The April 26 2026 judgment by the Constitutional Court in Absa Bank Limited and Another v Commissioner for the South African Revenue Service is a significant development in South African tax law. For the first time, a higher court has provided authoritative guidance on the interpretation and application of the general anti-avoidance rule (GAAR) contained in section 80A of the Income Tax Act.In the latest edition of Business Law Focus, host Evan Pickworth interviews leading tax expert and founder of AJM, Dr Albertus Marais, on the important implications of the judgment. They also explore why there was a dissenting ruling by one of the court’s eminent tax experts.Listen below: What this ruling means for taxpayersThe contextThe judgment is particularly noteworthy for its treatment of the role of intention in tax avoidance. Marais says the court made it clear the GAAR is not confined to circumstances where a taxpayer subjectively intends to avoid tax or deliberately seeks to obtain a tax benefit. Instead, the test is an objective one looking to the effect of the arrangement: where a tax benefit is obtained through an arrangement that falls within the statutory criteria, the GAAR may apply to the taxpayer, irrespective of the taxpayer’s personal knowledge or purpose.This has far-reaching implications. “The court confirmed participants in complex commercial or financing structures — such as those frequently encountered in financing transactions — may be exposed to the consequences of tax avoidance embedded within a broader scheme, even where they were unaware of the tax advantages engineered within that structure. In other words, liability under the GAAR may arise not only from deliberate tax planning, but also from participation in arrangements that, in their overall effect, result in impermissible tax benefits,” says Marais.The decision, therefore, represents a marked shift from the approach historically adopted under earlier general anti-avoidance provisions, where the test was premised on the taxpayer’s purpose or intent. By contrast, the current framework, as confirmed by the court, underscores an objective, effect-based enquiry.Taxpayers, advisers and financial institutions should take careful note of this development. “The judgment signals a stricter and more expansive application of the GAAR, and highlights the importance of thoroughly scrutinising the structure and consequences of transactions, not only from a commercial perspective, but also in terms of their potential tax outcomes,” concludes Marais.