Tax Administration Act

Link to law: http://www.gov.za/documents/tax-administration-act
Published: 2012-07-04

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Tax Administration Act 28 of 2011


Government Gazette
REPUBLIC OF SOUTH AFRICA

Vol. 5 Cape Town 4 20 No. 3
STATE PRESIDENT'S OFFICE No. 20
It is hereby notified that the President has assented to the following Act, which is hereby published for general information:–
No. 28 of 20 : Act, 20 .

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GENERAL EXPLANATORY NOTE:
[ ] Words in bold type in square brackets indicate omissions from existing enactments. Words underlined with a solid line indicate insertions in existing enactments.
ACT To provide for the effective and efficient collection of tax; to provide for the alignment of the administration provisions of tax Acts and the consolidation of the provisions into one piece of legislation to the extent practically possible; to determine the powers and duties of the South African Revenue Service and officials; to provide for the delegation of powers by the Commissioner; to provide for the authority to act in legal proceedings; to determine the powers and duties of the Minister of Finance; to provide for the establishment of the office of the Tax Ombud; to determine the powers and duties of the Tax Ombud; to provide for registration requirements; to provide for the submission of returns and the duty to keep records; to provide for reportable arrangements; to provide for the request for information; to provide for the carrying out of an audit or investigation by the South African Revenue Service; to provide for inquiries; to provide for powers of the South African Revenue Service to carry out searches and seizures; to provide for the con dentiality of information; to provide for the South African Revenue Service to issue advance rulings; to make provision in respect of tax assessments; to provide for dispute resolution; to make provision for the payment of tax; to provide for the recovery of tax; to provide for the South African Revenue Service to recover interest on outstanding tax debts; to provide for the refund of excess payments; to provide for the write-off and compromise of tax debts; to provide for the imposition and remittance of administrative non-compliance penalties; to provide for the imposition of understatement penalties; to provide for a voluntary disclosure programme; to provide for criminal offences and sanctions; to provide for the reporting of unprofessional conduct by tax practitioners; and to provide for matters connected therewith.
(English text signed by the President) (Assented to 2 July 2012)
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BE IT ENACTED by the Parliament of the Republic of South Africa, as follows:— ARRANGEMENT OF SECTIONS
Sections
CHAPTER 1
DEFINITIONS
1. De nitions
CHAPTER 2
GENERAL ADMINISTRATION PROVISIONS
Part A
In general
2. Purpose of Act 3. Administration of tax Acts 4. Application of Act 5. Practice generally prevailing
Part B
Powers and duties of SARS and SARS officials
6. Powers and duties 7. Con ict of interest 8. Identity cards 9. Decision or notice by SARS
Part C
Delegations
10. Delegations by the Commissioner
Part D
Authority to act in legal proceedings
11. Legal proceedings on behalf of Commissioner 12. Right of appearance in proceedings
Part E
Powers and duties of Minister
13. Powers and duties of Minister 14. Power of Minister to appoint Tax Ombud
Part F
Powers and duties of Tax Ombud
15. Office of Tax Ombud 16. Mandate of Tax Ombud 17. Limitations on authority 18. Review of complaint 19. Reports by Tax Ombud 20. Resolution and recommendations
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21. Con dentiality
CHAPTER 3
REGISTRATION
22. Registration requirements 23. Communication of changes in particulars 24. Taxpayer reference number
CHAPTER 4
RETURNS AND RECORDS
Part A
General
25. Submission of return 26. Third party returns 27. Other returns required 28. Statement concerning accounts 29. Duty to keep records 30. Form of records kept or retained 31. Inspection of records 32. Retention period in case of audit, objection or appeal 33. Translation
Part B
Reportable arrangements
34. De nitions 35. Reportable arrangements 36. Excluded arrangements 37. Disclosure obligation 38. Information to be submitted 39. Reportable arrangement reference number
CHAPTER 5
INFORMATION GATHERING
Part A
General rules for inspection, veri cation, audit and criminal investigation
40. Selection for inspection, veri cation or audit 41. Authorisation for SARS official to conduct audit or criminal investigation 42. Keeping taxpayer informed 43. Referral for criminal investigation 44. Conduct of criminal investigation
Part B
Inspection, request for relevant material, audit and criminal investigation
45. Inspection 46. Request for relevant material 47. Production of relevant material in person 48. Field audit or criminal investigation 49. Assistance during eld audit or criminal investigation
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Part C
Inquiries
50. Authorisation for inquiry 51. Inquiry order 52. Inquiry proceedings 53. Notice to appear 54. Powers of presiding officer 55. Witness fees 56. Con dentiality of proceedings 57. Incriminating evidence 58. Inquiry not suspended by civil or criminal proceedings
Part D
Search and seizure
59. Application for warrant 60. Issuance of warrant 61. Carrying out search 62. Search of premises not identi ed in warrant 63. Search without warrant 64. Legal professional privilege 65. Person’s right to examine and make copies 66. Application for return of seized relevant material or costs of damages
CHAPTER 6
CONFIDENTIALITY OF INFORMATION
67. General prohibition of disclosure 68. SARS con dential information and disclosure 69. Secrecy of taxpayer information and general disclosure 70. Disclosure to other entities 71. Disclosure in criminal, public safety or environmental matters 72. Self-incrimination 73. Disclosure to taxpayer of own record 74. Publication of names of offenders
CHAPTER 7
ADVANCE RULINGS
75. De nitions 76. Purpose of advance rulings 77. Scope of advance rulings 78. Private rulings and class rulings 79. Applications for advance rulings 80. Rejection of application for advance ruling 81. Fees for advance rulings 82. Binding effect of advance rulings 83. Applicability of advance rulings 84. Rulings rendered void 85. Subsequent changes in tax law 86. Withdrawal or modi cation of advance rulings 87. Publication of advance rulings 88. Non-binding private opinions 89. General rulings 90. Procedures and guidelines for advance rulings
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CHAPTER 8
ASSESSMENTS
91. Original assessments 92. Additional assessments 93. Reduced assessments 94. Jeopardy assessments 95. Estimation of assessments 96. Notice of assessment 97. Recording of assessments 98. Withdrawal of assessments 99. Period of limitations for issuance of assessments 100. Finality of assessment or decision
CHAPTER 9
DISPUTE RESOLUTION
Part A
General
101. De nitions 102. Burden of proof 103. Rules for dispute resolution
Part B
Objection and appeal
104. Objection against assessment or decision 105. Forum for dispute of assessment or decision 106. Decision on objection 107. Appeal against assessment or decision
Part C
Tax board
108. Establishment of tax board 109. Jurisdiction of tax board 110. Constitution of tax board 111. Appointment of chairpersons 112. Clerk of tax board 113. Tax board procedure 114. Decision of tax board 115. Referral of appeal to tax court
Part D
Tax court
116. Establishment of tax court 117. Jurisdiction of tax court 118. Constitution of tax court 119. Nomination of president of tax court 120. Appointment of panel of tax court members 121. Appointment of registrar of tax court 122. Con ict of interest of tax court members 123. Death, retirement or incapability of judge or member 124. Sitting of tax court not public 125. Appearance at hearing of tax court
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126. Subpoena of witness to tax court 127. Non-attendance by witness or failure to give evidence 128. Contempt of tax court 129. Decision by tax court 130. Order for costs by tax court 131. Registrar to notify parties of judgment of tax court 132. Publication of judgment of tax court
Part E
Appeal against tax court decision
133. Appeal against decision of tax court 134. Notice of intention to appeal tax court decision 135. Leave to appeal to Supreme Court of Appeal against tax court decision 136. Failure to lodge notice of intention to appeal tax court decision 137. Notice by registrar of period for appeal of tax court decision 138. Notice of appeal to Supreme Court of Appeal against tax court decision 139. Notice of cross-appeal of tax court decision 140. Record of appeal of tax court decision 141. Abandonment of judgment
Part F
Settlement of dispute
142. De nitions 143. Purpose of Part 144. Initiation of settlement procedure 145. Circumstances where settlement is inappropriate 146. Circumstances where settlement is appropriate 147. Procedure for settlement 148. Finality of settlement agreement 149. Register of settlements and reporting 150. Alteration of assessment or decision on settlement
CHAPTER 10
TAX LIABILITY AND PAYMENT
Part A
Taxpayers
151. Taxpayer 152. Person chargeable to tax 153. Representative taxpayer 154. Liability of representative taxpayer 155. Personal liability of representative taxpayer 156. Withholding agent 157. Personal liability of withholding agent 158. Responsible third party 159. Personal liability of responsible third party 160. Right to recovery of taxpayer 161. Security by taxpayer
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Part B
Payment of tax
162. Determination of time and manner of payment of tax 163. Preservation order 164. Payment of tax pending objection or appeal
Part C
Taxpayer account and allocation of payments
165. Taxpayer account 166. Allocation of payments
Part D
Deferral of payment
167. Instalment payment agreement 168. Criteria for instalment payment agreement
CHAPTER 11
RECOVERY OF TAX
Part A
General
169. Debt due to SARS 170. Evidence as to assessment 171. Period of limitation on collection of tax
Part B
Judgment procedure
172. Application for civil judgment for recovery of tax 173. Jurisdiction of Magistrates’ Court in judgment procedure 174. Effect of statement led with clerk or registrar 175. Amendment of statement led with clerk or registrar 176. Withdrawal of statement and reinstitution of proceedings
Part C
Sequestration, liquidation and winding-up proceedings
177. Institution of sequestration, liquidation or winding-up proceedings 178. Jurisdiction of court in sequestration, liquidation or winding-up proceedings
Part D
Collection of tax debt from third parties
179. Liability of third party appointed to satisfy tax debts 180. Liability of nancial management for tax debts 181. Liability of shareholders for tax debts 182. Liability of transferee for tax debts 183. Liability of person assisting in dissipation of assets 184. Recovery of tax debts from responsible third parties
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Part E
Assisting foreign governments
185. Tax recovery on behalf of foreign governments
Part F
Remedies with respect to foreign assets
186. Compulsory repatriation of foreign assets of taxpayer
CHAPTER 12
INTEREST
187. General interest rules 188. Period over which interest accrues 189. Rate at which interest is charged
CHAPTER 13
REFUNDS
190. Refunds of excess payments 191. Refunds subject to set-off and deferral
CHAPTER 14
WRITE OFF OR COMPROMISE OF TAX DEBTS
Part A
General provisions
192. De nitions 193. Purpose of Chapter 194. Application of Chapter
Part B
Temporary write off of tax debt
195. Temporary write off of tax debt 196. Tax debt uneconomical to pursue
Part C
Permanent write off of tax debt
197. Permanent write off of tax debt 198. Tax debt irrecoverable at law 199. Procedure for writing off tax debt
Part D
Compromise of tax debt
200. Compromise of tax debt 201. Request by debtor for compromise of tax debt 202. Consideration of request to compromise tax debt 203. Circumstances where not appropriate to compromise tax debt 204. Procedure for compromise of tax debt 205. SARS not bound by compromise of tax debt
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Part E
Records and reporting
206. Register of tax debts written off or compromised 207. Reporting by Commissioner of tax debts written off or compromised
CHAPTER 15
ADMINISTRATIVE NON-COMPLIANCE PENALTIES
Part A
General
208. De nitions 209. Purpose of Chapter
Part B
Fixed amount penalties
210. Non-compliance subject to penalty 211. Fixed amount penalty table 212. Reportable arrangement penalty
Part C
Percentage based penalty
213. Imposition of percentage based penalty
Part D
Procedure
214. Procedures for imposing penalty 215. Procedure to request remittance of penalty
Part E
Remedies
216. Remittance of penalty for failure to register 217. Remittance of penalty for nominal or rst incidence of non-compliance 218. Remittance of penalty in exceptional circumstances 219. Penalty incorrectly assessed 220. Objection and appeal against decision not to remit penalty
CHAPTER 16
UNDERSTATEMENT PENALTY
Part A
Imposition of understatement penalty
221. De nitions 222. Understatement penalty 223. Understatement penalty percentage table 224. Objection and appeal against decision not to remit understatement penalty
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Part B
Voluntary disclosure programme
225. De nitions 226. Qualifying person for voluntary disclosure 227. Requirements for valid voluntary disclosure 228. No-name voluntary disclosure 229. Voluntary disclosure relief 230. Voluntary disclosure agreement 231. Withdrawal of voluntary disclosure relief 232. Assessment or determination to give effect to agreement 233. Reporting of voluntary disclosure agreements
CHAPTER 17
CRIMINAL OFFENCES
234. Criminal offences relating to non-compliance with tax Acts 235. Criminal offences relating to evasion of tax 236. Criminal offences relating to secrecy provisions 237. Criminal offences relating to ling return without authority 238. Jurisdiction of courts in criminal matters
CHAPTER 18
REPORTING OF UNPROFESSIONAL CONDUCT
239. De nitions 240. Registration of tax practitioners 241. Complaint to controlling body of tax practitioner 242. Disclosure of information regarding complaint and remedies of taxpayer 243. Complaint considered by controlling body
CHAPTER 19
GENERAL PROVISIONS
244. Deadlines 245. Power of Minister to determine date for submission of returns and payment of
tax 246. Public officers of companies 247. Company address for notices and documents 248. Public officer in event of liquidation or winding-up 249. Default in appointing public officer or address for notices or documents 250. Authentication of documents 251. Delivery of documents to persons other than companies 252. Delivery of documents to companies 253. Documents delivered deemed to have been received 254. Defect does not affect validity 255. Rules for electronic communication 256. Tax clearance certi cate 257. Regulations by Minister
CHAPTER 20
TRANSITIONAL PROVISIONS
258. New taxpayer reference number 259. Appointment of Tax Ombud 260. Provisions relating to secrecy
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261. Public officer previously appointed 262. Appointment of chairpersons of tax board 263. Appointment of members of tax court 264. Continuation of tax board, tax court and court rules 265. Continuation of appointment to a post or office or delegation by Commissioner 266. Continuation of authority to audit 267. Conduct of inquiries and execution of search and seizure warrants 268. Application of Chapter 15 269. Continuation of authority, rights and obligations 270. Application of Act to prior or continuing action 271. Amendment of legislation 272. Short title and commencement
CHAPTER 1
DEFINITIONS
De nitions
1. In this Act, unless the context indicates otherwise, a term which is assigned a meaning in another tax Act has the meaning so assigned, and the following terms have the following meaning:
‘‘additional assessment’’ is an assessment referred to in section 92; ‘‘administration of a tax Act’’ has the meaning assigned in section 3(2); ‘‘administrative non-compliance penalty’’ has the meaning assigned in section 208; ‘‘assessment’’ means the determination of the amount of a tax liability or refund, by way of self-assessment by the taxpayer or assessment by SARS; ‘‘biometric information’’ means biological data used to authenticate the identity of a natural person by means of— (a) facial recognition; (b) ngerprint recognition; (c) voice recognition; (d) iris or retina recognition; and (e) other, less intrusive biological data, as may be prescribed by the Minister in a
regulation issued under section 257; ‘‘business day’’ means a day which is not a Saturday, Sunday or public holiday, and for purposes of determining the days or a period allowed for complying with the provisions of Chapter 9, excludes the days between 16 December of each year and 15 January of the following year, both days inclusive; ‘‘Commissioner’’ means the Commissioner for the South African Revenue Service appointed in terms of section 6 of the SARS Act or the Acting Commissioner designated in terms of section 7 of that Act; ‘‘company’’ has the meaning assigned in section 1 of the Income Tax Act; ‘‘connected person’’ means a connected person as de ned in section 1 of the Income Tax Act; ‘‘Customs and Excise Act’’ means the Customs and Excise Act, 1964 (Act No. 91 of 1964); ‘‘date of assessment’’ means— (a) in the case of an assessment by SARS, the date of the issue of the notice of
assessment; or (b) in the case of self-assessment by the taxpayer—
(i) if a return is required, the date that the return is submitted; or (ii) if no return is required, the date of the last payment of the tax for the tax
period or, if no payment was made in respect of the tax for the tax period, the effective date;
‘‘date of sequestration’’ means— (a) the date of voluntary surrender of an estate, if accepted by a court; or (b) the date of provisional sequestration of an estate, if a nal order of
