Australian tax request freezes SA man's assets

South Africa has frozen the local assets of Mark Krok in response to a request from Australia. Image: Salvatore Vuono Free Digital Photos

This means Krok's assets will be frozen until his outstanding taxes in Australia - amounting to more than R235m in April last year - have been paid. According to the judgment, the assets include property in Cape Town worth R40m and other valuables amounting to R295m in June 2012.

The preservation order followed a request from the Australian Tax Office (ATO) in 2012 for assistance in the collection of taxes under the double tax agreement reached with SA in 1999. The agreement provided for the avoidance of double tax and the prevention of tax evasion.

The ATO was concerned that Krok, who lived in Australia until 2008 before moving to the UK, would dissipate or conceal his assets in SA. SARS obtained a provisional preservation order in February last year, resulting in the assets being placed in the hands of a curator.

Legal principle confirmed

SARS spokesman Adrian Lackay said the revenue service welcomed the judgment as it confirmed an important legal principle of mutual assistance and co-operation among revenue authorities in different countries. He said the judgment would boost revenue authorities in combating cross-border tax evasion and attempts to conceal or dissipate assets, particularly by high net worth individuals.

SARS had called upon Krok, in terms of the Tax Administration Act, to state whether he admits liability for the R235m or for a lesser debt to the ATO. Should he fail to comply with the request, SARS would demand payment of the full outstanding amount.

"This may result in immediate collection steps being instituted by SARS," Lackay said.

Krok argued through his lawyers that an amendment to the double tax treaty - which they said paved way for the applicability of the agreement to taxes of every kind and description imposed under laws in SA and Australia - was gazetted only in December 2009.

Krok and a company registered in the British Virgin Islands, Jucool Enterprises - claiming to be the beneficial owner of the assets - argued that the ATO's tax claim arose from income earned between June 2004 and June 2009. In terms of this argument only information concerning taxes arising after July 2009 could be exchanged.

SARS argued that the provisions in the 1999 agreement had no limitation on the time period for the exchange of information.

Source: Business Day via I-Net Bridge