Cape Town - The long-running battle between the SA Revenue Service (Sars) and Cape Town swimwear model Candice-Jean van der Merwe over a $15.3 million (R252m at current exchange rate) gift from an unnamed Arab admirer has been shut down by the Supreme Court of Appeal (SCA).
The SCA endorsed an appeal by Sars, lodged against the order and judgment of the majority of the full court of the Western Cape High Court, which had upheld an appeal by Van der Merwe against a judgment of the Cape Town Tax Court.
The case goes back to 2014, when Van der Merwe filed her tax return for the 2014 tax year which reflected taxable income of R365 919. She also declared a receipt of R142 901 673 as a “gift from her companion abroad”.
In January 2015, Sars raised an original assessment in accordance with this return.
The “donation” was not subjected to tax. In February 2015, Sars started a process of interrogating the tax return and the foreign “donation”. They also explored a settlement.
On December 7, 2015, MacRoberts Attorneys (MR), representing Sars, wrote to Werksmans Attorneys, which represented Van der Merwe, enclosing a draft letter of audit findings, which stated that R142.9 million was not a gratuitous donation and was subject to income tax.
On December 18, 2015, Werksmans sent a settlement proposal to MR to which they replied on February 18, 2016, saying Sars had approved the settlement proposal.
The amount payable was R44 175 675. Werksmans sent MR proof of payment of the settlement consideration on March 10, 2016.
The matter would have been settled there had Van der Merwe not lodged a notice of objection to the additional assessment of February 17, 2016, together with an application for the late filing of the objection on September 10, 2018.
Her ground for challenging the additional assessment on its merits was that tax was imposed on non-taxable income and paid on the basis of the “pay now, argue later rule”.
SCA Judge Mahube Molemela said: “That set in motion the events leading to the application for default judgment that served before the tax court, in terms of which Van der Merwe sought to reverse what her attorneys had plainly agreed on her behalf.”
The SCA found that Van der Merwe simply did not meet the jurisdictional requirements that warranted the consideration of an application.