sequestration is granted by a court; ‘‘Diamond Export Levy Act’’ means the Diamond Export Levy Act, 2007 (Act No. 15 of 2007);
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‘‘Diamond Export Levy (Administration) Act’’ means the Diamond Export Levy (Administration) Act, 2007 (Act No. 14 of 2007); ‘‘document’’ means anything that contains a written, sound or pictorial record, or other record of information, whether in physical or electronic form; ‘‘effective date’’ is the date described in section 187(3), (4) and (5); ‘‘Estate Duty Act’’ means the Estate Duty Act, 1955 (Act No. 45 of 1955); ‘‘fair market value’’ means the price which could be obtained upon a sale of an asset between a willing buyer and a willing seller dealing at arm’s length in an open market; ‘‘income tax’’ means normal tax referred to in section 5 of the Income Tax Act; ‘‘Income Tax Act’’ means the Income Tax Act, 1962 (Act No. 58 of 1962); ‘‘information’’ includes information generated, recorded, sent, received, stored or displayed by any means; ‘‘international tax agreement’’ means an agreement entered into with the government of another country in accordance with a tax Act; ‘‘jeopardy assessment’’ is an assessment referred to in section 94; ‘‘judge’’ means a judge of the High Court of South Africa, whether in chambers or otherwise; ‘‘magistrate’’ means a judicial officer as de ned in section 1 of the Magistrates’ Courts Act, 1944 (Act No. 32 of 1944), whether in chambers or otherwise; ‘‘Mineral and Petroleum Resources Royalty (Administration) Act’’ means the Mineral and Petroleum Resources Royalty (Administration) Act, 2008 (Act No. 29 of 2008); ‘‘Minister’’ means the Minister of Finance; ‘‘official publication’’ means a binding general ruling, interpretation note, practice note or public notice issued by a senior SARS official or the Commissioner; ‘‘original assessment’’ is an assessment referred to in section 91; ‘‘practice generally prevailing’’ has the meaning assigned in section 5; ‘‘premises’’ includes a building, aircraft, vehicle, vessel or place; ‘‘prescribed rate’’ has the meaning assigned in section 189(3); ‘‘presiding officer’’ is the person referred to in section 50(1); ‘‘Promotion of Access to Information Act’’ means the Promotion of Access to Information Act, 2000 (Act No. 2 of 2000); ‘‘public notice’’ means a notice published in the Government Gazette; ‘‘public officer’’ is an officer referred to in section 246(1), (2) and (3); ‘‘reduced assessment’’ is an assessment referred to in section 93; ‘‘relevant material’’ means any information, document or thing that is forseeably relevant for tax risk assessment, assessing tax, collecting tax, showing non- compliance with an obligation under a tax Act or showing that a tax offence was committed; ‘‘reportable arrangement’’ has the meaning assigned in section 35; ‘‘representative taxpayer’’ has the meaning assigned in section 153(1); ‘‘responsible third party’’ has the meaning assigned under section 158; ‘‘return’’ means a form, declaration, document or other manner of submitting information to SARS that incorporates a self-assessment or is the basis on which an assessment is to be made by SARS; ‘‘SARS’’ means the South African Revenue Service established under the SARS Act; ‘‘SARS Act’’ means the South African Revenue Service Act, 1997 (Act No. 34 of 1997); ‘‘SARS con dential information’’ has the meaning assigned under section 68(1); ‘‘SARS official’’ means— (a) the Commissioner, (b) an employee of SARS; or (c) a person contracted by SARS for purposes of the administration of a tax Act
and who carries out the provisions of a tax Act under the control, direction or supervision of the Commissioner;
‘‘Securities Transfer Tax Act’’ means the Securities Transfer Tax Act, 2007 (Act No. 25 of 2007); ‘‘Securities Transfer Tax Administration Act’’ means the Securities Transfer Tax Administration Act, 2007 (Act No. 26 of 2007); ‘‘self-assessment’’ means a determination of the amount of tax payable under a tax Act by a taxpayer and—
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(a) submitting a return which incorporates the determination of the tax; or (b) if no return is required, making a payment of the tax; ‘‘senior SARS official’’ is a SARS official referred to in section 6(3); ‘‘serious tax offence’’ means a tax offence for which a person may be liable on conviction to imprisonment for a period exceeding two years without the option of a ne or to a ne exceeding the equivalent amount of a ne under the Adjustment of Fines Act, 1991 (Act No. 101 of 1991); ‘‘shareholder’’ means a person who holds a bene cial interest in a share in a company as de ned in the Income Tax Act; ‘‘Skills Development Levies Act’’ means the Skills Development Levies Act, 1999 (Act No. 9 of 1999); ‘‘tax’’, for purposes of administration under this Act, includes a tax, duty, levy, royalty, fee, contribution, penalty, interest and any other moneys imposed under a tax Act; ‘‘taxable event’’ means an occurrence which affects or may affect the liability of a person to tax; ‘‘tax Act’’ means this Act or an Act, or portion of an Act, referred to in section 4 of the SARS Act, excluding the Customs and Excise Act; ‘‘tax board’’ means a tax board established under section 108; ‘‘tax court’’ means a court established under section 116; ‘‘tax debt’’ means an amount of tax due by a person in terms of a tax Act; ‘‘tax offence’’ means an offence in terms of a tax Act or any other offence involving fraud on SARS or on a SARS official relating to the administration of a tax Act; ‘‘Tax Ombud’’ is the person appointed by the Minister under section 14; ‘‘tax period’’ means, in relation to— (a) income tax, a year of assessment as de ned in section 1 of the Income Tax Act; (b) provisional tax or employees’ tax, skills development levies as determined in
section 3 of the Skills Development Levies Act, and contributions as determined in section 6 of the Unemployment Insurance Contributions Act, the period in respect of which the amount of tax payable must be determined under the relevant tax Act;
(c) value-added tax, a tax period determined under section 27 of the Value-Added Tax Act or the period or date of the taxable event in respect of which the amount of tax payable must be determined under that Act;
(d) royalty payable on the transfer of mineral and petroleum resources, a year of assessment as de ned in section 1 of the Mineral and Petroleum Resources Royalty (Administration) Act;
(e) the levy on diamond exports as determined under section 2 of the Diamond Export Levy Act, the assessment period referred to in section 1 of the Diamond Export Levy (Administration) Act;
(f) securities transfer tax, the period referred to in section 3 of the Securities Transfer Tax Administration Act;
(g) any other tax, the period or date of the taxable event in respect of which the amount of tax payable must be determined under a tax Act; or
(h) a jeopardy assessment, the period determined under this Act; ‘‘taxpayer’’ has the meaning assigned under section 151;
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‘‘taxpayer information’’ has the meaning assigned under section 67(1)(b); ‘‘taxpayer reference number’’ is the number referred to in section 24; ‘‘thing’’ includes a corporeal or incorporeal thing; ‘‘this Act’’ includes the regulations and a public notice issued under this Act; ‘‘Transfer Duty Act’’ means the Transfer Duty Act, 1949 (Act No. 40 of 1949); ‘‘understatement penalty’’ means a penalty imposed by SARS in accordance with Part A of Chapter 16; ‘‘Unemployment Insurance Contributions Act’’ means the Unemployment Insurance Contributions Act, 2002 (Act No. 4 of 2002); ‘‘Value-Added Tax Act’’ means the Value-Added Tax Act, 1991 (Act No. 89 of 1991); ‘‘withholding agent’’ has the meaning assigned under section 156.
CHAPTER 2
GENERAL ADMINISTRATION PROVISIONS
Part A
In general
Purpose of Act
2. The purpose of this Act is to ensure the effective and efficient collection of tax by— (a) aligning the administration of the tax Acts to the extent practically possible; (b) prescribing the rights and obligations of taxpayers and other persons to whom
this Act applies; (c) prescribing the powers and duties of persons engaged in the administration of
a tax Act; and (d) generally giving effect to the objects and purposes of tax administration.
Administration of tax Acts
3. (1) SARS is responsible for the administration of this Act under the control or direction of the Commissioner.
(2) Administration of a tax Act means to— (a) obtain full information in relation to—
(i) anything that may affect the liability of a person for tax in respect of a previous, current or future tax period;
(ii) a taxable event; or (iii) the obligation of a person (whether personally or on behalf of another
person) to comply with a tax Act; (b) ascertain whether a person has led or submitted correct returns, information
or documents in compliance with the provisions of a tax Act; (c) establish the identity of a person for purposes of determining liability for tax; (d) determine the liability of a person for tax; (e) collect tax and refund tax overpaid; (f) investigate whether an offence has been committed in terms of a tax Act, and,
if so— (i) to lay criminal charges; and
(ii) to provide the assistance that is reasonably required for the investigation and prosecution of tax offences or related common law offences;
(g) enforce SARS’ powers and duties under a tax Act to ensure that an obligation imposed by or under a tax Act is complied with;
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(h) perform any other administrative function necessary to carry out the provisions of a tax Act; and
(i) give effect to the obligation of the Republic to provide assistance under an international tax agreement.
(3) If SARS has, in accordance with an international tax agreement, received a request for—
(a) information, SARS may obtain the information requested for transmission to the competent authority of the other country as if it were relevant material required for purposes of a tax Act and must treat the information obtained as if it were taxpayer information;
(b) the conservancy or the collection of an amount alleged to be due by a person under the tax laws of the requesting country, SARS may deal with the request under the provisions of section 185; or
(c) the service of a document which emanates from the requesting country, SARS may effect service of the document as if it were a notice, document or other communication required under a tax Act to be issued, given, sent or served by SARS.
Application of Act
4. (1) This Act applies to every person who is liable to comply with a provision of a tax Act (whether personally or on behalf of another person) and binds SARS.
(2) If this Act is silent with regard to the administration of a tax Act and it is speci cally provided for in the relevant tax Act, the provisions of that tax Act apply.
(3) In the event of any inconsistency between this Act and another tax Act, the other Act prevails.
Practice generally prevailing
5. (1) A practice generally prevailing is a practice set out in an official publication regarding the application or interpretation of a tax Act.
(2) Despite any provision to the contrary contained in a tax Act, a practice generally prevailing set out in an official publication, other than a binding general ruling, ceases to be a practice generally prevailing if—
(a) the provision of the tax Act that is the subject of the official publication is repealed or amended to an extent material to the practice, from the date the repeal or amendment becomes effective;
(b) a court overturns or modi es an interpretation of the tax Act which is the subject of the official publication to an extent material to the practice from the date of judgment, unless— (i) the decision is under appeal;
(ii) the decision is fact-speci c and the general interpretation upon which the official publication was based is unaffected; or
(iii) the reference to the interpretation upon which the official publication was based was obiter dicta; or
(c) the official publication is withdrawn or modi ed by the Commissioner, from the date of the official publication of the withdrawal or modi cation.
(3) A binding general ruling ceases to be a practice generally prevailing in the circumstances described in section 85 or 86.
Part B
Powers and duties of SARS and SARS officials
Powers and duties
6. (1) The powers and duties of SARS under this Act may be exercised for purposes of the administration of a tax Act.
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(2) Powers and duties which are assigned to the Commissioner by this Act must be exercised by the Commissioner personally but he or she may delegate such powers and duties in accordance with section 10.
(3) Powers and duties required by this Act to be exercised by a senior SARS official must be exercised by—
(a) the Commissioner; (b) a SARS official who has speci c written authority from the Commissioner to
do so; or (c) a SARS official occupying a post designated by the Commissioner for this
purpose. (4) The execution of a task ancillary to a power or duty under subsection (2) or (3)
may be done by— (a) an official under the control of the Commissioner or a senior SARS official; or (b) the incumbent of a speci c post under the control of the Commissioner or a
senior SARS official. (5) Powers and duties not speci cally required by this Act to be exercised by the
Commissioner or by a senior SARS official, may be exercised by a SARS official employed or contracted to exercise or perform powers or duties for purposes of the administration of a tax Act.
(6) The Commissioner may by public notice specify that a power or duty in a tax Act other than this Act must be exercised by the Commissioner personally or a senior SARS official.
Con ict of interest
7. The Commissioner or a SARS official may not exercise a power or become involved in a matter pertaining to the administration of a tax Act, if—
(a) the power or matter relates to a taxpayer in respect of which the Commissioner or the official has or had, in the previous three years, a personal, family, social, business, professional, employment or nancial relationship presenting a con ict of interest; or
(b) other circumstances present a con ict of interest, that will reasonably be regarded as giving rise to bias.
Identity cards
8. (1) SARS must issue an identity card to each SARS official exercising powers and duties for purposes of the administration of a tax Act.
(2) When a SARS official exercises a power or duty for purposes of the administration of a tax Act in person, the official must produce the identity card upon request by a member of the public.
(3) If the official does not produce the identity card, a member of the public is entitled to assume that the person is not a SARS official.
Decision or notice by SARS
9. (1) A decision made by a SARS official and a notice to a speci c person issued by SARS, excluding a decision given effect to in an assessment or a notice of assessment—
(a) is regarded as made by a SARS official, authorised to do so or duly issued by SARS, until proven to the contrary; and
(b) may in the discretion of a SARS official described in subparagraphs (i) to (iii) or at the request of the relevant person, be withdrawn or amended by— (i) the SARS official;
(ii) a SARS official to whom the SARS official reports; or (iii) a senior SARS official.
(2) If all the material facts were known to the SARS official at the time the decision was made, a decision or notice referred to in subsection (1) may not be withdrawn or
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amended with retrospective effect, after three years from the later of the— (a) date of the written notice of that decision; or (b) date of assessment or the notice of assessment giving effect to the decision (if
applicable).
Part C
Delegations
Delegations by the Commissioner
10. (1) A delegation by the Commissioner under section 6(2)— (a) must be in writing; (b) becomes effective only when signed by the person to whom the delegation is
made; (c) is subject to the limitations and conditions the Commissioner may determine
in making the delegation; (d) may either be to—
(i) a speci c individual; or (ii) the incumbent of a speci c post; and
(e) may be amended or withdrawn by the Commissioner. (2) A delegation does not divest the Commissioner of the responsibility for the
exercise of the delegated power or the performance of the delegated duty.
Part D
Authority to act in legal proceedings
Legal proceedings on behalf of Commissioner
11. (1) No SARS official other than the Commissioner or a SARS official duly authorised by the Commissioner may institute or defend civil proceedings on behalf of the Commissioner.
(2) For purposes of subsection (1), a SARS official who, on behalf of the Commissioner, institutes litigation, or performs acts which are relied upon by the Commissioner in litigation, is regarded as duly authorised until proven to the contrary.
(3) A senior SARS official may lay a criminal charge relating to a tax offence described in section 235.
Right of appearance in proceedings
12. (1) Despite any law to the contrary, a senior SARS official may on behalf of SARS or the Commissioner in proceedings referred to in a tax Act, appear ex parte in a judge’s chambers in the tax court or in a High Court.
(2) A senior SARS official may appear in the tax court or a High Court only if the person—
(a) is an advocate duly admitted under— (i) the Admission of Advocates Act, 1964 (Act No. 74 of 1964); or
(ii) a law providing for the admission of advocates in an area in the Republic which remained in force by virtue of paragraph 2 of Schedule 6 to the Constitution of the Republic of South Africa, 1996; or
(b) is an attorney duly admitted and enrolled under— (i) the Attorneys Act, 1979 (Act No. 53 of 1979); or
(ii) a law providing for the admission of attorneys in an area in the Republic which remained in force by virtue of paragraph 2 of Schedule 6 to the Constitution of the Republic of South Africa, 1996.
