draft EM 02 December 2010: Draft (surely) explanatory memorandum on the second draft reg 28 giving effect to s 36(1)(bB) of the Pension Funds Act.

NT response doc 02 December 2010: Regulation 28: response document to public comments re-



ceived. Also list of respondents. Sake24 02 December 2010: Syndicate member gets eight years behind bars. This is the so-

called Naqvi syndicate, with its Cipro links, which allegedly took SARS for R78 m. The Times 02 December 2010: More on the same story. Business Day 02 December 2010: Cipro controls ‘poor, out of date’—yet more on the same story. Business Day 02 December 2010: Keep bar on crooked directors—SARS. GN R 1131 GG 33813 03 December 2010: Amendment of rules (DAR/78) under ss 19, 120 of the C&E Act.* Updated tables 03 December 2010: Table A ‘Average exchange rates for a year of assessment’ &

Table B ‘Average monthly exchange rates’.* Business Times 05 December 2010: Wiese to lose millions in airport cash. Sunday Times 05 December 2010: Provinces not keen to fund youth fest. Treasury release 06 December 2010: Tips for Budget 2011 wanted. Ready? 1. Fire your idiot drafts-

persons. 2. Imprison all US fiscal terrorists. 3. Train SARS staffers. Sake24 06 December 2010: Wiese will perhaps be scrutinized over cash. Business report 06 December 2010: Wiese faces battle to reclaim £675 000. New act 07 December 2010: Skills Development Levies Amendment Act 24 of 2010. Sake24 07 December 2010: Wiese-pounds resound from SARS to Twitter. Business Report 07 December 2010: Confiscation of Wiese’s cash led by intelligence—agency. Correspondence 08 December 2010: FIN–GP–L10 but, curiously, also billed as AS–TD–L06 ‘Electronic

submission of transfer duty declarations & payments’.* Correspondence 08 December 2010: FIN–GP–L10 (Yup, another one) ‘Change in legislation with re-

gard to the submission of employees’ tax payments’.* Treasury release 08 December 2010: IMF/WB financial sector assessment programme. NT presentation 08 December 2010: ‘Regulation 28 public forums—2nd draft regulation 28’. SARB address 08 December 2010: Guv’s address to the ordinary general meeting of shareholders. SARB excon regs 09 December 2010: The latest update. Business Report 09 December 2010: Marcus applauded at her first bank shareholders’ meeting. GN R 1165 GG 33842 10 December 2010: Amendment of the levy on cotton lint under the Marketing of

Agricultural Products Act. GN 1106 GG 33857 10 December 2010: Draft financial sector charter under the codes of good practice

on broad-based black economic empowerment. Proc 75 GG 33864 10 December 2010: Determination of salaries & allowances of traditional leaders &

members of the National House & Provincial Houses of Traditional Leaders. A tradi-tional leader makes at least R161 996.

GN 1196 GG 33867 10 December 2010: Determination of upper limits of salaries, allowances & benefits of different members of municipal councils. The ‘total remuneration package’ is made up of a basic salary component, a travelling allowance, a housing allowance, the municipal contribution to a pension fund (a maximum of 15% of the basic salary) & the municipal contribution to a medical aid scheme. In addition, long trips are re-warded with a mileage allowance. Council vehicles may nevertheless be used for attendance at ‘specific functions’. Actual ‘out of pocket expenses’ are reimbursed. Councilors also get very generous cell phone allowances. The basic salary is pur-portedly deemed to include R120 000 a year as the amount to which s 8(1)(d) of the Income Tax Act applies. Hmmm. The Remuneration of Public Office Bearers Act al-lows such things to be proclaimed (77 TSH 2009) for the president (s 2(2)), deputy president, ministers & deputy ministers (s 4(3)), premiers, MECs & MPLs (s 6(4)) but where do mere councilors get a look-in? They don’t! Will SARS please note? No such false claim was made last year, when an equivalent regulation (not a GN!) was made. For an unrelated correction, read on.

New IN 10 December 2010: Interpretation Note 59 ‘Tax implications of the receipt or accrual of government grants & government scrapping payments’. This looks excellent & learned. Did its author have the courage to declare that s10(1)(y) is ineffective, by dint of the MOF’s failure to issue a Gazette notice (see Lost & Found)? Nope.

Treasury release 13 December 2010: New prudential limits & discussion document. Treasury release 13 December 2010: Carbon tax discussion paper. NT discussion paper 13 December 2010: ‘Reducing greenhouse gas emissions: the carbon tax option’.

Yeah, & that’s all that will be accomplished—a new tax. Draft guide 13 December 2010: ‘Draft comprehensive guide to the general anti-avoidance rule’.

So now we have a continuum ranging from ‘tax planning’ to ‘impermissible tax avoidance’ (GAAR) to ‘tax evasion’. For comment by 14 February 2011.*

Business Report 13 December 2010: A reader is, like me, struck by how lenient the press has been about the Christo Wiese affair. Could it be because his businesses account for a great deal of press advertising revenue?

SARB excon circ 14 December 2010: Circular 44/2010 on the revised prudential limits for institutional



investors. Treasury release 14 December 2010: Market-making obligations by primary dealers in RSA govern-

ment bonds during December 2010. Business Day 14 December 2010: SARS, Cipro team up to commit, sorry, combat fraud. Draft regs 15 December 2010: Draft amendment of rules (DAR/) under ss 38, 39,101A & 120 of

the Customs & Excise Act.* Draft forms 15 December 2010: DA 159 ‘Petroleum products: account for special storage ware-

house’ & DA 162 ‘Biodiesel account for Category 1 manufacturing warehouse’.* SARS release 15 December 2010: Supreme Court of Appeal judgment. SARS rightly celebrates the

decision in its favour in CSARS V NWK. Audits of simulated transactions will commence as from 15 February 2011. You are encouraged to go the VDP route before then if, say, you bought into a compulsorily convertible loan similar to the one in the case.*

Sake24 15 December 2010: Mike Schüssler (Economists.co.za) on the small gap between average workers’ & employers’ incomes. Also on the negative atmosphere prevail-ing against employers & small business.

GN R 1194 GG 33860 17 December 2010: Appointment of authorized dealer in foreign exchange with lim-ited authority.

GN 1115 GG 33888 20 December 2010: The Minister of Labour calls upon the Employment Conditions Commission to review the ‘earnings threshold’ under s 52 of the Basic Conditions of Employment Act. A bit of scratching around reveals that this unofficial term signifies the amount of earnings above which various provisions of this act do not apply. The latest threshold was set at R149 736 by GN R 300 GG 30872 of 2008.

GN 1116 GG 33890 20 December 2010: Notice calling for comments on the proposed Second-hand Goods Regulations for Accreditation of Dealers’ Associations, 2010.

BN 193 GG 33898 20 December 2010: Rules relating to the services for which a pharmacist may levy a fee & guidelines for levying such a fee or fees. In-bloody-credible!

SARB excon circular 20 December 2010: Circular 46/2010 on the implementation of the electronic export monitoring system & the withdrawal of form F178.

SARB excon circular 20 December 2010: Circular 47/2010 on the reporting of levy payments under the excon VDP.

Business Report 20 December 2010: Money owed to municipal coffers now tops R62 b. Municipal services form part of the state’s racially based redistribution machinery.

Business Report 22 December 2010: Wiese engages UK barrister renowned for tough cases. Beeld 22 December 2010: The National Taxpayer’s Union at last responds to recent re-

search on the effectiveness of tax boycotts (92 TSH 2010). Sake24 22 December 2010: Wiese hires top advocate to get his cash back. GN 1118 GG 33894 24 December 2010: As onetime minister of agriculture, Derek Hanekom tried it, &

drove at least 700 000 agricultural workers out of employment, by the government’s own count. Tokyo Sexwale, minister of human settlements, is all for it (82 TSH 2010). Now the department of rural development & land reform has published for comment a draft Land Tenure Security Bill, 2011. Even a fleeting glance is enough to show that it is unworkable. Repeating the same thing, expecting different results?

GN R 1217 GG 33897 24 December 2010: Amendment of rules (DAR/79) under ss 19A & 120 of the Cus-toms & Excise Act.*

GN 1234 GG 33899 24 December 2010: Correction of GN 1196 GG 33867 of 10 December 2010 above. GN R 1256 GG 33906 24 December 2010: Dispensing fee to be charged by persons licensed under

s 22C(1)(a) of the Medicines & Related Substances Act. Pharmacists have been na-tionalized, on the cheap. Is your business or mine next?

