In tax administration, the Commissioner-General has the mandate to protect revenue collected and collectible. As part of ensuring the protection of revenue, the Commissioner-General has the mandate to re-characterise or disregard any transaction that has the effect of eroding tax gains.

Required:
In accordance with the tax provision, under what circumstances will the Commissioner-General re-characterise any transaction?
(4 marks)

) The Commissioner-General reserves the right to re-characterise a transaction under
the following circumstances:

  • Fictitious or does not have a substantial economic effect
  • The form does not reflect its substance
  • Artificial
  •  Anything that is done to avoid or reduce tax liability
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