Debt: How to claim prescription in practice and how to enter a special plea

[Citizen X]

Post 14

Qualitative researchBackgroundConfidentiality between an attorney and client will always be held in high regard. Confidentiality is vital but so is the integrity of research. Mr A, B, C, D and Miss E are actual persons. Their full and further particulars including the accounts for which I successfully claimed extinctive prescription for has been are not for publication! Aliases are utilized throughout this work in reference to an actual person who had one or more debts eligible for extinctive prescription and were contacted either by the creditor, the creditor’s attorney performing a debt collection function or a debt collector. They were contacted after a considerable period had elapsed from the date that the debt became eligible for extinctive prescription. They sought some form of legal remedy. They chose the internet as a medium of information. They were not looking for general advice; they were looking for very specific answers. They happened upon a business and information online forum called The Forum SA.^[1] I consider myselfprivileged to have made even one post on The Forum Sa. I too had learned a great deal from members on this business and information online forum.Mr A, B, C, D and Miss came across my posts on extinctive prescription. My posts were, and still is a living work as the idea is not only to provide a sound legal explanation, but in essence to assist people in real time as soon as possible after they posted a question, query, concern or dispute. The further idea is to equip fellow members to such an extent that they too can answer any question on extinctive prescription and assist whoever may happen upon such posts. This is the ultimate challenge! My posts includes usable attachments an extinctive prescription claim precedent or template (to be served on the creditor and/or their attorney), a covering letter for the creditor and/or their attorney, an affidavit (to be used where the debtor claimed extinctive prescription), insight into litigation surrounding a scenario where a creditor still sues out summons after the fact of an extinctive prescription claim, an example of a special plea and an example of a potential summons that they may receive regarding such a debt. I made it clear that my advice was not to substitute for the services of an attorney should the matter indeed proceed to court, but much rather, that should they follow my directives there would be no reasonable justification for a creditor failing to process their extinctive prescription claim and confirming the same in writing on a signed letterhead. I stated on a public forum that their extinctive prescription claim would be processed by the creditor should my directive be followed. This is where we separate theory from practice. Quantitative research revealed that 82% of the respondents have follow up on my directives and used my precedent with success. There were however a few individuals who were not successful and sought my individual intervention. This reinforced a simple notion in me: The law is inaccessible to the vast majority of South Africans1 You may have such a problem today, you need assistance now and not in four months time!This was an opportunity to get practical insight into extinctive prescription claims in South Africa. I was equal to the task. A limited power of attorney was prepared and Mr A, B, C, D and Miss E empowered me as agent.The predetermined approach
My work is a live work in that the posts that I made on the internet are still active as at today’s date and still receives visitors. Throughout this work, even before I analysed the results of the quantitative research I was assisting people from all over South Africa with responses to their questions and resolutions to the practical problems their individual cases presented. I concluded early on that many creditor’s don’t have systems in place to process extinctive prescription claims, that many creditor’s don’t appreciate the distinctive between an extinctive prescription claim and a special plea of prescription and further they believe that a debtor can only raise prescription as a defence in a court; despite the fact that they pursuing the debt short of going to court.
I was presumptuous; I wanted a successful result in a maximum of two weeks from the date of serving the extinctive prescription claim. The result I was determined to obtain was complete legal certainty that the debt is prescribed as per the extinctive prescription claim. I wanted a signed letterhead in which the creditor and or their attorney confirmed in writing that the debtor claimed extinctive prescription; that the claim was processed; that the creditor acknowledges that the debt is prescribed, that the creditor has/will update all credit bureaus accordingly and that the creditor has abandoned their claim.
I therefore postulated a covering letter as well as several attachments including the extinctive prescription claim. I was intent on avoiding unnecessary delay due to a lack of understanding of extinctive prescription on the part of a creditor.

To be continued...

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[1] Vide http://www.theforumsa.co.za

[Citizen X]

The Financial Services Board Levy?

It’s apparent that this work on extinctive prescription claims in South Africa is a live one in that South Africans keep coming forward with new problem areas in their extinctive prescription claims.
1. I submit that the Financial Services Board Levy(FSB Levy) is not a government tax subject to a 30 year prescription period but rather it’s your typical debt subject to the 3 year prescription period;
2. Someone out there please prove me wrong!

