People who try to pay less tax by hiding behind the separate "legal personality" of a company could find themselves having to answer to the South African Revenue Service (Sars).
A Cape Town-based tax expert has unearthed a little-known piece of legislation which he says Sars could use to "pierce the corporate veil" and catch out tax avoiders.
Dr Albertus Marais of AJM Tax says while tax avoidance, per se, is not illegal, it must be done within the framework of the law.
He told CapeTalk's John Maytham that it all rests on whether it can be found that the “abuse" of legal personality amounts to an “unconscionable abuse" under the Companies Act.
It is possible, in my view, that the corporate veil of the company may be pierced and the tax advantages linked to that company may then be ignored for tax purposes by the commissioner for Sars.— Dr Albertus Marais, Director - AJM Tax
Could you find yourself on the wrong end of the Companies Act this filing season, click below to find out:
This article first appeared on CapeTalk : How you could you find yourself on the wrong end of the law this tax season