Synopsis

A monthly journal, published by PwC South Africa, that gives informed commentary on current developments in the tax arena, both locally and internationally.

Through analysis of and comment on new laws and judicial decisions of interest, Synopsis helps executives to identify developments and trends in tax law and revenue practice that may affect their business.

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In this edition:

Synopsis Tax today - December/November 2024

In our first article we discuss the case of The Thistle Trust v Commissioner for the South African Revenue Service ([2024] ZACC 19) that presented an interesting judicial debate on the interpretation of tax legislation, with respect in particular to the weight to be accorded to the relevant explanatory memorandum when interpreting the meaning and purpose of legislation. The Constitutional Court was divided (6 to 2), with the majority and minority judgments adopting different approaches to both the application of the contra fiscum rule and the use of explanatory memoranda in interpreting paragraph 80(2) of the Eighth Schedule to the Income Tax Act. An important question that arises is, to which extent is it appropriate to refer to an explanatory memorandum when interpretating a provision? Furthermore, what value does the explanatory memorandum add in ascertaining the purpose of a particular provision?

In our second article we look at what the IFRS17 phasing-in provisions mean for short-term insurers. In May 2017, the International Accounting Standards Board introduced IFRS 17 to replace the previously applicable IFRS 4 standard on insurance contracts with effect from 1 January 2023. To align the taxation of short-term insurers with the application of IFRS 17, a range of legislative amendments was introduced to section 28 of the Income Tax Act No. 58 of 1962 (‘the Act’) in 2022. These amendments provided short-term insurers with a period of three years in which to phase in the tax impact of transitioning from IFRS 4 to IFRS 17. The amendments proposed in the 2024 TLAB represent a significant milestone in addressing most of the concerns raised by short-term insurers from the initial application of section 28 under IFRS 17. These amendments will further refine the current wording of the section to align with the intended consequences of the phasing-in as well as the once-off transitional provisions.