My personal intervention was requested for a demand being made on a Financial Service Board Levy. The last payment was made on or about 2007. This debt therefore became eligible for extinctive prescription in early 2010.

The initial letter of demand my client received is as follows:


“Dear Sir / Madam,

RE: OUTSTANDING ACCOUNT - FINANCIAL SERVICES BOARD

1. We hereby confirm that we act on behalf of FINANCIAL SERVICES BOARD.

2. You have been handed over to us due to your failure to pay your outstanding account with our client.

3. Our instructions are that you are indebted to our client in the amount of R.,…. An immediate payment of no less than R…… is required to avoid further action.

4. Additional costs and/or penalties may have accumulated on your outstanding account, for which you are liable for. Contact us urgently in order to set up an affordable repayment agreement.

5. Should you fail to adhere to the above, the following may occur:
Further legal costs/penalties may accumulate on your account;

Legal action may be initiated;

Details of the non-payment of the account may be reported to the CREDIT BUREAUS by our client, which can adversely affect your credit rating”

Comment: The usual was done: Power of attorney drawn up and extinctive prescription claimed.

I was somewhat surprised by the response of the attorney of instruction:


“Dear Mr Naik,
1. Your correspondence dated .. November 2012 has reference.

2. Section 11(a)(iii) of the Prescription Act, No. 68 of 1969 provides that “the periods of prescription of debts shall be thirty years in respect of any debt in respect of any taxation imposed or levied by or under any law”.
3. The FSB imposes levies on financial institutions in terms of section 15A of the Financial Services Board Act, No. 97 of 1990 (the FSB Act) which provides that: “The board may impose by notice in the Gazette levies on financial institutions and may, subject to the provisions of this section, at any time in similar manner amend, substitute or withdraw any such notice”.
4. Any debt in the form of a levy imposed by the FSB on a financial institution therefore prescribes after thirty years (and not three) as it (the debt) is levied under a law and such law is the FSB Act.
5. Having regard to the aforementioned your client’s prescription claim has been decline and is thus still liable for the outstanding balance on this account.
6. Enclosed please find an updated statement with banking details for ease of reference.
7. We await your client’s urgent confirmation of payment.
Kind Regards”
Comment: I simply could not accept this state of affairs, I responded as follows:-

Continues next page.....

[Citizen X]

