An analysis of the evolution of the general anti-avoidance rules and the substance over form doctrine and its effectiveness to combat impermissible tax avoidance

Abstract

One of the most frequently quoted tax statements in articles and referred to by our judiciary must be that “Every man has the right to arrange his affairs in such a manner to pay the least tax possible”. However, every taxpayer, tax specialist and even SARS official should be aware that this right is limited. Limited, in that this right does not allow the taxpayer to tread into the waters of tax evasion, meaning purposefully entering into impermissible tax avoidance arrangements to avoid paying any tax liability that they were liable for should the arrangement not have been entered into. The content of this mini-dissertation is premised on researches which will primarily focus on two mechanisms which our law offers to detect impermissible tax avoidance arrangements and eliminate the effect thereof, namely the substance over form doctrine and the General Anti Avoidance Rules (hereinafter referred to as GAAR). More specifically, the development and the effectiveness of the substance over form doctrine as well as the GAAR. What will be seen throughout the analysis of the research is that our judiciary, tax specialist and government has through research, amendments, judgments, analytical articles regarding specific areas of the principles underlying the concept of the GAAR and the substance over form doctrine, contributed to the development of both these concepts. These developments have been done to ensure that the principles contained in GAAR and the substance over form doctrine are equipped to detect impermissible tax avoidance arrangements entrenched in the more intricate arrangements that are being structured to avoid tax.