New guide 24 December 2010: Transfer duty on eFiling. The recently amended ss 3 & 4 of the Transfer Duty Act require all transfer duty declarations & payments to be made elec-tronically. Various web pages on the transfer duty have been updated. Included is an invitation to settle with SARS if you purported to buy a trust as a (legally ridicu-lous) means of avoiding transfer duty. Strangely, SARS has seemingly forgotten about TC 11286 of 26 October 2007 (67 TSH 2008). A timely warning is given against tripartite agreements (I find it hopeless to explain the concept to some lawyers). And the scam involving the separate sale of land from a building contract is vulnerable to the application of s 50A of the Value-Added Tax Act (splitting of enterprises) & not, as I had imagined, s 12(d) (89 TSH 2010).*

SARB orders & rules 30 December 2010: Under the exchange control regulations. SARB excon manual 30 December 2010: The latest update. As usual, the amendments made are not

highlighted but you can tell which pages have been affected. GN 1140 GG 33900 31 December 2010: Notice of intention to amend the codes of good practice pub-

lished in GG 29617 on 9 February 2007 under the Broad-based Black economic Empowerment Act.



GN 1247 GG 33900 31 December 2010: Technical changes of public entities under the PFMA. GN 1248 GG 33900 31 December 2010: Listing of public entities under the PFMA. GN 1249 GG 33900 31 December 2010: Delisting of public entities under the PFMA. GN 1250 GG 33900 31 December 2010: Technical changes of public entities under the PFMA. GN 1251 GG 33900 31 December 2010: Technical changes of public entities under the PFMA. GN 1252 GG 33900 31 December 2010: Delisting of public entities under the PFMA. GN 1253 GG 33900 31 December 2010: Delisting of public entities under the PFMA. SARB statement 05 January 2011: On the official gold & foreign exchange reserves as at the end of

2010, as well as the international liquidity position. You gotta admit it; the new Guv believes in transparency.

SARB statement 06 January 2011: Of assets & liabilities as at the end of 2010. 2011 Budget 23 February 2011: This is the date given on the Treasury’s website.

* On the SARS website. § Not included in Tax Shock, Horror Database.

LOST & FOUND

TSH Database This month 97 items were added to the Tax Shock, Horror Database. Land subdivision Since 16 September 1998, the President has failed to proclaim the Subdivision of

Agricultural Land Act Repeal Act 64 of 1998. Provisional tax tables Since forever, the Commish has failed to gazette the annual provisional tax tables. Exempt grants & Since 1 February 2006. the MOF has neglected to issue the Gazette notice required scrapping payments to make s 10(1)(y) effective. Don’t tell the taxi industry.

MONTHLY NOTEBOOK

VAT: can proof of payment ever be necessary for a zero‐rating?

Despite the vast (and vastly counterproductive) outpourings of documents from SARS, it can easily be shown that, as usual, it is doing a lousy job even by its own standards. Take, for example, its exercise of its power under s 11(3) of the Value-Added Tax Act, to determine the

documentary proof substantiating the vendor’s entitle-ment to apply the said rate [zero] under [s 11(1) and (2)] as is acceptable to the Commissioner.

Not only was the list of required documents incom-plete ab initio but SARS is incapable of keeping its list up to date with amendments. But what really set my blood boiling are the substantive requirements it slyly inserts into the relevant interpretation notes, clearly in usurpation of its delegated power merely to stipulate documentary requirements. This power can relate only to matters seen as essential by the

legislature in the text of the act, not nice-to-haves that might or might not prove useful in the dis-charge of SARS’s duty to administer the act.

Take, for example, the requirement in Interpreta-tion Note 31 that, in order for the s 11(1)(a)(i) zero-rating for so-called direct exports to be made avail-able, the vendor must be able to provide

Proof of payment (including the Exchange Control declaration form from the Reserve Bank, where the consideration exceeds exchange limits).

I am reliably told that until payment has been ef-fected and the supposedly required proof is made available, SARS will not allow the zero-rating to be claimed. In other words, under audit, exporters on credit suffer add-backs and sanctions.

Yet I challenge anyone to show me where pay-ment is referred to in s 11(1)(a)(i).

PAYE assessments: when to tell the Commish to get lost & die

I am ashamed to admit that it has taken me years to realize the significance of the definition of the term ‘tax’ in s 1 of the Income Tax Act. Essentially, it means ‘any levy, tax leviable’ under the act. The point is that, despite or, perhaps better, because of its duality (74 TSH 2009), PAYE is technically a tax, thanks to this definition in para 1 of the Fourth Schedule to the act:

‘[E]mployees’ tax’ means the tax required to be de-ducted or withheld by an employer in terms of para-graph 2 from remuneration paid or payable to an em-ployee;

When poorly trained SARS staff perform what with a straight face they call a PAYE audit they usually de-mand money to the accompaniment of threats, thus committing the crime of extortion and so terrifying

many a pusillanimous employer. The fact is that they can do nothing until they issue assessments, and I cannot abide the day until someone lays charges against the Minister, the Commissioner and the Commissioner’s staff for such scandalous behaviour.

A slightly better class of SARS staffer knows about assessments but then issues them with gay aban-don, even for long-forgotten years, in utter disre-gard of the law. The fact is that the issue of such assessments is governed by the misleadingly headed s 79 (‘Additional assessments’), and taxes such as PAYE are specifically catered for. Here is how the relevant part reads:

Provided that the Commissioner shall not raise an assessment under this subsection— (ii) in respect of any tax referred to in paragraph (c),



after the expiration of three years from the date of payment of any amount paid in respect of such tax unless—

(aa) the Commissioner is satisfied that the fact that such tax was not paid in full was due to fraud or misrepresentation or non-disclosure of material facts; or

(bb) the Commissioner and the taxpayer agree otherwise prior to the expiry of that three year period; or

Be sure to understand this important defence thor-oughly the next time you are dunned with assess-ments for long-past years.

CGT: part‐disposals

The atrociously drafted capital gains tax requires you to apportion what any even moderately sane person would have called your base cost expendi-ture when you dispose of part of an asset, so that, first, you will be able to compute your capital gain or loss on that particular disposal and, secondly, know what balance of base cost expenditure is available to be set off against future proceeds aris-ing from a further partial or an outright disposal of the same asset.

Here is how para 33(1)(a) puts it:

(a) the proportion of the expenditure attributable to the part disposed of is an amount which bears to the expenditure allowable in terms of para-graph 20 in respect of the entire asset the same proportion as the market value of the part dis-posed of bears to the market value of the entire asset immediately prior to that disposal; and

Long have I battled with this wretched provision. Say you own a huge tract of land and decide to

subdivide it and sell off only a small portion. Your task is to establish the numerator and denominator of the required ratio.

I presume that the numerator, being the market value of the part disposed of, is usually going to be the proceeds you expect from its disposal (para 31(1)(g)), unless a special type of asset is involved, some hanky-panky is going on or the parties are related (s 31(1)).

In order to establish the denominator, you are put to the expense of valuing the entire, pre-split hold-

ing. In some circumstances you are going to have to commission two valuations, one of the part dis-posed of and another of the entirety. As a lawyer would say, although for a very much higher fee, I am fortified in this conclusion by para 67AB(2), part of the horrific machinery for dealing with interests in collective investment schemes:

(2) For purposes of paragraph 33(1) the market value of the part disposed of must be treated as being equal to the amount of the cash so received or the market value of the assets so acquired

You don’t deem the proceeds of a part-disposal of unit trust units to be the market value of the part disposed of unless there are far worse options lurk-ing about.

But the really interesting question is how you are meant to value the entirety in the face of the knowledge that a piece of it has already been dis-lodged and has perhaps acquired a higher or even a lower value than would otherwise be attributable to it on, say, its relative area, compared with the area of the entirety.

What can ‘immediately prior to that disposal’ mean other than a split second before the deemed time of disposal established under para 13?

By that time you will have done everything nec-essary to effect the disposal, and, I maintain, you must instruct your valuer to value the entirety on that basis, thus boosting the denominator, shrink-ing the critical ratio and increasing your capital gain or lessening your capital loss. Bummer!

PAYE: discrimination against nonresident independent contractors?

At one of our seminars during 2010 a wise regular attendee raised what I think is a very clever idea about natural persons who are independent con-tractors but, against all common-law reason, stand to be branded as ‘employees’ for PAYE purposes, on the crazy, arse-about-face basis that they derive ‘remuneration’.

You would not believe me even if I could esti-mate how many hundreds or perhaps even thou-sands of man-years have been wasted by both tax specialists and SARS & payroll officials struggling to understand the PAYE system, on account, almost exclusively, of the mindless proclivity of the idiot draftsperson to include substantive law within defi-nitions.

This correspondent’s idea perfectly illustrates what is wrong with such an approach to legal draft-ing, but, please, do not hurry to feel in any way

smug or superior on this account. For I have seen countless commercial contracts drawn by both law-yers and, perish the thought, accountants, from the very biggest firms, positively luxuriating, often by way of a contractually stipulated power, in hope-lessly jumbling definitions and substantive provi-sions together.

In computer programming terms, the practice amounts to defining your variables within opera-tional code, and vice versa. Go ahead. Ask your IT fundi what will be the result should you write a pro-gram on this basis, and you will understand a lot more about the crap contracts that you and your firm so often produce.

