Commissioner for the South African Revenue Service v Wyner

The respondent, Catherine Marcia Wyner, had leased a Clifton bungalow site from the City of Cape Town for over 20 years. In 1994 the Council resolved to sell such sites to existing lessees at market value, which in Wyner’s case was R802 000, substantially below true market value. Lacking funds, she obtained bridging finance from Investec Bank expressly to purchase the property and resell it within 12 months at a profit. She bought the property on 29 August 1994 and sold it on 4 September 1995 for R2 850 000, making a net profit of R1 530 947. SARS assessed the profit as revenue and included it in her gross income. Wyner contended that the profit was of a capital nature.

The appeal by the Commissioner for the South African Revenue Service was upheld, the judgment of the Full Court was set aside, and the assessment including the profit in the respondent’s gross income was confirmed.

The case reaffirms the central importance of the taxpayer’s intention at acquisition in distinguishing between capital and revenue receipts, and confirms that even a single transaction can constitute a scheme of profit-making. It rejects attempts to rely on equitable or public policy considerations to convert an objectively commercial, profit-driven transaction into a capital realisation.