Van der Merwe, the daughter of businessman Gary van der Merwe, received a gift of nearly R145m in May 2013 from a foreign national. The businessman and his daughter have jointly issued summonses against Sars totalling R7.6 billion.
According to court documents filed in the Cape Town Tax Court, the Minister of Finance is the first defendant, and the second defendant is the Sars Commissioner.
With the assistance of her father, who has had a series of long-running court battles with Sars himself, Candice is looking to reclaim an estimated R65m from the taxman.
When reached Sars was unable to immediately comment.
Van der Merwe (Gary) said when his daughter first received the gift in 2013 Sars launched a legal assault on her, himself and a number of related trusts and companies based on the incorrect assumption that she was a conduit for her father to bring money into the country.
He said a blanket preservation order was thrown over all money and assets belonging to his daughter and her family, leaving them without access to funds and having to make requests for money to buy food from a court-appointed curator, Cloete Murray.
The preservation order was swiftly followed up with an extensive nine-month inquiry into every facet of the Van der Merwe family’s life and finances, which determined that the money that Van der Merwe (Candice) received was indeed not her father’s money, as the family had maintained, according to Van der Merwe’s lawyers.
“Sars, however, proceeded to allege that the money received by Candice was income, not a donation, and raised an income tax assessment of more than R44m, which she was forced to pay in order to have the preservation order uplifted over her assets.
“She made payment in terms of the ‘pay now, argue later’ rule, a controversial but constitutionally approved mechanism that compels taxpayers to pay money claimed from them by Sars, on the condition that they can later challenge the basis for making the payment in court,” Van der Merwe said.
Van der Merwe is adamant that the money was not taxable as foreign donations made by non-citizens to citizens are only taxable in the hands of the donor in their home country, not in South Africa.
According to the court papers, Van der Merwe (Candice) declared the receipt of the foreign funds as a “gift from her companion abroad” in the income tax return in respect of the 2014 tax year and stated such funds to constitute non-taxable income.
Sars duly issued and provided a notice of assessment in respect of the 2014 tax year, which did not include the foreign funds as taxable income, according to the court papers.
The court papers placed on record that the foreign funds were given to Candice and that her father had and has no interest in these funds.
“Sars was simply wrong in thinking that the funds received by her may not be her own and that Sars speculates without foundation in adopting this position.”
Candice van der Merwe and her father are also suing Sars for R1bn each in constitutional damages for the consequences of the actions taken by Sars, which they allege to have violated their constitutional rights.
Her father is suing Sars for R5.6bn for ruining his online lottery business and unsuccessfully prosecuting him for various tax offences in a criminal trial in the Cape Town High Court.