Author: Mareli Treurnicht (Cliffe Dekker Hofmeyr). Section 99 of the Tax Administration Act, No 28 of 2011 (TAA) prescribes the period of limitations (ie prescription) for the issuance of assessments. Section 99 currently states that the South African Revenue Service (SARS) may not make an assessment in terms of Chapter 8 of the TAA, inter alia: three years after the date of assessment of an original assessment by SARS; (in the case of self-assessment for which a return is required) five years after the date of assessment of an original assessment by way of self-assessment by the taxpayer or, if no return is received, by SARS; or (in the case of a self-assessment for which no return is required) after the expiration of five years from either the date of the last payment of the tax for the tax period or the effective date, if no payment was made in respect Read More …
Category: Tax Administration
The onus of proof rule for the imposition of understatement penalties
Author: Ruaan van Eeden As a basic principle, under s102(1) of the Tax Administration Act, No 28 of 2011 (TAA), the onus of proof that an amount is not taxable or that an amount is deductible, rests on the taxpayer, whereas under s102(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).
The importance of tax litigation strategy
Recently, the Kwazulu-Natal High Court had to consider whether it could adjudicate on papers put before it by SARS in motion proceedings, or, whether the matter ought to be referred for oral evidence given the fact that the taxpayer had raised material dispute of facts to the SARS’ allegations. What is of interest in this case is not what the Court ultimately decided, but rather its reasons for doing so. Within those reasons lie valuable lessons to be learnt when SARS or a taxpayer engages in litigation.
How must SARS issue a notice in terms of s172(1) of the Tax Administration Act?
One of the interesting Tax Administration cases of 2015 was Lifman and Others v The Commissioner of the South African Revenue Services and others (unreported), where the Western Cape High Court took a purposive approach to the interpretation of section 172(1) of the Tax Administration Act, No 28 of 2011 (“the Act”) i.e.: in light of the purpose for which it was enacted. The facts of the case are that during an inquiry in terms of section 50 of the Act into notorious Cape Town underground boss, Mark Lifman’s affairs, SARS found that Lifman and a number of close corporations (“CC’s”) of which he was the sole member, owed approximately R13 million in taxes.
Lodging a Complaint against the South African Revenue Service
Author: Dr Beric Croome The Tax Administration Act No. 28 of 2011 (“TAA”) which took effect on 1 October 2012 created the Office of the Tax Ombud to deal with complaints against the South African Revenue Service (“SARS”) empowering that office to deal with complaints made by a taxpayer regarding a service matter or procedural or administrative matter arising from the application of the provisions of a tax Act by SARS. Before a taxpayer can lodge a complaint with the Office of the Tax Ombud, it is important that they have exhausted the internal complaints resolution mechanisms within SARS, unless there are compelling circumstances to do so. The TAA prescribes what constitutes compelling circumstances and those are not dealt with further in this article.
SARS uses banks to collect debt
Author: Amanda Visser (IOL) Several financial institutions, including banks, have accused the South African Revenue Service (SARS) of not following its own processes when collecting outstanding tax debt; instead using them as its first port of call. Statistics by the Banking Association of South Africa indicate banks each receive between 4 000 and 8 000 appointments on a monthly basis to collect tax debt on SARS’s behalf. This has increased from an average of 150 per month in previous years. The administrative cost per appointment amounts to R200.
Adjustment of energy savings tax incentive
Author: Nicole Paulsen In recent years, the South African energy landscape has undergone significant changes with the introduction of a number of private and public sector renewable energy projects. In order to ensure the commercial viability of the renewable energy projects, Government introduced an energy efficiency program which provides for qualifying tax allowances so as to assist and encourage taxpayers to reduce their energy footprint.
Increasing disconnect between SARS’ legislated powers and its internal policies
Author: Jerome Brink (Tax Associate at ENSafrica) While the Tax Administration Act, 28 of 2011 (“the TAA”) determined and consolidated the powers and duties of South African Revenue Service (“SARS”) officials engaged in the administration of a tax Act, it also, to a certain extent codified the rights and obligations of taxpayers to whom the TAA applies. Due to the fact that the TAA has now been in effect for a couple of years since its commencement date of 1 October 2012, there is a greater understanding of how the legislation is being practically implemented. Recent experience indicates that there may be a growing disconnect between the internal policies being implemented by SARS officials and the actual powers provided for in the enabling legislation. This article briefly highlights two examples recently encountered in practice.
Proposed amendments to the Tax Administration Act no. 28 of 2011: keeping up with international standards
Authors: Robert Gad, Anneke Meiring and Jadyne Devnarain The purpose of the Tax Administration Act No. 28 of 2011 (“the TAA”), is to ensure the effective and efficient collection of tax, by aligning the administration of the tax Acts to the extent practically possible, prescribing the rights and obligations of taxpayers and other persons to whom the TAA applies, prescribing the powers and duties of persons engaged in the administration of a tax Act, and generally giving effect to the objects and purposes of tax administration.
Court case puts SARS on the spot over ‘rogue’ unit
Author: Natasha Marrian (BDlive) An alleged tax offender, who was also suspected of drug smuggling, is taking the South African Revenue Service (SARS) to court over millions he paid in penalties in a case that tests the lawfulness of the work of a covert unit of the agency. Martin Wingate-Pearse has argued in court papers that information on his case was obtained through unlawful means, in particular through the work of the alleged “rogue unit” whose existence came to light last year. The case is set to shed further light on the activities of the unit and places SARS in an awkward position as it is forced to defend the actions of a unit it has already found to be unlawful.