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Johannesburg - Taxpayers who have entered into simulated contracts such as that by the maize giant NWK, should gear themselves up for a visit from the South African Revenue Service (Sars) from next February.
This veiled threat follows the judgment by the appeal court in favour of Sars in its case against NWK.
This case involved outstanding tax of more than R30m.
The simulated contract was between NWK, First National Bank (FNB) and an FNB subsidiary.
NWK initially took a loan of R50m from FNB and was to repay the money by delivering maize to the value of the loan amount to the FNB subsidiary.
During the tax years 1999 to 2003 NWK paid interest on a loan from the FNB subsidiary and claimed it as a tax deduction. Sars initially allowed the deduction, but in 2003 became suspicious that the so-called loan agreement between NWK and Slab Trading Company was a simulated contract actually aimed at helping NWK to avoid tax or pay less tax.
Sars has warned taxpayers involved in similar simulated contracts to make use of the public disclosure programme launched in November this year.
Those who decide not to make use of the opportunity before receiving a knock on their doors for an audit will have to prepare for fines and interest on assessments based on the appeal court decision.
For business news in Afrikaans, go to Sake24.com.
