First South African Holdings (Pty) Ltd v Commissioner for the South African Revenue Service

The taxpayer submitted an income tax return for the 2002 year, overstating its taxable income by failing to apply s 24I(7A) of the Income Tax Act, which limited the taxation of certain foreign exchange gains. The Commissioner issued an original assessment in July 2003 based on this incorrect return, allowing a carried-forward assessed loss and resulting in no tax payable. In April 2006, within three years, the Commissioner issued an additional assessment disallowing the set-off of the assessed loss, making the previously declared income fully taxable. After realising its earlier error, the taxpayer applied in July 2007 for a reduced assessment under s 79A of the Act. The Commissioner refused, holding he was precluded by law from considering the request. The High Court dismissed the taxpayer’s application, and the taxpayer appealed to the Supreme Court of Appeal.

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

The case clarifies the interpretation of section 79A of the Income Tax Act, particularly the meaning of ‘assessment’ and the commencement of the three-year period for reduced assessments. It affirms limits on the Commissioner’s and taxpayers’ ability to revisit assessments, reinforcing certainty and finality in tax administration.