Dear Madam,

1. I refer to your electronic mail dated ..November 2012, the contents of which have been duly noted;
2. I have written power of attorney to act on this matter and am therefore duly authorised to respond hereto;
2.1 Though in civil matters the benchmark measure is always balance of preponderance also known as balance of probability, I’m confident that by the last averment herein I will have proved Cecil James case beyond reasonable doubt. Let’s use the criminal benchmark measure, shall we?
3. I would firstly like to vest your attention on what section 11(a)(iii) states before I clarify my client’s position and instructions:
3.1. The periods of prescription of debts shall be the followingthirty years in respect of any debt in respect of any taxation imposed or levied by or under any law;
3.2 The context is really quite clear any taxation that is either imposed or any taxation that is levied. Let’s look at this enacted text, alternatively Statute alternatively Act of Parliament in a different way. The main idea in paragraph iii is taxation; so the idea is that such taxation can be imposed or levied by or under any law. The inference is clear: another law such as the Customs Act can levy or impose this tax to be paid to the state as just that tax. The point of departure is the noun taxation. This taxation can be imposed or levied. I will turn to the Interpretation Act and the Income Tax Act in due course. I firstly would like to direct your attention to the ordinary dictionary meaning of taxation. Taxation is defined as money that has to be paid as taxes.[1]
3.3. I now would like to vest your attention on ‘taxes,’ tax is a noun: money that you have to pay to the government so that it can pay for public services.[2]
3.4 I now direct your attention to section 1 of The Income Tax Act 58 of 1962(as amended), entitled interpretation:'tax' or 'the tax' or 'taxation'means any levy or tax leviable under this Act; and for the purposes of Part IV of Chapter III includes any levy or tax leviable under any previous Income Tax Act;[Definition of 'tax' or 'the tax' or 'taxation' amended by s. 1 (c) of Act 6 of 1963 and substituted by s. 19 (1)(m) of Act 30 of 1998.]
3.5 I now vest your attention to the Interpretation Act 33 of 1957(as amended) section 2[definitions]: “law” means any law, proclamation, ordinance, Act of Parliament or other enactment having
the force of law. The point will become apparent when we refer to your averments 2,3 and 4 in which you imply that the levy in [this] case is taxation leviable by any law and section 15A of the Financial Services Board Act 97 of 1990 finds reference in your averment .
“2. Section 11(a)(iii) of the Prescription Act, No. 68 of 1969 provides that “the periods of prescription of debts shall be thirty years in respect of any debt in respect of any taxation imposed or levied by or under any law”.
3. The FSB imposes levies on financial institutions in terms of section 15A of the Financial Services Board Act, No. 97 of 1990 (the FSB Act) which provides that: “The board may impose by notice in the Gazette levies on financial institutions and may, subject to the provisions of this section, at any time in similar manner amend, substitute or withdraw any such notice”.
4. Any debt in the form of a levy imposed by the FSB on a financial institution therefore prescribes after thirty years (and not three) as it (the debt) is levied under a law and such law is the FSB Act.”
5. I now choose to do the unexpected by firstly turning to a common sense example:
Even ‘Body Corporates,’ i.e. the management of Town House Complex,’ charge levies, they sometimes simply refer to this as levy. In this context this levy they charge is for repairs and maintenance, cleaning the pool, paying the security guards etc. It is not a levy that will manifest in taxation that would ultimately go to the State as tax!
continues next page...

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[1] Vide: Oxford Dictionary. Oxford University Press. Page 1530

[2] Op Cit para 17

[Citizen X]

