In search of tax excellence, by legally maximizing opportunities and minimizing risks.

Employers & Experience: Cliffe Dekker Hofmeyr Inc.

Johan was appointed as a director of Hofmeyr Tax and Secretarial Services, a subsidiary of Hofmeyr Herbstein & Gihwala Inc., and then also became a director of Cliff Dekker Hofmeyr Inc., after Cliff Dekker and Hofmeyr merged in September 2008. Johan was Hofmeyr's first dedicated tax director.

The idea was to have a relative small tax function to support Hofmeyr as a firm, which Johan did in the various mergers and acquisition transactions in which the firm was involved.

Johan formed a unit with the Litigation Department of Hofmeyr to concentrate on tax disputes, and was also involved in numerous Alternative Dispute Resolutions and other settlement negotiations.

Reported Tax Cases

• Vacation Exchanges International (Pty) Ltd v C:SARS (70 SATC 249)
• The taxpayer is better known as RCI. RCI is in holiday exchanges and gave its employees points to make use of holiday accommodation booked in their system. SARS assessed RCI for employees' tax, because in SARS' opinion the holiday accommodation amounted to a fringe benefit.
• At first it was argued that it did not gave rise to a fringe benefit, but this argument lost in the Tax Court in Cape Town. On appeal in the High Court it was still argued that it did not gave rise to a fringe benefit, but in the alternative a technical argument was devised that SARS could not tax the employer, but had to tax each employee. On this basis the case succeeded.
• Sallies Ltd v C:SARS (70 SATC 39)
• Sallies was assessed in terms of section 103(2), because SARS was of the opinion that Sallies was trafficking in its assessed tax loss, and its interest on the acquisition of shares was also disallowed. The case was actually about section 103(2), because of the magnitude of the amounts involve, which SARS luckily conceded minutes before the case started. It was then argued in court that the interest was deductible, because the shares were acquired to earn taxable income. Unfortunately, neither the Tax Court nor the High Court agreed that the interest was deductible.