S23H Flashcards
Facts:
Telkom made a payment of R178m to Velociti as a cash incentive bonus for Velociti obtaining subscribers for telkom Mobile on a specific tariff plan. According to the agreement between Telkom and Velociti, a once-off incentive bonus was paid for each new connection (contract) created by Velociti, and the connections were to be completed before the dispensation expired on 30 September 2011. These new customers entered into 24-month contracts with Telkom Mobile.
Telkom also paid a separate commission for the benefit that is derived from the subscription fees, over the term of the subscription agreement, being 24 months. This ongoing commission was separate and apart from the incentive bonuses paid on the conclusion of the contract.
Telkom wanted to clain the full amount paid to Velociti as a deduction in the year in which the incentive bonus was paid. SARS did not agree with this and wanted to add back a poriton of the R178m in terms of s23H, as they argued Telkom Mobile’s benefit extended over 24 months, the contract period.
Section 23H - Telkom
Issue:
The key question was when and how the benefit, in respect of which the expenditure was incurred, was enjoyed.
Principle:
The period to which the expenditure ‘relates’ must be the period during which the benefit is enjoyed.
So always ask, when and how is the benefit enjoyed and over what period is the benefit enjoyed?
