A fundamental reason for the existence of the rules of prescription in our tax law is to provide a taxpayer with certainty as regards its tax position. It is therefore important that such rules are clear and not subject to unfettered discretions. In disputes with the Commissioner for South African Revenue Service (the Commissioner or SARS), prescription is a powerful defence available to compliant taxpayers, allowing them to bring finality to their tax assessments. For some time, amendments to the prescription provisions have been on the cards. SARS has motivated for such amendments due to the fact that it has been involved in protracted information entitlement disputes which it alleges are being used as a delaying tactic to force audits closer to the end of a prescription period. SARS also alleges that it has difficulty finalising certain audits within prescription periods due to their sheer complexity.
Category: Tax Administration
SARS’s investigative powers – a possible backstage pass to matters pending before court?
Author: Yashika Govind (Associate at CLiffe Dekker Hofmeyr). Chapter 5 of the Tax Administration Act, No 28 of 2011 (TAA) confers a broad range of information-gathering powers on the South African Revenue Service (SARS). Taxpayers are often assessed for more than one tax period at a time, however, the waters become muddied when there are parallel processes carried on in which the issues being investigated by SARS, overlap with disputes pending before the Tax Court. The taxpayer is then saddled with defending itself in respect of a tax period before court while simultaneously sourcing and providing relevant material pertaining to the same legal issues for an audit of a later tax period. In these circumstances, there is often an overlap of facts, law and witnesses which will ultimately be presented in court, thus rendering the information gathering process questionable.
Tax administration: SARS’ constitutional obligations and taxpayers’ rights
Author: Andries Myburgh (Tax Director at ENSafrica). Given recent media coverage of the various Constitutional Court challenges involving government institutions and the Presidency; the perceived power struggle between the Commissioner for the South African Revenue Service (“SARS”) and the Minister of Finance; as well as SARS’ continued pressure to collect revenue in difficult economic times that see corporate taxpayers endure declining revenues and increasing costs; it is useful to remind taxpayers and their shareholders of their constitutional rights and SARS’ constitutional obligations when it performs its functions in administering various taxation legislation. This topic is very complex and, accordingly, what follows is a very broad overview of these issues. Taxpayers and their shareholders are encouraged to obtain specialised legal advice or assistance when confronted with potential investigations or audits by SARS.
SARS continues crack down on non-compliance in cash ‘n carry sector
South African Revenue Service (SARS) Commissioner, Tom Moyane, today announced the launch of random on-site inspections targeted at Cash & Carry businesses. This effort is part of the new focused approach, launched in December 2015, to combat non-compliance in several high-risk sectors, starting with the Cash & Carry sector. On-site inspectors will perform compliance checks to identify registration, filing non-compliance and thus flag any suspicious businesses.
Customs and excise legislation gets much needed overhaul
Author: Georgia Mavropoulos (EY). New legislation will affect customs systems, processes and policies. International conventions, best practice, globalisation, and technology have assisted in giving the South African customs legislative framework a make-over. This resulted in changes to systems, processes and policies affecting importers and service providers. The current Customs and Excise Act 91 of 1964 is over 50 years old, and is getting a long overdue overhaul.
The duty to exhaust internal remedies before applying to the High Court for a review
The duty to exhaust internal remedies before applying to the High Court for a review of a SARS decision in terms of the Promotion of Administrative Justice Act One of the most significant developments in South Africa’s fiscal law since its birth, some hundred years ago, has been the coming into existence of a constitutional right (as distinct from a very limited antecedent common law right) to administrative justice. This is one of the rights enshrined in the Constitutional Bill of Rights. It finds detailed expression in the Promotion of Administrative Justice Act 3 of 2000 (‘PAJA’).
Unilateral extension of prescription in certain specific tax matters
Author: Carmen Gers and Chris de Bruyn (ENSafrica). Section 99 of the Tax Administration Act, 28 of 2011 (“Tax Admin Act”), which regulates prescription in relation to tax assessments, provides that a three-year prescription period applies where the South African Revenue Service (“SARS”) has had a previous opportunity to assess a taxpayer (e.g. income tax) and a five-year prescription period applies in the case of self-assessment (e.g. value added tax and employees’ tax). In an ENSafrica article dated 19 August 2015, we addressed the proposed unilateral extension of prescription by SARS as was provided for in the draft Tax Administration Laws Amendment Bill (“Draft Bill”), a copy of which can be found here.
Absolving of employer from an employees’ tax liability process to be formalised
The Taxation Laws Amendment Act, No 23 of 2015 (TLAA) contains an amendment to a somewhat odd provision, that has seemingly stood the test of time since the introduction of the Fourth Schedule into the Income Tax Act, No 58 of 1962. Paragraph 5(2) of the Fourth Schedule, dealing with absolving an employer from liability in respect of employees’ tax, has now been amended to provide a more formal approach, when compared to its previous version, which is still riddled with discretionary powers.
SARS explains 2015 Tax Administration Amendments
Author: Lorys Charalambous (Tax-News.com) On December 17, the South African Revenue Service (SARS) issued an explanatory memorandum on the 2015 Tax Administration Laws Amendment Bill (TALAB). In particular, the memorandum looks at the TALAB provisions giving effect to the collection of information from South African financial institutions (FIs), and the associated obligation on the FIs to register with SARS regarding the Foreign Account Tax Compliance Act (FATCA) intergovernmental agreement (IGA) with the United States that was signed in July last year.
Gordhan halts Sars plans to ‘assess situation’
Author: Matthew le Cordeur (News24). Cape Town – Finance Minister Pravin Gordhan in December instructed the SA Revenue Service (Sars) to halt its extensive restructuring plans, so he could assess the situation before allowing the process to continue. Treasury spokesperson Phumza Macanda told Fin24 on Thursday that Gordhan asked Sars commissioner Tom Moyane at a meeting in December to suspend his ambitious plans. “He met briefly with Sars management in December and yes, he asked that major initiatives be put on hold until he’s had time to assess the situation fully,” she said. “He is yet to be brought up to speed so there haven’t been any major decisions as yet,” she said.