When SARS publishes its interpretation of tax legislation, taxpayers may assume that the position is legally settled. But a recent Supreme Court of Appeal (SCA) judgment illustrates why SARS’s interpretation should not automatically be treated as the final word on what the law means.
In Commissioner for the South African Revenue Service v Cornucopia Trust, handed down on 7 September 2026, the SCA dismissed SARS’s appeal by a four-to-one majority, finding that the raising fees in question qualified as “similar finance charges” under section 24J of the Income Tax Act.
The ruling is significant because it challenges the reasoning behind SARS Interpretation Note 142 (IN 142), in which SARS stated that raising fees do not qualify as similar finance charges.
Nico Theron, founder of Unicus Tax Specialists SA, says the case illustrates a fundamental distinction between SARS’s interpretation of legislation and the law itself.
“An Interpretation Note is not legislation. SARS’s interpretation of legislation does not become correct merely because it has been published in an Interpretation Note,” says Theron.
When SARS’s interpretation is challenged
The dispute centred on whether certain raising fees could qualify as “similar finance charges” for purposes of section 24J. The Tax Court had found that the fees in question qualified, but SARS disagreed and issued IN 142 setting out its contrary interpretation.
The SCA majority subsequently dismissed SARS’s appeal. It found that SARS’s approach risked treating “similar” as meaning “identical”, leaving little independent meaning for the words “similar finance charges” in the legislation.
The Court held that a finance charge need not itself be interest to qualify. Instead, the question is whether it performs a sufficiently similar economic function. In the case before it, the raising fee was linked to the loan amount, interest rate and duration of the facility, and formed part of the economic cost of obtaining credit.
The judgment does not mean that all raising fees qualify for a deduction. The Court’s conclusion related to the particular fees and commercial circumstances before it. A fee charged merely for arranging finance may still fall outside section 24J.
Taxpayers should look beyond SARS’s guidance
For businesses and their advisers, the broader lesson is that published guidance should not replace an assessment of the relevant legislation and judicial decisions.
SARS Interpretation Notes explain how the revenue authority interprets and applies tax law. However, the Cornucopia Trust judgment demonstrates that this interpretation can be challenged, and that a court may reach a different conclusion.
Taxpayers considering a position that differs from SARS’s published guidance must assess the relevant legislation, applicable judgments and facts of their own circumstances. The ruling does not provide blanket authority to disregard SARS guidance or claim every expense described as a raising fee.
The SCA judgment was not unanimous. The dissenting judge supported SARS’s interpretation, underscoring that the legal question was contested.
For Theron, the case reinforces the importance of examining the legal basis for a tax position rather than assuming that SARS’s published view settles the matter.
SARS has a role in administering tax legislation, but its interpretation is not legislation itself. The Cornucopia Trust judgment provides a concrete example of why that distinction matters.