Author: SAIT In the course of carrying out their mandate of assessing and collecting taxes owed to the government, the South African Revenue Services (SARS) frequently has to request “relevant material” from taxpayers. Currently, relevant material is defined as “any information, document or thing that is foreseeably relevant for the administration of a tax Act…” This definition, however, has caused practical challenges for SARS.
Category: Tax Administration
SARS must choose its remedies
The decision of Rogers J, in Commissioner for the South African Revenue Service v Tradex (Pty) Ltd and others (9 September 2014, case no 12949/2013, as yet unreported) has raised a number of issues pertaining to the circumstances under which the South African Revenue Service (SARS) is entitled to obtain a preservation order against a taxpayer in terms of s163 of the Tax Administration Act, No 28 of 2011 (TAA). Ultimately it was found that SARS was not entitled to a preservation order as it was not ‘required’ to secure the collection of the taxes that could have become due in that instance.
MEDIA STATEMENT – Revised Draft Taxation Laws Amendment Bill, 2014, Revised Draft Tax Administration Laws Amendment Bill, 2014, and Response Document
The National Treasury today publishes the revised draft Taxation Laws Amendment Bill, 2014, (TLAB) revised draft Tax Administration Laws Amendment Bill 2014, (TALAB) and the draft Response Document that was presented to the Standing Committee on Finance (SCOF) in Parliament yesterday (15 October 2014).
Tax Administration – Prescription and raising of additional assessments
Many taxpayers are generally aware that there is a prescription provision contained in our tax law. However, it is not always understood that the prescription provisions apply only if certain statutory requirements are met. In this regard it is not uncommon for SARS to assess taxpayers beyond the prescription period of three years. It is therefore necessary for taxpayers to understand the circumstances in which prescription will apply and also the relevant statutory provisions dealing with prescription. Section 79 of the Income Tax Act No. 58 of 1962 (the Act) contained the prescription provisions prior to the enactment of the Tax Administration Act No. 28 of 2011 (the TAA). These provisions are now contained in section 99 of the TAA.
Tax Administration – SARS's power to recover tax
The Tax Administration Act No. 28 of 2011 (TAA) came into effect on 1 October 2012 (save for certain provisions that are still to come into force). This important piece of legislation seeks to incorporate into one Act all those administrative provisions (except for customs and excise) that are generic to all tax Acts and that were previously duplicated across all the different tax Acts. Significantly, the TAA provides the South African Revenue Service (SARS) with substantial powers in relation to important administrative aspects of tax, such as the collection of information and the imposition and recovery of tax.
Tax Administration – SARS Preservation orders
A Cape Town based businessman has been the subject of investigation by SARS into alleged VAT fraud, and has been issued with an assessment for R291 million. An unexplained gift to the daughter of the tax debtor When his daughter, a swimwear model, received – out of the blue and without explanation – an eye-wateringly large gift of $15.3 million (equivalent to some R143 million) from an unnamed Arab admirer plus two luxury cars worth R2.75 million, SARS suspected that this money and these assets were intended for her father and had been ostensibly channelled to her so as to avoid their being seized by SARS to fund the payment of her father’s tax debt.
Tax Administration – Understatement penalties before 1 October 2012
The promulgation of the Tax Administration Act No. 28 of 2011 (the TAA), which came into effect on 1 October 2012, brought into effect a basis for the imposition of penalties in respect of “understatements”. An understatement arises where a return is not submitted, amounts are omitted from or deductions are erroneously claimed in a return submitted to SARS. The understatement penalty is a percentage-based penalty applied to the “shortfall”. The shortfall is defined in the following terms in section 222(3):
Tax Administration – Reasonable care required for SARS to waive tax penalties
Judgment was handed down in the case of Harding v Revenue and Customs Commissioners [2013] UKUT 575 (TCC) in the Upper Tribunal (Tax and Chancery Chamber) on 15 November 2013. The case revolved around the question of whether an omission by a taxpayer of a severance payment in his tax return amounted to a ‘careless mistake’ in terms of the United Kingdom Finance Act, 2007 (UK Finance Act). Background The Appellant held a senior position in a company forming part of a leading accounting practice. He entered into a compromise agreement with his employer whereby his contract of employment was terminated and he received approximately £110,000.00 in severance payments (payment).
Coming Soon – changes to the dispute forms and process
All saved or pending income tax dispute forms, Notice of Objection (NOO) or Notice of Appeal (NOA), will be deleted from eFiling after 31 October 2014. The dispute forms and process will be changed in November 2014. Taxpayers, who haven’t submitted their forms (NOO or NOA), by 31 October 2014, will need to manually transfer the information to the updated NOO or NOA, which will be available in November 2014. Top Tip: The deadline for submitting a dispute is 30 business days: Objection – from the date of the assessment Appeal – from the date the objection wasn’t allowed or wasn’t allowed in full.
Improvements effected on land not owned by the taxpayer
Author: Emil Brincker (DLA Cliffe Dekker Hofmeyr) On 1 October 2014, the South African Revenue Service (SARS) released Binding Private Ruling 180 (Ruling) dealing with the question of whether a taxpayer, who is a party to a Public Private Partnership (PPP), would qualify for a deduction under s12N of the Income Tax Act, No 58 of 1962 (Act) in respect of improvements effected on land not owned by the taxpayer.In respect of PPP’s, Government often undertakes to provide underlying land to a private party for the construction of buildings or the improvement of the land, without parting with ownership of such land.