Parties wishing to cancel a contract should try to do so within the same year of assessment as it was entered into, to avoid adverse cash-flow consequences.
The Taxation Laws Amendment Act, 2015, introduced a number of amendments to, inter alia, certain sections of the Income Tax Act, 1962 (the Act), and certain paragraphs of the Eighth Schedule to the Act in order to address the cancellation of contracts. These amendments came into effect on 1 January 2016.
The principle underlying these amendments is that prior year assessments cannot be reopened to take account of subsequent events.