(On the other hand, I salute the truly great local commercial draftspersons, who deserve every penny of their very high fees.)

To get back to independent contractors:



First, madly, nonresident independent contrac-tors are denied the supposed relief immediately following.

Secondly, all resident independent contractors are, even more madly, unconditionally excluded from the set of employees under the labour law, to which they do not belong!

Thirdly, some such resident contractors are conditionally effectively deemed to be employ-ees for PAYE purposes. (You have to do a lot of mental rewriting to understand this part.)

Fourthly, some of those just included within the ranks of deemed employees are conditionally excluded, by way of the following faux, childishly drafted second proviso to the definition of the term ‘remuneration’ in para 1 of the Fourth Schedule to the Income Tax Act:

Provided further that a person will be deemed to be carrying on a trade independently as aforesaid if he throughout the year of assessment employs three or more employees who are on a full time basis engaged in the business of such person of rendering any such service, other than any employee who is a connected person in relation to such person;

On this basis, you can easily grasp my correspon-dent’s point: All nonresident contractors are thus not only effectively deemed to be employees but are denied access to the conditional exclusion en-joyed by residents. This situation, he says, violates the nondiscrimination articles included, surely, in all the many tax treaties that South Africa has so proudly concluded. It’s by no means my field but, for what it’s worth, I tend to agree.

Can you trade in a ‘s 21 company’?

Think of all the times you have spoken about a ‘s 21 company’. Have you ever looked up s 21 of the Companies Act?

21. (1) Any association— (a) formed or to be formed for any lawful purpose; (b) having the main object of promoting religion, arts,

sciences, education, charity, recreation, or any other cultural or social activity or communal or group interests;

(c) which intends to apply its profits (if any) or other income in promoting its said main object;

(d) which prohibits the payment of any dividend to its members; and

(e) which complies with the requirements of this section in respect to its formation and registration,

may be incorporated as a company limited by guaran-tee.

(2) The memorandum of such association shall comply with the requirements of this Act and shall, in addition, contain the following provisions:

(a) The income and property of the association whencesoever derived shall be applied solely to- wards the promotion of its main object, and no portion thereof shall be paid or transferred, directly or indirectly, by way of dividend, bonus, or otherwise howsoever, to the members of the association or to its holding company or subsidiary: Provided that nothing herein contained shall prevent the payment in good faith of reasonable remuneration to any officer or servant of the association or to any member thereof in return for any services actually rendered to the association.

Astonishingly, there are still people about who be-lieve that a s 21 company is free from income tax; an idea that was killed stone dead by the Commis-sion of Enquiry into the Companies Act (RP 45/1970 of 15 April 1970).

This is in fact one of several important topics magisterially discussed In Cuninghame v First Ready Development 249 (238/08) [ZASCA] 120 (28 September 2009) (see the Monthly Listing), in which a s 21 company ‘changed from managing a

rental pool on a non-profit basis to the manage-ment of the hotel business as a whole…’.

Brand JA’s judgment, I am sure, beats any text-book on the subject:

[19] … I agree that there is nothing in s 21 which pro-hibits an association not for gain from making a profit. On the contrary, s 21(1)(c) specifically provides that the association is obliged to apply its profits (if any) to promote its main object…. If the expression ‘group in-terests’ in s 21(1)(b) is to be construed without any limitation, the preceding references in the section to re-ligion, arts, sciences and so forth could hardly have any meaning. As I see it, an association of persons seeking to promote, eg religion, arts, sports and so forth would of necessity qualify as a group with a common interest. Conversely, it could probably be said of the shareholders and members of most—if not all—companies that they are a group with a common inter-est. With commercial companies that common interest will usually lie in the purpose of profit or gain. It is true that most companies, and particularly commercial companies, will not comply with the other requirements of s 21. But that is not the point. The point is that if the reference to ‘group interest’ is to be afforded the wide meaning contended for by the respondent it will for all intents and purposes render s 21(1)(b) nugatory. To my way of thinking, the phrase…‘communal or group interests’ must therefore be construed eiusdem generis with that which comes before it. This raises the ques-tion: can it be said that the preceding words share a genus or common denominator? I think they do. As I see it, they all refer…to associations pursuing charita-ble, benevolent, cultural or social activities, as opposed to commercial enterprises. In order to comply with s 21(1)(b) the object of the association must therefore be a communal or group interest of the kind contem-plated in the earlier part of the section and not a com-mercial enterprise.

[20] Furthermore, s 21(1)(b) must, in my view, be interpreted in the context of ‘an association not for gain’. [T]he expression is only used in the heading and not in any provision of s 21. Nonetheless, and even though headings and marginal notes are said not to be



passed by the legislature, they are often used to de-termine the meaning of ambiguous or doubtful statu-tory expressions (see eg Cockram, Interpretation of Statutes, 3 ed 63 et seq and the cases there cited). Even more significant in the present context, I think, is that there are other sections in the Companies Act (eg s 24 and s 49(3)) which refer to an entity incorporated under s 21 as ‘an association not for gain’.

And here is his conclusion:

[35]…. On that interpretation, the respondent is con-ducting an unlawful business which should be termi-nated by way of a liquidation order. This renders it un-necessary to consider the further grounds advanced by the appellants as to why the winding-up of the respon-dent would be just and equitable [under s 344(h) of the Companies Act]. I am mindful of the special considera-tions contained in s 21(2)(b) for the winding-up of s 21 associations which are reflected in the respondent's memorandum. But it is clear, in my view, that these provisions presuppose that the respondent is a genu-ine s 21 association which, I believe, it is not. In con-

sequence the respondent stands to be liquidated in the ordinary course.

The upshot was that it was found to be ‘just and equitable’ that the company be wound up under s 344(h) of the Companies Act.

Finally, did it matter that many s 21 companies are operated in blithe ignorance of this no-profit-making rule?

[33] Secondly, there is the argument that we must take judicial notice of the fact that there are numerous as-sociations with purely commercial objects that were in-corporated under s 21 which will obviously be affected by the interpretation of s 21(1)(b) in that it will render their objects unlawful. Apart from the fact that I can hardly take judicial notice of something that I simply do not know, this is another argument that, in my view, takes the matter no further. We can hardly avoid what we consider to be the proper meaning of a statutory provision because it will cause considerable inconven-ience to a substantial number of people. If that is true, it is something to be taken up with the legislature.

As a shareholder, can you threaten to l iquidate a company?

I was brought up to believe that threats represent bad manners, and sometimes can amount to extor-tion. Even a fool can cast his eye over this section of the Companies Act and perhaps even deduce that a solvent operating company in good standing may be wound up (Yes, the act uses both terms, to indicate exactly the same thing) in just two circum-stances:

344. A company may be wound up by the Court if— (a) the company has by special resolution resolved

that it be wound up by the Court; (h) it appears to the Court that it is just and equitable

that the company should be wound up.

I don’t know about you, but I read the special-resolution thingee as being, well, consensual. Here is s 199(3) of the Companies Act:

(3) With the consent of a majority in number of the members of a company having the right to attend and vote at such meeting and holding in the aggregate not less than ninety-five per cent of the total votes of all such members, a resolution may be proposed and passed as a special resolution at a meeting of which less than twenty-one clear days’ notice has been given….

Let me try this: Now hear this! I shall liquidate our jointly owned company, as long as you vote with me on the issue. As a threat, it lacks—I dunno—oomph.

How about the court thingee? It so happens that we’ve just had a case on the matter, Cuninghame v First Ready Development 249 (238/08) [ZASCA] 120 (28 September 2009) (see the Monthly Listing; by accident, I left it out of the last issue). This cites what is without doubt the leading SA case on the issue when, under s 344(h), it would be ‘just and equitable’ to wind up a company, namely, Rand Air (Pty) Ltd v Ray Bester Investments (Pty) Ltd 1985

(2) SA 345 (W). Here, to save space, I am going to cheat, by quoting not what Coetzee J said in Rand Air but what Claassen AJ said he said, in Wiseman v Ace Table Soccer (Pty) Ltd 1991 (4) SA 171 (W) (the words embraced by quotation marks are those of Coetzee J):

‘The type of case in which it would apply is very ade-quately described by Pennington in Corporate Law 4 ed at 691 et seq. The learned author points out that this is an independent and separate ground for a wind-ing-up order and that it is no longer, as it used to be, necessary that the circumstances should be analogous to those which justify an order on one or more of the specific grounds which precede this one; that conse-quently new kinds of cases may be brought under this head by judicial interpretation, but the cases which have so far been decided, the author points out, in England, and that is also the position in South Africa, have fallen into only five broad categories. It should be emphasized that these categories may be extended by the Courts in the future, but more about that later. Only a very broad description of these categories is called for.’