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Part E
Powers and duties of Minister
Powers and duties of Minister
13. (1) The powers conferred and the duties imposed upon the Minister by or under the provisions of a tax Act may—
(a) be exercised or performed by the Minister personally; and (b) except for the powers under sections 14 and 257, be delegated by the Minister
to the Deputy Minister or Director-General of the National Treasury. (2) The Director-General may in turn delegate the powers and duties delegated to the
Director-General by the Minister to a person under the control, direction or supervision of the Director-General.
Power of Minister to appoint Tax Ombud
14. (1) The Minister must appoint a person as Tax Ombud— (a) for a term of three years, which term may be renewed; and (b) under such conditions regarding remuneration and allowances as the Minister
may determine. (2) The person appointed under subsection (1) or (3) may be removed by the Minister
for misconduct, incapacity or incompetence. (3) During a vacancy in the office of Tax Ombud, the Minister may designate a person
in the office of the Tax Ombud to act as Tax Ombud. (4) No person may be designated in terms of subsection (3) as acting Tax Ombud for
a period longer than 90 days at a time. (5) A person appointed as Tax Ombud—
(a) is accountable to the Minister; (b) must have a good background in customer service as well as tax law; and (c) may not at any time during the preceding ve years have been convicted
(whether in the Republic or elsewhere) of— (i) theft, fraud, forgery or uttering a forged document, perjury, an offence
under the Prevention and Combating of Corrupt Activities Act, 2004 (Act No. 12 of 2004); or
(ii) any other offence involving dishonesty, for which the person has been sentenced to a period of imprisonment exceeding two years without the option of a ne or to a ne exceeding the amount prescribed in the Adjustment of Fines Act, 1991 (Act No. 101 of 1991).
Part F
Powers and duties of Tax Ombud
Office of Tax Ombud
15. (1) The staff of the office of the Tax Ombud must be employed in terms of the SARS Act and be seconded to the office of the Tax Ombud at the request of the Tax Ombud in consultation with the Commissioner.
(2) When the Tax Ombud is absent or otherwise unable to perform the functions of office, the Tax Ombud may designate another person in the office of the Tax Ombud as acting Tax Ombud.
(3) No person may be designated in terms of subsection (2) as acting Tax Ombud for a period longer than 90 days at a time.
(4) The expenditure connected with the functions of the office of the Tax Ombud is paid out of the funds of SARS.
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Mandate of Tax Ombud
16. (1) The mandate of the Tax Ombud is to review and address any complaint by a taxpayer regarding a service matter or a procedural or administrative matter arising from the application of the provisions of a tax Act by SARS.
(2) In discharging his or her mandate, the Tax Ombud must— (a) review a complaint and, if necessary, resolve it through mediation or
conciliation; (b) act independently in resolving a complaint; (c) follow informal, fair and cost-effective procedures in resolving a complaint; (d) provide information to a taxpayer about the mandate of the Tax Ombud and
the procedures to pursue a complaint; (e) facilitate access by taxpayers to complaint resolution mechanisms within
SARS to address complaints; and (f) identify and review systemic and emerging issues related to service matters or
the application of the provisions of this Act or procedural or administrative provisions of a tax Act that impact negatively on taxpayers.
Limitations on authority
17. The Tax Ombud may not review— (a) legislation or tax policy; (b) SARS policy or practice generally prevailing, other than to the extent that it
relates to a service matter or a procedural or administrative matter arising from the application of the provisions of a tax Act by SARS;
(c) a matter subject to objection and appeal under a tax Act, except for an administrative matter relating to such objection and appeal; or
(d) a decision of, proceeding in or matter before the tax court.
Review of complaint
18. (1) The Tax Ombud may review any issue within the Tax Ombud’s mandate on receipt of a request from a taxpayer.
(2) The Tax Ombud may— (a) determine how a review is to be conducted; and (b) determine whether a review should be terminated before completion.
(3) In exercising the discretion set out in subsection (2), the Tax Ombud must consider such factors as—
(a) the age of the request or issue; (b) the amount of time that has elapsed since the requester became aware of the
issue; (c) the nature and seriousness of the issue; (d) the question of whether the request was made in good faith; and (e) the ndings of other redress mechanisms with respect to the request.
(4) The Tax Ombud may only review a request if the requester has exhausted the available complaints resolution mechanisms in SARS, unless there are compelling circumstances for not doing so.
(5) To determine whether there are compelling circumstances, the Tax Ombud must consider factors such as whether—
(a) the request raises systemic issues; (b) exhausting the complaints resolution mechanisms will cause undue hardship
to the requester; or (c) exhausting the complaints resolution mechanisms is unlikely to produce a
result within a period of time that the Tax Ombud considers reasonable.
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(6) The Tax Ombud must inform the requester of the results of the review or any action taken in response to the request, but at the time and in the manner chosen by the Tax Ombud.
Reports by Tax Ombud
19. (1) The Tax Ombud must— (a) report directly to the Minister; (b) submit an annual report to the Minister within ve months of the end of
SARS’ nancial year; and (c) submit a report to the Commissioner quarterly or at such other intervals as
may be agreed. (2) The reports must—
(a) contain a summary of at least ten of the most serious issues encountered by taxpayers and identi ed systemic and emerging issues referred to in section 16(2)(f), including a description of the nature of the issues;
(b) contain an inventory of the issues described in subparagraph (a) for which— (i) action has been taken and the result of such action;
(ii) action remains to be completed and the period during which each item has remained on such inventory; or
(iii) no action has been taken, the period during which each item has remained on such inventory and the reasons for the inaction; and
(c) contain recommendations for such administrative action as may be appropri- ate to resolve problems encountered by taxpayers.
(3) The Minister must table the annual report of the Tax Ombud in the National Assembly.
Resolution and recommendations
20. (1) The Tax Ombud must attempt to resolve all issues within the Tax Ombud’s mandate at the level at which they can most efficiently and effectively be resolved and must, in so doing, communicate with SARS officials identi ed by SARS.
(2) The Tax Ombud’s recommendations are not binding on taxpayers or SARS.
Con dentiality
21. (1) The provisions of Chapter 6 apply with the changes required by the context for the purpose of this Part.
(2) SARS must allow the Tax Ombud access to information in the possession of SARS that relates to the Tax Ombud’s powers and duties under this Act.
(3) The Tax Ombud and any person acting on the Tax Ombud’s behalf may not disclose information of any kind that is obtained by or on behalf of the Tax Ombud, or prepared from information obtained by or on behalf of the Tax Ombud, to SARS, except to the extent required for the purpose of the performance of functions and duties under this Part.
CHAPTER 3
REGISTRATION
Registration requirements
22. (1) A person— (a) obliged to apply to; or (b) who may voluntarily,
register with SARS under a tax Act must do so in terms of the requirements of this Chapter or, if applicable, the relevant tax Act.
(2) A person referred to in subsection (1) must—
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(a) apply for registration within the period provided for in a tax Act or, if no such period is provided for, 21 business days of so becoming obliged or within the further period as SARS may approve in the prescribed form and manner;
(b) apply for registration for one or more taxes in the prescribed form and manner; and
(c) provide SARS with the further particulars and any documents as SARS may require for the purpose of registering the person for the tax or taxes.
(3) A person registered or applying for registration under a tax Act may be required to submit biometric information in the prescribed form and manner if the information is required to ensure—
(a) proper identi cation of the person; or (b) counteracting identity theft or fraud.
(4) A person who applies for registration in terms of this Chapter and has not provided all particulars and documents required by SARS, may be regarded not to have applied for registration until all the particulars and documents have been provided to SARS.
(5) Where a taxpayer that is obliged to register with SARS under a tax Act fails to do so, SARS may register the taxpayer for one or more tax types as is appropriate under the circumstances.
Communication of changes in particulars
23. A person who has been registered under section 22 must communicate to SARS within 21 business days any change that relates to—
(a) postal address; (b) physical address; (c) representative taxpayer; (d) banking particulars used for transactions with SARS; (e) electronic address used for communication with SARS; or (f) such other details as the Commissioner may require by public notice.
Taxpayer reference number
24. (1) SARS may allocate a taxpayer reference number in respect of one or more taxes to each person registered under a tax Act or this Chapter.
(2) SARS may register and allocate a taxpayer reference number to a person who is not registered.
(3) A person who has been allocated a taxpayer reference number by SARS must include the relevant reference number in all returns or other documents submitted to SARS.
(4) SARS may regard a return or other document submitted by a person to be invalid if it does not contain the reference number referred to in subsection (3) and must inform the person accordingly if practical.
CHAPTER 4
RETURNS AND RECORDS
Part A
General
Submission of return
25. (1) A person required under a tax Act to submit or who voluntarily submits a return must do so—
(a) in the prescribed form and manner; and
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(b) by the date speci ed in the tax Act or, in its absence, by the date speci ed by the Commissioner in the public notice requiring the submission.
(2) A return must contain the information prescribed by a tax Act or the Commissioner and be a full and true return.
(3) A return must be signed by the taxpayer or by the taxpayer’s duly authorised representative and the person signing the return is regarded for all purposes in connection with a tax Act to be cognisant of the statements made in the return.
(4) Non-receipt by a person of a return form does not affect the obligation to submit a return.
(5) SARS may, prior to the issue of an original assessment by SARS, request a person to submit an amended return to correct an undisputed error in a return.
(6) SARS may extend the time period for ling a return in a particular case, in accordance with procedures and criteria in policies published by the Commissioner.
(7) The Commissioner may also extend the ling deadline generally or for speci c classes of persons by public notice.
(8) An extension under subsection (6) or (7) does not affect the deadline for paying the tax.
Third party returns
26. The Commissioner may by public notice require a person who employs, pays amounts to, receives amounts on behalf of or otherwise transacts with another person, or has control over assets of another person, to submit a return with the required information in the prescribed form and manner and by the date speci ed in the notice.
Other returns required
27. SARS may require a person to submit further or more detailed returns regarding any matter for which a return is required or prescribed by a tax Act.
Statement concerning accounts
28. (1) SARS may require a person who submits nancial statements or accounts prepared by another person in support of that person’s submitted return, to submit a certi cate or statement by the other person setting out the details of—
(a) the extent of the other person’s examination of the books of account and of the documents from which the books of account were written up; and
(b) whether or not the entries in those books and documents disclose the true nature of the transactions, receipts, accruals, payments or debits in so far as may be ascertained by that examination.
(2) A person who prepares nancial statements or accounts for another person must, at the request of that other person, submit to that other person a copy of the certi cate or statement referred to in subsection (1).
Duty to keep records
29. (1) A person must keep the records, books of account or documents that— (a) enable the person to observe the requirements of a tax Act; (b) are speci cally required under a tax Act; and (c) enable SARS to be satis ed that the person has observed these requirements.
(2) The requirements of this Act to keep records for a tax period apply to a person who—
(a) has submitted a return for the tax period;
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(b) is required to submit a return for the tax period and has not submitted a return for the tax period; or
(c) is not required to submit a return but has, during the tax period, received income, has a capital gain or capital loss, or engaged in any other activity that is subject to tax or would be subject to tax but for the application of a threshold or exemption.
(3) Records need not be retained by the person described in— (a) subsection (2)(a), after a period of ve years from the date of the submission
of the return; and (b) subsection (2)(c), after a period of ve years from the end of the relevant tax
period.
Form of records kept or retained
30. (1) The records, books of account, and documents referred to in section 29, must be kept or retained—
(a) in their original form in an orderly fashion and in a safe place; (b) in the form, including electronic form, as may be prescribed by the
Commissioner in a public notice; or (c) in a form speci cally authorised by a senior SARS official in terms of
subsection (2). (2) A senior SARS official may, subject to the conditions as the official may
determine, authorise the retention of information contained in records, books of account or documents referred to in section 29 in a form acceptable to the official.
Inspection of records
31. The records, books of account and documents referred to in section 29 whether in the form referred to in section 30(1) or in a form authorised under section 30(2), must at all reasonable times during the required periods under section 29, be open for inspection by a SARS official in the Republic for the purpose of—
(a) determining compliance with the requirements of sections 29 and 30; or (b) an inspection, audit or investigation under Chapter 5.
Retention period in case of audit, objection or appeal
32. Despite section 29(3), if— (a) records are relevant to an audit or investigation under Chapter 5 which the
person subject to the audit or investigation has been noti ed of or is aware of; or
(b) a person lodges an objection or appeal against an assessment or decision under section 104(2),
the person must retain the records relevant to the audit, objection or appeal until the audit is concluded or the assessment or the decision becomes nal.
Translation
33. (1) In the case of information that is not in one of the official languages of the Republic, a senior SARS official may by notice require a person who must furnish the information to SARS, to produce a translation in one of the official languages determined by the official within a reasonable period.
(2) A translation referred to in subsection (1) must— (a) be produced at a time and at the place speci ed by the notice; and (b) if required by SARS, be prepared and certi ed by a sworn and accredited
translator or another person approved by the senior SARS official.
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Part B
Reportable arrangements
De nitions
34. In this Part and in section 212, unless the context indicates otherwise, the following terms, if in single quotation marks, have the following meanings:
‘arrangement’ means any transaction, operation, scheme, agreement or under- standing (whether enforceable or not); ‘ nancial bene t’ means a reduction in the cost of nance, including interest,
nance charges, costs, fees and discounts on a redemption amount; ‘ nancial reporting standards’ means, in the case of a company required to submit nancial statements in terms of the Companies Act, 2008 (Act No. 71 of 2008), nancial reporting standards prescribed by that Act, or, in any other case, the Generally Accepted Accounting Practice or appropriate nancial reporting standards that provide a fair presentation of the nancial results and position of the taxpayer; ‘participant’, in relation to an ‘arrangement’, means— (a) a ‘promoter’; or (b) a company or trust which directly or indirectly derives or assumes that it
derives a ‘tax bene t’ or ‘ nancial bene t’ by virtue of an ‘arrangement’; ‘pre-tax pro t’, in relation to an ‘arrangement’, means the pro t of a ‘participant’ resulting from that ‘arrangement’ before deducting normal tax, which pro t must be determined in accordance with ‘ nancial reporting standards’ after taking into account all costs and expenditure incurred by the ‘participant’ in connection with the ‘arrangement’ and after deducting any foreign tax paid or payable by the ‘participant’ in connection with the ‘arrangement’; ‘promoter’, in relation to an ‘arrangement’, means a person who is principally responsible for organising, designing, selling, nancing or managing the reportable arrangement; ‘tax bene t’ includes avoidance, postponement or reduction of a liability for tax.
Reportable arrangements
35. (1) An ‘arrangement’ is a reportable arrangement if it is listed in terms of subsection (2) or if a ‘tax bene t’ is or will be derived or is assumed to be derived by any ‘participant’ by virtue of the ‘arrangement’ and the ‘arrangement’—
(a) contains provisions in terms of which the calculation of interest as de ned in section 24J of the Income Tax Act, nance costs, fees or any other charges is wholly or partly dependent on the assumptions relating to the tax treatment of that ‘arrangement’ (otherwise than by reason of any change in the provisions of a tax Act);
(b) has any of the characteristics contemplated in section 80C(2)(b) of the Income Tax Act, or substantially similar characteristics;
(c) gives rise to an amount that is or will be disclosed by any ‘participant’ in any year of assessment or over the term of the ‘arrangement’ as— (i) a deduction for purposes of the Income Tax Act but not as an expense for
purposes of ‘ nancial reporting standards’; or (ii) revenue for purposes of ‘ nancial reporting standards’ but not as gross
income for purposes of the Income Tax Act; (d) does not result in a reasonable expectation of a ‘pre-tax pro t’ for any
‘participant’; or (e) results in a reasonable expectation of a ‘pre-tax pro t’ for any ‘participant’
that is less than the value of that ‘tax bene t’ to that ‘participant’ if both are discounted to a present value at the end of the rst year of assessment when
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that ‘tax bene t’ is or will be derived or is assumed to be derived, using consistent assumptions and a reasonable discount rate for that ‘participant’.
