Christoffel Hendrik Wiese and Others v Commissioner for the South African Revenue Service

SARS instituted action against the appellants under s 183 of the Tax Administration Act 28 of 2011, alleging that they knowingly assisted Energy Africa (Pty) Ltd to dissipate its assets in order to obstruct the collection of tax. Energy Africa declared a dividend in specie on 19 April 2013, transferring its sole asset (a loan account claim) to its holding company. This occurred after SARS had notified Energy Africa of its intention to raise CGT and STC assessments arising from a 2007 restructuring transaction, but before the formal assessments were issued in August 2013. SARS later issued substantial CGT and STC assessments and, when Energy Africa was unable to pay and was liquidated, sought to recover the tax debt from the appellants personally. The appellants disputed liability, contending that no ‘tax debt’ existed at the time of the asset dissipation and challenged the admissibility of their inquiry testimony in subsequent proceedings.

The appeal was dismissed with costs, including the costs of two counsel.

This judgment clarifies that, for purposes of third-party liability under s 183 of the Tax Administration Act, a tax debt need not be formally assessed at the time of asset dissipation. It reinforces the principle that tax liability arises by operation of law upon a taxable event and strengthens SARS’s ability to combat asset dissipation designed to frustrate tax collection. The decision also confirms the admissibility of inquiry evidence in later proceedings, enhancing SARS’s investigative and recovery powers.