6. The same actually holds true for section 15A of the Statute that you cite, this money, alternatively this levy will not find its way to SARS in terms of taxation for redistribution for many things such as our infrastructure etc.
7. I’m acutely aware that academic text are not an authoritative source of law, they nonetheless do have persuasive value: Let’s turn to the leading authority on extinctive prescription in South Africa MM Loubser and his book ‘Extinctive prescription;
8. According to Loubser, a tax which may be so called or referred to by a similar term such as ‘levy,’ or ‘duty,’ constitutes a pecuniary charge imposed by a public authority upon persons or property for public purposes. A charge by a public authority for the rendering of services or performing its functions is often referred to as a ‘fee,’ and in deciding whether a charge constitutes a fee or a tax the fact that services are rendered in exchange for payment is an important factor characterizing such a charge as a fee rather than a tax.[1]
9. The point Loubser makes so clearly is that with typical tax, the Government simply takes tax to which it sometimes also refers to as levy, in its correct context of course, This is the 30 year prescription period, now a fee, just like the Body Corporate fee is in exchange for something very specific, the Body Corporate Town house fee or levy is for garden services, pool cleaning, repairs and maintenance: This is the service the render in exchange for a fee or for a levy, this fee or this levy doesn’t go to SARS, it goes straight to the coffers of the town house complex Body Corporate;
10. I now direct your attention to section15A of the Financial Services Board Act, No. 97 of 1990(as amended):-
“15A. Levies
(1) The board may impose by notice in the Gazette levies on financial institutions and may,
subject to the provisions of this section, at any time in similar manner amend, substitute or withdraw any such notice.
(1A)
(a) Before imposing levies referred to in subsection (1), the board must publish the proposed levies in such manner as it considers appropriate in order to bring the proposed levies to the attention of the financial institutions in question and the users of financial services rendered by these institutions, together with a statement that representations about the proposed levies may be made to the board within a
specified time.
(b) Before imposing levies the board must have regard to any representations made in pursuance of the statement referred to in paragraph (a).
(c) Paragraphs (a) and (b) do not apply where the board, with the approval of the
Minister, is of the opinion that the delay involved in complying with those
paragraphs would be prejudicial to the functions of the board in terms of section 3
(a) and (c).
(2)
(a) The board shall in any such notice determine -
(i) the amounts of the levies or the bases or manners of calculation or
determination of the amounts;
(ii) the periods in respect of which levies are imposed, the dates on which levies
or the periods within which they are payable, and the manners of payment;
(iii) the rates of interest and manner of calculation of interest contemplated in
subsection (3);
(iv) the manner in which applications for exemptions contemplated in
subsection (4) shall be made; and
(v) the manner in which a notice contemplated in subsection (4) (b) (ii) shall be
served.
(b) The board may in any such notice -
(i) impose different levies referred to in subsection (1); and
(ii) determine different amounts, bases or manners of calculation or determination, periods, dates, manners of payment, rates of interest and manners of calculation of interest, manners of making application or of service referred to in paragraph (a), in respect of different financial institutions, different categories of financial institutions and different sub-categories of a specific type of financial institution.
(3)
(a) A financial institution which is under such notice liable for payment of a levy, and
which fails to pay the levy in full within the period for payment as determined in
the notice or on the date so determined, shall, at the rate and calculated in the
manner determined in the notice, pay interest on the balance of the levy
outstanding and on the interest so payable but unpaid.
(b) A levy imposed by any such notice, and interest owed in respect thereof, shall be
deemed to be a debt due to the board and may be recovered by the board by way of
judicial process in a competent court.
(4)
(a) The board may upon the application of a financial institution, and if the board is of
the opinion that there are sound reasons therefor, grant exemption to the financial
institution from a provision of the notice to the extent and subject to the conditions
determined by the board.
(b) An exemption contemplated in paragraph (a) shall lapse when -
(i) the board on the ground of facts and information at its disposal finds that the
financial institution concerned has contravened a provision of a condition
imposed as contemplated in paragraph (a), or has failed to comply therewith,
or has otherwise acted contrary to the exemption; and
(ii) the board has served a written notice to that effect in accordance with the
provisions of a notice referred to in subsection (1) on the institution.
(c) The board shall before taking a decision contemplated in paragraph (b) (i), grant
the financial institution concerned the opportunity deemed fit by the board to be
heard.”
10.1 One can clearly see that the levy referred to in section 15 of the aforesaid Act is not a tax or taxation or taxes that go to the government for tax purposes.The Board and not the government will use it for whatever legitimate purpose they have, sending members brochures, rendering information just to name a few;
10.2 In Peter Davis v SARS. CASE NO: 14551/2009, Local Division, we se the context of section 11(a)(ii) very, very clearly, this is how the 30 year prescription argument goes in that case:
“Regarding the issue of prescription the respondent averred that the debt of the applicant
fell into the category of “a debt in respect of any taxation imposed or levied by or under
any law” in terms of the provisions of section 11(a) (iii) of the Prescription Act and as
such the aforesaid debt in terms of section 11 (a) of the Prescription Act, would prescribe
after 30 years.
A good starting point is to set out paragraph 28 (1) (a) and (b) of the fourth schedule of
the Act the relevance will become apparent later in the judgment.
“28(1) (a) and (b)-
28(1) There shall be set off against the liability of the taxpayer in respect of any taxes (as
defined in subparagraph (8) due by the taxpayer, the amounts of employees tax deducted
or withheld by the taxpayer’s employer during any year of assessment for which the
taxpayer’s liability for normal tax has been assessed by the Commissioner and the
amount of provisional tax paid by the taxpayer in respect of any such year, and if-
(a) The sum of the said amounts of employ tax and provisional tax exceeds the
amount of the taxpayer’s total liability for the said taxes, the excess amount shall
be refunded to the taxpayer; or
(b) The taxpayer’s total liability for the aforesaid taxes exceeds the sum of the said
amounts of employees tax and provisional tax, the amount of the excess shall be
payable by the taxpayer to the Commissioner.”
The crisp issue in this matter, is to establish whether the amount owed by the applicant
amounts to a tax debt or an ordinary debt.
The starting point therefore is to establish if the amount owed falls within that defined in
paragraph 28 above. If it does fall within paragraph 28, the respondent may invoke
paragraph 28 (7) to recover from the applicant the amount owed. Obviously if the
amount owed falls within that defined in paragraph 28, the amounts can only be regarded
as a tax debt that is ‘a debt in respect of any taxation imposed or levied by or under any
law’ and therefore as such, the applicant’s indebtedness to the respondent would not have
prescribed. However, if the amount owed is an ordinary debt then the respondents claim
against the applicant would indeed have prescribed.
I set out paragraph 28(7) below for easy reference:
Section 28(7) reads as follows:
“If the Commissioner, purporting to act under the provisions of this paragraph, pays to
any person by way of a refund any amount which was not properly payable to that person
under those provisions or which was in excess of the amount due to such a person by way
of a refund under those provisions, such amount or the excess, as the case may be, shall
forthwith be repaid by the person concerned to the Commissioner and shall be
recoverable by the Commissioner under this Act as if it were a tax.” [My emphasis in
italics]
On analysing the evidence it is important to establish what meaning is given to the word
purport [ing] as a verb. In the Oxford Shorter Dictionary the word purport denotes:
“1.trans...; to convey to the mind; to mean, imply. b. Const. inf.: to profess or to claim by
its tenor ...”
Turning to deal with the various affidavits filed, it is noted that as at paragraph 6 of the
applicant’s replying affidavit, the applicant admits that his employer deducted the tax
from the lump sum payment portion of the provident fund due to him and paid it over to
the respondent in terms of the provisions of the fourth schedule of the Act and thus the
said payment fell into the category of employees tax or as commonly known, “pay as you
earn” (PAYE) tax.
In paragraph 8 of the respondents answering affidavit, the respondent states that the
PAYE payments received emanated from the employer of the applicant and as such
should have been credited to the employer’s account, however in error, was credited to
the applicant’s account instead….”
10.3 Para 10.2 was just to demonstrate how the tax/levy 30 year prescription argument goes!

