n South African Law Journal - The different permutations of CSARS v Brummeria : was it something other than an 'interest-free' loan? : notes
|Article Title||The different permutations of CSARS v Brummeria : was it something other than an 'interest-free' loan? : notes|
|© Publisher:||Juta Law Publishing|
|Journal||South African Law Journal|
|Affiliations||1 University of Cape Town|
|Publication Date||Jan 2012|
|Pages||236 - 247|
In Commissioner, South African Revenue Service v Brummeria Renaissance (Pty) Ltd 2007 (6) SA 601 (SCA) (Brummeria) the court held that the interest-free component of the loan between the parties was an amount which had accrued to the taxpayer, Brummeria Renaissance (Pty) Ltd (hereinafter referred to as Brummeria). Moreover, the court found that this amount was subject to tax. Brummeria has been the subject of some debate.
Through the debate, two distinct views on Brummeria have emerged. These views have in common that the loan in Brummeria was not interest-free at all. Instead, the first argument is that the agreement was a variation of a mortgage agreement called a pactum antichresis, in terms of which the creditor retained possession of the mortgaged property and interest was received by that creditor in the form of the taking of the fruits of the property (Arthur Schoeman 'Brummeria: much ado about nothing' (2008) 57 The Taxpayer 39). The alternative hypothesis is that the 'interest-free' component of the loan was in reality a concession on the part of the retiree in the nature of rent under a lease agreement (Steven Jones 'Brummeria: much ado about nothing' (2011) 307 Tax Breaks 1).
Article metrics loading...