Please note that this article is a poorly written effort at satire merely trying to point out the conundrums of interpreting the Bible in a totally literal way – also pointing to the fact that land reform based on an ancestral claim to land is an exercise in futility. 


Creationism versus Evolution on our ancestral claim to land in South Africa.

Creationism is a religious belief that everything we hold dear or live in fear of was created by some divine creator. You get Young Earth Creationism and Old Earth Creationism with the difference simply being that Young Earth creationists believe that God created the universe within the last 10,000 years, literally as described in Genesis.

So the Young Earth creation myth vaguely goes as follows:

Early one Monday morning – roughly about 10 000 years ago – God was hanging around near the current day location of Orion’s Belt, when it occurred to him that the opposite of darkness might be better.

And there was light.

Now being able to see that there was in fact nothing worth seeing, God went to work and without any further delay created the whole universe in its current form over the next 4 days. Saturday he saved for a special creation – he made Adam in his own image. It thus logically follows that men are more important than woman; God made us first and you can burn all the bras in the world, it won’t change a thing. It’s in the Bible so just deal with it.

Creating the universe must have been extremely hard work so on the Sunday God decided to take a break.

A considerable time later God had a serious sense of humour failure and decided to lovingly drown all of his creation, excluding Noah and his immediate family, and some very fortunate animals who were allowed to enter the Ark two by two. The Ark came to rest on Mount Ararat which is located in modern-day Turkey.

There are 2 possibilities for the location of the Garden of Eden:

  1. The Bible places the Garden of Eden at the head of the Persian Gulf, in modern-day Iraq where the Tigris and Euphrates rivers run into the sea.
  2. The Bible is silent on where the sons of Adam and Eve found wives, so one can only assume that they had no other option but to have a sexy time with their sisters – possibly placing the Garden of Eden somewhere near the current day location of Brakpan.

Evolutionists simply believe that Homo sapiens evolved in Africa and about 70 000 years ago decided to move out of Africa.

The options for where we come from are thus as follows:

  1. We are all cousins and we come from Turkey
  2. We are all Arabs and we come from Iraq
  3. We are all cousins and we come from Brakpan
  4. We all evolved in Africa

It is thus abundantly clear that we all either come from Africa or that we all come from Iraq or Turkey and that means that we all have the same ancestral claim to land in South Africa.

Maybe the issue is just not about land, but about something else altogether.

From a tax perspective, taxpayers could be subject to Capital Gains Tax and Value-Added Tax in the event of the expropriation of an asset.

The functioning of Capital Gains Tax centres around four basic building blocks -asset, disposal, proceeds and base cost. The definition of asset is wide enough to include virtually any asset bar currency. In general terms, it can be said that a disposal event has occurred when a taxpayer held an asset at the beginning of a tax year and no longer holds it at the end. Proceeds would generally refer to the selling price of an asset, or in our case any compensation received. The base cost of an asset includes the acquisition cost, improvement cost, and any other direct cost associated with the acquisition, improvement or disposal of the asset. Any wear and tear or allowances claimed on the asset will reduce its base cost.

Since expropriation would result in a taxpayer not holding an asset at the end of a tax year, a disposal event will have occurred and the liability for Capital Gains Tax will come to be. To determine if a capital gain has been made, the taxpayer would need to deduct the base cost of the asset from any proceeds (compensation) received.

Where no compensation is received or where the taxpayer has received compensation that is less than the base cost of the asset, the taxpayer has made a capital loss. The capital loss can be used to reduce any other capital gain in the current tax year, and if no sufficient capital gain exists against which to offset, the unused portion of the capital loss can be carried forward to be used in future tax years.

Where the proceeds exceed the base cost, a taxable position for the taxpayer will arise. Previously claimed wear and tear or similar allowances will be recouped (in the case of allowance assets). The recoupment will be limited to the lower of proceeds or cost of the asset and is taxed as income in the year of expropriation. From SARS’s perspective this is only fair as the taxpayer could previously deduct the allowances and has now effectively recouped a portion thereof via the compensation received. In cases where the compensation exceeds the original cost (limiting factor for recoupment), the taxpayer will make a capital gain which will have to be included in taxable income at an inclusion rate of either 80% in the case of companies and trusts and 40% where an individual is concerned.

The above seems quite draconian considering that any assets expropriated would usually happen contrary to the intention and wishes of the taxpayer. To be taxed on something over which you have no control would hardly be fair. Fortunately, roll-over relief is available under paragraph 65 of the 8th Schedule of the Income Tax Act. This paragraph deals with involuntary disposals where the compensation received is used to purchase a replacement asset(s). Broadly put, a taxpayer subject to an involuntary disposal can elect to disregard any recoupment and capital gain in the current tax year and have it taxed only once the replacement asset is disposed of (in the case of a non-allowance asset) or spread out over the period in which tax allowances on the replacement asset is claimed. This does not remove the liability for tax, but merely defers it. Nevertheless, a tax deferred is a tax saved.

In order to make use of the roll-over provided for in section 65, a number of requirements must be met. The most important is that the full compensation will be used to reinvest in a replacement asset(s), the replacement asset(s) will be subject to Capital Gains Tax in South Africa when disposed of and that the contract for the acquisition of the replacement asset be concluded within 12 months from the date of expropriation.

Scholars seem somewhat divided as to what constitutes a replacement asset. Some are of the view that if for example a farm is expropriated, then it must be replaced by another farm. We believe this not to be the case, and that any asset will meet the criteria of a replacement asset, as long as it falls within the Capital Gains Tax net and the requirements of paragraph 65 are met in full.

The Value Added Tax implication is quite straight forward. VAT revolves around the notion of supply, and thus the only relevant question is whether a supply has been made or not.

In 1997 Shell and SARS were involved in a court case involving VAT on compensation received for an expropriated farm. In what has come to be known as the ‘Annandale Farms judgement’, the court held that as no voluntary supply had been made, but rather a compulsory one, the land owner was not subject to VAT on the compensation received.

Unfortunately for VAT vendors, the VAT act was amended and supply now includes compulsory transactions or transactions occasioned by operation of law. As such, in the event of expropriation, VAT will be payable on any compensation received.

The land restitution process began in 1994 and the number of valid claims submitted by December 1998 totalled 79 700. By 2013 close to 76 000 claims were completed successfully. Only 5 856 of the successful claimants chose to have their land restored to them while the rest preferred to receive cash instead.

Said the then Minister of Rural Development and Land Reform, Gugile Nkwinti: “We thought everybody when they got a chance to get land, they would jump for it. Now only 5 856 have opted for land restoration. We no longer have a peasantry; we now have wage earners.”

In my opinion, the focus should rather be on poverty alleviation, education and job creation, but that seems to be above the comprehension of government who insists to unashamedly have some socialistic land reform fit at the behest of people like The Cabbage Patch Kid and his red beret-wearing minions.

Nelson Mandela said: “Education is the most powerful weapon which you can use to change the world”

Let’s all rather scream and shout about fair, free and equal education.

Article by C2M Director, Carel Steenkamp, CA (SA) RA.


Read other articles by Carel Steenkamp:

Christiaan Binneman




Technical assistance provided by C2M Associate, Christiaan Binneman CA (SA).

For more information phone Christiaan on 021 914 0261 or email