The learned Judge then mentions the five categories which are:

1. The disappearance of the substratum of the company.

2. The illegality of its objects and fraud committed in connection therewith.

3. A deadlock in the management of the company’s affairs.

4. Grounds analogous to the dissolution of partnership. 5. Oppression. The learned Judge then continues at 350I:

‘Now, whilst it is true that these categories certainly do not constitute any kind of numerus clausus, leaving it open to the Courts to devise other categories in future,



it is nevertheless useful and instructive to list them in this fashion so as to illustrate the kind of thing which can be complained of under this heading. For a num-ber of decades already, the Courts have not found it necessary to devise further categories. It is indeed dif-ficult to think of anything else which could possibly fall into the genus of categories…. When one deals par-ticularly with a solvent company, and it should be borne in mind that all these categories that I have enumerated really relate to solvent companies, a Court will have to be persuaded on very adequate grounds that there is need for a further category, such as merely the advisability of having its affairs investigated in this particular way.’

In Cuninghame, ground 2 was used to wind up a so-called s 21 company conducting a commercial

hotel, an unlawful object under s 21(1)(b) of the Companies Act.

In many shareholders’ disputes, only ground 3 will be available to support a threat of dissolution by one side when the parties simply cannot agree on some significant issue.

Surprisingly often, tax is used as a weapon in commercial disputes, usually by way of extortion-ate threats of disclosure. But what if it is the disso-lution-threatening party who wants to violate the tax laws, against the refusal of the compliant party? You might think that no attorney would be so stupid as to advise a client on such a course of action, yet I have seen it happen.

The victim’s proper response is to call the other side’s bluff and himself make the threatened appli-cation to court.

The foreign dividend participation exemption

I’m an attendee at our ‘Tax Update’ seminar late last year. In the notes a particular line catches my eye, as sounding odd:

Also exempt, in terms of a new item, s 10(1)(k)(ii)(d)-(iii), is a dividend received or accrued from a ‘foreign financial instrument holding company’ as defined in s 41 (corporate restructuring).

When the speaker, who didn’t write the notes, gets to the amendments to s 10(1)(k) of the Income Tax Act, he doesn’t refer to this line but suggests that, downwind of the latest amendments, taxpayers should check their continued eligibility for the so-called foreign dividend participation exemption. My heart runs cold, as it ought to when I have reason to believe I might have misled someone about the true import of the law.

The rest of the seminar is a blur as I confirm on my netbook that the odd-sounding line is erroneous and that SA investors with qualifying offshore ‘for-eign companies’ retain their vital exemption on ‘for-eign dividends’ from such companies.

Would you conclude that three specialists in the field don’t know their law, or that the law is impos-sible to know within a reasonable period?

Using the s 10(1)(k) site map The s 10(1)(k) exemption, as it currently reads, is three pages long and contains 849 words. Here, to begin with, is its substantive fiscal structure, or site map:

Primary exemption (i) (exempt) Exclusion (prima facie nonexempt) Exclusion (aa) (prima facie nonexempt) Exclusion from exclusion (prima facie exempt) Exclusion (cc) (prima facie nonexempt) Exclusion from exclusion (prima facie exempt) Exclusion (dd) (prima facie nonexempt) Exclusion from exclusion (prima facie exempt) Primary exemption (ii) (exempt) Qualification (aa) Qualification (bb) Qualification (cc) Qualification (dd)

Exclusion from qualification (i) (prima facie non-exempt)

Exclusion from qualification (ii) (prima facie non-exempt)

Exclusion from qualification (iii) (prima facie non-exempt)

Can you believe that any human being wishing to communicate with fellow such beings would do it in this fashion?

Bear in mind, while you ponder your answer, that, whether you are consulting a book or a com-puter file, you are effectively reading a scroll, as did our ancient forbears, and only a part of the scroll will be visible to you at any time. Yet, unless you know precisely where you are on the site map at any particular time in relation to each and every phrase, you cannot tell whether you are reading an exemption or a nonexemption.

So how are you meant to tell where you are? By the relative amount of space from the edge of

the scroll to the beginning (margin) of the phrase you are reading or of the passage within which that phrase is embedded. Having established the mar-gin of interest, you must trace its source back to one of the numbered markers in the site map (for example, s 10(k)(ii)(dd)). (It would be easiest to carry out this operation with an actual scroll, since, with either a book or a screen, you will encounter page-beginning and page-end discontinuities and so lose track of the true relative position of the mar-gin of the text.) Once you have the marker number, you have to consult the site map in order to tell whether the phrase of interest lies within an ex-emption or a nonexemption.

Excuse me for a moment while, for the ump-teenth time and with the usual difficulty, I exercise restraint by calling the idiots responsible for this state of affairs and its perpetuation frigging arse-holes. When I was young and impressionable I believed that it was necessary to present legisla-tion in this manner, as a matter of law accessible only to the officially recognized legal fraternity. To-day I have taught myself (and—if you have been



reading my stuff—you) the principles of legal draft-ing, and stand ready to challenge anyone in the land to engage with me on this or any other ques-tion of such drafting.

Join me—Yeah!—on Route s 10(k)(ii)(dd) It gets worse; far, far worse. For my next trick I ask you to move to marker s 10(k)(ii)(dd) on the site map so that, in the table that follows, I may demon-strate how it was amended by the latest amending act, the Taxation Laws Amendment Act 7 of 2010, and, more importantly, the effective dates of these changes.

‘What?’ you might respond. ‘A puny subpara-graph comes in for more than one amendment and more than one effective date is involved?’

You ain’t seen nuttink yet. Instead of replacing

s 10(k)(ii)(dd) in its entirety, the legal idiots at the National Treasury amended it no fewer than six times (s 18(1)(n) and (q) to (u) of Act 7 of 2010), giving the amendments no fewer than three differ-ent effective dates! Included is a type of amend-ment I have never previously encountered but abounds in this year’s amending act: amendments to amendments currently being made! It has taken me hours to figure out just what is going on.

The final outcome To spare you any suspense, allow me to declare (a) that the foreign dividend participation exemption endures; (b) that is has been expanded so as to include dividends from a ‘headquarter company’; and that (c) it will soon exclude dividends from a foreign financial instrument holding company.

Out with the old… …and in with the new 10. (1) There shall be exempt from normal tax—

(k)… (ii) any foreign dividend received by or accrued to a person—

(ii) any foreign dividend or any dividend paid or de-clared by a headquarter company received by or accrued to a person— Section 18(1)(n), Act 7 of 2010 Effective 1 January 2011

This supposedly important change takes place on 1 January 2011. That’s democracy for you—lots of warn-ing of important amendments that might affect your pocket; in this instance, all of two months over the De-cember holiday period. What is odd is that the new definition of a ‘headquarter company’ itself is effective as from the commencement of years of assessment commencing on or after 1 January 2011, which is not quite the same thing. Someone made a booboo.

(dd) if that person (whether alone or together with any other company forming part of the same group of companies as that person) holds at least 20 per cent of the total equity share capital and voting rights in the company declaring the dividend, or 20 per cent of the total member’s interest and vot-ing rights in the co-operative declaring the dividend, which co-operative is established in terms of the laws of any country other than the Republic:

(dd) if that person (whether alone or together with any other company forming part of the same group of companies as that person) holds at least 20 per cent of the total equity shares and voting rights in the company declaring the dividend, or 20 per cent of the total member’s interest and voting rights in the co-operative declaring the dividend, which co-operative is established in terms of the laws of any country other than the Republic: Section 18(1)(q), Act 7 of 2010 Effective 1 January 2011

It makes sense, should you replace the definition of ‘equity share capital’ with a definition of ‘equity shares’, to scour the act for the old usage and eradicate it, as happens here. But, if you are a fiscal terror-ist parachuted in by the US and hired by the National Treasury, you will overlook the definition of the term ‘share incentive scheme’ in s 1, as well as s 64B(3)(d). What a bunch of pathetic incompetents!

Provided that—

Provided that this exemption must not apply in re-spect of any dividend received by or accrued to any person—

The words ‘must not apply’ are entirely new to the principal act. There’s always some snot-nosed arsehole trying to introduce new tax languages and then forgetting the project the next, drunken weekend.

(A) in determining the total equity share capital or member’s interest, there shall not be taken into

(i) if— (aa)



account any share which would have constituted a hybrid equity instrument, as contemplated in sec-tion 8E, but for the three year period requirement contained in that section;

(A) any amount of that dividend is determined directly or indirectly with reference to; or (B) that dividend arises directly or indirectly from, any amount paid or payable by any person to any other person; and (bb) the amount so paid or payable is deductible by the person and— (A) is not subject to normal tax in the hands of that other person; or (B) where that other person is a controlled foreign company, is not taken into account in determining the net income, as defined in section 9D (2A), of that controlled foreign company; or

This gloss disappears, in its entirety.

Perhaps in another life I’ll understand what this cu-riously presented provision means.

Time travel—amendment to current amendment!

The last ‘or is deleted. Section 18(1)(s), Act 7 of 2010 Effective 1 October 2011, applying to dividends derived

during years of assessment commencing on or after that date.