Madam, I could well cite more caselaw; I don’t believe that this is necessary! Please process my client’s extinctive prescription claim and confirm the same to writing on a signed letterhead.

I would like to hear of similar experiences regarding a misunderstanding of whether the FSB levy is a government tax which goes to the Government or a levy or fee charged for certain services rendered.

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[1] Vide MM Loubster. Extinctive Prescription. 1996. Page 39 and 40.
Confer Master v Il Back & Co LTD 1981 (4) SA 763 (c), 1983 (1) SA 986 (A)
Contra: A fee payable to any company or body is not a tax and the general 3 year period applies!

[Dave A]

4. Any debt in the form of a levy imposed by the FSB on a financial institution therefore prescribes after thirty years (and not three) as it (the debt) is levied under a law and such law is the FSB Act.

I suggest that's the point that you need to break down, and I regret I'm not convinced you've succeeded.

The subject of the position of Body Corporate levies looks pretty interesting.

[Citizen X]

A very good afternoon to you Dave,

I understand your position! I think here I’m blameworthy for having an inability to articulate clearly enough or rather in as few words as possible that the FSB levy is not a government tax but rather a typical debt subject to the 3 year prescription period.

It’s so very important to dissect a problem area such as this and then articulate it clearly and very concisely.


Your directive of dissecting section 11(a)(3) alternatively starting with it is now my point of departure.


1. Section 11 is entitled, ‘Periods of Prescription of Debts,’. Section 11 has 4 sub sections. Section 11(a) has 4 paragraphs. Section 11(a)(iii) therefore reads as follows: The periods of prescription of debts shall be the following: thirty years in respect of-any debt in respect of any taxation imposed or levied by or under any law;