(2) The Commissioner may list an ‘arrangement’ by public notice, if satis ed that the ‘arrangement’ may lead to an undue ‘tax bene t’.
(3) This section does not apply to an excluded ‘arrangement’ referred to in section 36.
Excluded arrangements
36. (1) An ‘arrangement’ is an excluded ‘arrangement’ if it is— (a) a loan, advance or debt in terms of which—
(i) the borrower receives or will receive an amount of cash and agrees to repay at least the same amount of cash to the lender at a determinable future date; or
(ii) the borrower receives or will receive a fungible asset and agrees to return an asset of the same kind and of the same or equivalent quantity and quality to the lender at a determinable future date;
(b) a lease; (c) a transaction undertaken through an exchange regulated in terms of the
Securities Services Act, 2004 (Act No. 36 of 2004); or (d) a transaction in participatory interests in a scheme regulated in terms of the
Collective Investment Schemes Control Act, 2002 (Act No. 45 of 2002). (2) Subsection (1) applies only to an ‘arrangement’ that—
(a) is undertaken on a stand-alone basis and is not directly or indirectly connected to any other ‘arrangement’ (whether entered into between the same or different parties); or
(b) would have quali ed as having been undertaken on a stand-alone basis as required by paragraph (a), were it not for a connected ‘arrangement’ that is entered into for the sole purpose of providing security and if no ‘tax bene t’ is obtained or enhanced by virtue of the security ‘arrangement’.
(3) Subsection (1) does not apply to an ‘arrangement’ that is entered into— (a) with the main purpose or one of its main purposes of obtaining or enhancing
a ‘tax bene t’; or (b) in a speci c manner or form that enhances or will enhance a ‘tax bene t’.
(4) The Commissioner may determine an ‘arrangement’ to be an excluded ‘arrangement’ by public notice, if satis ed that the ‘arrangement’ is not likely to lead to an undue ‘tax bene t’.
Disclosure obligation
37. (1) The ‘promoter’ must disclose the information referred to in section 38 in respect of a reportable arrangement.
(2) If there is no ‘promoter’ in relation to the ‘arrangement’ or if the ‘promoter’ is not a resident, all other ‘participants’ must disclose the information.
(3) A ‘participant’ need not disclose the information in respect of the ‘arrangement’ if the ‘participant’ obtains a written statement from—
(a) the ‘promoter’ that the ‘promoter’ has disclosed the ‘arrangement’; or (b) any other ‘participant’, if subsection (2) applies, that the other ‘participant’
has disclosed the ‘arrangement’. (4) The ‘arrangement’ must be disclosed within 45 business days after an amount is
rst received by or has accrued to a ‘participant’ or is rst paid or actually incurred by a ‘participant’ in terms of the ‘arrangement’.
(5) SARS may grant extension for disclosure for a further 45 business days, if reasonable grounds exist for the extension.
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Information to be submitted
38. The ‘promoter’ or ‘participant’ must submit, in relation to a reportable arrangement, in the prescribed form and manner and by the date speci ed—
(a) a detailed description of all its steps and key features, including, in the case of an ‘arrangement’ that is a step or part of a larger ‘arrangement’, all the steps and key features of the larger ‘arrangement’;
(b) a detailed description of the assumed ‘tax bene ts’ for all ‘participants’, including, but not limited to, tax deductions and deferred income;
(c) the names, registration numbers, and registered addresses of all ‘participants’; (d) a list of all its agreements; and (e) any nancial model that embodies its projected tax treatment.
Reportable arrangement reference number
39. SARS must, after receipt of the information contemplated in section 38, issue a reportable arrangement reference number to each ‘participant’ for administrative purposes only.
CHAPTER 5
INFORMATION GATHERING
Part A
General rules for inspection, veri cation, audit and criminal investigation
Selection for inspection, veri cation or audit
40. SARS may select a person for inspection, veri cation or audit on the basis of any consideration relevant for the proper administration of a tax Act, including on a random or a risk assessment basis.
Authorisation for SARS official to conduct audit or criminal investigation
41. (1) A senior SARS official may grant a SARS official written authorisation to conduct a eld audit or criminal investigation, as referred to in Part B.
(2) When a SARS official exercises a power or duty under a tax Act in person, the official must produce the authorisation.
(3) If the official does not produce the authorisation, a member of the public is entitled to assume that the official is not a SARS official so authorised.
Keeping taxpayer informed
42. (1) A SARS official involved in or responsible for an audit under this Part must, in the form and in the manner as may be prescribed by the Commissioner by public notice, provide the taxpayer with a report indicating the stage of completion of the audit.
(2) Upon conclusion of the audit or a criminal investigation, and where— (a) the audit or investigation was inconclusive, SARS must inform the taxpayer
accordingly within 21 business days; or (b) the audit identi ed potential adjustments of a material nature, SARS must
within 21 business days, or the further period that may be required based on the complexities of the audit, provide the taxpayer with a document containing the outcome of the audit, including the grounds for the proposed assessment or decision referred to in section 104(2).
(3) Upon receipt of the document described in subsection (2)(b), the taxpayer must within 21 business days of delivery of the document, or the further period requested by the taxpayer that may be allowed by SARS based on the complexities of the audit, respond in writing to the facts and conclusions set out in the document.
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(4) The taxpayer may waive the right to receive the document. (5) Subsections (1) and (2)(b) do not apply if a senior SARS official has a reasonable
belief that compliance with those subsections would impede or prejudice the purpose, progress or outcome of the audit.
(6) SARS may under the circumstances described in subsection (5) issue the assessment or make the decision referred to in section 104(2) resulting from the audit and the grounds of the assessment must be provided to the taxpayer within 21 business days of the assessment or the decision referred to in section 104(2), or the further period that may be required based on the complexities of the audit.
Referral for criminal investigation
43. (1) If at any time before or during the course of an audit it appears that a person may have committed a serious tax offence, the investigation of the offence must be referred to a senior SARS official responsible for criminal investigations for a decision as to whether a criminal investigation should be pursued.
(2) Relevant material gathered during an audit after the referral, must be kept separate from the criminal investigation and may not be used in criminal proceedings instituted in respect of the offence.
(3) If an investigation is referred under subsection (1) the relevant material and les relating to the case must be returned to the SARS official responsible for the audit if—
(a) it is decided not to pursue a criminal investigation; (b) it is decided to terminate the investigation; or (c) after referral of the case for prosecution, a decision is made not to prosecute.
Conduct of criminal investigation
44. (1) During a criminal investigation, SARS must apply the information gathering powers in terms of this Chapter with due recognition of the taxpayer’s constitutional rights as a suspect in a criminal investigation.
(2) In the event that a decision is taken to pursue the criminal investigation of a serious tax offence, SARS may make use of relevant material obtained prior to the referral referred to in section 43.
(3) Relevant information obtained during a criminal investigation may be used for purposes of audit as well as in subsequent civil and criminal proceedings.
Part B
Inspection, request for relevant material, audit and criminal investigation
Inspection
45. (1) A SARS official may, for the purposes of the administration of a tax Act and without prior notice, arrive at a premises where the SARS official has a reasonable belief that a trade or enterprise is being carried on and conduct an inspection to determine only—
(a) the identity of the person occupying the premises; (b) whether the person occupying the premises is registered for tax; or (c) whether the person is complying with sections 29 and 30.
(2) A SARS official may not enter a dwelling-house or domestic premises, except any part thereof used for the purposes of trade, under this section without the consent of the occupant.
Request for relevant material
46. (1) SARS may, for the purposes of the administration of a tax Act in relation to a taxpayer, whether identi ed by name or otherwise objectively identi able, require the taxpayer or another person to, within a reasonable period, submit relevant material (whether orally or in writing) that SARS requires.
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(2) A senior SARS official may require relevant material in terms of subsection (1) in respect of taxpayers in an objectively identi able class of taxpayers.
(3) A request by SARS for relevant material from a person other than the taxpayer is limited to the records maintained or that should reasonably be maintained by the person in relation to the taxpayer.
(4) A person receiving from SARS a request for relevant material under this section must submit the relevant material to SARS at the place and within the time speci ed in the request.
(5) SARS may extend the period within which the relevant material must be submitted on good cause shown.
(6) Relevant material required by SARS under this section must be referred to in the request with reasonable speci city.
(7) A senior SARS official may direct that relevant material be provided under oath or solemn declaration.
(8) A senior SARS official may request relevant material that a person has available for purposes of revenue estimation.
Production of relevant material in person
47. (1) A senior SARS official may, by notice, require a person, whether or not chargeable to tax, to attend in person at the time and place designated in the notice for the purpose of being interviewed by a SARS official concerning the tax affairs of the person, if the interview—
(a) is intended to clarify issues of concern to SARS to render further veri cation or audit unnecessary; and
(b) is not for purposes of a criminal investigation. (2) The senior SARS official issuing the notice may require the person interviewed to
produce relevant material under the control of the person during the interview. (3) Relevant material required by SARS under subsection (2) must be referred to in
the notice with reasonable speci city. (4) A person may decline to attend an interview, if the distance between the place
designated in the notice and the usual place of business or residence of the person exceeds the distance prescribed by the Commissioner by public notice.
Field audit or criminal investigation
48. (1) A SARS official named in an authorisation referred to in section 41 may require a person, with prior notice of at least 10 business days, to make available at the person’s premises speci ed in the notice relevant material that the official may require to audit or criminally investigate in connection with the administration of a tax Act in relation to the person or another person.
(2) The notice referred to in subsection (1) must— (a) state the place where and the date and time that the audit or investigation is
due to start (which must be during normal business hours); and (b) indicate the initial basis and scope of the audit or investigation.
(3) SARS is not required to give the notice if the person waives the right to receive the notice.
(4) If a person at least ve business days before the date listed in the notice advances reasonable grounds for varying the notice, SARS may vary the notice accordingly, subject to conditions SARS may impose with regard to preparatory measures for the audit or investigation.
(5) A SARS official may not enter a dwelling-house or domestic premises, except any part thereof used for the purposes of trade, under this section without the consent of the occupant.
Assistance during eld audit or criminal investigation
49. (1) The person on whose premises an audit or criminal investigation is carried out, must provide such reasonable assistance as is required by SARS to conduct the audit or investigation, including—
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(a) making available appropriate facilities, to the extent that such facilities are available;
(b) answering questions relating to the audit or investigation; and (c) submitting relevant material as required.
(2) No person may without just cause— (a) obstruct a SARS official from carrying out the audit or investigation; or (b) refuse to give the access or assistance as may be required under subsection (1).
(3) The person may recover from SARS after completion of the audit (or, at the person’s request, on a monthly basis) the costs for the use of photocopying facilities in accordance with the fees prescribed in section 92(1)(b) of the Promotion of Access to Information Act.
Part C
Inquiries
Authorisation for inquiry
50. (1) A judge may, on application made ex parte by a senior SARS official grant an order in terms of which a person described in section 51(3) is designated to act as presiding officer at the inquiry referred to in this section.
(2) An application under subsection (1) must be supported by information supplied under oath or solemn declaration, establishing the facts on which the application is based.
(3) A senior SARS official may authorise a person to conduct an inquiry for the purposes of the administration of a tax Act.
Inquiry order
51. (1) A judge may grant the order referred to in section 50(2) if satis ed that there are reasonable grounds to believe that—
(a) a person has— (i) failed to comply with an obligation imposed under a tax Act; or
(ii) committed a tax offence; and (b) relevant material is likely to be revealed during the inquiry which may provide
proof of the failure to comply or of the commission of the offence. (2) The order referred to in subsection (1) must—
(a) designate a presiding officer before whom the inquiry is to be held; (b) identify the person referred to in subsection (1)(a); (c) refer to the alleged non-compliance or offence to be inquired into; (d) be reasonably speci c as to the ambit of the inquiry; and (e) be provided to the presiding officer.
(3) A presiding officer must be a person appointed to the panel described in section 111.
Inquiry proceedings
52. (1) The presiding officer determines the conduct of the inquiry as the presiding officer thinks t.
(2) The presiding officer must ensure that the recording of the proceedings and evidence at the inquiry is of a standard that would meet the standard required for the proceedings and evidence to be used in a court of law.
(3) A person has the right to have a representative present when that person appears as a witness before the presiding officer.
Notice to appear
53. (1) The presiding officer may, by notice in writing, require a person, whether or not chargeable to tax, to—
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(a) appear before the inquiry, at the time and place designated in the notice, for the purpose of being examined under oath or solemn declaration, and
(b) produce any relevant material in the custody of the person. (2) If the notice requires the production of relevant material, it is sufficient if the
relevant material is referred to in the notice with reasonable speci city.
Powers of presiding officer
54. The presiding officer has the same powers regarding witnesses at the inquiry as are vested in a President of the tax court under sections 127 and 128.
Witness fees
55. The presiding officer may direct that a person receive witness fees to attend an inquiry in accordance with the tariffs prescribed in terms of section 51bis of the Magistrates’ Courts Act, 1944 (Act No. 32 of 1944).
Con dentiality of proceedings
56. (1) An inquiry under this Part is private and con dential. (2) The presiding officer may, on request, exclude a person from the inquiry if the
person’s attendance is prejudicial to the inquiry. (3) Section 69 applies with the necessary changes to persons present at the
questioning of a person, including the person being questioned. (4) Subject to section 57(2), SARS may use evidence given by a person under oath or
solemn declaration at an inquiry in a subsequent proceeding involving the person or another person.
Incriminating evidence
57. (1) A person may not refuse to answer a question during an inquiry on the grounds that it may incriminate the person.
(2) Incriminating evidence obtained under this section is not admissible in criminal proceedings against the person giving the evidence, unless the proceedings relate to—
(a) the administering or taking of an oath or the administering or making of a solemn declaration;
(b) the giving of false evidence or the making of a false statement; or (c) the failure to answer questions lawfully put to the person, fully and
satisfactorily.
Inquiry not suspended by civil or criminal proceedings
58. Unless a court orders otherwise, an inquiry relating to a person referred to in section 51(1)(a) must proceed despite the fact that a civil or criminal proceeding is pending or contemplated against or involves the person, a witness or potential witness in the inquiry, or another person whose affairs may be investigated in the course of the inquiry.
Part D
Search and seizure
Application for warrant
59. (1) A senior SARS official may, if necessary or relevant to administer a tax Act, authorise an application for a warrant under which SARS may enter a premises where relevant material is kept to search the premises and any person present on the premises and seize relevant material.
(2) SARS must apply ex parte to a judge for the warrant, which application must be supported by information supplied under oath or solemn declaration, establishing the facts on which the application is based.
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(3) Despite subsection (2), SARS may apply for the warrant referred to in subsection (1) and in the manner referred to in subsection (2), to a magistrate, if the matter relates to an audit or investigation where the estimated tax in dispute does not exceed the amount determined in the notice issued under section 109(1)(a).
Issuance of warrant
60. (1) A judge or magistrate may issue the warrant referred to in section 59(1) if satis ed that there are reasonable grounds to believe that—
(a) a person failed to comply with an obligation imposed under a tax Act, or committed a tax offence; and
(b) relevant material likely to be found on the premises speci ed in the application may provide evidence of the failure to comply or commission of the offence.
(2) A warrant issued under subsection (1) must contain the following: (a) the alleged failure to comply or offence that is the basis for the application; (b) the person alleged to have failed to comply or to have committed the offence; (c) the premises to be searched; and (d) the fact that relevant material as de ned in section 1 is likely to be found on
the premises. (3) The warrant must be exercised within 45 business days or such further period as
a judge or magistrate deems appropriate on good cause shown.
Carrying out search
61. (1) A SARS official exercising a power under a warrant referred to in section 60 must produce the warrant.
(2) Subject to section 63, a SARS official’s failure to produce a warrant entitles a person to refuse access to the official.
