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.
Category: Objections & Appeals
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.
Shuttleworth could have 'shuttled' his monies out of South Africa without the payment of a levy
Author: Gigi Nyanin (Cliffe Dekker Hofmeyr) In a far reaching judgment the Supreme Court of Appeal (SCA) held on 01 October 2014 that Mark Shuttleworth could have repatriated his funds out of South Africa without the imposition of a 10% exit levy that was imposed by the South African Reserve Bank (SARB) at that stage. In particular, it was indicated that the SARB had to repay such levy together with interest at the prescribed rate from 13 April 2012 to the date of payment.
Shuttleworth’s battle ‘for all South Africans’
Author: Amanda Visser (BDlive) Businessman and philanthropist Mark Shuttleworth appears intent on continuing his battle over the constitutionality of some of SA’s exchange control regulations. The cryptic response by the Reserve Bank after this week’s decision by the Supreme Court of Appeal (SCA) in favour of Mr Shuttleworth indicates it and the Treasury may also be heading for the Constitutional Court.
New tax dispute resolutions promulgated
The new rules governing objections and appeals were promulgated under section 103 of the Tax Administration Act No. 28 of 2011 (‘TAA’) in Government Gazette 37819 on 11 July 2014. These rules replace the rules which were promulgated under section 107A of the Income Tax Act and for all practical purposes the new rules took effect on 11 July 2014 and will therefore regulate the resolution of tax disputes going forward.
Complaints procedure for the Office of the Tax Ombud
The Minister of Finance, Pravin Gordhan, officially launched the Office of the Tax Ombud (‘OTO’) on 7 April 2014. Judge Bernard Ngoepe was announced as the Tax Ombud in October 2013. The OTO has recently released an informal guide in print form, which summarises the complaints procedure to be followed by taxpayers. The guide can be obtained from their offices and other government offices.
Keeping the lid on Pandora's Box
If only all judgments were formulated with the elegant reasoning and perspicacity of the judgment delivered by Rogers J in the Western Cape Division of the High Court in Kluh Investments (Pty) Ltd v Commissioner for the South African Revenue Service (case number A48/2014, as yet unreported) on 9 September 2014. The appeal was against the dismissal of an appeal brought in the tax court against an additional assessment levied by the South African Revenue Service (SARS) in respect of the 2004 – year of assessment. SARS added an amount of R110 million to the appellant’s taxable income on the basis that the gross income giving rise to such taxable income had accrued to the appellant during its 2004 year of assessment on disposal of a plantation as contemplated in Paragraph 14 of the First Schedule to the Income Tax Act 58 of 1962 (Act).
Search and seizure: the extent of SARS's powers
In order to give effect to the information gathering powers of the South African Revenue Service (SARS), SARS may apply to a magistrate or a judge to issue a search and seizure warrant so as to, unannounced, enter premises where relevant material is being kept, conduct a search of a person’s premises and seize relevant material. Section 59 of the Tax Administration Act, No 28 of 2011 (TAA) provides that in obtaining the search and seizure warrant, SARS must make an ex parte application to a judge, which application must be supported by information supplied under oath or solemn declaration, establishing the facts upon which the application is based.
The importance of documentation in tax disputes highlighted in the new dispute resolution rules
Authors: Stephen Lavetan and Taryn Solomon of ENSafrica With effect from 1 January 2013, new rules were introduced in the Income Tax Act No. 58 of 1962 (‘the Act’) governing the tax consequences flowing from the reduction or waiver of debts. According to the Explanatory Memorandum, the amendments were prompted in response to the global financial crisis and the unusually large number of companies facing financial distress. The intention was therefore to establish a mechanism which facilitated debt reductions without creating an additional obligation to pay further tax.
The case of GB Mining v Commissioner: SARS
Author: Erich Bell (SAIT Technical) This case stems from disallowed and partially disallowed objections raised against revised assessments for the 2003-2006 tax years of the appellant, GB Mining, where the matter went on appeal through the Pretoria Tax Court which dismissed the appeal except for certain management fees which do not form part of the appeal to the SCA. This case clearly highlights the importance of supporting information submitted with a return and the burden of proof on the taxpayer when disputing an assessment.