Vindicated for VAT treatment

WOOLIES: RELATED TO RIGHTS ISSUE

- Amanda Visser

Its 2014 acquisition of Australian department store David Jones has been labelled a "R20 billion blunder", but Woolworths Holdings has now at least been vindicated over its value-added tax (VAT) treatment of the transaction.

The Supreme Court of Appeal (SCA) has held that a "comprehensive consideration" of an entity's activities is required, rather than isolating a "single or a segregated" set of transactions.

It has dismissed - with costs - a South African Revenue Service (Sars) appeal against a Western Cape Tax Court ruling in favour of Woolworths Holdings' VAT treatment at the time.

The acquisition was funded by cash, debt and equity funding through a R10 billion underwritten rights offer.

Woolworths incurred VAT of R18.6 million in respect of professional services for the rights offer to local and foreign shareholders.

It deducted input VAT of about R8.5 million for services provided by local service providers, declared R15.5 million (foreign) for the services supplied by foreign (non-resident) service providers, and claimed R12.8 million of the cost.