(3) The SARS official may— (a) open or cause to be opened or removed in conducting a search, anything
which the official suspects to contain relevant material; (b) seize any relevant material; (c) seize and retain a computer or storage device in which relevant material is
stored for as long as it is necessary to copy the material required; (d) make extracts from or copies of relevant material, and require from a person
an explanation of relevant material; and (e) if the premises listed in the warrant is a vessel, aircraft or vehicle, stop and
board the vessel, aircraft or vehicle, search the vessel, aircraft or vehicle or a person found in the vessel, aircraft or vehicle, and question the person with respect to a matter dealt with in a tax Act.
(4) The SARS official must make an inventory of the relevant material seized in the form, manner and at the time that is reasonable under the circumstances and provide a copy thereof to the person.
(5) The SARS official must conduct the search with strict regard for decency and order, and may search a person if the official is of the same gender as the person being searched.
(6) The SARS official may, at any time, request such assistance from a police officer as the official may consider reasonably necessary and the police officer must render the assistance.
(7) No person may obstruct a SARS official or a police officer from executing the warrant or without reasonable excuse refuse to give such assistance as may be reasonably required for the execution of the warrant.
(8) If the SARS official seizes relevant material, the official must ensure that the relevant material seized is preserved and retained until it is no longer required for—
(a) the investigation into the non-compliance or the offence described under section 60(1)(a); or
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(b) the conclusion of any legal proceedings under a tax Act or criminal proceedings in which it is required to be used.
Search of premises not identi ed in warrant
62. (1) If a senior SARS official has reasonable grounds to believe that— (a) the relevant material referred to in section 60(1)(b) and included in a warrant
is at premises not identi ed in the warrant and may be removed or destroyed; (b) a warrant cannot be obtained in time to prevent the removal or destruction of
the relevant material; and (c) the delay in obtaining a warrant would defeat the object of the search and
seizure, a SARS official may enter and search the premises and exercise the powers granted in terms of this Part, as if the premises had been identi ed in the warrant.
(2) A SARS official may not enter a dwelling-house or domestic premises, except any part thereof used for purposes of trade, under this section without the consent of the occupant.
Search without warrant
63. (1) A senior SARS official may without a warrant exercise the powers referred to in section 61(3)—
(a) if the owner or person in control of the premises so consents in writing; or (b) if the senior SARS official on reasonable grounds is satis ed that—
(i) there may be an imminent removal or destruction of relevant material likely to be found on the premises;
(ii) if SARS applies for a search warrant under section 59, a search warrant will be issued; and
(iii) the delay in obtaining a warrant would defeat the object of the search and seizure.
(2) A SARS official must, before carrying out the search, inform the owner or person in control of the premises—
(a) that the search is being conducted under this section; and (b) of the alleged failure to comply with an obligation imposed under a tax Act or
tax offence that is the basis for the search. (3) Section 61(4) to (8) applies to a search conducted under this section. (4) A SARS official may not enter a dwelling-house or domestic premises, except any
part thereof used for purposes of trade, under this section without the consent of the occupant.
Legal professional privilege
64. (1) If SARS foresees the need to search and seize relevant material that may be alleged to be subject to legal professional privilege, SARS must arrange for an attorney from the panel appointed under section 111 to be present during the execution of the warrant.
(2) An attorney with whom SARS has made an arrangement in terms of subsection (1) may appoint a substitute attorney to be present on the appointing attorney’s behalf during the execution of a warrant.
(3) If, during the carrying out of a search and seizure by SARS, a person alleges the existence of legal professional privilege in respect of relevant material and an attorney is not present under subsection (1) or (2), SARS must seal the material, make arrangements with an attorney from the panel appointed under section 111 to take receipt of the material and, as soon as is reasonably possible, hand over the material to the attorney.
(4) An attorney referred to in subsections (1), (2) and (3)— (a) is not regarded as acting on behalf of either party; and (b) must personally take responsibility—
(i) in the case of a warrant issued under section 60, for the removal from the premises of relevant material in respect of which legal privilege is alleged;
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(ii) in the case of a search and seizure carried out under section 63, for the receipt of the sealed information; and
(iii) if a substitute attorney in terms of subsection (2), for the delivery of the information to the appointing attorney for purposes of making the determination referred to in subsection (5).
(5) The attorney referred to in subsection (1) or (3) must within 21 business days make a determination of whether the privilege applies and may do so in the manner the attorney deems t, including considering representations made by the parties.
(6) If a determination of whether the privilege applies is not made under sub- section (5) or a party is not satis ed with the determination, the attorney must retain the relevant material pending nal resolution of the dispute by the parties or an order of court.
(7) The attorney from the panel appointed under section 111 and any attorney acting on behalf of that attorney referred to in subsection (1) must be compensated in the same manner as if acting as Chairperson of the tax board.
Person’s right to examine and make copies
65. (1) The person to whose affairs relevant material seized relates, may examine and copy it.
(2) Examination and copying must be made— (a) at the person’s cost in accordance with the fees prescribed in accordance with
section 92(1)(b) of the Promotion of Access to Information Act; (b) during normal business hours; and (c) under the supervision determined by a senior SARS official.
Application for return of seized relevant material or costs of damages
66. (1) A person may request SARS to— (a) return some or all of the seized material; and (b) pay the costs of physical damage caused during the conduct of a search and
seizure. (2) If SARS refuses the request, the person may apply to a High Court for the return
of the seized material or payment of compensation for physical damage caused during the conduct of the search and seizure.
(3) The court may, on good cause shown, make the order as it deems t. (4) If the court sets aside the warrant issued in terms of section 60(1) or orders the
return of the seized material, the court may nevertheless authorise SARS to retain the original or a copy of any relevant material in the interests of justice.
CHAPTER 6
CONFIDENTIALITY OF INFORMATION
General prohibition of disclosure
67. (1) This Chapter applies to— (a) SARS con dential information as referred to in section 68(1); and (b) taxpayer information, which means any information provided by a taxpayer or
obtained by SARS in respect of the taxpayer, including biometric information. (2) An oath or solemn declaration undertaking to comply with the requirements of this
Chapter in the prescribed form, must be taken before a magistrate, justice of the peace or commissioner of oaths by—
(a) a SARS official and the Tax Ombud, before commencing duties or exercising any powers under a tax Act; and
(b) a person referred to in section 70 who performs any function referred to in that section, before the disclosure described in that section may be made.
(3) In the event of the disclosure of SARS con dential information or taxpayer information contrary to this Chapter, the person to whom it was so disclosed may not in
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any manner disclose, publish or make it known to any other person who is not a SARS official.
(4) A person who receives information under section 68, 69, 70 or 71, must preserve the secrecy of the information and may only disclose the information to another person if the disclosure is necessary to perform the functions speci ed in those sections.
(5) The Commissioner may, for purposes of protecting the integrity and reputation of SARS as an organisation and after giving the taxpayer at least 24 hours’ notice, disclose taxpayer information to the extent necessary to counter or rebut false allegations or information disclosed by the taxpayer, the taxpayer’s duly authorised representative or other person acting under the instructions of the taxpayer and published in the media or in any other manner.
SARS con dential information and disclosure
68. (1) SARS con dential information means information relevant to the administra- tion of a tax Act that is—
(a) personal information about a current or former SARS official, whether deceased or not;
(b) information subject to legal professional privilege vested in SARS; (c) information that was supplied in con dence by a third party to SARS the
disclosure of which could reasonably be expected to prejudice the future supply of similar information, or information from the same source;
(d) information related to investigations and prosecutions described in section 39 of the Promotion of Access to Information Act;
(e) information related to the operations of SARS, including an opinion, advice, report, recommendation or an account of a consultation, discussion or deliberation that has occurred, if— (i) the information was given, obtained or prepared by or for SARS for the
purpose of assisting to formulate a policy or take a decision in the exercise of a power or performance of a duty conferred or imposed by law; and
(ii) the disclosure of the information could reasonably be expected to frustrate the deliberative process in SARS or between SARS and other organs of state by— (aa) inhibiting the candid communication of an opinion, advice, report
or recommendation or conduct of a consultation, discussion or deliberation; or
(bb) frustrating the success of a policy or contemplated policy by the premature disclosure thereof;
(f) information about research being or to be carried out by or on behalf of SARS, the disclosure of which would be likely to prejudice the outcome of the research;
(g) information, the disclosure of which could reasonably be expected to prejudice the economic interests or nancial welfare of the Republic or the ability of the government to manage the economy of the Republic effectively in the best interests of the Republic, including a contemplated change or decision to change a tax or a duty, levy, penalty, interest and similar moneys imposed under a tax Act or the Customs and Excise Act;
(h) information supplied in con dence by or on behalf of another state or an international organisation to SARS;
(i) a computer program, as de ned in section 1(1) of the Copyright Act, 1978 (Act No. 98 of 1978), owned by SARS; and
(j) information relating to the security of SARS buildings, property, structures or systems.
(2) A person who is a current or former SARS official— (a) may not disclose SARS con dential information to a person who is not a
SARS official; (b) may not disclose SARS con dential information to a SARS official who is not
authorised to have access to the information; and
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(c) must take the precautions that may be required by the Commissioner to prevent a person referred to in paragraph (a) or (b) from obtaining access to the information.
(3) A person who is a SARS official or former SARS official may disclose SARS con dential information if—
(a) the information is public information; (b) authorised by the Commissioner; (c) disclosure is authorised under any other Act which expressly provides for the
disclosure of the information despite the provisions in this Chapter; (d) access has been granted for the disclosure of the information in terms of the
Promotion of Access to Information Act; or (e) required by order of a High Court.
Secrecy of taxpayer information and general disclosure
69. (1) A person who is a current or former SARS official must preserve the secrecy of taxpayer information and may not disclose taxpayer information to a person who is not a SARS official.
(2) Subsection (1) does not prohibit the disclosure of taxpayer information by a person who is a current or former SARS official—
(a) in the course of performance of duties under a tax Act, including— (i) to the South African Police Service or the National Prosecuting
Authority, if the information relates to, and constitutes material information for the proving of, a tax offence;
(ii) as a witness in civil or criminal proceedings under a tax Act; or (iii) the taxpayer information necessary to enable a person to provide such
information as may be required by SARS from that person; (b) under any other Act which expressly provides for the disclosure of the
information despite the provisions in this Chapter; (c) by order of a High Court; or (d) if the information is public information.
(3) An application to the High Court for the order referred to in subsection (2)(c) requires prior notice to SARS of at least 15 business days unless the court, based on urgency, allows a shorter period.
(4) SARS may oppose the application on the basis that the disclosure may seriously prejudice the taxpayer concerned or impair a civil or criminal tax investigation by SARS.
(5) The court may not grant the order unless satis ed that the following circumstances apply:
(a) the information cannot be obtained elsewhere; (b) the primary mechanisms for procuring evidence under an Act or rule of court
will yield or yielded no or disappointing results; (c) the information is central to the case; and (d) the information does not constitute biometric information.
(6) Subsection (1) does not prohibit the disclosure of information— (a) to the taxpayer; or (b) with the written consent of the taxpayer, to another person.
(7) Biometric information of a taxpayer may not be disclosed by SARS except under the circumstances described in subsection (2)(a)(i).
(8) The Commissioner may, despite the provisions of this section, publish— (a) the name and taxpayer reference number of a taxpayer; and (b) a list of approved public bene t organisations for the purposes of the
provisions of sections 18A and 30 of the Income Tax Act.
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Disclosure to other entities
70. (1) A senior SARS official may provide to the Director-General of the National Treasury taxpayer information or SARS con dential information in respect of—
(a) a taxpayer which is an— (i) institution referred to in section 3(1) of the Public Finance Management
Act, 1999 (Act No. 1 of 1999); or (ii) entity referred to in section 3 of the Local Government: Municipal
Finance Management Act, 2003 (Act No. 56 of 2003), to the extent necessary for the Director-General to perform the functions and exercise the powers of the National Treasury under those Acts; and
(b) a class of taxpayers to the extent necessary for the purposes of tax policy design or revenue estimation.
(2) A senior SARS official may disclose to— (a) the Statistician-General the taxpayer information as may be required for the
purpose of carrying out the Statistician-General’s duties to publish statistics in an anonymous form;
(b) the Chairperson of the Board administering the National Student Financial Aid Scheme, the name and address of the employer of a person to whom a loan or bursary has been granted under that scheme, for use in performing the Chairperson’s functions under the National Student Financial Aid Scheme Act, 1999 (Act No. 56 of 1999);
(c) a commission of inquiry established by the President of the Republic of South Africa under a law of the Republic, the information to which the Commission is authorised by law to have access; and
(d) to an employer (as de ned in the Fourth Schedule to the Income Tax Act) of an employee (as de ned in the Fourth Schedule), but only the income tax reference number, identity number, physical and postal address of that employee and such other non- nancial information in relation to that employee, as that employer may require in order to comply with its obligations in terms of a tax Act.
(3) A senior SARS official may disclose to— (a) the Governor of the South African Reserve Bank, or other person to whom the
Minister delegates powers, functions and duties under the Exchange Control Regulations, 1961, issued under section 9 of the Currency and Exchanges Act, 1933 (Act No. 9 of 1933), the information as may be required to exercise a power or perform a function or duty under the South African Reserve Bank Act, 1989 (Act No. 90 of 1989), or those Regulations;
(b) the Financial Services Board, the information as may be required for the purpose of carrying out the Board’s duties and functions under the Financial Services Board Act, 1990 (Act No. 97 of 1990);
(c) the Financial Intelligence Centre, the information as may be required for the purpose of carrying out the Centre’s duties and functions under the Financial Intelligence Centre Act, 2001 (Act No. 38 of 2001); and
(d) the National Credit Regulator, the information as may be required for the purpose of carrying out the Regulator’s duties and functions under the National Credit Act, 2005 (Act No. 34 of 2005).
(4) A senior SARS official may disclose to an organ of state or institution listed in a regulation issued by the Minister under section 257, information to which the organ of state or institution is otherwise lawfully entitled to and for the purposes only of verifying the correctness of the following particulars of a taxpayer:
(a) name and taxpayer reference number (b) any identifying number; (c) physical and postal address and other contact details;
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(d) employer’s name, address and contact details; and (e) other non- nancial information as the organ of state or institution may require
for purposes of verifying paragraphs (a) to (d). (5) The information disclosed under subsection (2) or (3) may only be disclosed by
SARS or the persons or entities referred to in subsection (2) or (3) to the extent that it is—
(a) necessary for the purpose of exercising a power or performing a regulatory function or duty under the legislation referred to in subsection (2) or (3); and
(b) relevant and proportionate to what the disclosure is intended to achieve as determined under the legislation.
(6) SARS must allow the Auditor-General to have access to information in the possession of SARS that relates to the performance of the Auditor-General’s duties under section 4 of the Public Audit Act, 2004 (Act No. 25 of 2004).
(7) Despite subsections (1) to (5), a senior SARS official may not disclose information under this section if satis ed that the disclosure would seriously impair a civil or criminal tax investigation.
Disclosure in criminal, public safety or environmental matters
71. (1) If so ordered by a judge under this section, a senior SARS official must disclose the information described in subsection (2) to—
(a) the National Commissioner of the South African Police Service, referred to in section 6(1) of the South African Police Service Act, 1995 (Act No. 68 of 1995); or
(b) the National Director of Public Prosecutions, referred to in section 5(2)(a) of the National Prosecuting Authority Act, 1998 (Act No. 32 of 1998).
(2) Subsection (1) applies to information which may reveal evidence— (a) that an offence (other than a tax offence) has been or may be committed in
respect of which a court may impose a sentence of imprisonment exceeding ve years;
(b) that may be relevant to the investigation or prosecution of the offence; or (c) of an imminent and serious public safety or environmental risk.
(3) A senior SARS official may, if of the opinion that— (a) SARS has information referred to in subsection (2); (b) the information will likely be critical to the prosecution of the offence or
avoidance of the risk; and (c) the disclosure of the information would not seriously impair a civil or criminal
tax investigation, make an ex parte application to a judge in chambers for an order authorising SARS to disclose the information under subsection (1).
