- Supreme Court of Appeal dismissed SARS appeal against Woolworths Holdings regarding input tax deductions on underwriting services for a 2014 rights offer to fund David Jones Limited acquisition
- Woolworths Holdings raised R10 billion through a rights offer to help fund the R21.4 billion acquisition and claimed input tax on underwriting services related to non-resident shareholders while declaring output tax for resident shareholders
- SARS disallowed the deduction arguing that issuing shares was an isolated activity rather than continuous enterprise activity and imposed additional tax and penalties
- Tax Court and SCA both ruled in favor of Woolworths Holdings finding that as an investment holding company the expenses were incurred in furtherance of enterprise activities
- The judgment clarifies input tax deductibility for investment holding companies conducting capital raising activities
Source: sars.gov.za
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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