(ii) from any portfolio contemplated in paragraph (e) of the definition of ‘company’ in section 1; Section 18(1)(r), Act 7 of 2010 Effective 1 January 2011, applying to dividends derived


Time travel—amendment to current amendment!

The word ‘or’ is inserted at the end of s 10(1)(k)(ii)(dd)-(ii), snappily described in Act 7 of 2010 as

the end of item (B) of paragraph (i)(bb) of the proviso to item (dd) of subsection (1)(k)(ii).

Section 18(1)(s), Act 7 of 2010 Effective 1 October 2011, applying to dividends derived


(B) this exemption shall not apply in respect of any dividend received by or accrued to any person from any portfolio contemplated in paragraph (e) of the definition of ‘company’ in section 1; and;

This exclusion from the exemption survives in identical form as s 10(1)(k)(ii).

(C) this exemption shall not apply in respect of any foreign dividend which forms part of any transac-tion, operation or scheme in terms of which any amount received by or accrued to any person is exempt from tax while any corresponding expendi-



ture (other than expenditure for the delivery of any goods, including electricity) is deductible by that person or by any connected person in relation to that person in determining the liability for tax of that person or connected person, as the case may be, in terms of this Act; Part of this legally ignorant exclusion from the exemption perhaps survives to some extent as s 10(1)(k)(i).

This substitution of the so-called proviso enjoys an effective date coincident with that of the new definition of a ‘headquarter company’. The amendments to the new proviso enjoy effective dates coincident with the insertion of s 10(1)(k)(iii), which follows immediately below.

(iii)

from any foreign financial instrument holding com-pany as defined in section 41; Section 18(1)(u), Act 7 of 2010 Effective 1 October 2011, applying to dividends derived


Pace the mistake in our notes (to be corrected in the electronic version), this is not an exemption but an exclusion from the exemption, that is, a nonexemption.

Estate duty, donations tax & antenuptial contracts

In s 3(3)(a) the Estate Duty Act effectively exempts

any amount due and recoverable under a policy of insurance, if—

(i) the amount due under such policy is recoverable by the surviving spouse or child of the deceased under a duly registered ante-nuptial or post-nuptial con-tract; or

In s 56(1)(a) the Income Tax Act exempts from do-nations tax the value of property disposed of under a donation

(a) to or for the benefit of the spouse of the donor under a duly registered antenuptial or post-nuptial contract or under a notarial contract entered into as contemplated in section 21 of the Matrimonial Property Act, 1984 (Act no 88 of 1984);

These happen to be the only references to an-tenuptial contracts (ANCs) in both acts. While both provisions cater for postnuptial contracts, only the donations tax relief allows for a change in the mat-rimonial property system under s 21 of the Matri-monial Property Act. On the other hand, while the estate duty effective exemption is restricted to a policy of insurance, the donations tax exemption is unconstrained as to asset type.

The words policy of insurance appear only three times in the Estate Duty Act, twice in close connec-tion and solely with ‘domestic policies’. Since the effective exemption pointedly refrains from making any such connection, I would ordinarily hazard the guess that it applies to life policies that are either real or deemed property in the estate, and such an outcome would make a lot of fiscal sense.

Alas, what I have been calling an effective ex-

emption is in truth an exclusion from a deemed inclusion dealing solely with policies of insurance that are ‘domestic policies’. Thus, in the exclusion, the apparent compound noun policy of insurance is in truth a compound pronoun for policy of insur-ance which is a ‘domestic policy’.

If I am right, policies of insurance that are real but not deemed property cannot win this particular relief (but could be dealt with under the inter-spousal exemption, the notorious s 4(q); 68 TSH 2008). In other words, were you to deal with such a policy in your ANC, your ghost will be mightily dis-pleased to see it chargeable with duty in your es-tate.

Two asides are irresistible:

Pronouns are exceedingly rare in legislation. Over the years, I have reluctantly concluded that in such an arena they ought to be altogether avoided, and this instance illustrates their dan-gers.

Simplifications (I call them tags), such as an effective exemption, are essential to under-standing complex legislation but will always lead to error when you start confusing the map (the tag) with the territory (the actual law).

The really significant difference between the two reliefs is the inclusion of a ‘child’ in the estate duty exemption. In the donations tax exemption the ANC

is clearly solely that entered into between the spouses.

Whose ANC is the subject-matter of the estate duty exemption? The textbook writers suggest that, possibly, its is either the deceased’s or the child’s

ANC.



Learning law with your PC: redistribution agreements (a true shocker)

In 80 TSH 2009 I dealt with the repudiation of an inheritance, with the intention of elucidating the nature of the interest of what I call a beneficiary under a will. To cut a long story short, such an in-terest is properly identified as a personal right against the executor to claim a testamentary bene-fit, should the property concerned survive the ad-ministrative process. It is not a patrimonial right—that is, it is not property—but a form of contingent interest or spes.

I learnt an awfully long time ago that a redistribu-tion agreement is an agreement between the bene-ficiaries under a will not to exchange property but to rearrange the character of their respective enti-tlements upon their adiation—the only point at which they acquire property, either directly or in the form of a claim for delivery against the executor.

Today, I would guess that, whether or not their agreement is a valid redistribution agreement, their signatures thereto would of themselves necessitate and thus evidence their adiation under the will.

But when the buggers play silly buggers and try and rewrite the deceased’s will for (usually) him, usually in an attempt to defraud SARS, what hap-pens in law is that they effectively adiate under the will and so acquire property, and then proceed to divvy that property up between themselves, usually to the massive advantage of the surviving spouse (and, more to the point, his or her eventual heirs). Unknowingly, they thus trigger two sets of charge-able events—once out of the estate, and again as between themselves.

Thus a valid redistribution is not in itself a patri-monial event; the beneficiaries benefit exactly as envisaged under the will, albeit not in the specific form so envisaged.

Redistribution agreements are dealt with in the Close Corporations Act, the Deeds Registry Act, the Mining Titles Registration Act and, if you search hard enough, the Income Tax Act and the Transfer Duty Act.

Wanting to flesh out this understanding by refer-ence to the case law, I pulled my usual trick of searching the South African Law Reports published by Jutas, and got the shock of my life. Not only is there extremely little to find, from 1947 to date, but what is there is flat wrong!

In Hoeksma and Another v Hoeksma 1990 (2) SA

893 (A) it is embarrassing to see a great bench struggling to come to the right decision for the wrong reasons. As usual, I blame, primarily, coun-sel on both sides. But a couple of bum decisions from the past also played a role, as you will see from this excerpt from the judgment of Niena-ber AJA (as he then was):

…. What appellant's counsel did contend was that the oral agreement constituted a redistribution agreement. He relied in particular on a dictum of C Clayden J in Klerck NO v Registrar of Deeds 1950 (1) SA 626 (T) at 629:

‘I agree with the argument on behalf of the appellant that in every redistribution there must be involved sale, exchange, or donation between one heir and another, or between the heir and the surviving spouse.’

Because it was a redistribution agreement, and did not involve a sale or donation, therefore, so the argument proceeded, it must be an exchange.

The short answer is of course that this approach begs the question—the issue is not whether the agreement can be described as a redistribution agreement, but whether it amounted to an exchange. In my judgment, for the reasons already discussed, it did not. Nor do I consider that the appellants can de-rive any real support from the dictum of Jansen J in Rabie v Die Meester van die Hooggeregshof en ’n An-der 1960 (3) SA 848 (T) at 850G: ‘Dit ly geen twyfel aan nie dat “verdeling” ’n

“vervreemding” uitmaak nie.’

But a further shock awaited me. The reason why I have visited this particular topic is that a truly clued-up sometime contributor to this newsletter warned me that he did not believe that Meyerowitz on Administration of Estates supported my view of redistribution agreements. That warning struck me as odd, since what I believe I know about the topic I learnt, mano a mano, from the justly famous Dave Meyerowitz himself.

Yet it is true. At § 12.31 appears a sentence that, believe it or not, reminds me of what Advocate Meyerowitz himself told me, so many years ago and explains why it took me so many years fully to understand what he said:

The basis of a redistribution agreement is that the heirs or legatees who have vested rights are able to deal with these rights.

The citation is to Bydawell v Chapman 1953 3 SA

514 (A). You are going to have to trust me on this one.

Lawyers use the word vested far more incautiously than tax accountants, and what are referred to here, all appearances to the contrary notwithstand-ing, are not, I repeat, not patrimonial rights.

As for Bydawell—and this point you are free to check for yourself—well, I am sorry to report that it has nothing at all to do with what in law is properly referred to as a redistribution agreement.

So, smartass, you might respond, if there ain’t no case law and the leading textbook is wrong, how on earth could I know what is and what isn’t a re-distribution agreement?

Easy-peasy. The qualification of an agreement as a redistribution agreement, as opposed, say, to a so-called family agreement, is mediated by the principle of the testamentary power. Usurp that power, and you have a family agreement, chocka-block full of patrimonial events, and tax bills (in-come tax, CGT, VAT, donations tax, transfer duty, STT, estate duty; you name it) that will set your ears



ringing and your head spinning. Anything less will be the ware Jakob—a redistribution agreement.

