Rennies Travel (Pty) Ltd v The Commissioner for the South African Revenue Services

Rennies Travel (Pty) Ltd operated a travel agency arranging international air travel. Its income streams included service fees charged to clients, standard commission from airlines for ticket sales, and supplementary commission payable by airlines when agreed sales targets were met. SARS conducted a VAT audit for the period February 2012 to December 2016 and issued additional VAT assessments, levying VAT at the standard rate on the supplementary commission. Rennies objected, contending that the supplementary commission constituted consideration for arranging international passenger transport and was therefore zero-rated under s 11(2)(a) and (d) of the VAT Act. The Tax Court upheld SARS’ view, holding that the supplementary commission related to marketing and promotion services. Rennies appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The Tax Court’s order was set aside and replaced with an order setting aside the additional VAT assessments to the extent that they imposed VAT at the standard rate on supplementary commission for the February 2012 to December 2016 VAT periods. No order was made as to costs in the Tax Court.

The case clarifies the VAT treatment of incentive or supplementary commission in the travel industry, confirming that such commission may be zero-rated where it constitutes consideration for arranging international passenger transport. It reinforces the principle that VAT liability depends on identifying an actual supply of services, not merely the conditions under which payment is earned. The judgment also affirms the supremacy of the Tax Administration Act over court rules in determining procedural time limits for tax appeals.