Court rebukes SARS for harassing taxpayer

According to a Business Day report, the taxpayer, a chartered accountant, was employed as a structured finance specialist at a bank. She was approached by the CE of the bank to enter into a restraint-of-trade agreement, which she agreed in return for a payment of R1.1m. The taxpayer was later retrenched. Under the agreement she was to be paid in two tranches, the first including an amount that was used to settle a loan the bank had made to her to acquire shares in the bank under a share incentive scheme. The court had to determine if the agreement was genuine and if the payment received by the taxpayer should be included in her gross income. The report says that in a ground-breaking decision, the court found that a restraint-of-trade agreement was not a sham and the payment the taxpayer received from her employer should have been included in her gross income. The court considered SARS’ actions in putting the taxpayer to the expense of a court case vexatious. It said the Receiver’s conduct ‘constitutes the harassment of a taxpayer and does not behove’ SARS. Full Business Day report