MM Auditors Tax Case Law Update – Week of 5 October 2026

Written By MARISKA MALAN

This week: the Supreme Court of Appeal (SCA) allows loan raising fees as a deduction, and a taxpayer pays SARS's full trial costs without the case ever being heard.

Each week we pick the court cases and SARS guidance that matter most to our clients, explain what happened, and set out what it means for you.

In this issue

  1. CSARS v Cornucopia Trust (SCA) – loan raising fees are deductible under section 24J

  2. MNO v CSARS (Tax Court) – late documents, a postponed trial and a large costs bill

  3. Other new judgments to watch

  4. New SARS interpretation notes and guidance

  5. Diary reminder

1. Loan raising fees are deductible: CSARS v Cornucopia Trust

CSARS v Cornucopia Trust (469/2025) [2026] ZASCA 116 – Supreme Court of Appeal, judgment delivered 7 September 2026.

Overview of the case

  • The taxpayer: Cornucopia Trust, a property investment trust in Bloemfontein.

  • The loans: The trust borrowed from Sanlam Group entities to buy and refinance commercial properties.

  • The fee: It paid an upfront raising fee of about 2% of the loan facilities and deducted it under section 24J.

  • SARS's view: In 2016 the wording changed from "related finance charges" to "similar finance charges". SARS said this narrowed the section, and that a once-off, upfront fee is not similar to interest because it is not tied to time or the outstanding balance.

  • The taxpayer's view: Without the raising fee there is no loan. The fee is part of the price of the credit.

  • The finding: The SCA agreed that Parliament meant to narrow the section, but still rejected SARS's reading. It looked at the substance of the fee, not its label.

  • Why: The fee was linked to the amount borrowed, was required to get the funds, and formed part of the cost of the credit. A lender could just as easily charge a higher rate and a lower fee for the same result.

  • Outcome: The raising fees were "similar finance charges" and deductible under section 24J. SARS lost.

What it means for taxpayers

  • Debt-funded businesses benefit: Property investors, developers, farmers and companies that borrow large amounts can claim raising, arrangement or facility fees that work like a cost of credit.

  • Not every funding cost qualifies: The court separated raising fees from legal fees, advisory fees and admin charges. Those still need their own basis for deduction.

  • Check past returns: If SARS disallowed a raising fee, or you did not claim one, ask us whether an objection or a request for correction is still in time.

  • Keep the paperwork: Keep the facility letter showing how the fee is calculated (usually a percentage of the loan) and that it is a condition of drawdown.

  • Spread correctly: Section 24J spreads finance charges over the term of the loan; the fee is not always deductible in full in the year paid.

2. Late documents cost a taxpayer SARS's full trial costs: MNO v CSARS

MNO v CSARS (Case No. IT 46503) – Tax Court, Johannesburg (Wilson J).

Overview of the case

  • The dispute: An appeal against four income tax assessments, set down for four days from 1 to 4 June 2026.

  • What went wrong: On 30 May 2026, two days before trial, the taxpayer found a large amount of additional material.

  • SARS's response: Its expert could not properly review the new material over one weekend.

  • The result: The taxpayer agreed the appeal had to be postponed indefinitely. The court never decided whether SARS's assessments were right.

  • The costs fight: The taxpayer accepted it must pay wasted costs, but disputed how much.

  • The order: The taxpayer must pay SARS's senior and junior counsel on Scale C for all four reserved days, plus the expert's reasonable preparation and reservation fees.

  • The court's view: The material should have been disclosed long before. The judge criticised the conduct sharply.

What it means for taxpayers

  • Gather documents early: Every document supporting your case should be with your advisers at objection stage, not on the eve of trial.

  • Litigation is expensive even without a ruling: This taxpayer now pays two legal teams and still has no answer on the tax.

  • Use the cheaper routes first: Objection, alternative dispute resolution (ADR) and settlement talks can narrow or end a dispute before court.

  • Be trial-ready before you go to court: Once a date is set, counsel and experts are booked and paid for, whether or not the hearing goes ahead.

  • Our tip: Keep a complete file for every SARS audit or verification from day one. We can help set this up.

3. Other new judgments to watch

SARS published these judgments in the last two weeks; we will cover the outcomes once the full judgments are available.

  • 8 Sep 2026 – Cuba Dumakude v Bidvest Bank Ltd and Another (054716/25), High Court, Gauteng (Pretoria): Whether SARS could send a third-party notice to the taxpayer's bank without first issuing a final demand, and who is entitled to the funds held.

  • 23 Jul 2026 – SARSTC IT 45931 and VAT 22285 (published 30 Sep 2026), Tax Court, Durban: Procedural issue in an ongoing income tax and VAT appeal involving SARS officials.

Why it matters: A third-party notice lets SARS take money directly from your bank account to settle tax debt. If you receive a SARS final demand, contact us immediately.

4. New SARS interpretation notes and guidance

SARS issued a new version of its repairs note on 30 September 2026. Recent notes still relevant to our clients are also listed.

  • 30 Sep 2026 – Interpretation Note 74 (Issue 4) (New): Deduction and recoupment of repairs, sections 11(d) and 8(4)(a). Replaces Issue 3 (May 2023). Repairs that restore an asset are deductible; improvements are not. We are reviewing the changes and will report next week.

  • 27 Jul 2026 – Interpretation Note 145: Employment Tax Incentive (ETI) – who is an "employee". SARS will test whether real work was done: supervision, assigned tasks, recorded leave and cash wages actually paid.

  • 31 Mar 2026 – Interpretation Note 78 (Issue 2): Section 24C allowance for future contract expenditure. Updated after the Big G Restaurants and Clicks Constitutional Court cases. Claiming the allowance may trigger a SARS verification.

Action points

  • Repairs (IN 74): Keep invoices that describe the work done. Where repairs and improvements happen together, have them split on the invoice or by a quantity surveyor.

  • ETI (IN 145): Employers claiming ETI should keep payslips, proof of payment, leave records and job descriptions for each qualifying employee. Paperwork alone is no longer enough.

  • Section 24C (IN 78): Expect questions from SARS if you claim this allowance. Keep the contract and a calculation of the future costs.

5. Diary reminder and contact

  • Filing season closes 23 October 2026 for individual taxpayers who are not provisional taxpayers (SARS filing season dates). Send us your documents now if we have not yet filed your return.

Questions about any of these cases? Contact Mariska Malan CA(SA) RA

MM Auditors • Ouditeure, Chartered Accountants (SA), Vryheid

This newsletter is general information, not tax advice. Please speak to us before acting on it, as the right answer depends on your own facts.

Sources

MARISKA MALAN
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