(4) The National Commissioner of the South African Police Service, the National Director of Public Prosecutions or a person acting under their respective direction and control, if—
(a) carrying out an investigation relating to an offence or a public safety or environmental risk referred to in subsection (2); and
(b) of the opinion that SARS may have information that is relevant to that investigation,
may make an ex parte application to a judge in chambers for an order requiring SARS to disclose the information referred to in subsection (2).
(5) SARS must be given prior notice of at least 10 business days of an application under subsection (4) unless the judge, based on urgency, allows a shorter period and SARS may oppose the application on the basis that the disclosure would seriously impair or prejudice a civil or criminal tax investigation or other enforcement of a tax Act by SARS.
Self-incrimination
72. (1) A taxpayer may not refuse to comply with his or her obligations in terms of legislation to complete and le a return or an application on the grounds that to do so might incriminate him or her, and an admission by the taxpayer contained in a return, application, or other document submitted to SARS by a taxpayer is admissible in criminal proceedings against the taxpayer for an offence under a tax Act, unless a competent court directs otherwise.
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(2) An admission by the taxpayer of the commission of an offence under a tax Act obtained from a taxpayer under Chapter 5 is not admissible in criminal proceedings against the taxpayer, unless a competent court directs otherwise.
Disclosure to taxpayer of own record
73. (1) A taxpayer or the taxpayer’s duly authorised representative is entitled to obtain—
(a) a copy, certi ed by SARS, of the recorded particulars of an assessment or decision referred to in section 104(2) relating to the taxpayer;
(b) access to information submitted to SARS by the taxpayer or by a person on the taxpayer’s behalf; and
(c) other information relating to the tax affairs of the taxpayer. (2) A request for information under subsection (1)(c) must be made under the
Promotion of Access to Information Act. (3) The person requesting information under subsection (1)(b) may be required to pay
for the costs of copies in accordance with the fees prescribed in section 92(1)(b) of the Promotion of Access to Information Act.
Publication of names of offenders
74. (1) The Commissioner may publish for general information the particulars speci ed in subsection (2), relating to a tax offence committed by a person, if—
(a) the person was convicted of the offence; and (b) all appeal or review proceedings relating to the offence have been completed
or were not instituted within the period allowed. (2) The publication referred to in subsection (1) may specify—
(a) the name and area of residence of the offender; (b) any particulars of the offence that the Commissioner thinks t; and (c) the particulars of the ne or sentence imposed.
CHAPTER 7
ADVANCE RULINGS
De nitions
75. In this Chapter, unless the context indicates otherwise, the following terms, if in single quotation marks, have the following meanings:
‘advance ruling’ means a ‘binding general ruling’, a ‘binding private ruling’ or a ‘binding class ruling’; ‘applicant’ means a person who submits an ‘application’ for a ‘binding private ruling’ or a ‘binding class ruling’; ‘application’ means an application for a ‘binding private ruling’or a ‘binding class ruling’; ‘binding class ruling’ means a written statement issued by SARS regarding the application of a tax Act to a speci c ‘class’ of persons in respect of a ‘proposed transaction’; ‘binding effect’ means the requirement that SARS interpret or apply the applicable tax Act in accordance with an ‘advance ruling’ under section 82; ‘binding general ruling’ means a written statement issued by a senior SARS official under section 89 regarding the interpretation of a tax Act or the application of a tax Act to the stated facts and circumstances; ‘binding private ruling’ means a written statement issued by SARS regarding the application of a tax Act to one or more parties to a ‘proposed transaction’, in respect of the ‘transaction’; ‘class’ means— (a) shareholders, members, bene ciaries or the like in respect of a company,
association, pension fund, trust, or the like; or (b) a group of persons, that may be unrelated and—
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(i) are similarly affected by the application of a tax Act to a ‘proposed transaction’; and
(ii) agree to be represented by an ‘applicant’; ‘class member’ and ‘class members’ means a member or members of the ‘class’ to which a ‘binding class ruling’ applies; ‘non-binding private opinion’ means informal guidance issued by SARS in respect of the tax treatment of a particular set of facts and circumstances or ‘transaction’, but which does not have a ‘binding effect’ within the meaning of section 88; ‘proposed transaction’ means a ‘transaction’ that an ‘applicant’ proposes to undertake, but has not agreed to undertake, other than by way of an agreement that is subject to a suspensive condition or is otherwise not binding; and ‘transaction’ means any transaction, deal, business, arrangement, operation or scheme and includes a series of transactions.
Purpose of advance rulings
76. The purpose of the ‘advance ruling’ system is to promote clarity, consistency and certainty regarding the interpretation and application of a tax Act by creating a framework for the issuance of ‘advance rulings’.
Scope of advance rulings
77. SARS may make an ‘advance ruling’ on any provision of a tax Act.
Private rulings and class rulings
78. (1) SARS may issue a ‘binding private ruling’ upon ‘application’ by a person in accordance with section 79.
(2) SARS may issue a ‘binding class ruling’ upon ‘application’ by a person in accordance with section 79.
(3) SARS may make a ‘binding private ruling’ or ‘binding class ruling’ subject to the conditions and assumptions as may be prescribed in the ruling.
(4) SARS must issue the ruling to the ‘applicant’ at the address shown in the ‘application’ unless the ‘applicant’ provides other instructions, in writing, before the ruling is issued.
(5) A ‘binding private ruling’ or ‘binding class ruling’ may be issued in the prescribed form and manner, must be signed by a senior SARS official and must contain the following:
(a) a statement identifying it as a ‘binding private ruling’ or as a ‘binding class ruling’ made under this section;
(b) the name, tax reference number (if applicable), and postal address of the ‘applicant’;
(c) in the case of a ‘binding class ruling’, a list or a description of the affected ‘class members’;
(d) the relevant statutory provisions or legal issues; (e) a description of the ‘proposed transaction’; (f) any assumptions made or conditions imposed by SARS in connection with the
validity of the ruling; (g) the speci c ruling made; and (h) the period for which the ruling is valid.
(6) In the case of a ‘binding class ruling’, the ‘applicant’ alone is responsible for communicating with the affected ‘class members’ regarding the ‘application’ for the ruling, the issuance, withdrawal or modi cation of the ruling, or any other information or matter pertaining to the ruling.
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Applications for advance rulings
79. (1) An ‘application’ must be made in the prescribed form and manner. (2) An ‘application’ for a ‘binding private ruling’ may be made by one person who is
a party to a ‘proposed transaction’, or by two or more parties to a ‘proposed transaction’ as co-applicants, and if there is more than one ‘applicant’, each ‘applicant’ must join in designating one ‘applicant’ as the lead ‘applicant’ to represent the others.
(3) An ‘application’ for a ‘binding class ruling’ may be made by a person on behalf of a ‘class’.
(4) An ‘application’ must contain the following minimum information: (a) the ‘applicant’s’ name, applicable identi cation or taxpayer reference number,
postal address, email address, and telephone number; (b) the name, postal address, email address and telephone number of the
‘applicant’s’ representative, if any; (c) a complete description of the ‘proposed transaction’ in respect of which the
ruling is sought, including its nancial implications; (d) a complete description of the impact the ‘proposed transaction’ may have
upon the tax liability of the ‘applicant’ or any ‘class member’ or, if relevant, any connected person in relation to the ‘applicant’ or any ‘class member’;
(e) a complete description of any ‘transaction’ entered into by the ‘applicant’ or ‘class member’ prior to submitting the ‘application’ or that may be undertaken after the completion of the ‘proposed transaction’ which may have a bearing on the tax consequences of the ‘proposed transaction’ or may be considered to be part of a series of ‘transactions’ involving the ‘proposed transaction’;
(f) the proposed ruling being sought, including a draft of the ruling; (g) the relevant statutory provisions or legal issues; (h) the reasons why the ‘applicant’ believes that the proposed ruling should be
granted; (i) a statement of the ‘applicant’s’ interpretation of the relevant statutory
provisions or legal issues, as well as an analysis of relevant authorities either considered by the ‘applicant’ or of which the ‘applicant’ is aware, as to whether those authorities support or are contrary to the proposed ruling being sought;
(j) a statement, to the best of the ‘applicant’s’ knowledge, as to whether the ruling requested is referred to in section 80;
(k) a description of the information that the ‘applicant’ believes should be deleted from the nal ruling before publication in order to protect the con dentiality of the ‘applicant’ or ‘class members’;
(l) the ‘applicant’s’ consent to the publication of the ruling by SARS in accordance with section 87; and
(m) in the case of an ‘application’ for a ‘binding class ruling’— (i) a description of the ‘class members’; and
(ii) the impact the ‘proposed transaction’ may have upon the tax liability of the ‘class members’ or, if relevant, any connected person in relation to the ‘applicant’ or to any ‘class member’.
(5) SARS may request additional information from an ‘applicant’ at any time. (6) An ‘application’ must be accompanied by the ‘application’ fee prescribed under
section 81. (7) SARS must provide an ‘applicant’ with a reasonable opportunity to make
representations if, based upon the ‘application’ and any additional information received, it appears that the content of the ruling to be made would differ materially from the proposed ruling sought by the ‘applicant’.
(8) An ‘applicant’ may withdraw an ‘application’ for a ruling at any time. (9) A co-applicant to a ‘binding private ruling’ referred to in subsection (2) may
withdraw from an ‘application’ at any time. (10) A withdrawal does not affect the liability to pay fees under section 81.
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Rejection of application for advance ruling
80. (1) SARS may reject an ‘application’ for an ‘advance ruling’ if the ‘application’— (a) requests or requires the rendering of an opinion, conclusion or determination
regarding— (i) the market value of an asset;
(ii) the application or interpretation of the laws of a foreign country; (iii) the pricing of goods or services supplied by or rendered to a connected
person in relation to the ‘applicant’ or a ‘class member’; (iv) the constitutionality of a tax Act; (v) a ‘proposed transaction’ that is hypothetical or not seriously contem-
plated; (vi) a matter which can be resolved by SARS issuing a directive under the
Fourth Schedule to the Income Tax Act; (vii) whether a person is an independent contractor, labour broker or personal
service provider; or (viii) a matter which is submitted for academic purposes;
(b) contains— (i) a frivolous or vexatious issue;
(ii) an alternative course of action by the ‘applicant’ or a ‘class member’ that is not seriously contemplated; or
(iii) an issue that is the same as or substantially similar to an issue that is— (aa) currently before SARS in connection with an audit, investigation or
other proceeding involving the ‘applicant’ or a ‘class member’ or a connected person in relation to the ‘applicant’ or a ‘class member’;
(bb) the subject of a policy document or draft legislation that has been published; or
(cc) subject to dispute resolution under Chapter 9; (c) involves the application or interpretation of a general or speci c anti-
avoidance provision or doctrine; (d) involves an issue—
(i) that is of a factual nature; (ii) the resolution of which would depend upon assumptions to be made
regarding a future event or other matters which cannot be reasonably determined at the time of the ‘application’;
(iii) which would be more appropriately dealt with by the competent authorities of the parties to an agreement for the avoidance of double taxation;
(iv) in which the tax treatment of the ‘applicant’ is dependent upon the tax treatment of another party to the ‘proposed transaction’ who has not applied for a ruling;
(v) in respect of a ‘transaction’ that is part of another ‘transaction’ which has a bearing on the issue, the details of which have not been disclosed; or
(vi) which is the same as or substantially similar to an issue upon which the ‘applicant’ has already received an unfavourable ruling;
(e) involves a matter the resolution of which would be unduly time-consuming or resource intensive; or
(f) requests SARS to rule on the substance of a ‘transaction’ and disregard its form.
(2) The Commissioner may publish by public notice a list of additional considerations in respect of which the Commissioner may reject an ‘application’.
(3) If SARS requests additional information in respect of an ‘application’ and the ‘applicant’ fails or refuses to provide the information, SARS may reject the ‘application’ without a refund or rebate of any fees imposed under section 81.
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Fees for advance rulings
81. (1) In order to defray the cost of the ‘advance ruling’ system, the Commissioner may by public notice prescribe fees for the issuance of a ‘binding private ruling’ or ‘binding class ruling’, including—
(a) an ‘application’ fee; and (b) a cost recovery fee.
(2) Following the acceptance of an ‘application’ SARS must, if requested, provide the ‘applicant’ with an estimate of the cost recovery fee anticipated in connection with the ‘application’ and must notify the ‘applicant’ if it subsequently appears that this estimate may be exceeded.
(3) The fees imposed under this section constitute fees imposed by SARS within the meaning of section 5(1)(h) of the SARS Act, and constitute funds of SARS within the meaning of section 24 of that Act.
(4) If there is more than one ‘applicant’ for a ruling in respect of a ‘proposed transaction’ SARS may, upon request by the ‘applicants’, impose a single prescribed fee in respect of the ‘application’.
Binding effect of advance rulings
82. (1) If an ‘advance ruling’ applies to a person in accordance with section 83, then SARS must interpret or apply the applicable tax Act to the person in accordance with the ruling.
(2) An ‘advance ruling’ does not have ‘binding effect’ upon SARS in respect of a person unless it applies to the person in accordance with section 83.
(3) A ‘binding general ruling’ may be cited by SARS or a person in any proceedings, including court proceedings.
(4) A ‘binding private ruling’ or ‘binding class ruling’ may not be cited in any proceeding, including court proceedings, other than a proceeding involving an ‘applicant’ or a ‘class member’, as the case may be.
(5) A publication or other written statement issued by SARS does not have ‘binding effect’ unless it is an ‘advance ruling’.
Applicability of advance rulings
83. A ‘binding private ruling’ or ‘binding class ruling’ applies to a person only if— (a) the provision or provisions of the Act at issue are the subject of the ‘advance
ruling’; (b) the person’s set of facts or ‘transaction’ are the same as the particular set of
facts or ‘transaction’ speci ed in the ruling; (c) the person’s set of facts or ‘transaction’ falls entirely within the effective
period of the ruling; (d) any assumptions made or conditions imposed by SARS in connection with the
validity of the ruling have been satis ed or carried out; (e) in the case of a ‘binding private ruling’, the person is an ‘applicant’ identi ed
in the ruling; and (f) in the case of a ‘binding class ruling’, the person is a ‘class member’ identi ed
in the ruling.
Rulings rendered void
84. (1) A ‘binding private ruling’ or ‘binding class ruling’ is void ab initio if— (a) the ‘proposed transaction’ as described in the ruling is materially different
from the ‘transaction’ actually carried out; (b) there is fraud, misrepresentation or non-disclosure of a material fact; or (c) an assumption made or condition imposed by SARS is not satis ed or carried
out. (2) For purposes of this section, a fact described in subsection (1) is considered
material if it would have resulted in a different ruling had SARS been aware of it when the original ruling was made.
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Subsequent changes in tax law
85. (1) Despite any provision to the contrary contained in a tax Act, an ‘advance ruling’ ceases to be effective if—
(a) a provision of the tax Act that was the subject of the ‘advance ruling’ is repealed or amended in a manner that materially affects the ‘advance ruling’, in which case the ‘advance ruling’ will cease to be effective from the date that the repeal or amendment is effective; or
(b) a court overturns or modi es an interpretation of the tax Act on which the ‘advance ruling’ is based, in which case the ‘advance ruling’ will cease to be effective from the date of judgment unless— (i) the decision is under appeal;
(ii) the decision is fact-speci c and the general interpretation upon which the ‘advance ruling’ was based is unaffected; or
(iii) the reference to the interpretation upon which the ‘advance ruling’ was based was obiter dicta.
(2) An ‘advance ruling’ ceases to be effective upon the occurrence of any of the circumstances described in subsection (1), whether or not SARS publishes a notice of withdrawal or modi cation.
Withdrawal or modi cation of advance rulings
86. (1) SARS may withdraw or modify an ‘advance ruling’ at any time. (2) If the ‘advance ruling’ is a ‘binding private ruling’ or ‘binding class ruling’, SARS
must rst provide the ‘applicant’ with notice of the proposed withdrawal or modi cation and a reasonable opportunity to object to the decision.