And for the same price I’ll tell you one thing

more. In the old days no one understood these principles better than what, with justification, we used to call SARS assessors.

Patrimonial v chargeable events—my personal f iscal credo

When ownership in land passes This is how the principal part of s 16 of the Deeds Registry Act reads

How real rights shall be transferred 16. Save as otherwise provided in this Act or in any

other law the ownership of land may be conveyed from one person to another only by means of a deed of transfer executed or attested by the registrar, and other real rights in land may be conveyed from one person to another only by means of a deed of cession attested by a notary public and registered by the registrar….

On this basis, I would call such registration a patri-monial event, in the sense that registration in the Deeds Office is what passes ownership or other real rights in land from one legal entity to another.

Nevertheless, from a fiscal point of view it might be an event of very little significance indeed, on account of having been preceded either by some critical underlying patrimonial event culminating in registration or even by a chargeable event.

In other words, not all patrimonial events are necessarily chargeable events.

A patrimonial approach to tax Careful readers of this newsletter—and there are two or three—will know that one of its principal aims is to promote what I call a patrimonial (prop-erty) approach to tax, under which economic actors are encouraged to be on the lookout for patrimonial events—the passing of property as widely under-stood under the common law (72 TSH 2009) from one legal entity to another or the creation or even destruction of property in the hands of a single such entity.

Why? Because patrimonial events are very often chargeable events under one tax law or another and sometimes even several such laws, whether simultaneously or ad seriatim. And chargeable events lead either to a liability to account for the tax concerned or some form of relief under such a tax.

I deliberately identify a liability to account for a tax rather than a liability to the tax itself because fiscal accountability does not necessarily imply a liability to pay. For example, you might earn interest income and perhaps even have to report it; never-theless it might be exempt from the so-called in-come tax. As a vendor, you might ‘supply’ ‘goods’ for a ‘consideration’ and have to account for ‘output tax’; nevertheless your claims for ‘input tax’ might leave you free of any actual liability to pay.

So please understand that by chargeable event I mean accountable chargeable event, which might or might not lead to an increase or decrease in actual fiscal liability.

A working hypothesis My working hypothesis runs as follows:

The fiscal universe is exquisitely concerned with just two things, and two things alone, property and services, and only when these are involved in patrimonial events, even if only in the sense of giving rise to a claim by one party against an-other.

The rendering or ‘supply’ of services will always amount to a chargeable event.

A patrimonial event involving the transfer, crea-tion or destruction of property is likely to amount to a chargeable event.

If a patrimonial transaction does not immediately and directly involve property, watch out! What you are almost certainly seeing is the rendering of a service, which, at least under the income tax, will attract a higher rate of tax.

Patrimony & the tax laws If I were today teaching the Income Tax Act I would restate Lategan by saying that an accrual is a pat-rimonial event first and a chargeable event only secondly, since, unless some form of property arises in the hands of the putative taxpayer, even if only by way of a claim against his counterparty, there can be no accountability for the income tax. Entitled to, after all, means to acquire a patrimonial right, and nothing else.

As for the wretched CGT, I have demonstrated again and again (for example, 78 TSH 2009) that what it is aimed at is property as understood under the common law, excluding circulating currency. (Yes, of any country.) If it is about anything at all, it is about patrimonial events. (The idiot who wrote the definition of a CGT ‘asset’ is, without exception, the worst draftsperson it has been my misfortune to be mugged by. I would cheerfully see him executed by firing squad.)

VAT is, for as-yet unresearched historical rea-sons, patrimonially far more interesting, since, apart from its obvious focus on ‘services’, its patri-monial stance is schizoid, in that ‘goods’ are an incomplete repository of targeted property; you have to look as well to ‘services’ in order to un-cover the rest of the patrimonial tax base:

‘[S]ervices’ means anything done or to be done, in-cluding the granting, assignment, cession or surrender of any right or the making available of any facility or advantage…;

What is a right in this context if it is not property? Far more obviously patrimonially focused are the

donations tax, estate duty, securities transfer tax and transfer duty (which includes a curious attempt to tackle the purported purchase and sale of trusts, positively crying out for patrimonial exegesis, in-cluding the role of the hugely troubled case on the topic, TC 11286 of 26 October 2007; 67 TSH 2008, which, despite a great many promises, I have still



not got around to).

Terms and conditions apply You would be amazed to know from which eminent legal personality, now safely deceased, I learnt the difference between terms and conditions. Strangely coincidentally, as a callow student it troubled me that the tax textbooks of the time said nothing about conditionality, which struck me as being a terribly complicated issue. The truth is, rather, that the issue is at once simple and lies at the heart of taxation.

Contractual terms v conditions If all taxes are about patrimonial events of one form or another, and such events are contractually or quasi-contractually (for example, when property arises or is transferred or destroyed under statute) mediated, you cannot possibly reach correct fiscal conclusions unless you can tell contractual terms from conditions.

What is meant by ‘agreement’? Under the common law and just about every piece of legislation I have ever looked at, a contract is concluded when the parties have all indicated their assent to it, usually by way of signature. This mo-ment is variously described, even within particular pieces of legislation, including, importantly in the tax field, the effective dates of their tediously sev-eral amendments.

Under the Income Tax Act and its amending acts, for example, a targeted agreement will very often be one that is concluded, entered into or signed by every party.

All of these elegantly varied qualifiers mean the same thing—the parties have reached agreement but the agreement need not necessarily yet be in effect and binding.

It is to be contrasted with an agreement that takes effect, which, in the jargon, is one that has been perfected.

Scores and scores of references in the act sim-ply to an agreement have possibly to be treated with care, since, prima facie, an agreement might with equal ease simply be concluded or it might be perfected.

The Value-Added Tax Act includes far fewer ref-erences to agreements, only a handful requiring an agreement to be in writing or to be concluded or signed by the parties thereto.

The Transfer Duty Act, by contrast, uses the word agreement very sparsely, and only once each in the contexts of an agreement concluded or en-tered into.

What is meant by ‘contract’? How about contracts? To reverse the order, the Transfer Duty Act eschews the word, entirely. The Value-Added Tax Act uses it only a moderate num-ber of times, with only one reference being made to a contract in writing. The Income Tax Act and its amending acts use the word almost as often as the word agreement, and contracts are a moderate number of times said to be concluded or entered into.

A dangerous ambiguity Potentially, then, a very high degree of ambiguity might lie hidden in our tax laws, in the sense that it might not always be crystal clear whether an agreement or a contract, pure and simple, is envis-aged or a perfected agreement or contract.

Suspensive v resolutive conditions What mediates perfection in this context? The an-swer is itself significantly ambiguous—it is condi-tionality.

A contract subject to a suspensive condition is concluded, it is entered into, it is a contract, but it is ineffective, nonbinding and imperfect until the sus-pensive condition is fulfilled, when the contract is said to have been perfected.

For example, I sell you my house, provided that you are able to raise a mortgage loan from the bank within a stipulated or reasonable period. We have agreed on the transaction, but only when the bank clears the loan will our agreement be effective and binding upon both of us.

Even though the adjectives suspensive and re-solutive confuse the hell out of lawyers (even the odd judge) I speak to, I call this suspensive condi-tionality, in order to avoid ambiguity and distinguish it from resolutive conditionality.

A contract subject to a resolutive condition is per-fect—effective and binding. Should the resolutive condition be triggered, however, the terms of the contract might be changed or the entire contract dissolved.

For example, I sell you my house, finish and Se-lebian klaar. Should you prove to be unable to bribe the appropriate officials in order to secure a rezoning to, say, valuable hotel rights, the sale is off. (Note: the Constitutional Court has thoughtfully identified the critical bribees as those in your mu-nicipality, not province—City of Johannesburg Met-ropolitan Municipality v Gauteng Development Tri-bunal and Others CCT 89/09 [2010] ZACC 11 (88 TSH 2010).)

Patrimony & conditionality In patrimonial terms:

The conclusion of a contract subject to a sus-pensive condition does not give rise to any pat-rimonial consequences until the condition is ful-filled or satisfied. If there is more than one such condition, it is the fulfillment of the last one that triggers the patrimonial event. (The parties each enjoy personal rights to enforce performance but these do not constitute property under the common law. They can be turned into property, but only, I say, by way of a transaction of render-ing a service!)

The conclusion of a contract subject only to a resolutive condition in itself amounts to a patri-monial event. Should the resolutive condition be fulfilled, a further patrimonial event takes place.

Performance Some contracts are of such a nature that they are dependent upon performance, either by one party



or by all the parties to the contract, in which event the requirement is referred to as reciprocal per-formance.

This is an extremely complex topic, and such contracts can be of a suspensive nature and have dramatically unexpected patrimonial effects (82 TSH 2010).