2. I submit that the word ‘levied,’ is actually what causes the confusion here and that this can easily be put to rest by asking a reverse question: what is it here that is levied? Taxation either imposed or levied by a law or under a law. So, yes, it does indeed mention by or under a law, but what is it exactly that is been imposed or levied under any law that prescribes in 30 years? The answer again is taxation!
3. We must now appreciate that taxation in such contexts go to the Government via SARS. This taxation is then used to develop our infrastructure, pay public servants, run public departments etc.
4. To further place levy and levied in context here, we can ask another simple question: What is the fuel levy and to whom does it go to? The fuel levy is a tax, a portion of the amount we pay for a litre of petrol is levied and goes to the Government for redistribution;
5. If the fuel levy in the same category as the FSB levy? I say definitely not! My reasoning, the fuel levy goes to government whereas the FSB levy doesn’t go to government at all but is used by the FSB itself.
6. This is a tell-tale sign of the difference between a fee and a levy. According to Loubser, a tax which may be so called or referred to by a similar term such as ‘levy,’ or ‘duty,’ constitutes a pecuniary charge imposed by a public authority upon persons or property for public purposes. A charge by a public authority for the rendering of services or performing its functions is often referred to as a ‘fee,’ and in deciding whether a charge constitutes a fee or a tax the fact that services are rendered in exchange for payment is an important factor characterizing such a charge as a fee rather than a tax.[1]
7. Based on this the FSB charges a fee for among other things printing brochures, information sheets etc. for the members. This therefore cannot rightfully be said to be a tax.
8. This is what SARS have to say on their website about exercise duties and levies

EXCISE DUTIES AND LEVIES

The basis for the imposition of Excise duties and levies is primarily fiscal by nature, meaning that it is levied to provide the State with an easy collectable and constant stream of revenue. For this reason, the criteria used to select a product suitable for this purpose (excisable product) is basically that it should be fast-moving, high-volume, daily consumables and, in addition to this, mostly non-essential products (e.g. alcohol and tobacco products); hence the popular name “Sin Taxes”.A secondary function of these duties and levies is to influence consumer behavior, meaning that Government may manipulate Excise duties and levies to discourage the consumption of certain harmful products; i.e. harmful to human health (tobacco products) as well as harmful to the environment (plastic bags and electricity production from non-renewable sources).

[2]
9. I now go back to my example of the Body Corporate Levy. They also use the words ‘levy’ and ‘levied.’ This levy refers to costs for repairs and maintenance, cleaning the pool, the gardening service, the security and such other things. It’s a fee that goes directly to the Body Corporate but not to the Government as tax…


Boss, I rest my case

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[1] Vide MM Loubster. Extinctive Prescription. 1996. Page 39 and 40.
Confer Master v Il Back & Co LTD 1981 (4) SA 763 (c), 1983 (1) SA 986 (A)
Contra: A fee payable to any company or body is not a tax and the general 3 year period applies!

[2]Vide http://www.sars.gov.za/home.asp?pid=54522

[Dave A]

Where in the law on prescription does it say the "taxation" has to go to government?

I'll come back to Body Corporate levies once we've resolved your exceptionally narrow definition of "taxation."

[Citizen X]

Where in the law on prescription does it say the "taxation" has to go to government?

I'll come back to Body Corporate levies once we've resolved your exceptionally narrow definition of "taxation."

A very good morning to you Dave,
I think we should attempt to get at the entire crux of this matter here together. That being said, a more detailed narrative of what you find to be issue or dispute is really required
Okay, let’s resolve as follows (I love intellectual curiosity, it gives me a high! It’s actually a problem):-
The underpinnings of my response is simply: Please prove me wrong!( Nothing wrong with this stance right!). I have already stated my position and justified my position! If there's a more credible position, it's welcomed!
On balance of probability, I sincerely believe that my position as reflected on pages #42,43,44,46 is far more probable than what was I challenged with by the jurist in question(in their letter of response that is!). I further sincerely believe that my position is objectively justifiable. I don’t see that I’m sincerely wrong in my propositionIf it’s balanced view that we want here alternatively another position, then my stance is very simple: I have already stated my position. The questions are asked and answered.
You have for the lack of a better expression raised a notice of exception or in pursuit of a better explanation placed my proposition in issue. The onus now shifts! The burden of proof shifts! It’s now upon you articulate this alternative position in sufficient detail(quality wise) proportionate to the detail I have provided(quality wise).
This is the only way I will be able to understand where on any of my averments regarding this individual matter you find incorrect reasoning, alternatively incorrect inference alternatively misinterpretation of section 11(a)(iii) i.e. I can then see the sum total of your indifference(nothing wrong with indifference) and then respond to it on merits
A narrow view or definition in law is sometimes not only essential but rather quite vital to exclude rather than to include.

