Editor’s Note:
In this fourth newsletter for 2025 we consider the following:
Fraud of Funds by Inter-Bank Transfer
Filing Season
Tax Ombud Media Release, 7 July 2025
SARS Ins, BGRs, VRs, and Guides Noter-Up
Tony Davey – Editor | Duncan McAllister – Co-Editor
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There have been numerous cases in which a fraudster intercepts an email addressed to, say, a firm of attorneys, requesting their banking details to effect payment for a purchase of immovable property. The thief replies purporting to be the firm and provides their own banking details. By the time the fraud is discovered, the thief is long gone. Sometimes the victim seeks recourse against the attorneys as happened in Edward Nathan Sonnenberg Inc v Hawarden 2024 (5) SA 9 (SCA), but the prospects of success are not guaranteed. As happened in that case, ENS was absolved of liability for the loss. Would the victim be entitled to a capital loss in such a case? The typical knee-jerk response is that the theft of funds is not an asset for CGT purposes and hence no capital loss can arise. But does that view stand up to scrutiny?
When the payer hits the ‘Pay’ button on their banking app, they acquire a personal right against their bank to carry out their payment instruction. This right constitutes the proceeds on part-disposal of the bank account, and usually there would be no capital gain or loss as the base cost of the bank account would equal the proceeds.
After the instruction is carried out by the bank, that right is extinguished in exchange for proceeds equal to a delictual claim against the fraudster. The base cost of the delictual claim is equal to the market value of the amount by which the victim was impoverished in giving up the personal right against their bank when payment was effected.
The definition of ‘asset’ in paragraph 1 of the Eighth Schedule includes ‘property of whatever nature, whether movable or immovable, corporeal or incorporeal, excluding any currency, …’. A debt is a movable, incorporeal asset and comprises property (CIR v Estate CP Crewe and another 1943 AD 656, 12 SATC 344 at 352).
The Eighth Schedule recognises debts as assets – see for example, paragraph 56(1) which disallows a capital loss on a debt owed between connected persons unless the debtor suffers one of the adverse events in paragraph 56(2).
A debt claim is a financial instrument as defined in section 1 and hence excluded as a personal-use asset under paragraph 53(3)(e).
When the debt becomes irrecoverable, there would arguably be a disposal under paragraph 11 either through extinction (opening words), abandonment (paragraph 11(1)(b)) or loss (paragraph 11(1)(c)). Paragraph 4(b)(i)(bb) applies when an asset has been disposed of in a prior year and allows a capital loss for part of the proceeds ‘as has become irrecoverable during the current year of assessment’. While there is no reference to irrecoverability in paragraph 11, it is submitted that a capital loss should be claimable under one of the events mentioned in paragraph 11. The loss should be claimable when the debt is extinguished through abandonment (paragraph 13(1)(b)) or when it is clear that no compensation or further compensation will be received (paragraph 13(1)(c)). These cases are concerned with the loss of a debt asset and have nothing to do with currency, which is notes and coins in current circulation.
FILING SEASON
- Key dates for individuals:
- Auto-assessments: 7 – 20 July 2025
- Filing season opens for non-provisional taxpayers who were not auto-assessed: 21 July – 20 October 2025
- Provisional taxpayers: 21 July – 19 January 2026
For the 2025 Tax Season, SARS will identify eligible provisional taxpayers and invite them to express their interest to receive an Auto Assessment. Eligible and interested provisional taxpayers will be included in the Auto Assessment population.
SARS has announced a number of changes to the ITR12 tax return for individuals, which include among others:
For the 2026 year of assessment, the s 6quat rebate for foreign taxes on foreign capital gains will no longer be limited by the SA inclusion rate (40% for individuals). For purposes of the comparative inclusion in taxable income of a taxable capital gain, the SA inclusion rate will be assumed to be 100%. This has now been catered for in the ITR12 return. This amendment is equally applicable to companies and trusts.
From the 2025 year of assessment, resident and non-resident taxpayers will be presented with a specific ITR12 and IRP6 tax-return type based on taxpayer registration status available with SARS, namely:
- A resident will be presented with the resident wizard questionnaire.
- A non-resident will be presented with the non-resident wizard questionnaire.
- Taxpayers who ceased to be resident during the year of assessment will be presented with the resident and non-resident wizard questionnaire.
Reinstatement of RSA Tax Residency
The Registration, Amendments, and Verification Form (RAV01) form will enable a taxpayer who ceased to be an RSA tax resident in the past to indicate the reinstated date on the ‘Reinstatement Date of RSA Tax Residency’ line item.
TAX OMBUD MEDIA RELEASE, 7 JULY 2025
The office of the Tax Ombud (OTO) has issued a media statement, launching its annual campaign titled ’Smart Taxpayers – Do the Right Thing‘, to coincide with the start of the 2025 tax filing season.
As part of the campaign roll-out, a two-day activation was recently held in Pretoria where taxpayers could lodge new complaints against SARS, check the status of existing complaints and learn more about their rights and responsibilities.
Sections 15 to 21 of the Tax Administration Act (TAA) govern the powers and duties of the Tax Ombud who is appointed by the Minister of Finance.
Section 16 of the TAA prescribes the mandate of the OTO but notably confines this to only reviewing and addressing any complaint by a taxpayer ’regarding a service matter or a procedural or administrative matter‘ arising from the application of a tax Act by SARS. Thus, for example, substantive matters, involving the merits of a tax dispute, cannot be considered by the OTO.
Further to this, Section 17 provides that the OTO may not review legislation or tax policy; SARS policy or practice (unless it relates to a service, procedural or administrative matter); a matter subject to objection and appeal (unless it relates to an administrative matter); nor a decision of the tax court.
Importantly from a methodology perspective, section 18 of the TAA, governing the OTO review process, provides that the OTO may review a complaint only if the taxpayer has first exhausted the complaints resolution mechanisms of SARS (termed the SARS Complaints Monitoring Office, (CMO)) unless there are compelling circumstances for not doing so.