COMPANY NEWS IN BRIEF
SARS wins R71.5m tax case against Capitec
The South African Revenue Service (SARS) has finally won its bid to deny Capitec the R71.5 million VAT return it claimed back in 2017.
The tax collector and the bank have had a long litigious battle since SARS disallowed Capitec from claiming the R71.5 million tax deduction when it filed its VAT return in November 2017. SARS also levied a 10% late payment penalty for the understatement of the bank's VAT liability at the time.
Initially, the Tax Court in Cape Town ruled in Capitec's favour, saying that the bank was entitled to deduct this amount from its VAT liability. But SARS took the matter to the Supreme Court of Appeal (SCA) and the Bloemfontein-based court confirmed on Tuesday that the tax collector's assessment was correct.
Capitec claimed an input tax deduction related to its unsecured lending business. When issuing personal loans to its customers, Capitec provided those customers with an insurance policy, or "loan cover", which would settle the customers' debt in the event of death or retrenchment.
These policies were underwritten by Guardrisk from 1 May 2015. Before that, the loan cover was underwritten by Channel Life Insurance. And because Capitec insured itself against the unpaid amount, it did not suffer any credit loss when these policies paid out.-Fin24
The South African Revenue Service (SARS) has finally won its bid to deny Capitec the R71.5 million VAT return it claimed back in 2017.
The tax collector and the bank have had a long litigious battle since SARS disallowed Capitec from claiming the R71.5 million tax deduction when it filed its VAT return in November 2017. SARS also levied a 10% late payment penalty for the understatement of the bank's VAT liability at the time.
Initially, the Tax Court in Cape Town ruled in Capitec's favour, saying that the bank was entitled to deduct this amount from its VAT liability. But SARS took the matter to the Supreme Court of Appeal (SCA) and the Bloemfontein-based court confirmed on Tuesday that the tax collector's assessment was correct.
Capitec claimed an input tax deduction related to its unsecured lending business. When issuing personal loans to its customers, Capitec provided those customers with an insurance policy, or "loan cover", which would settle the customers' debt in the event of death or retrenchment.
These policies were underwritten by Guardrisk from 1 May 2015. Before that, the loan cover was underwritten by Channel Life Insurance. And because Capitec insured itself against the unpaid amount, it did not suffer any credit loss when these policies paid out.-Fin24
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