If I may be so bold, allow me to ask you a few questions please(in pursuit of a balanced view)?

1. Do you believe that the FSB levy is taxation which prescribes in 30 years? Do you belive that the FSB levy is the same as the fuel levy? If so, why?2. What do you base your belief upon?
3. What technique of statutory interpretation have you utilized to arrive at your understanding of section 11(a)(iii). Eg. I utilize a contextual approach, with an emphasis on guidance from academia and case-law
4. I close with the following(already stated in #’s 42, 43, 44, and 46) :-
5. section 1 of The Income Tax Act 58 of 1962(as amended), entitled interpretation:'tax' or 'the tax' or 'taxation'means any levy or tax leviable under this Act; and for the purposes of Part IV of Chapter III includes any levy or tax leviable under any previous Income Tax Act;[Definition of 'tax' or 'the tax' or 'taxation' amended by s. 1 (c) of Act 6 of 1963 and substituted by s. 19 (1)(m) of Act 30 of 1998.]
6. The ‘This Act,’ in point 4 refers to The Income Tax Act 58 of 1962
7. In Peter Davis v SARS. CASE NO: 14551/2009, Local Division, we see the context of section 11(a)(ii) very, very clearly. The crisp issue in this matter, is to establish whether the amount owed by the applicantamounts to a tax debt or an ordinary debt. The reason for the issue is to establish whether it prescribes in 30 years or in 3 years!
....

8. Here we look to case law, the locus classic us is The Master v IL Back & Co LTD 1983(1) SA 986 (A) at 1000h, an important differentiation was made between a fee of a public authority where such a fee is for a specific service or rendering a service in exchange for a fee or subscription and then a tax which is also called by similar names such as ‘levy,’ or ‘duty,’ which in essence is a pecuniary charge imposed by a public authority on either property or individuals for public purposes; The idea is to differentiate between a tax and a fee
9. In the context of section 11(a)(iii), levy can reasonably be taken to mean Fuel Levy, Environmental levy Diamond Export Levy etc. The idea is to distinguish between the use of the word 'levy,' 'levied,' but using a narrow approach to exclude 'levy,' in general and to include levy such as fuel levy etc.

The real questions, I think are: whether or not the FSB levy is the equivalent or in the same category as the fuel levy? What does the fuel levy and FSB levy have in common? What is the FSB levy not included with the other levies on the SARS website?
http://www.sars.gov.za/home.asp?pid=54522


Any alternative credible view or position is welcomed by anyone really! Any additional clarification is welcomed!

[Dave A]

Hi Vanash,

Not being schooled in the methods of legal debate, I regret I must rely on classical debating methods and logic in exploring the issue. This does not mean I can't follow your arguments and I suggest the difference is more in method and style than material content.

In support of my position:

1. I suggest that the definition of taxation in the Income Tax Act is legally applicable to the Income Tax Act only.

My foundation in suggestion this is that there are other forms of taxation that are not defined by the definition of taxation (or tax, the tax et al) in the Income Tax Act. Specific examples would be VAT (The Value-Added Tax Act, 1991 (Act No. 89 of 1991)), import duties (The Customs and Excise Act, 1964 (Act No. 91 of 1964))
and transfer duties, to name but a few that fall under the administration of SARS.

To reinforce the point, if I look at the Value-Added Tax Act, the defintion of tax is as follows:

"tax" means the tax chargeable in terms of this Act;

2. SARS is not the only authority administering taxes.

As example, I point to property taxes known as "rates" which are levied by municipalities on property owners.
In the days of the Joint Services Board there was a JSB levy, also a form of taxation.
I'm also tempted to add Workmans Compensation and a few others to the list, but I trust the point is already made - SARS is not the only public authority collecting taxes.

So I trust we now agree that The Income Tax Act does not define taxation for all law, and that SARS does not administer all taxes.

