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TAX3705 ASSIGNMENT 1 SEMESTER 1 OF 2022
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TAX3705ASSIGNMENT 01 SOLUTION
SEMESTER 01 - 2022
1a)
Primary legislation is an Act that has been passed by the Parliament.
Secondary legislation can make small changes to an Act. The Act must say what changes
can be made to it by secondary legislation and what process the secondary legislation
will follow.
Secondary legislation can also create new rules or add more details to an Act.
b)
Taxpayers often find them in a position where the letter of the law is applied by the
Commissioner when they are assessed for tax. In some instances, however, the boot
may be on the other foot and the taxpayer may find himself of herself having to interpret,
possibly plan around and complete a tax return where the letter of the law provides the
taxpayer with an outcome that could clearly not have been the intention of the legislature.
An example of this is the exemption for low-cost housing fringe benefits that was inserted
into the law by the end of 2013.
Paragraph 5(3A) of the Seventh Schedule to the Income Tax Act allows immovable
property to be transferred to an employee at no fringe benefit value unless the employees
remuneration proxy exceeds R250 000, the value of the property exceeds R450 000 and
the employee is a person connected to the employer.
A non-shareholding director who receives a house worth R4 million instead of his normal
cash salary therefore qualifies for this nil value benefit.
c)
The contra fiscum rule is a common law principle stipulating that should a taxing
statutory provision reveal an ambiguity, the ambiguous provision must be interpreted in
a manner that favours a taxpayer (Badenhorst v CIR 1955 (2) SA 207 (N) 215).
This significant judgment suggests that there may be different rules of interpretation
when dealing with statutes as opposed to contracts. In a dissenting judgment in the
SCA, concerning inter alia the contra fiscum rule, there is an important statement and
the judgment may well be appealed.
Recourse to the meaning of the speakers of words used in a statute is not determined in
the same fashion as that of words used in a contract. In order to ascertain the intention
of the lawmaker, one must have regard to the appropriate principles of law-making.
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