Karolien van Wyk


On 6 September 2017, the Honourable Mr Justice Binns-Ward of the High Court of South Africa, Western Cape Division, handed down judgment in the case of KOS and others v the Minister of Home Affairs and others[1]. This case dealt with difficulties which transgendered persons, in marriages that were solemnised in terms of the Marriage Act,[2] were experiencing in obtaining the recordal by the Department of Home Affairs of their sex / gender change, as provided for under the Alteration of Sex Description and Sex Status Act[3] (the Alteration Act).

The Alteration Act makes provision for the formal acknowledgement, recordal and legal consequences of a person who underwent surgical and / or medical treatment to alter their sexual characteristics from male to female or vice versa.

In the aforementioned case, the first, third and fifth Applicants were married to the second, fourth and sixth Applicants respectively. These marriages were solemnised in accordance with the Marriage Act[4] and more specifically before the transition of the first, third and fifth Applicants. All the Applicants are content in their respective marital relationships and currently have no wish or intention to end them.

The seventh Applicant is a non-profit organisation named Gender Dynamix. The seventh Applicant seeks to promote and defend the right of transgender and “gender non-conforming” persons in South Africa and beyond. They have been working for a decade now on various issues concerning the implementation of the Alteration Act. They have surmised that the issues fall within three basic categories, which are:

  1. Ignorance by relevant officials of the existence and content of the Alteration Act;
  2. The absence of prescribed forms and procedures for the administration thereof; and
  3. The requirement by the Department that applicants who were married in terms of the Marriage Act[5] first obtain a divorce before being allowed to have their altered sex / gender recorded; alternatively the arbitrary deletion or alteration by the Department of the official record of the affected marriages.

The first, third and fifth Applicants applied to the Director-General of the Department of Home Affairs, to have their sex descriptions added onto their respective birth registers. The Applicants considered the fact that the registration of the altered sex status of the transgender parties will result in the public records showing that their marriages have become same-sex marriages to be irrelevant to their marriage status.

The Department of Home Affairs maintained that this is not the situation and that their applications cannot be granted while their marriages remain registered as having been solemnised in terms of the Marriage Act[6]. This resulted in the applications of the first and third Applicants being refused alternatively that the Department failed to make a decision in respect thereof. However, the fifth Applicant’s application was dealt with differently. The Department did alter the sex description, and then simultaneously deleted the particulars recorded in the population register of the marriage with the sixth Applicant. The sixth Applicant’s surname was changed to her maiden name.

Furthermore, various officials from the Department of Home Affairs informed the first and third Applicants that they will only be successful in their applications if they terminated their marriages solemnised under the Marriage Act[7] and remarried under the Civil Union Act[8]. Unfortunately, in the absence of an irretrievable breakdown in their marital relationship, no grounds existed for them to seek an order for the dissolution of their marriages.

The essence of the Respondents’ contentions is that the first to sixth Applicants are the victims of a legislative conundrum. The Alteration Act does not contain any sections prohibiting a person who is married under the Marriage Act[9] to alter their sex / gender. The Respondents argued that even though it is not prohibited under the Alteration Act, this Act should not be read alone, but in conjunction with the Marriage Act[10] and the Civil Union Act[11].

The court found that none of the Acts, alone or read together, prohibits a person in these circumstances to alter their sex / gender. The court mentioned that it appears that the approach taken by the Respondents have been coloured by the persisting influence of the religious and social prejudice against the recognition of same-sex unions which was accommodated by the decision not to  amend the Marriage Act[12], but to bring the Civil Union Act[13] alongside it instead.

It was ordered that the second Respondent, the Director General of the Department of Home Affairs, must determine applications of this nature irrespective of the person’s marital status, and in particular, irrespective of whether the applicant’s marriage or civil union (if any) was solemnised under the Marriage Act[14] or the Civil Union Act[15].

The second Respondent had to, within 30 days from date of the order, unconditionally and without the derogation from his approval of the fifth Applicant’s application, reinstate on the register the record of the particulars of the solemnisation of the said marriage in terms of the Marriage Act[16].

[1] 2298/2017

[2] 25 of 1961

[3] 49 of 2003

[4] 25 of 1961

[5] 25 of 1961

[6] 25 of 1961

[7] 25 of 1961

[8] 17 of 2006

[9] 25 of 1961

[10] 25 of 1961

[11] 17 of 2006

[12] 25 of 1961

[13] 17 of 2006

[14] 25 of 1961

[15] 17 of 2006

[16] 25 of 1961


Alicea van der Ryst

What is VAT:

VAT consists mainly out of two concepts which are known as output VAT and input VAT.[1]  Output VAT gets levied once it has been established that there is a supply made by a vendor for goods or services in the course or furtherance of any “enterprise” carried on by it.[2]  On the other hand input VAT is the output VAT borne by a vendor on supplies of goods and/or services made to the vendor by other vendors, and in respect of which the vendor is entitled to claim a refund from SARS.[3]

The possible effect of VAT on a PBO:

A Public Benefits Organisation (PBO) is an organisation which complies with the relevant provisions of the Income Tax Act 58 of 1962[4] (hereafter “Income Tax Act”).

A PBO is a term defined and used in the Income Tax Act, however when one looks at the VAT Act, a PBO can either be regarded as an association not for gain, or a welfare organisation, which is a further sub-division of an association not for gain.[5]  There are specific legislation governing each of the above categories.

