New Adventure Shelf 122 (Pty) Ltd v Commissioner of the South African Revenue Services

The appellant sold immovable property in September 2006 for R17.72 million, triggering a taxable capital gain in its 2007 tax year under the Eighth Schedule to the Income Tax Act 58 of 1962. SARS assessed capital gains tax accordingly in 2008, and the appellant did not object, rendering the assessment final. The purchaser later defaulted, paid only about R4.5 million, and in 2011 the parties agreed to cancel the sale. The property was re-transferred to the appellant, which retained the amounts paid as damages. The appellant then sought to have the 2007 assessment reopened and reduced, arguing it had been taxed on proceeds never received.

The appeal was dismissed with costs, including the costs of two counsel. The 2007 capital gains tax assessment remained final and conclusive.

The case clarifies the interaction between the finality of tax assessments and the capital gains tax regime, confirming that later events such as cancellation of a sale do not permit reopening finalized assessments. It establishes that capital losses arising from cancellations must be accounted for in the year of cancellation, reinforcing certainty and finality in South African tax administration.