Milnerton Estates Ltd v Commissioner for the South African Revenue Service

Milnerton Estates Ltd, a property developer, sold township stands under sale agreements concluded in one tax year. Although the transfer of the stands and payment of the purchase prices occurred in the following tax year, all suspensive conditions attached to the sale agreements were fulfilled in the year of conclusion. The purchasers had either taken possession or were entitled to possession in that same year. SARS included the full purchase prices in the taxpayer’s taxable income for the year in which the sale agreements were concluded, which the taxpayer disputed.

The appeal by Milnerton Estates Ltd was dismissed, and the inclusion of the full purchase price in the taxpayer’s taxable income for the year in which the sale agreements were concluded was upheld.

The case reaffirms the application of section 24(1) of the Income Tax Act and confirms that income from property sales may be deemed received for tax purposes when sale agreements are concluded, even if transfer and payment occur later. It underscores the binding nature of precedent within the Supreme Court of Appeal and provides certainty for taxpayers and SARS regarding the timing of income recognition in instalment sale transactions.