Associations not for gain:

An “association not for gain”, as defined in the VAT Act, means any religious institution of a public character; any other organisation (except an educational institution) which does not carry on its activities for the purposes of profit or gain to any owner, member or shareholder; and educational institutions of a public character.[6]

Usually businesses further their financial objectives through commercial activities, however associations not for gain have a variety of income sources including, but not limited to donations, bequests, collections, and fundraising activities combined with commercial activity to generate additional income.[7] Consequently, there may be a mixture of standard-rated and zero-rated taxable supplies, exempt supplies and supplies which are outside the scope of VAT.[8] If an association not for gain supplies goods or services which it received as a donation, the supply is exempt in terms of Section 12(b) of the VAT Act. The exemption applies whether the supply is made for a consideration or not.

To qualify as a welfare organisation it must firstly be an approved PBO and it must also carry on “welfare activities” as listed in Regulation Number 112 in the Government Gazette Number 27235 issued on 11 February 2005 (hereafter “Regulation 112”).[9]

Welfare organisation:

A welfare organisation is a special type of association not for gain, or a sub-division thereof, which means that the VAT Act should have the exact application to welfare organisations as with associations not for gain.[10]

Welfare organisations are however entitled to benefits which are not available to an association not for gain. This includes paragraph (b)(ii) of the definition of “enterprise” in Section 1(1) of the VAT Act, which regards supplies made for no consideration to be taxable supplies to the extent that the taxable supplies are in connection with carrying on certain “welfare activities” listed in Regulation 112.[11] Welfare organisations are therefore provided with an option to register voluntarily as vendors without having to meet the minimum threshold or the requirement that supplies must be made for a consideration.[12]

This allows a welfare organisation the ability to claim a refund of input VAT in respect of supplies made for no consideration in respect of “welfare activities” conducted.

An additional benefit available to welfare organisations is that it is entitled to deduct input VAT in respect of soliciting donations with advertising, as this activity is regarded as an integral part of conducting “welfare activities”.[13]

It is clear from the aforementioned explanations that organisations which fall within in the definitions of “association not for gain” or “welfare organisations” are identified for preferential treatment under the VAT Act.[14]  This means that the standard definitions used to determine the application of the VAT Act, as explained above, will not be formally applied to these type of entities, but in conjunction with their specific regulations.

[1] Haupt P. Notes on South African Income Tax (2016), 35th Edition. (Publications: Roggebaai 2016), page 905.

[2] Section 7(1) of the Value-Added Tax Act 89 of 1991

[3] Haupt P. Notes on South African Income Tax (2016), 35th Edition. (Publications: Roggebaai 2016), page 906.

[4] Section 30(3) of the Income Tax Act 58 of 1962.

[5] Interpretation Note 70 issued by the South African Revenue Service dated 14 March 2013, page 26.

[6] Interpretation Note 70 issued by the South African Revenue Service dated 14 March 2013, page 26 read with Section 1(1) of the Value-Added Tax Act 89 of 1991.

[7] Interpretation Note 70 issued by the South African Revenue Service dated 14 March 2013, page 26.

[8] Ibid page 26.

[9] Ibid page 26.

[10] Interpretation Note 70 issued by the South African Revenue Service dated 14 March 2013, page 28.

[11] Section 1(1) of the Value-Added Tax Act 89 of 1991.

[12] Interpretation Note 70 issued by the South African Revenue Service dated 14 March 2013, page 28.

[13] Ibid page 28.

[14] VAT414, Guide for Association not for Gain and Welfare Organisations, (10 March 2016), (Publication:SARS), page 14.


Nadia Burger

The existing FIC Act 38 of 2001 was amended due to the fact that South Africa is a member of the Financial Action Task Force (FATF), an international body that works with financial institutions to combat financial crime. However, the existing Act does not meet the standards of the FATF.

The Minister of Finance has signed and gazetted various provisions of the abovementioned Act to come into operation on 13 June 2017. The implementation of different provisions of the Act will be effective on different dates. The next date of implementation was 2 October 2017 and thereafter a date will be determined for the final implementation of the remaining provisions.

This amendment will not have a direct impact on everyday consumers, but will affect attorney firms, estate agencies, banks, trusts and all other accountable institutions directly. The term “accountable institution” is defined as a person or organisation referred to in Schedule 1 of the FIC Act that carries out business of any entity listed in the Act.

The provisions which came into effect on 13 June 2017 do not require changes to existing regulations, exemptions or internal systems of institutions to comply with the FIC Act.

The provisions which came into effect on 2 October 2017, however, introduces new terms and will require changes to existing regulations and exemptions under the existing FIC Act as well as staff training and major changes to systems by accountable institutions. These new terms are:

  • Customer due diligence: Accountable institutions must assess whether domestic prominent influential persons and foreign prominent public officials present a higher risk to the institution. Transactions must also be monitored on an ongoing basis and not just once off.
  • Risk management and compliance programmes: Accountable institutions must assess areas of their business that open up the risk of money laundering or financing terrorism. Steps must be taken to mitigate potential risk areas of a business.
  • Beneficial ownership: Management will be held accountable for non-compliance with the Act.
  • Freezing of assets: Properties and transactions can be frozen.

The aim of the Amendment Act is to be more stringent and to effectively attempt to extinguish money laundering, illegal financial transactions and the financing of terrorism.

This newsletter is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.