Fidelis Munyoro Chief Court Reporter
CONCESSIONARY school fees charges offered to elite private schools’ workers is income and liable to taxation in terms of the law, the Supreme Court has ruled. Justice Tendai Uchena made the ruling in the tax row pitting Arundel School, Chisipite Senior School, St Johns Educational College, Gateway School, St Georges College and Christian Brothers College, on one hand, and the Zimbabwe Revenue Authority (Zimra) on the other.
The schools had approached the Supreme Court on appeal against the decision of the Special Court for Income Tax Appeals, which dismissed their appeals against the determination of the Zimra Commissioner-General turning down their objection against an income tax assessment for additional profit tax. The appeal raised three issues for determination, whether or not the lower court correctly found that the subsidised school fees fit in the definition of gross income in terms of section 8(1) and 8(1) (b) of the Income Tax Act.
Secondly, whether or not the lower court correctly found that the subsidised school fees were “an advantage or benefit” in terms of section 8(1) (f) 8(1) (a) of the Act, and, lastly, whether or not the court correctly assessed the calculations of such waived amounts. Arguing for the six schools, Advocate Firoz Girach submitted that the difference between the amount paid by full school fee-paying children and that paid by the children of parents employed at these schools was not part of the schools employees’ gross income under section 8(1) of the Income Tax Act.
The lower court, he argued, was wrong in dismissing the schools objection to that difference being included in the assessment of payable tax. He further argued that the subsidised fees were not an amount in terms of section 2 of the Act. But Zimra lawyer Advocate Thembinkosi Magwaliba insisted that the schools were liable to tax in terms of section 8(1) of the Act. He said according to Zimra, the definition of the term “gross income” covered the position of the Trust schools workers’ school fee concession for their children. In his ruling, Justice Uchena did not accept Mr Girach’s contention and upheld the tax collector’s argument and decision on the matter.
“It is clear that the benefit received by the employees of the appellants’ falls within the broad definition of the term gross income and, therefore, was subject to taxation,” said Justice Uchena, while dismissing the trust schools appeal. He said section 8(1) (b) of the Act clearly stated that any amount received or accrued in respect of services rendered or to be rendered whether due and payable under any contract of employment or service was liable to taxation.
On whether or not the lower court correctly found that the subsidised school fees were “an advantage or benefit” in terms of section 8(1) (f) 8(1) (a) of the Act, Justice Uchena noted that the concessionary fee benefit was granted to the schools’ workers. He said the benefit was not being used for the benefit of the schools’ business but that of their workers.