An analysis of Section 80A(C)(ii) of the Income Tax Act no. 58 of 1962 as amended

[摘要] ENGLISH ABSTRACT: In November 2006 section 103(1) of the Act was abolished and replaced by anew Part IIA, containing sections 80A to 80L, which targets impermissible taxavoidance arrangements. Section 80A(c)(ii) introduced a new concept to theSouth African tax law: a misuse or abuse of the provisions of the Act,including Part IIA thereof.The objective of this study was to establish the origin, meaning, applicationand effect of section 80A(c)(ii) of the Act. The evolution of section 80A(c)(ii)was therefore examined where after the enacted version was analyzed. Itwas essential to determine the origin of section 80A(c)(ii) in order to establishsome point of reference from which inferences could be drawn as to thepossible application and effect thereof. Case law, practice statements andarticles relating to its proposed root was then examined.A 'misuse or abuse' of a provision, it was found, implies, frustrating orexploiting the purpose of the provision. This contention was confirmed byexisting Canadian precedent. Such an interpretation, however, has a strongresemblance to the words in which the draft version of section 80A(c)(ii) wascouched. It is therefore in contrast to the presumption that different words (inthe enacted version) imply a different meaning. The precise meaning of thewords 'misuse or abuse' is thus still elusive.It was established that section 80A(c)(ii) has its roots in section 245 of theCanadian Act. Section 245(4) was regarded as an effective comparative tosection 80A(c)(ii) as it also contained a so-called misuse or abuse rule. Theapplication of this rule in the Canadian tax environment required the followingprocess:- Interpret (contextually and purposively) the provisions relied on by thetaxpayer, to determine their object, spirit and purpose.- Determine whether the transaction frustrates or defeats the object, spirit orpurpose of the provisions.Section 245(4) had the effect of reviving the modern approach (a contextualand/or purposive theory) to the interpretation of statutes in Canada.Reference to the 'spirit' of a provision (above) was found not to extend themodern approach to statutory interpretation: it does not require of the court tolook for some inner and spiritual meaning within the legislation. As section245(4) was regarded as an effective comparative to section 80A(c)(ii) it wascontented that it would have a similar effect, than that of its Canadiancounterpart, on the approach to statutory interpretation in South Africa.However, it was established that a modern approach to statutoryinterpretation was already authoritative in South Africa. This finding led theauthor to the conclusion that section 80A(c)(ii) could at best only reinforce thecase for applying such an approach. Such a purpose for section 80A(c)(ii)was however found to be void in the light of the Constitution of the Republic ofSouth Africa, which was enacted in 1996, and provides a sovereign authorityfor the application of the modern approach.It was also found that the practical burden of showing that there was a'misuse or abuse of the provisions of this Act (including the provisions of thisPart)' will rest on the shoulders of the Commissioner, notwithstanding section82 of the Act.

[发布机构] Stellenbosch University