3. So what is taxation as intended by the laws of prescription?

I suggest that without a definition by statutory law or common law jurisprudence on prescription to hand, I must point you to what you raised earlier:

8. According to Loubser, a tax which may be so called or referred to by a similar term such as ‘levy,’ or ‘duty,’ constitutes a pecuniary charge imposed by a public authority upon persons or property for public purposes. A charge by a public authority for the rendering of services or performing its functions is often referred to as a ‘fee,’ and in deciding whether a charge constitutes a fee or a tax the fact that services are rendered in exchange for payment is an important factor characterizing such a charge as a fee rather than a tax.

The relationship between the calculation of the fee raised and the service(s) rendered (or should that be the lack of a relationship) is critical to determining whether a charge is a "fee" or a "tax".

The FSB levy has the form and substance of taxation according to this definition.
The Financial Services Board is a public authority, empowered by legislation to administer the affairs of the Financial Services Industry.
The levy and the manner in which it is to be calculated has been promulgated by Government Gazette and in accordance with the Financial Services Board Act and the regulations made thereunder.


Accordingly on the evidence to hand I can only conclude that requirements for a 30 year prescription period have been met.

[Citizen X]

Hi Vanash,

Not being schooled in the methods of legal debate, I regret I must rely on classical debating methods and logic in exploring the issue. This does not mean I can't follow your arguments and I suggest the difference is more in method and style than material content.

In support of my position:

1. I suggest that the definition of taxation in the Income Tax Act is legally applicable to the Income Tax Act only.

My foundation in suggestion this is that there are other forms of taxation that are not defined by the definition of taxation (or tax, the tax et al) in the Income Tax Act. Specific examples would be VAT (The Value-Added Tax Act, 1991 (Act No. 89 of 1991)), import duties (The Customs and Excise Act, 1964 (Act No. 91 of 1964))
and transfer duties, to name but a few that fall under the administration of SARS.

To reinforce the point, if I look at the Value-Added Tax Act, the defintion of tax is as follows:


2. SARS is not the only authority administering taxes.

As example, I point to property taxes known as "rates" which are levied by municipalities on property owners.
In the days of the Joint Services Board there was a JSB levy, also a form of taxation.
I'm also tempted to add Workmans Compensation and a few others to the list, but I trust the point is already made - SARS is not the only public authority collecting taxes.

So I trust we now agree that The Income Tax Act does not define taxation for all law, and that SARS does not administer all taxes.

3. So what is taxation as intended by the laws of prescription?

I suggest that without a definition by statutory law or common law jurisprudence on prescription to hand, I must point you to what you raised earlier:


The relationship between the calculation of the fee raised and the service(s) rendered (or should that be the lack of a relationship) is critical to determining whether a charge is a "fee" or a "tax".

The FSB levy has the form and substance of taxation according to this definition.
The Financial Services Board is a public authority, empowered by legislation to administer the affairs of the Financial Services Industry.
The levy and the manner in which it is to be calculated has been promulgated by Government Gazette and in accordance with the Financial Services Board Act and the regulations made thereunder.


Accordingly on the evidence to hand I can only conclude that requirements for a 30 year prescription period have been met.

Noted Boss, Noted!!

I regret I must rely on classical debating methods and logic in exploring the issue.

Classical debating techniques and logic in exploring an issue remain the best technique. It is this very technique used in one case in particular proves my point. I will revert in due course. Let's resolve as follows: I'll give my final thoughts on this matter based on both academia as well as case law.. Just on the note of inference, inference of a primary fact gives rise to a secondary fact which then is the subject of further inference! That said, Justinian and company share your view on exploring issues!!
No offence intended
Ironically it's actually 2 things you said in this thread that will ultimately assist me to prove this matter beyond any reasonable doubt(we going to use the criminal court standard here not balance of probability as should be used in civil court or civil matters, I knew I was on to something the very first time this matter came before me, there was just so much research involved and I needed to respond in real time to the writer of that letter, I assured them that I would respond in 24 hours, that letter I drafted was a product of 1 day's research and resulting work!.. There are cases! It just takes a great deal of time to summarise them. I'll focus on 'ratio decidendi,' courts reason for decision largely..will revert, just need time..'It's just a question of time'(Depeche Mode 1987)

No stress Boss, I'm easy like a Sunday morning!