Anglo Platinum Management Services (Pty) Ltd v Commissioner for the South African Revenue Service

Anglo Platinum Management Services (Pty) Ltd implemented a salary sacrifice scheme allowing employees to forego part of their cash remuneration in exchange for the use of company-owned motor vehicles. The employer purchased and owned the vehicles, claimed depreciation, and recovered the total cost (including running expenses and notional interest) through predetermined monthly salary sacrifices. For the 2004–2008 tax years, Anglo Platinum treated the use of the vehicles as a taxable fringe benefit under paragraph (i) of the definition of ‘gross income’ in section 1 of the Income Tax Act 58 of 1962, read with the Seventh Schedule, and withheld employees’ tax accordingly. SARS assessed the scheme differently, contending that no valid and binding salary sacrifice agreement existed and that the amounts allocated to the scheme constituted ordinary remuneration taxable under paragraph (c), resulting in an additional assessment of R11 543 041. The Tax Court upheld SARS’s view, prompting an appeal to the Supreme Court of Appeal.

The appeal was upheld with costs, including the costs of two counsel. The order of the Tax Court was set aside and replaced with an order allowing the taxpayer’s appeal against the assessment.

The case provides authoritative guidance on the tax treatment of salary sacrifice arrangements in South African law. It confirms that properly structured and implemented salary sacrifice schemes are lawful and that the determination of their validity is a factual enquiry. The judgment clarifies the distinction between ordinary remuneration and taxable fringe benefits under the Income Tax Act, particularly in relation to employer-provided motor vehicles.