Author: Chris de Bruyn(Candidate attorney at ENSAfrica). In the matter of ABC (Pty) Ltd v Commissioner for the South African Revenue Service (ITC 0038/2015) (“ABC case”), the Tax Court had to consider whether the taxpayer discharged the onus to prove that “exceptional circumstances” existed for an extension of the period allowed for the taxpayer to object to an assessment, in terms of section 104 of the Tax Administration Act, 28 of 2011 (“TAA”).
Category: Income Tax
SARS Tax Clearance Certificate – be cleared online
Author: Sduduzo Mhlongo (ENSAfrica candidate attorney). The South African Revenue Service (“SARS”) has introduced a new Tax Compliance Status System (“TCS”) from 18 April 2016 in an effort to improve compliance and to make it easier for taxpayers to manage their tax affairs. The Tax Compliance Status System is a holistic view of the tax compliance level across all registered tax types. The new system makes it stress-free for taxpayers to obtain a Tax Clearance Certificate (“TCC”) and allows taxpayers to obtain a Tax Compliance Status PIN which can be used by authorised third parties to verify the taxpayer’s compliance status online via SARS eFiling. There are 2 steps in the process of obtaining a TCS:
Tax Administration – Onus of proof for understatement penalty
As a basic principle, under section 102(1) of the Tax Administration Act 28 of 2011 (the TAA), the onus of proof that an amount is not taxable or that an amount is deductible, rests on the taxpayer, whereas under section 102(2) of the TAA, the onus of proof pertaining to the facts upon which an understatement penalty is imposed, is upon the South African Revenue Service (SARS). Too often, upon the conclusion of investigations or reviews, SARS threatens exorbitant understatement penalties for seemingly innocuous and easily resolvable queries. A good example is the classic turnover/expenditure reconciliation process which could produce, in certain instances, horrendous results for a taxpayer where the calculations are devoid of commercial logic.
Section 104 of the Tax Administration Act and the meaning of ‘exceptional circumstances’ – a cautionary tale
Author: Heinrich Louw (Senior Associate). In terms of s104 of the Tax Administration Act, No 28 of 2011 (Act), a taxpayer who is aggrieved by an assessment or decision of the South African Revenue Service (SARS), may object to the assessment or decision. The Act states that the objection must be lodged within 30 business days from the date of the assessment. A senior SARS official may extend this period by no more than 21 business days, unless the official “…is satisfied that exceptional circumstances exist which gave rise to the delay in lodging the objection”.
Pay Now, Argue Later: Are There Any Exceptions To This Rule?
Author: Alan Lewis (Practitioner in Private Practice). We look at exceptions to SARS’ pay now, argue later rule and how they are being applied At first glance, it appears that the “pay now, argue later-rule” approach, which applies when SARS’ demands payment of all outstanding or assessed taxes, is set in stone. In terms of Section 164 (1) of Tax Administration Act (TAA), a taxpayer’s obligation to pay taxes, and SARS’ right to recover taxes, is not suspended by an objection, appeal, or pending the decision of the Tax Court. This means that, in most cases, a taxpayer’s pleas for an extension of their obligation to pay these taxes falls on deaf ears.
Prescription rules: When the clock stops ticking
Author: Kyle Mandy (PwC). In order to prevent the five year rule from being abused, there are certain exceptions. Section 99 of the Tax Administration Act regulates the prescription of tax periods. The most important circumstances in which SARS is barred from raising further assessments in relation to a tax period are those relating to the passing of time. As a general rule, SARS is time-barred from raising an assessment in relation to a tax period as follows:
Can SARS limit legal professional privilege?
Authors: Natalie Napier and Phillip Lourens (Hogan Lovells). New rules have come into effect for how legal professional privilege is regulated, we look at what effects they may have in practise. Amendments have been made to the Tax Administration Act (the TAA) by the insertion of a new section 42A with effect from 8 January 2016. Section 42A prescribes the procedures and requirements that must be followed by the taxpayer in order to claim legal professional privilege in respect of relevant material required by SARS, during an inquiry or during the conduct of a search and seizure by SARS.
Impact of tax on investment returns
Saving more and investing through a tax-free savings account is a very tax efficient way of ensuring maximum after-tax returns for your hard earned money, according to Francis Marais, research and investment analyst at Glacier by Sanlam. “Fortunately, in South Africa, we have a few tools to help with achieving maximum tax efficiency. Some are explicit tax savings vehicles, while some are less explicit, but worth keeping in mind,” said Marais.
SARS MEDIA STATEMENT – Special Voluntary Disclosure Programme in respect of offshore assets and income
In the 2016 Budget Speech, the Minister of Finance announced a Special Voluntary Disclosure Programme to give opportunity for non-compliant taxpayers to voluntarily disclose offshore assets and income. With a new global standard for the automatic exchange of information between tax authorities providing SARS with additional information from 2017, time is now running out for taxpayers who still have undisclosed assets abroad. To encourage compliance, Government proposes a Special Voluntary Disclosure Programme for individuals and companies to regularise both their tax and exchange control affairs for a limited window period described below. The South African Revenue Service (SARS) and the South African Reserve Bank (SARB) are working jointly to ensure that applications for the Special Voluntary Disclosure Programme are assessed through one joint process for both tax non-compliance and exchange control contraventions.
Budget 2016 South African budget speech summary | tax proposals
Overview The Honourable Minister of Finance read the 2016 South African budget speech on 24 February 2016. In this summary, we address only the revenue (i.e. tax) side of the budget proposals. As this budget speech has received an unusual amount of interest, we have set out the tax proposals in more detail than usual, although this summary is not intended to be comprehensive. The economic growth outlook for 2016 has been revised down to 0.9%. Tax revenues are projected to be R11.6-billion down; corporate tax is estimated to be R13-billion down; value added tax (“VAT”) is to be R5.7-billion down and personal income tax R1.9-billion down. On the other hand, customs duties should increase by R4.3-billion.