Conditionality in general Conditionality, widely understood, thus goes to the very existence or continued existence and content of a binding contract. Inasmuch as a contract deals with property under the common law, its patrimonial consequences will be mediated by its conditions.

Terms But please, please be careful. All contracts require performance of one kind or another, under their terms, which are simply the mechanical details of the envisaged arrangement, such as required co-operation or assistance, openness to a so-called due-diligence investigation, the applicable national or state law, the execution and delivery of critical documents and, not least, payment.

A condition goes to the existence of the contract or its substantive modification or even dissolution. The patrimonial consequences are immediate and direct as soon as the condition comes into opera-tion.

Anything else is a term and has no patrimonial effect, unless its neglect or imperfect performance leads to a delictual claim. If my contract with you is perfected, that is, it is unconditional or subject only to an as-yet unfulfilled resolutive condition, and you fail to honour one of its terms, I can demand either specific performance under that term or, if the term is sufficiently important, the cancellation of the con-tract and damages (a downstream or indirect pat-rimonial consequence).

No matter how important a term might seem to you, if it lacks conditionality, it will have no immedi-ate and direct patrimonial effect.

Fixed property a little different Thanks to the Deeds Registry Act, fixed property can be a little different in this respect from other forms of property, since, in the great majority of fixed property contracts, registration in the Deeds Office will be a mere term, yet registration is essen-tial to the transfer of ownership and so qualifies as a patrimonial event in its own right.

Chargeable events can precede patrimonial The point is that far more commercially and, espe-cially, fiscally important patrimonial events might have taken place long before registration, such as in the form of a claim for delivery against the seller in favour of the buyer. Need I point out that such a claim is property under the common law?

Transfer duty The transfer duty is a striking tax, in that a charge-able event is triggered when you acquire property

by way of a transaction or in any other manner, or on the amount by which the value of any property is en-hanced by the renunciation, on or after the said date,

of an interest in or restriction upon the use or disposal of that property….

The word acquire in fiscal legislation can be treacherous. I have shown elsewhere that in the Transfer Duty Act it has nothing whatsoever to do with the transfer of ownership, which is in any event governed by the Deeds Registry Act. Ordi-narily, you acquire under the Transfer Duty Act when you enter into a ‘transaction’

irrespective of whether the transaction was conditional or not (definition of the ‘date of acquisition’ in s 1).

Thus in a suspensive fixed property transaction the chargeable event might well precede all patrimonial events!

In addition, the Transfer Duty Act allows a trans-action to be cancelled or, under a resolutive condi-tion, dissolved before registration takes place, even after the date for payment of the tax! (In a can-celled fixed property transaction—agreement by both parties is implied—the patrimonial event van-ishes, as long as the cancellation may be seen as the exercise of an express, implied or even in-serted suspensive condition.)

Value-added tax The Value-Added Tax Act, by carelessly injecting a performance requirement into the concept of a ‘supply’, creates confusion when a chargeable event involving fixed property arises, since registra-tion is essential, yet earlier payment is said to enjoy precedence in establishing a time of supply.

The problem springs from the structural need first to establish a chargeable event (a ‘supply’) and then to attach to it a deemed date of supply. This particular outcome seemingly has the time of sup-ply antedating the actual chargeable supply!

Capital gains tax The CGT possibly displays similar features, since it, too, requires a chargeable event to be established (a ‘disposal’) and then, in a very well hidden provi-sion, seeks to time such an event.

(It is such a poorly constructed tax that a chargeable event involving ‘proceeds’ also has to be considered, simultaneously.)

Donations tax The donations tax follows common-law principles in establishing the patrimonial event yet also allows the chargeable event to be resolutively cancelled, again, even after the date for payment.

Why couldn’t life be made simpler? These examples show that, while it is necessary, it is not always sufficient to be on the alert to spot patrimonial events, since the wretched law does not reliably match these with chargeable events.

Yet one of the golden principles of sound legal drafting—or so I believe—is to depart from the common law only for the most outstandingly com-pelling reasons.

The catch, if you work for SARS or, far, far, far worse, the National Treasury, is to know and un-derstand the common law in the first place.

Feature Supplement to 93 Tax Shock Horror 2010

Cases

December 2010

Winners & Losers In That Other Beautiful Game Current & Past Case Reports

by Julian Ware © 2010 J Ware ([email protected])

Rescission of judgment— judgment without notice Sepataka v CSARS

South Gauteng High Court (2010)—72 SATC 279 (judgment delivered by Spilg J): SARS’ officials raised estimated income tax assessments upon the taxpayer based upon an apparent capital reconciliation. The taxpayer objected to the assessments. Even so and unbeknownst to him, SARS obtained a judgment against him by filing a statement with the Registrar of the High Court under s 91 of the Income Tax Act. Subsequently it admit-ted (although not to the taxpayer) that it had made an error, revised the assessments and withdrew the statement lodged with the Registrar. Many years later the taxpayer was alerted to the judgment when he was unable to obtain credit. He applied for its rescission. The powers of the various provisions of the act entitle the Commissioner to obtain a judgment based upon an estimate, but, since they are draconian, they must be exercised with care by properly experienced and suitably qualified personnel. Under the ‘pay now argue later’ principle it is competent for the Commissioner to demand and collect assessed taxes under objection, but a judgment may not be sought in the face of a pending objection. The express provisions to collect tax despite an objection and appeal would be unnecessary if a judgment could be obtained in the interim. Since the judgment could not be lawfully obtained, on account of the pending lodged and noted objec-tion, the judgment was a nullity and was set aside. Under an obiter dic-tum, Justice Spilg (a former silk) was critical of SARS’S approach, opining that a statement lodged with a registrar of a court under s 91 ought to contain certain minimum information to satisfy constitutional proportional-ity and to safeguard taxpayers’ rights.

Validity of estimates— RSC levies City of Tshwane Metropolitan Municipality v Cable City (Pty) Ltd

Supreme Court of Appeal (2009)—72 SATC 285 (judgment delivered by Maya JA; Brand JA, Cloete JA, Jafta JA & Hurt AJA concurring): Section 12 of the now defunct Regional Services Councils Act did not empower the minister of finance to authorize a metropolitan municipal council, under government notice, to estimate levies. Although s 12(1A)(e) was couched in a wide form and purported to allow the minister, by way of notice, to make such other provisions as were deemed necessary to enable a coun-cil to impose and claim a levy, it was not be interpreted in isolation but had to be read in conjunction with s 12 as a whole. Besides, the words ‘shall be calculated’ in their ordinary grammatical context connote a certain de-gree of mathematical precision, and do not permit of arbitrary estimates. The legislature could not have intended to give councils the power sum-marily to estimate levies. The provision in the notice empowering councils to estimate levies was ultra vires the empowering provisions contained in s 12, and was unlawful. Not satisfied with the outcome, the municipality subsequently applied to the Constitutional Court for leave to appeal. Its application was unanimously dismissed, with costs.

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Briefing

December 2010 An unfair exemption

by Michael Stein © 2010 M L Stein ([email protected])

Section 10(1)(d)(iv) of the Income Tax Act exempts from income tax the receipts and accruals of a qualifying company or society or any other associa-tion of persons established to promote the common interests of their members carrying on a particular kind of business, profession or occupation.

Until recently, such an entity had to be approved by the Commissioner, subject to conditions pre-scribed by the Minister of Finance by regulation. Not to be accused of indecent haste, no Minister has ever prescribed the required regulations, with the result that it has presumably been impossible for the Commissioner to approve the application of the exemption. Nevertheless, at least some of the entities concerned have been not been deterred, either by the law or its enforcement, from claiming exemption from income tax.

The latest amending act, the Taxation Laws Amendment Act 7 of 2010, has scrapped the re-quirement that the Minister prescribe regulations and instead, with effect as from its date of promul-gation, 2 November 2010, made necessary the Commissioner’s approval ‘in terms of section 30B’.

Approval requirements This section has been inserted in the principal act with effect as from the same date. It is very wordy, and I list only what matters.

In order for it to qualify for the exemption, the en-tity’s constitution or the written instrument under which it has been established must include the following rules:

It must have a committee, board of manage-ment or similar governing body consisting of at least three persons, not the connected persons of each other, to accept fiduciary responsibility.

No single person may directly or indirectly con-trol its decision-making powers.

It may not directly or indirectly distribute any of its funds or assets to any person other than in the course of furthering its objectives.

It is required to use substantially the whole of its funds for the sole or principal object for which it has been established.

Substantially the whole of its activities must be directed to the furtherance of its sole or principal object and not for the specific benefit of an indi-vidual member or a minority group.

It may not have a share or other interest in a business, profession or occupation carried on by its members.

It may not pay to any employee, office bearer or a member or any other person ‘remuneration’ that is excessive, considered in the light of what is generally considered reasonable in the sector and for the services concerned.

Substantially the whole of its funding must be derived from its annual or other long-term mem-bers or from an appropriation by government in the national, provincial or local sphere.

