Author: Robert Gad and Jadyne Devnarain (ENSAfrica) In terms of the current Tax Court rules published under the Income Tax Act No. 58 of 1962, where the Commissioner for the South African Revenue Service (“SARS”) did not comply with the prescribed time frames in respect of dispute resolution, practically, there was little that a taxpayer could do. This could change in terms of the proposed new Tax Court rules expected to come into force later this year.
Category: Objections & Appeals
Supreme Court of Appeal addresses administrative fairness in raising assessments and disputes before the Tax Court
An interesting judgment was handed down in the Supreme Court of Appeal (SCA) on 12 June 2014 in the matter of Commissioner for the South African Revenue Service v Pretoria East Motors (Pty) Ltd (291/12) [2014] ZASCA 91. The taxpayer operated a car dealership in Pretoria. The South African Revenue Service (SARS) conducted an audit on the taxpayer in respect of its 2000 to 2004 years of assessments, and as a result raised various additional assessments in respect of, inter alia, income and value-added tax (VAT).
Where is tax dispute resolution and controversy heading?
Author: Johan van der Walt (KPMG) The tax world has changed globally (mainly OECD and G20 driven), in Africa (especially through African Tax Administration Forum initiatives) as well as locally (SARS becoming a world-class revenue authority with substantial technology and resource investment). Sharon Katz-Perlman, KPMG’s Head of Global Tax Dispute Resolution and Controversy recently observed: “Around the world, levels of tax disputes have reached record heights, and the rise in tax controversy shows no signs of abating.”
Tax Adminstration – Grounds on which an assessment can be withdrawn
If a taxpayer is unable to pay a tax debt, Chapter 14 of the Tax Administration Act No. 28 of 2011 (the TAA) makes provision for the taxpayer to apply to the South African Revenue Service (SARS) for the debt to be written off or compromised, that is to say, partially written off. However, SARS is in the business of collecting tax, not of waiving the payment of tax. It will only write off a tax debt if it is in its own interests to do so, for example because it would be impossible or uneconomic to collect the debt. The fact that the taxpayer would suffer hardship if he had to pay the tax debt is irrelevant in this regard, and is not a factor that SARS takes into consideration.
Withdrawal of assessments under the Tax Administration Act
Author: Danielle Botha (DLA CLiff Dekker Hofmeyer) Section 98 of the Tax Administration Act, No 28 of 2011 (TAA) makes provision for the withdrawal of an assessment by the South African Revenue Service (SARS) in certain circumstances. Prior to its amendment, s98 allowed for the withdrawal of an assessment (despite no appeal having been noted or objection lodged), that was: a) issued to the incorrect taxpayer; b) issued in respect of the incorrect tax period; or c) issued as a result of an incorrect payment allocation.
New page on the institution of legal proceedings
Author: SARS Legal and Policy What is it? The institution of legal proceedings is a process whereby a taxpayer delivers court papers to SARS requiring the Commissioner for SARS to appear and defend a matter in the High Court. Prior notice before the institution of the proceedings is required in some instances, particular in matters involving the State. What does the tax and customs laws say? There are two different Acts in terms of which the institution of legal proceedings against the Commissioner for SARS is governed and although they have a similar purpose, the requirements are not identical.
CSARS v Mobile Telephone Networks Holdings (Pty) Ltd (966/12) [2014] ZASCA 4 (7 March 2014)
Introduction The Supreme Court of Appeal delivered its judgement for the case between Commissioner for the South African Revenue Service v Mobile Telephone Networks Holdings (Pty) Ltd (966/12) [2014] ZASCA 4 on the 7th of March 2014. This case concerns itself with the apportionment of audit fees incurred for a dual or mixed purpose in terms of section 11(a) read with section 23(f) and (g). Facts The group structure were as follows: the respondent,
GW van der Merwe & 12 Others v CSARS – HC 1984-14 WC – 17 February 2014
Introduction The Western Cape High Court recently delivered its judgement in the application lodged by the first applicant being GW van der Merwe and others, for an order that a temporary interdict be issued preventing the second respondent, Piet JJ Marais, from commencing an inquiry authorised by Davis J, in terms of a court order made by virtue of the provisions of Part C of Chapter 5 of the Tax Administration Act, No 28 of 2011, pending the final outcome of an application to declare the relevant provisions of the Tax Administration Act which authorises such enquiry unconstitutional and invalid. Further, the applicants requested an order to have the third applicant, Elle-Sarah Rossato, to allow them access to the court file in order to enable the aforesaid review application to be made.
Renewed focus on high net worth individuals: the Krok judgment
Alexa Muller – Associate at ENSafrica High net worth individuals and their associated trusts have in the past been identified by the South African Revenue Service (“SARS”) as posing a risk of non-compliance to tax legislation. The recent confirmation of a preservation order by the North Gauteng High Court in C:SARS v Krok and Jucool Enterprises Inc. (Case No. 1319/13) now renews the focus of SARS in this regard. The Krok judgment is significant for a number of reasons – including on the basis that it considers: section 185 of the Tax Administration Act No. 28 of 2011 (“the Tax Administration Act”) which empowers SARS to recover tax on behalf of foreign governments in certain circumstances; whether one can transfer beneficial ownership of “blocked” assets – i.e. assets placed under the physical control of an authorised dealer subsequent to the emigration of a South African resident; and the day-to-day actions Read More …
VAT – where to lodge objection – Tax Court or High Court?
The Pretoria Tax Court made an interesting ruling in ITC No 1866 [2013] 75 SATC 268. Section 32(1) of the Value-Added Tax Act No. 89 of 1991 (the VAT Act) states that the following decisions of the South African Revenue Service (SARS) are subject to objection and appeal, namely: In terms of section 23(7) of the VAT Act notifying that person of SARS’s refusal to register that person in terms of the VAT Act. In terms of section 24(6) or (7) of the VAT Act notifying a person of SARS’s decision to cancel, or refusal to cancel his registration in terms of the VAT Act.