When You Change Your Case Too Late: A Hard Lesson From Baseline v SARS (2026 ZASCA 20)

As tax practitioners, we often focus on what argument to run. This judgment is a reminder that in tax litigation, the real difficulty often lies not only in what case is advanced, but in whether that case has been properly identified, framed and preserved at the correct procedural stage. In that sense, Baseline shows that the formulation of a taxpayer’s case, as early as the objection stage, can be just as decisive as the merits themselves.

In Baseline Civil Contractors v SARS, the taxpayer raised an additional or ostensibly new argument at the appeal stage. Initially, the case was framed on the basis that a profit share payment was deductible. Later, the taxpayer pivoted and argued that the same amount never constituted part of its gross income. On the surface, that may seem like a legitimate alternative approach in that the net result would be the same. In reality, it was fatal.

The issue before the Court turned on the proper interpretation of Rule 32(3) of the Tax Court Rules, which governs the extent to which a taxpayer may introduce new grounds of appeal at the pleadings stage.

The SCA drew a clear line. The important distinction is therefore not merely between an old and a new contention, but between a new argument and a new case. Rule 32(3) permits the former, but it does not allow a taxpayer to attack an amount or part of the assessment that was not previously placed in dispute at objection stage. That distinction is not academic. It goes to the heart of how tax disputes are structured. A case for the deduction of expenditure and a case for non-inclusion in gross income are fundamentally different. They do not sit comfortably alongside one another, if at all, and they cannot be introduced interchangeably at different stages of the dispute process (even if each alternative would yield the same net result).

What makes this judgment particularly important is how often this issue arises in practice. Objections are frequently treated as a procedural step rather than a substantive one. They are drafted too narrowly or fail to consider how the matter may evolve. When the matter reaches appeal stage and pressure increases, there is a temptation to reframe or strengthen the case. This judgment confirms that there are limits to that approach.

The objection is not a formality. It is the procedural step that lays the foundation of the entire dispute. That is why the later pleadings cannot be used to redesign the terrain of the dispute. The Court was also clear that one cannot run inconsistent positions. It is not open to a taxpayer to argue that an amount is deductible, while at the same time contending that it never accrued as income in the first place. Those positions are mutually destructive.

The broader lesson is one of discipline. Tax litigation is structured, sequential and procedural. Each step builds on the last. If the groundwork is not properly laid at the objection stage, the ability to manoeuvre later becomes severely restricted. In many cases, SARS does not need to win on the merits if the taxpayer’s case fails on process.

For those involved in disputes or objection drafting, this judgment is a timely reminder that the objection is not administrative housekeeping. It is the moment at which the taxpayer must identify, with care, what is being impugned in the assessment and on what coherent legal footing. Get that foundation wrong, and there may be no later opportunity to repair it.

Intellectual property disclaimer: The contents of any article published by Pieterse Sellner Erasmus should not be construed as professional legal advice.