, PLEASE USE THIS DOCUMENT AS A GUIDE ONLY
QUESTION 1 (TAX ADMINISTRATION, TAX AVOIDANCE AND TAXPAYER)
1. Advise Yaya on the meaning of the term ‘impermissible avoidance arrangement’ with specific
reference to the requirements that must be met in terms of Section 80A before a
transaction/scheme/arrangement is deemed to be an ‘impermissible avoidance arrangement.
1. Introduction
The Commissioner of SARS has invoked the general anti-avoidance rules (GAAR) contained in Part
IIA of Chapter III of the Act (sections 80A to 80L). SARS is of the view that the transaction
involving the purchase and subsequent sale of your shares in Themba-Bread (Pty) Ltd constitutes an
'impermissible avoidance arrangement' designed to secure an impermissible tax benefit.¹
To successfully defend against SARS's claim, it is crucial to understand the legal definition and the
specific requirements that SARS must prove for an arrangement to be classified as 'impermissible'
under Section 80A.
2. The Meaning of an 'Impermissible Avoidance Arrangement'
An 'impermissible avoidance arrangement' is defined as any transaction, operation, scheme, or
agreement entered into by a taxpayer where the sole or main purpose is to obtain a tax benefit, and
which meets one or more of the specific tests outlined in Section 80A.²
For SARS to successfully apply Section 80B and issue assessments, it must prove that both of the
following requirements are met:
Requirement 1: The Sole or Main Purpose is to Obtain a Tax Benefit
The primary reason for entering into the arrangement must be to secure a tax advantage.³ In your
situation, SARS will argue that the main purpose of you acquiring Themba-Bread, allowing it to
become profitable, and then selling it to Owethu, was to enable the company to utilise its assessed
losses against its new income, thereby avoiding normal tax. The Commissioner will consider all the
facts and circumstances to determine the true purpose of the transaction.⁴
1 Silke 2021, p. 1135 (Ch. 32).
2 Silke 2021, p. 1136.
3 Silke 2021, p. 1135.
4 Silke 2021, p. 1135.
QUESTION 1 (TAX ADMINISTRATION, TAX AVOIDANCE AND TAXPAYER)
1. Advise Yaya on the meaning of the term ‘impermissible avoidance arrangement’ with specific
reference to the requirements that must be met in terms of Section 80A before a
transaction/scheme/arrangement is deemed to be an ‘impermissible avoidance arrangement.
1. Introduction
The Commissioner of SARS has invoked the general anti-avoidance rules (GAAR) contained in Part
IIA of Chapter III of the Act (sections 80A to 80L). SARS is of the view that the transaction
involving the purchase and subsequent sale of your shares in Themba-Bread (Pty) Ltd constitutes an
'impermissible avoidance arrangement' designed to secure an impermissible tax benefit.¹
To successfully defend against SARS's claim, it is crucial to understand the legal definition and the
specific requirements that SARS must prove for an arrangement to be classified as 'impermissible'
under Section 80A.
2. The Meaning of an 'Impermissible Avoidance Arrangement'
An 'impermissible avoidance arrangement' is defined as any transaction, operation, scheme, or
agreement entered into by a taxpayer where the sole or main purpose is to obtain a tax benefit, and
which meets one or more of the specific tests outlined in Section 80A.²
For SARS to successfully apply Section 80B and issue assessments, it must prove that both of the
following requirements are met:
Requirement 1: The Sole or Main Purpose is to Obtain a Tax Benefit
The primary reason for entering into the arrangement must be to secure a tax advantage.³ In your
situation, SARS will argue that the main purpose of you acquiring Themba-Bread, allowing it to
become profitable, and then selling it to Owethu, was to enable the company to utilise its assessed
losses against its new income, thereby avoiding normal tax. The Commissioner will consider all the
facts and circumstances to determine the true purpose of the transaction.⁴
1 Silke 2021, p. 1135 (Ch. 32).
2 Silke 2021, p. 1136.
3 Silke 2021, p. 1135.
4 Silke 2021, p. 1135.
