8 October 2007



Portfolio Committee on Finance




Dear Sirs


2007 Revenue Laws Amendment Bill


Please find attached the comments by Deloitte on the 2007 Revenue Laws Amendment Bill.


As a general comment, we would like to commend Treasury on their willingness to engage with taxpayers with regard to the drafting process. This has enabled taxpayers with specific problems to influence the drafting of the amendments designed to resolve those problems at a relatively early stage. Treasury has also been accommodating in terms of engaging with taxpayers since the draft Bill was made public, with a view to understanding problems created by the proposed wording or proposed effective dates of the proposals.


On a less positive note, we are very concerned by the trend evidenced in this draft Bill to implement provisions to the detriment of the taxpayer with retrospective effect. While the effective dates of the introduction of the amendments are not themselves necessarily retrospective, the way in which the amendments are worded will in several cases, fundamentally affect taxpayers’ vested rights, in a negative way, and will convert transactions entered into in the past (in certain cases, back to 2001!) from tax neutral or tax exempt transactions into taxable transactions. This is simply unacceptable. Taxpayers must be able to know with a degree of certainty when they enter into transactions what the tax consequences of those transactions are.


A clear policy needs to be developed with regard to retrospective legislation. We have found that SARS and Treasury are extremely uncomfortable with making legislation retrospective if it is designed to assist the taxpayer, even in situations which clearly merit urgent relief, but at the same time are seeking to bring in measures to the detriment of taxpayers without concern for whether or not existing rights are affected.


In our view, there must be flexibility to allow for a degree of retrospectivity where this is clearly merited to protect either taxpayers or SARS from significant hardship. However, in no case whatsoever should the retrospectivity affect closed years of assessment, and it should definitely be the exception rather than the rule in other cases. If a policy can be formulated which is clear, then Treasury need not be uncomfortable about making legislation retrospective where it falls within the acceptable parameters defined under the policy, but will not be able to do so in any other case.


We thank you for your consideration of these comments.


Yours faithfully





Anne Bennett

Director: Tax Services

Deloitte & Touche

Practitioner Registration No. PR-2D33418


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