Constitutional Court has ruled in Capitec’s favour over a massive tax dispute with the South African Revenue Service.
The Constitutional Court has ruled in Capitec’s favour over a R71 million rand tax dispute with the South African Revenue Service .
“To protect itself against the risk that unsecured borrowers might be unable to repay loans upon retrenchment or death, Capitec took out insurance policies,” said the Concourt. “SARS disallowed the deduction on the basis that the supply of the loan cover did not constitute a taxable supply. SARS took the view that the loan cover was provided for no consideration and thus had no value; and in the alternative, that the loan cover constituted an exempt supply.”Following SARS’s disallowance, Capitec took the appeal to the tax court, which upheld the appeal and set aside SARS’ additional assessment.
Despite a minor component of Capitec’s business being a taxable supply , this did not convert the exempt supply into a taxable supply.
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