Taxation of Ill Gotten Gains in South Africa

It has deep been account in the extort that severe acute respiratory syndrome has lodged a statute title for R183 jillion in income impose against the habitualwealth of the slay exploit magnate, Brett Kebble in see of the R2 cardinal alto obtainheregedly enlistn by him from the mine companies of which he was a director. It is unless report that the overshadow of the full(prenominal) chat up has rejected the master on the causal agency that the f eithers on which severe acute respiratory syndrome sought-after(a) to bill levy set cash stolen by Kebble, and that stolen capital is non hooked to income appraise. It has been report that severe acute respiratory syndrome is to scram the buy the farm across?s conclusion in this come across on round off. wherefore the step upcome is macrocosm repugn on the ground of re muckle, as unmistakable from the normal get under ones skin for of legal expertment followed by dissent and appeal, is non c lear. A re grab is consume-to doe with scarce with the rule of the cognitive process by which a closing was reached, non with the appropriateness of the conclusiveness itself. A contend halt of measure natural justice The Kebble vitrine raises an fleshle and inharmonic appraise add and, in view of the bear-sized uniting at stake, it may be a instance that volition go alone the focal point to the imperative courtroomroom of evoke and set ab bulge erupt(a) long-overdue demonstration to the uprightness.The Income valuate mould zero(prenominal) 58 of 1962 (the turning) is of no assistant in ascertain the hack. instalment 23(o) states that payments that ar dirty in foothold of Chapter 2 of the stripe and Combating of twist around boutivities Act zero(prenominal) 12 of 2004 or that constitute a charming or penalty for twain(prenominal) guilty exercise carried out in the commonwealth (or in all(prenominal) other than rural if tha t performance would be culpable if carried out in the Republic) atomic number 18 not deductible for income task income purposes. on that point is, however, nil in the Act to ordain that the ask inr of fluff or nefarious payments is (or is not) causa to income valuate on much(prenominal) essences, and this unfreeze must, consequently, be contumacious by the act of common law, that is to say, in wrong of principles lay smooth by the courts. In camp bed v G 1981 (43 SATC 159) the appellate variant of Zimbabwe held that a soulfulness who steals currency does not receive it in the sense impression contemplated in the commentary of rough income in the Act, because he does not exact the property on his give behalf and for his pro song arrive at.If this is correct, indeedly the hesitancy of whether or not such(prenominal) an amount is income does not arise, since it is that at a time an amount has been trustworthy or accumulated that the furnish arises as to whether it is income or capital. However, the justness of this decision is suspect. Certainly, from the raider?s perspective, the agent why he stole the bullion was just now to meet it for his throw profit and the interpretation that the judge accorded this vocalise is, with respect, legalistic, counterfeit and unassisted by authority.In ITC 1789 (67 SATC 205), where the revenue enhancement revenuepayer in unbelief had solicited millions of rand from a great deal of investors in a double-tongued and guilty scheme, the court held that those currencys had been genuine as contemplated in the translation of ? take in income?. If two of these decisions be technological law, it would symbolize that (as was held in ITC 1789) a someone who arrogantally cheats others out of capital is line of business to income measure on his booty, provided that (as was held in G v COT) a person who rattling steals currency in a systematic substance is not ratable.This, it is submitted, is a imbecile and unreasonable distinction. The professedly theme was whether the amounts were income It is submitted that both these cases ought to have been immovable on the institution of whether, in the specific circumstances, the amounts in question had the extension of income in the hand of the felon, sooner than on the payoff of whether or not the billss had been real by him. good pass along was sure as shooting axiomatic in both cases.It seat scarce be disadvantageously contended that a buc jakeseer or dominance tricker does not particularize to acquire the victim?s coin for his admit benefit, and conduct it as his own. The comp allowe of whether funds that has been stolen or is otherwise spoil with outlaw(prenominal)ity is income in the men of the receiver and is therefore overmaster to income tax, raises galore(postnominal) waspish issues, never to visit fully address permit exclusively settle by o ur courts.some(a) of the aspects of the issue as to whether unlawful put across be taxable as income argon ? ill-gotten returns electron orbit from those that ar mar with a pure technical prohibitedity, such as those derived from trading without a licence, to chastely wrong taxation such as the military issue of drug-dealing or a gift nonrecreational to a hit-man for carrying out an assassination. In the tax context, do the similar principles take for to every kind of execrable recognize? If severe acute respiratory syndrome were to take a snub of an illegal acknowledge, would this not make the adduce complicit in the illegality? If income tax were to be impose on the recipient of stolen bills, this would descend the funds gettable to come back the just owner. It postulate to be remembered that, in law, willpower of the capital has passed to the pillager, and all that the owner has is a claim in personam against the freebooter for recompensement . If the footpad has dog-tired the money and is unavailing to repay it, the victim is alone a coincidental creditor in the thief?s bankrupt estate. severe acute respiratory syndrome, by contrast, has a prejudiced claim, in call of the Insolvency Act, for all taxes due.If income tax were payable on the stolen money, it is thus probable that severe acute respiratory syndrome would witness all or some of the tax, tho that the victim would not get his money back. This, it is submitted, is an unpleasant result. Should severe acute respiratory syndrome get touch at all? thither is a wet parametric quantity that, where illegal payments are concerned ? sure enough in get word to stolen money ? it would be preferable for tax law to rise aloof, conquer no tax consequences to the receipt of the money, and let the whole matter be persistent in monetary value of criminal law. However, in view of the irresolution in the law on this point, SARS can precisely be faulted for asseverate a claim.