Krok v Commissioner for the South African Revenue Service

The Australian Tax Office (ATO) requested assistance from the South African Revenue Service (SARS) to recover alleged income tax liabilities owed by Mr Mark Krok to Australia for the years 2004 to 2009. The request was made under the Double Taxation Agreement (DTA) between South Africa and Australia, as amended by a 2008 Protocol introducing mutual assistance in tax collection (article 25A). SARS obtained an ex parte preservation order under ss 163 and 185 of the Tax Administration Act 28 of 2011 to preserve Mr Krok’s South African assets pending recovery of the alleged Australian tax debt. Mr Krok and a related offshore entity, Jucool Enterprises Inc, opposed confirmation of the order, arguing that the Protocol did not apply retrospectively to taxes arising before 1 July 2009 and that Jucool was the beneficial owner of the assets. The High Court confirmed the preservation order, and Mr Krok and Jucool appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, including the costs of two counsel, and the preservation order over Mr Krok’s assets was confirmed.

The case is significant for clarifying the scope and application of article 25A of South Africa’s double taxation agreements and confirming that South African courts may grant preservation orders to assist foreign revenue authorities in recovering tax debts, even where the underlying tax liabilities arose before the introduction of mutual assistance provisions. It also affirms the strength of SARS’s statutory powers under the Tax Administration Act in cross-border tax enforcement.