(3) SARS must specify the date the decision to withdraw or modify the ‘advance ruling’ becomes effective, which date may not be earlier than the date—
(a) the decision is delivered to an ‘applicant’, unless the circumstances in subsection (4) apply; or
(b) in the case of a ‘binding general ruling’, the decision is published. (4) SARS may withdraw or modify a ‘binding private ruling’ or a ‘binding class
ruling’ retrospectively if the ruling was made in error and if— (a) the ‘applicant’ or ‘class member’ has not yet commenced the ‘proposed
transaction’ or has not yet incurred signi cant costs in respect of the arrangement;
(b) a person other than the ‘applicant’ or ‘class member’ will suffer signi cant tax disadvantage if the ruling is not withdrawn or modi ed retrospectively and the ‘applicant’ will suffer comparatively less if the ruling is withdrawn or modi ed retrospectively; or
(c) the effect of the ruling will materially erode the South African tax base and it is in the public interest to withdraw or modify the ruling retrospectively.
Publication of advance rulings
87. (1) A person applying for a ‘binding private ruling’ or ‘binding class ruling’ must consent to the publication of the ruling in accordance with this section.
(2) A ‘binding private ruling’ or ‘binding class ruling’ must be published by SARS for general information in the manner and in the form that the Commissioner may prescribe, but without revealing the identity of an ‘applicant’, ‘class member’ or other person identi ed or referred to in the ruling.
(3) Prior to publication, SARS must provide the ‘applicant’ with a draft copy of the edited ruling for review and comment.
(4) SARS must consider, prior to publication, any comments and proposed edits and deletions submitted by the ‘applicant’, but is not required to accept them.
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(5) An ‘applicant’ for a ‘binding class ruling’ may consent in writing to the inclusion of information identifying it or the ‘proposed transaction’ in order to facilitate communication with the ‘class members’.
(6) The application or interpretation of the relevant tax Act to a ‘transaction’ does not constitute information that may reveal the identity of an ‘applicant’, ‘class member’ or other person identi ed or referred to in the ruling.
(7) SARS must treat the publication of the withdrawal or modi cation of a ‘binding private ruling’ or ‘binding class ruling’ in the same manner and subject to the same requirements as the publication of the original ruling.
(8) Subsection (2) does not— (a) require the publication of a ruling that is materially the same as a ruling
already published; or (b) apply to a ruling that has been withdrawn before SARS has had occasion to
publish it. (9) If an ‘advance ruling’has been published, notice of the withdrawal or modi cation
thereof must be published in the manner and media as the Commissioner may deem appropriate.
Non-binding private opinions
88. (1) A ‘non-binding private opinion’ does not have ‘binding effect’ upon SARS. (2) A ‘non-binding private opinion’ may not be cited in any proceedings including
court proceedings, other than proceedings involving the person to whom the opinion was issued.
Binding general rulings
89. (1) A senior SARS official may issue a ‘binding general ruling’ that is effective for either—
(a) a particular tax period or other de nite period; or (b) an inde nite period.
(2) A ‘binding general ruling’ must state— (a) that it is a ‘binding general ruling’ made under this section; (b) the provisions of a tax Act which are the subject of the ‘binding general
ruling’; and (c) either—
(i) the tax period or other de nite period for which it applies; or (ii) in the case of a ‘binding general ruling’ for an inde nite period, that it is
for an inde nite period and the date or tax period from which it applies. (3) A ‘binding general ruling’ may be issued as an interpretation note or in another
form and may be issued in the manner that the Commissioner prescribes. (4) A publication or other written statement does not constitute and may not be
considered or treated as a ‘binding general ruling’ unless it contains the information prescribed by subsection (2).
Procedures and guidelines for advance rulings
90. The Commissioner may issue procedures and guidelines, in the form of ‘binding general rulings’, for implementation and operation of the ‘advance ruling’ system.
CHAPTER 8
ASSESSMENTS
Original assessments
91. (1) If a tax Act requires a taxpayer to submit a return which does not incorporate a determination of the amount of a tax liability, SARS must make an original assessment
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based on the return submitted by the taxpayer or other information available or obtained in respect of the taxpayer.
(2) If a tax Act requires a taxpayer to submit a return which incorporates a determination of the amount of a tax liability, the submission of the return is an original self-assessment of the tax liability.
(3) If a tax Act requires a taxpayer to make a determination of the amount of a tax liability and no return is required, the payment of the amount of tax due is an original assessment.
(4) If a taxpayer does not or is not required to submit a return, SARS may make an assessment based on an estimate under section 95 if that taxpayer fails to pay the tax required under a tax Act.
(5) If a tax Act requires a taxpayer to submit a return— (a) the making of an assessment under subsection (4) does not detract from the
obligation to submit a return; and (b) the taxpayer in respect of whom the assessment has been issued may, within
the period described in section 104, request SARS to issue a reduced assessment or additional assessment by submitting a complete and correct return.
Additional assessments
92. If at any time SARS is satis ed that an assessment does not re ect the correct application of a tax Act to the prejudice of SARS or the scus, SARS must make an additional assessment to correct the prejudice.
Reduced assessments
93. (1) SARS may make a reduced assessment if— (a) the taxpayer successfully disputed the assessment under Chapter 9; (b) necessary to give effect to a settlement under section 149; (c) necessary to give effect to a judgment pursuant to an appeal under Part E of
Chapter 9 and there is no right of further appeal; or (d) SARS is satis ed that there is an error in the assessment as a result of an
undisputed error by— (i) SARS; or
(ii) the taxpayer in a return. (2) SARS may reduce an assessment despite the fact that no objection has been
lodged or appeal noted.
Jeopardy assessments
94. (1) SARS may make a jeopardy assessment in advance of the date on which the return is normally due, if the Commissioner is satis ed that it is required to secure the collection of tax that would otherwise be in jeopardy.
(2) In addition to any rights under Chapter 9, a review application against an assessment made under this section may be made to the High Court on the grounds that—
(a) its amount is excessive; or (b) circumstances that justify a jeopardy assessment do not exist.
(3) In proceedings under subsection (2), SARS bears the burden of proving that the making of the jeopardy assessment is reasonable under the circumstances.
Estimation of assessments
95. (1) SARS may make an original, additional, reduced or jeopardy assessment based in whole or in part on an estimate if the taxpayer—
(a) fails to submit a return as required; or (b) submits a return or information that is incorrect or inadequate.
(2) SARS must make the estimate based on information readily available to it.
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(3) If the taxpayer is unable to submit an accurate return, a senior SARS official may agree in writing with the taxpayer as to the amount of tax chargeable and issue an assessment accordingly, which assessment is not subject to objection or appeal.
Notice of assessment
96. (1) SARS must issue to the taxpayer assessed a notice of the assessment made by SARS stating—
(a) the name of the taxpayer; (b) the taxpayer’s taxpayer reference number, or if one has not been allocated, any
other form of identi cation; (c) the date of the assessment; (d) the amount of the assessment; (e) the tax period in relation to which the assessment is made; (f) the date for paying the amount assessed; and (g) a summary of the procedures for lodging an objection to the assessment.
(2) In addition to the information provided in terms of subsection (1) SARS must give the person assessed—
(a) in the case of an assessment described in section 95 or an assessment that is not fully based on a return submitted by the taxpayer, a statement of the grounds for the assessment; and
(b) in the case of a jeopardy assessment, the grounds for believing that the tax would otherwise be in jeopardy.
Recording of assessments
97. (1) The particulars of an assessment and the amount of tax payable thereon must be recorded and kept by SARS.
(2) A notice of assessment issued by SARS is regarded as made by a SARS official authorised to do so or duly issued by SARS, until proven to the contrary.
(3) The record of an assessment is not open to public inspection. (4) The record of an assessment, whether in electronic format or otherwise, may be
destroyed by SARS after ve years from the date of assessment or the expiration of a further period that may be required by the Auditor-General.
Withdrawal of assessments
98. (1) SARS may, despite the fact that no objection has been lodged or appeal noted, withdraw an assessment which—
(a) was issued to the incorrect taxpayer; (b) was issued in respect of the incorrect tax period; or (c) was issued as a result of an incorrect payment allocation.
(2) An assessment withdrawn under this section is regarded not to have been issued.
Period of limitations for issuance of assessments
99. (1) SARS may not make an assessment in terms of this Chapter— (a) three years after the date of assessment of an original assessment by SARS; (b) in the case of self-assessment for which a return is required, ve years after the
date of assessment of an original assessment— (i) by way of self-assessment by the taxpayer; or
(ii) if no return is received, by SARS; (c) in the case of a self-assessment for which no return is required, after the
expiration of ve years from the— (i) date of the last payment of the tax for the tax period; or
(ii) effective date, if no payment was made in respect of the tax for the tax period;
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(d) in the case of— (i) an additional assessment if the—
(aa) amount which should have been assessed to tax under the preceding assessment was, in accordance with the practice generally prevail- ing at the date of assessment, not assessed to tax; or
(bb) full amount of tax which should have been assessed under the preceding assessment was, in accordance with the practice, not assessed;
(ii) a reduced assessment, if the preceding assessment was made in accordance with the practice generally prevailing at the date of that assessment; or
(iii) a tax for which no return is required, if the payment was made in accordance with the practice generally prevailing at the date of that payment; or
(e) in respect of a dispute that has been resolved under Chapter 9. (2) Subsection (1) does not apply to the extent that—
(a) in the case of assessment by SARS, the fact that the full amount of tax chargeable was not assessed, was due to— (i) fraud;
(ii) misrepresentation; or (iii) non-disclosure of material facts;
(b) in the case of self-assessment, the fact that the full amount of tax chargeable was not assessed, was due to— (i) fraud;
(ii) intentional or negligent misrepresentation; (iii) intentional or negligent non-disclosure of material facts; or (iv) the failure to submit a return or, if no return is required, the failure to
make the required payment of tax; (c) SARS and the taxpayer so agree prior to the expiry of the limitations period;
or (d) it is necessary to give effect to—
(i) the resolution of a dispute under Chapter 9; or (ii) a judgment pursuant to an appeal under Part E of Chapter 9 and there is
no right of further appeal.
Finality of assessment or decision
100. (1) An assessment or a decision referred to in section 104(2) is nal if, in relation to the assessment or decision—
(a) it is an assessment described— (i) in section 95(1) and no return described in section 91(5)(b) has been
received by SARS; or (ii) in section 95(3);
(b) no objection has been made, or an objection has been withdrawn; (c) after decision of an objection, no notice of appeal has been led; (d) the dispute has been settled under Part F of Chapter 9; (e) an appeal has been determined by the tax board and there is no referral to the
tax court under section 115; (f) an appeal has been determined by the tax court and there is no right of further
appeal; or (g) an appeal has been determined by a higher court and there is no right of further
appeal. (2) Subsection (1) does not prevent SARS from making an additional assessment, but
in respect of an amount of tax that has been dealt with in a disputed assessment referred to in—
(a) subsection (1)(d), (e) and (f), SARS may only make an additional assessment under the circumstances referred to in section 99(2)(a) and (b); and
(b) subsection (1)(g), SARS may not make an additional assessment.
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CHAPTER 9
DISPUTE RESOLUTION
Part A
General
De nitions
101. In this Chapter, unless the context indicates otherwise, the following terms, if in single quotation marks, have the following meanings:
‘appellant’, except in Part E of this Chapter, means a person who has noted an appeal against an assessment or ‘decision’ under section 107; ‘decision’ means a decision referred to in section 104(2); ‘registrar’ means the registrar of the tax court; and ‘rules’ mean the rules made under section 103.
Burden of proof
102. (1) A taxpayer bears the burden of proving— (a) that an amount, transaction, event or item is exempt or otherwise not taxable; (b) that an amount or item is deductible or may be set-off; (c) the rate of tax applicable to a transaction, event, item or class of taxpayer; (d) that an amount quali es as a reduction of tax payable; (e) that a valuation is correct; or (f) whether a ‘decision’ that is subject to objection and appeal under a tax Act, is
incorrect. (2) The burden of proving whether an estimate under section 95 is reasonable or the
facts on which SARS based the imposition of an understatement penalty under Chapter 16, is upon SARS.
Rules for dispute resolution
103. (1) The Minister may, after consultation with the Minister of Justice and Constitutional Development, by public notice make ‘rules’ governing the procedures to lodge an objection and appeal against an assessment or ‘decision’, and the conduct and hearing of an appeal before a tax board or tax court.
(2) The ‘rules’ may provide for alternative dispute resolution procedures under which SARS and the person aggrieved by an assessment or ‘decision’ may resolve a dispute.
Part B
Objection and appeal
Objection against assessment or decision
104. (1) A taxpayer who is aggrieved by an assessment made in respect of the taxpayer may object to the assessment.
(2) The following decisions may be objected to and appealed against in the same manner as an assessment:
(a) a decision under subsection (4) not to extend the period for lodging an objection;
(b) a decision under section 107(2) not to extend the period for lodging an appeal; and
(c) any other decision that may be objected to or appealed against under a tax Act.
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(3) A taxpayer entitled to object to an assessment or ‘decision’ must lodge an objection in the manner, under the terms, and within the period prescribed in the ‘rules’.
(4) A senior SARS official may extend the period prescribed in the ‘rules’ within which objections must be made if satis ed that reasonable grounds exist for the delay in lodging the objection.
(5) The period for objection must not be so extended— (a) for a period exceeding 21 business days, unless a senior SARS official is
satis ed that exceptional circumstances exist which gave rise to the delay in lodging the objection;
(b) if more than three years have lapsed from the date of assessment or the ‘decision’; or
(c) if the grounds for objection are based wholly or mainly on a change in a practice generally prevailing which applied on the date of assessment or the ‘decision’.
Forum for dispute of assessment or decision
105. A taxpayer may not dispute an assessment or ‘decision’ as described in section 104 in any court or other proceedings, except in proceedings under this Chapter or by application to the High Court for review.
Decision on objection
106. (1) SARS must consider a valid objection in the manner and within the period prescribed under this Act and the ‘rules’.
(2) SARS may disallow the objection or allow it either in whole or in part. (3) If the objection is allowed either in whole or in part, the assessment or ‘decision’
must be altered accordingly. (4) SARS must, by notice, inform the taxpayer objecting or the taxpayer’s
representative of the decision referred to in subsection (2), unless the objection is stayed under subsection (6) in which case notice of this must be given in accordance with the ‘rules’.
(5) The notice must state the basis for the decision and a summary of the procedures for appeal.
(6) If a senior SARS official considers that the determination of the objection or an appeal referred to in section 107, whether on a question of law only or on both a question of fact and a question of law, is likely to be determinative of all or a substantial number of the issues involved in one or more other objections or appeals, the official may—
(a) designate that objection or appeal as a test case; and (b) stay the other objections or appeals by reason of the taking of a test case on a
similar objection or appeal before the tax court, in the manner, under the terms, and within the periods prescribed in the ‘rules’.
Appeal against assessment or decision
107. (1) After delivery of the notice of the decision referred to in section 106(4), a taxpayer objecting to an assessment or ‘decision’ may appeal against the assessment or ‘decision’ to the tax board or tax court in the manner, under the terms and within the period prescribed in this Act and the ‘rules’.
(2) A senior SARS official may extend the period within which an appeal must be lodged for—
(a) 21 business days, if satis ed that reasonable grounds exist for the delay; or (b) up to 45 business days, if exceptional circumstances exist that justify an
extension beyond 21 business days. (3) A notice of appeal that does not satisfy the requirements of subsection (1) is not
valid. (4) If an assessment or ‘decision’ has been altered under section 106(3), the
assessment or ‘decision’ as altered is the assessment or ‘decision’ against which the appeal is noted.
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(5) By mutual agreement, SARS and the taxpayer making the appeal may attempt to resolve the dispute through alternative dispute resolution under procedures speci ed in the ‘rules’.