It must, as part of its dissolution, transfer its assets to a qualifying recipient.

Amendments to its constitution or written in-strument must be submitted to the Commis-sioner within thirty days of being effected.

It must comply with reporting requirements de-termined by the Commissioner from time to time.

It must not knowingly be, or become a party to, and must not knowingly permit itself to be used as part of, an impermissible avoidance ar-rangement or transaction, operation or scheme.

Unfair competition These requirements are all fine but there is a re-grettable omission of a qualification found in com-parable exemptions.

For example, s 10(1)(cN), which exempts the re-ceipts and accruals of an approved public benefit organization from income tax, limits the business undertakings that may be carried on free of income tax. One of the restrictions is that the business un-dertakings or trading activities may not result in unfair competition with ‘taxable entities’.

Another example, s 10(1)(cO), exempts the re-ceipts and accruals of approved recreational clubs from income tax. It, too, does not apply to receipts and accruals derived from business undertakings or trading activities resulting in unfair competition with taxable entities.

Why is there not a similar restriction on the ex-emption allowed to the entities referred to in s 10(1)(d)(iv), some of which engage in extensive trading activities in competition with taxable enti-ties?

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Davey’s Locker

December 2010 Allocate your estate efficiently How to emulate US billionaires

by Tony Davey © 2010 A H Davey ([email protected] www.tonydavey.com)

American billionaires, notably Warren Buffett and Bill Gates, have recently encouraged a re-surgence of philanthropic behav-iour by pledging to bequeath the majority of their wealth to chari-table causes.

In my experience in advising so-called high-net-worth indi-viduals here in South Africa, it is uncommon for charities to be seriously considered as heirs, even in part, in lieu of a trust fund or children.

Tax morality has many facets but, in my view, would be im-proved if there were a perceived efficient use of taxes collected, including estate duty, in favour of deserving causes, which would benefit the needy, leading to socioeconomic improvement and a more stable society.

Many wealthy clients, particu-larly the self-made, believe that they can manage and allocate money better than the govern-

ment can spend tax collections. Do they realize that the Estate Duty Act allows them the oppor-tunity of proving the point—without limitation?

Section 4(h) of the Estate Duty Act allows the deduction against a natural person’s estate of be-quests to a public benefit organi-zation (PBO) approved by the Commissioner under s 30 of the Income Tax Act.

In essence, if you were to be-queath the balance of your es-tate in excess of the R3,5 m threshold to qualifying PBOs of your choice, you would be exer-cising your legal right to apply the proceeds directly to an hon-est, effective and well-managed cause, without incurring any estate duty liability.

American billionaires have—possibly unwittingly—scored an estate planning point!

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December 2010

Evidence Corner—evidence could make a welcome change to tax cases

You can trust me: I am your lawyer

by Andrew Paizes © 2010 A Paizes ([email protected])

The first of the privileges I con-sider is the legal professional privilege. It operates on the prem-ise that the legal system itself depends, for its function and its survival, on the preservation of confidentiality of communications between lawyer and client. If you cannot be assured that what you tell your lawyer will remain out of the hands of the court and your adversary, you may not be pre-pared to disclose to him or her material that might count against you—even if that material could be crucial to making out your case or your defence in a criminal trial.

There has arisen, therefore, a rule at common law that commu-nications between a legal adviser and client are privileged if the following requirements are satis-fied:

The legal adviser was acting in a professional capacity at the time.

The adviser was consulted in confidence.

The communication was made for the purpose of obtaining legal advice.

The advice does not facilitate the commission of a crime or fraud.

Of these requirements, it is the third that is the most controversial and interesting. It is not neces-sary, for the privilege to arise, that litigation be contemplated. Nor is

it necessary that the sole purpose of the consultation be the procur-ing of legal advice. In fact, unlike the position in some other juris-dictions, it is not necessary that this be the primary or even the dominant purpose. It is sufficient that the communication be made in connection with that purpose.

In a claim for the privilege, cer-tain rules apply. Since it is the client’s privilege and not that of the legal adviser, it is the client who must claim the privilege. If he or she does not do so, there is nothing the lawyer can do to pre-vent disclosing the contents of the communication. The lawyer may, however, claim privilege on the client’s behalf if so instructed. The judicial officer may properly inform a client who is testifying of the right to privilege, but it is then up to the witness to decide whether to claim the privilege. The judge may not prevent cross-examination if the witness de-cides to answer questions on the communications made by him or her to the lawyer.

For a rule that has been a cor-nerstone of the Anglo-American legal system for some four centu-ries or so, the privilege has a strangely chequered history. Its rationale has changed more than once: the focus has shifted from a concern to guard the secrets of the client in Elizabethan England, to a need to provide the client with freedom to consult lawyers without fear in the 18th century, to

the modern human-rights-based philosophy, which sees the privi-lege in much wider terms.

The modern conception of the privilege is broader than a mere rule of evidence that excludes certain evidence from being venti-lated in court. It sees the privilege as a substantive rule—almost like a rule of property—which has the effect that you have rights to pro-tect your communications to your lawyer even before the matter gets to court. You might, for in-stance, be able to defeat powers of search and seizure—even statutory powers—by showing that the communication was privi-leged.

Even before the advent of the Constitution, our courts recog-nized that the privilege went be-yond being a mere rule of evi-dence and was a manifestation of a fundamental principle upon which our judicial system is based—the right of every person of access to a legal adviser. This right clearly included, said the courts, the right to consult such an adviser privately and confiden-tially.

The Constitution has given greater force to these develop-ments. Although it contains no express recognition of the right to consult an adviser privately and in confidence, there is enough to suggest strongly the implicit crea-tion of that right. There is an ex-press recognition of the right of all persons to have access to the

December 2010


courts (s 34); the right of an ac-cused person to the assistance of counsel (s 35(3)(f)) and not to be compelled to give self-incrimina-ting evidence (s 36(3)(j)); and the general right to privacy, which in-cludes the right all persons have not to have the privacy of their communications infringed (s 14).

The result is that a client who has been the victim of a breach or violation of the rights protected by the privilege has certain reme-dies at his or her disposal. He or she may apply for a stay of a

criminal trial, on the ground that such prejudice has ensued that the trial is unlikely to be fair. This is an extreme measure which the courts are disinclined to grant. A more likely result is that the valid-ity of warrants to search or seize privileged material may be at-tacked. If such an attack is suc-cessful, the courts may issue a ‘preservation order’ to preserve the evidence so that the court in the ensuing trial can apply its mind to the question whether the unlawfully obtained evidence

should be received in terms of s 35(5) of the Constitution.

This section provides as fol-lows:

Evidence obtained in a manner that violates any right in the Bill of Rights must be excluded if the ad-mission of that evidence would render the trial unfair or otherwise be detrimental to the administration of justice.

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The Bsp Stylebook

Costa Divaris & Duncan S McAllister Standardize your firm’s use of the English language, avoid embarrassing errors

& save time looking up spelling, usage & presentation.


Shortcut Keys in Word by Duncan S McAllister

December 2010

More Google shortcuts

Here are some more shortcut keys for refining your Internet search using Google. The square brackets must be ignored when typing the search term.

“[text]” Find exact term or phrase eg—“comprehensive guide to CGT” Note: Google is generally case insensi-tive.

[text] OR [text] Find pages containing either word eg—insolvency OR sequestration

Note: the ‘OR’ must be in capital letters.

[word A]–[word B] Find word A but not word B eg—SARS-virus-syndrome

[words] * [words]

The asterisk is used to indicate unknown missing words eg—

disappeared like snow upon the * face

Note: The asterisk (known as a wildcard) only works with words and not letters. Thus you cannot use Google to solve your crossword in that man-ner.

site:[website address] eg—site:www.sars.gov.za “com-prehensive guide”

link:[find linked pages] eg—link:www.bspseminars.co.za

#...#[search within a number range] eg—interpretation notes 55…60

daterange:[search within specific date range] eg—integritax daterange:200901-201012

safesearch: [exclude adult content] eg—safesearch:breast cancer

info: [find info about a page] eg—info:www.bsp-seminars.co.za

related: [related pages] eg—related:www.sars.gov.za

cache: [view cached page] eg—cache:google.com

filetype:[restrict search to specific filetype] eg—dividends tax filetype:pdf

allintitle: [search for keywords in page title] eg—allintitle:"what’s new on the site" SARS

inurl:[restrict search to page URLs] eg—inurl:kalahari

site:.doman extension [specific domain search] eg—site:.ac, site:.edu, site:.gov, site:.org and so on

site:country code [restrict search to country] eg—site:.uk “capital gains tax”

intext:[search for keyword in body text] eg—intext:expropriation

allintext: [return pages with all words specified in body text] eg—allintext:9C safe haven

book[search book text] eg—book Spud – Learning to Fly

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‘Who Shopped Christo Wiese?’ · ‘Who Shopped Christo Wiese?’ —What’s the world coming...

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