(6) Proceedings on the appeal are suspended while the alternative dispute resolution procedure is ongoing.
Part C
Tax board
Establishment of tax board
108. (1) The Minister may by public notice— (a) establish a tax board or boards for areas that the Minister thinks t; and (b) abolish an existing tax board or establish an additional tax board as
circumstances may require. (2) Tax boards are established under subsection (1) to hear appeals referred to in
section 107 in the manner provided in this Part.
Jurisdiction of tax board
109. (1) An appeal against an assessment or ‘decision’ must in the rst instance be heard by a tax board, if—
(a) the tax in dispute does not exceed the amount the Minister determines by public notice; and
(b) a senior SARS official and the ‘appellant’ so agree. (2) SARS must designate the places where tax boards hear appeals. (3) The tax board must hear an appeal at the place referred to in subsection (2) which
is closest to the ‘appellant’s’ residence or place of business, unless the ‘appellant’ and SARS agree that the appeal be heard at another place.
(4) In making a decision under subsection (1)(b), a senior SARS official must consider whether the grounds of the dispute or legal principles related to the appeal should rather be heard by the tax court.
(5) If the chairperson prior to or during the hearing, considering the grounds of the dispute or the legal principles related to the appeal, believes that the appeal should be heard by the tax court rather than the tax board, the chairperson may direct that the appeal be set down for hearing de novo before the tax court.
Constitution of tax board
110. (1) A tax board consists of— (a) the chairperson, who must be an advocate or attorney from the panel
appointed under section 111; and (b) if the chairperson, a senior SARS official, or the taxpayer considers it
necessary— (i) an accountant who is a member of the panel referred to in section 120;
and (ii) a representative of the commercial community who is a member of the
panel referred to in section 120. (2) Sections 122, 123, 124, 126, 127 and 128 apply, with the necessary changes, and
under procedures determined in the ‘rules’, to the tax board and the chairperson.
Appointment of chairpersons
111. (1) The Minister must, in consultation with the Judge-President of the Division of the High Court with jurisdiction in the area where the tax board is to sit, by public notice appoint advocates and attorneys to a panel from which a chairperson of the tax board must be nominated from time to time.
(2) The persons appointed under subsection (1)— (a) hold office for ve years from the date the notice of appointment is published
in the public notice; and (b) are eligible for reappointment as the Minister thinks t.
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(3) The Minister may terminate an appointment made under this section at any time for misconduct, incapacity or incompetence.
(4) A member of the panel must be appointed as chairperson of a tax board. (5) A chairperson will not solely on account of his or her liability to tax be regarded
as having a personal interest or a con ict of interest in any matter upon which he or she may be called upon to adjudicate.
(6) A chairperson must withdraw from the proceedings as soon as the chairperson becomes aware of a con ict of interest which may give rise to bias which the chairperson may experience with the case concerned or other circumstances that may affect the chairperson’s ability to remain objective for the duration of the case.
(7) Either party may ask for withdrawal of the chairperson on the basis of con ict of interest or other indications of bias, under procedures provided in the ‘rules’.
Clerk of tax board
112. (1) The Commissioner must appoint a clerk of the tax board. (2) The clerk acts as convenor of the tax board. (3) If no chairperson is available in the jurisdiction within which the tax board is to be
convened, the clerk may convene the tax board with a chairperson from another jurisdiction.
(4) The clerk of the tax board must, within the period and in the manner provided in the ‘rules’, submit a notice to the members of the tax board and the ‘appellant’ specifying the time and place for the hearing.
Tax board procedure
113. (1) Subject to the procedure provided for by the ‘rules’, the chairperson determines the procedures during the hearing of an appeal as the chairperson sees t, and each party must have the opportunity to put the party’s case to the tax board.
(2) The tax board is not required to record its proceedings. (3) The chairperson may, when the proceedings open, formulate the issues in the
appeal. (4) The chairperson may adjourn the hearing of an appeal to a convenient time and
place. (5) A senior SARS official must appear at the hearing of the appeal in support of the
assessment or ‘decision’. (6) At the hearing of the appeal the ‘appellant’ must—
(a) appear in person in the case of a natural person; or (b) in any other case, be represented by the representative taxpayer.
(7) If a third party prepared the ‘appellant’s’ return involved in the assessment or ‘decision’, that third party may appear on the ‘appellant’s’ behalf.
(8) The ‘appellant’ may, together with the notice of appeal, or within the further period as the chairperson may allow, request permission to be represented at the hearing otherwise than as referred to in subsection (6).
(9) If neither the ‘appellant’ nor anyone authorised to appear on the ‘appellant’s’ behalf appears before the tax board at the time and place set for the hearing, the tax board may con rm the assessment or ‘decision’ in respect of which the appeal has been lodged—
(a) at the request of the SARS representative; and (b) on proof that the ‘appellant’ was furnished with the notice of the sitting of the
tax board. (10) If the tax board con rms an assessment or ‘decision’ under subsection (9), the
‘appellant’ may not thereafter request that the appeal be referred to the tax court under section 115.
(11) If the senior SARS official fails to appear before the tax board at the time and place set for the hearing, the tax board may allow the ‘appellant’s’ appeal at the ‘appellant’s’ request.
(12) If the tax board allows the appeal under subsection (11), SARS may not thereafter refer the appeal to the tax court under section 115.
(13) Subsections (9), (10), (11) and (12) do not apply if the chairperson is satis ed that sound reasons exist for the non-appearance and the reasons are delivered by the ‘appellant’ or SARS to the clerk of the tax board within 10 business days after the date
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determined for the hearing or the longer period as may be allowed in exceptional circumstances.
Decision of tax board
114. (1) The tax board, after hearing the ‘appellant’s’ appeal against an assessment or ‘decision’, must decide the matter in accordance with this Chapter.
(2) The Chairperson must prepare a written statement of the tax board’s decision that includes the tax board’s ndings of the facts of the case and the reasons for its decision, within 60 business days after conclusion of the hearing.
(3) The clerk must by notice in writing submit a copy of the tax board’s decision to SARS and the ‘appellant’.
Referral of appeal to tax court
115. (1) If the ‘appellant’ or SARS is dissatis ed with the tax board’s decision or the Chairperson fails to deliver the decision under section 114(2) within the prescribed 60 business day period, the ‘appellant’ or SARS may within 21 business days, or within the further period as the Chairperson may on good cause shown allow, after the date of the notice referred to in section 114(3) or the expiry of the period referred to in section 114(2), require, in writing, that the appeal be referred to the tax court for hearing.
(2) The tax court must hear de novo a referral of an appeal from the tax board’s decision under subsection (1).
Part D
Tax court
Establishment of tax court
116. (1) The President of the Republic may by proclamation in the Gazette establish a tax court or additional tax courts for areas that the President thinks t and may abolish an existing tax court as circumstances may require.
(2) The tax court is a court of record.
Jurisdiction of tax court
117. (1) The tax court for purposes of this Chapter has jurisdiction over tax appeals lodged under section 107.
(2) The place where an appeal is heard is determined by the ‘rules’. (3) The court may hear an interlocutory application relating to an objection or appeal
and may decide on a procedural matter as provided for in the ‘rules’.
Constitution of tax court
118. (1) A tax court established under this Act consists of— (a) a judge or an acting judge of the High Court, who is the president of the tax
court; (b) an accountant selected from the panel of members appointed in terms of
section 120; and (c) a representative of the commercial community selected from the panel of
members appointed in terms of section 120. (2) If the president of the tax court, a senior SARS official or the ‘appellant’ so
requests, the representative of the commercial community referred to in subsection (1)(c) must—
(a) if the appeal relates to the business of mining, be a registered mining engineer; or
(b) if the appeal involves the valuation of assets, be a sworn appraiser.
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(3) If an appeal to the tax court involves a matter of law only or is an application for condonation or an interlocutory application, the president of the court alone must decide the appeal.
(4) The president of the court alone decides whether a matter for decision involves a matter of fact or a matter of law.
(5) The Judge-President of the Division of the High Court with jurisdiction in the area where the relevant tax court is situated, may direct that the tax court consist of three judges or acting judges of the High Court (one of whom is the president of the tax court) and the members of the court referred to in subsections (1)(b) and (c) and (2), where necessary, if—
(a) the amount in dispute exceeds R50 million; or (b) SARS and the ‘appellant’ jointly apply to the Judge-President.
Nomination of president of tax court
119. (1) The Judge-President of the Division of the High Court with jurisdiction in the area for which a tax court has been constituted must nominate and second a judge or an acting judge of the division to be the president of that tax court.
(2) The Judge-President must determine whether the secondment referred to in subsection (1) applies for a period, or for the hearing of a particular case.
(3) A judge will not solely on account of his or her liability to tax be regarded as having a personal interest or a con ict of interest in any matter upon which he or she may be called upon to adjudicate.
Appointment of panel of tax court members
120. (1) The President of the Republic by proclamation in the Gazette must appoint the panel of members of a tax court for purposes of section 118(1)(b) and (c) for a term of office of ve years from the date of the relevant proclamation.
(2) A person appointed in terms of subsection (1) must be a person of good standing who has appropriate experience.
(3) A person appointed in terms of subsection (1) is eligible for reappointment for a further period or periods as the President of the Republic may think t.
(4) The President of the Republic may terminate the appointment of a member under this section at any time for misconduct, incapacity or incompetence.
(5) A member’s appointment lapses in the event that the tax court is abolished under section 116(1).
(6) A member of the tax court must perform the member’s functions independently, impartially and without fear, favour or prejudice.
Appointment of registrar of tax court
121. (1) The Commissioner appoints the ‘registrar’ of the tax court. (2) A person appointed as ‘registrar’ and persons appointed in the ‘registrar’s’ office
are SARS employees. (3) The ‘registrar’ and other persons referred to in subsection (2) must perform their
functions under this Act and the ‘rules’ independently, impartially and without fear, favour or prejudice.
Con ict of interest of tax court members
122. (1) A member of the court must withdraw from the proceedings as soon as the member becomes aware of a con ict of interest which may give rise to bias which the member may experience with the case concerned or other circumstances that may affect the member’s ability to remain objective for the duration of the case.
(2) Either party may ask for withdrawal of a member on the basis of con ict of interest or other indications of bias, under procedures provided in the ‘rules’.
(3) A member of the court will not solely on account of his or her liability to tax be regarded as having a personal interest or a con ict of interest in the case.
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Death, retirement or incapability of judge or member
123. (1) If at any stage during the hearing of an appeal, or after hearing of the appeal but before judgment has been handed down, one of the judges dies, retires or becomes otherwise incapable of acting in that capacity, the hearing of an appeal must be heard de novo.
(2) If the tax court has been constituted under section 118(5), the hearing of the appeal referred to in subsection (1) must proceed before the remaining judges and members, if the remaining judges constitute the majority of judges before whom the hearing was commenced.
(3) If at any stage during or after the hearing of an appeal but before judgment has been handed down, a member of the tax court dies, retires or becomes incapable of acting in that capacity, the hearing of the appeal must proceed before the president of the tax court, any other judges, the remaining member, and, if the president deems it necessary, a replacement member.
(4) The judgment of the remaining judges and members referred to in subsection (1) or (3) is the judgment of the court.
Sitting of tax court not public
124. (1) The tax court sittings for purposes of hearing an appeal under section 107 are not public.
(2) The president of the tax court may in exceptional circumstances, on request of any person, allow that person or any other person to attend the sitting but may do so only after taking into account any representations that the ‘appellant’ and a senior SARS official, referred to in section 12 appearing in support of the assessment or ‘decision’, wishes to make on the request.
Appearance at hearing of tax court
125. (1) A senior SARS official referred to in section 12 may appear at the hearing of an appeal in support of the assessment or ‘decision’.
(2) The ‘appellant’ or the ‘appellant’s’ representative may appear at the hearing of an appeal in support of the appeal.
Subpoena of witness to tax court
126. SARS, the ‘appellant’ or the president of a tax court may subpoena any witness in the manner prescribed in the ‘rules’, whether or not that witness resides within the tax court’s area of jurisdiction.
Non-attendance by witness or failure to give evidence
127. (1) A person subpoenaed under section 126 is liable to the ne or imprisonment speci ed in subsection (2), if the person without just cause fails to—
(a) give evidence at the hearing of an appeal; (b) remain in attendance throughout the proceedings unless excused by the
president of the tax court; or (c) produce a document or thing in the person’s possession or under the person’s
control according to the subpoena. (2) The president of the tax court may impose a ne or, in default of payment,
imprisonment for a period not exceeding three months, on a person described in subsection (1) upon being satis ed by—
(a) oath or solemn declaration; or (b) the return of the person by whom the subpoena was served,
that the person has been duly subpoenaed and that the person’s reasonable expenses have been paid or offered.
(3) The president of the tax court may, in addition to imposing a ne or imprisonment under subsection (2), issue a warrant for the person to be apprehended and brought to give evidence or to produce the document or thing in accordance with the subpoena.
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(4) A ne imposed under subsection (2) is enforceable as if it were a penalty imposed by a High Court in similar circumstances and any laws applicable in respect of a penalty imposed by a High Court apply with the necessary changes in respect of the ne.
(5) The president of the tax court may, on good cause shown, remit the whole or any part of the ne or imprisonment imposed under subsection (2).
(6) The president of the tax court may order the costs of a postponement or adjournment resulting from the default of a witness, or a portion of the costs, to be paid out of a ne imposed under subsection (2).
Contempt of tax court
128. (1) If, during the sitting of a tax court, a person— (a) wilfully insults a judge or member of the tax court; (b) wilfully interrupts the tax court proceedings; or (c) otherwise misbehaves in the place where the hearing is held,
the president of a tax court may impose upon that person a ne or, in default of payment, imprisonment for a period not exceeding three months.
(2) An order made under subsection (1) must be executed as if it were an order made by a Magistrate’s Court under similar circumstances, and the provisions of a law which apply in respect of such an order made by a Magistrate’s Court apply with the necessary changes in respect of an order made under subsection (1).
Decision by tax court
129. (1) The tax court, after hearing the ‘appellant’s’ appeal lodged under section 107 against an assessment or ‘decision’, must decide the matter on the basis that the burden of proof as described in section 102 is upon the taxpayer.
(2) In the case of an assessment or ‘decision’ under appeal, the tax court may— (a) con rm the assessment or ‘decision’; (b) order the assessment or ‘decision’ to be altered; or (c) refer the assessment back to SARS for further examination and assessment.
(3) In the case of an appeal against an understatement penalty imposed by SARS under a tax Act, the tax court must decide the matter on the basis that the burden of proof is upon SARS and may reduce, con rm or increase the understatement penalty so imposed.
(4) If SARS alters an assessment as a result of a referral under sub- section (2)(c), the assessment is subject to objection and appeal.
Order for costs by tax court
130. (1) The tax court may, in dealing with an appeal under this Chapter and on application by an aggrieved party, grant an order for costs in favour of the party, if—
(a) the SARS grounds of assessment or ‘decision’ are held to be unreasonable; (b) the ‘appellant’s’ grounds of appeal are held to be unreasonable; (c) the tax board’s decision is substantially con rmed; (d) the hearing of the appeal is postponed at the request of the other party; or (e) the appeal is withdrawn or conceded by the other party after the ‘registrar’
allocates a date of hearing. (2) The costs referred to in subsection (1) must be determined in accordance with the
fees prescribed by the rules of the High Court. (3) A cost order in favour of SARS constitutes funds of SARS within the meaning of
section 24 of the SARS Act.
Registrar to notify parties of judgment of tax court
131. The ‘registrar’ must notify the ‘appellant’ and SARS of the court’s decision within 21 business days of the date of the delivery of the written decision.
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Publication of judgment of tax court
132. A judgment of the tax court dealing with an appeal under this Chapter must be published for general information and, unless the sitting of the tax court was public under the circumstances referred to in section 124(2), in a form that does not reveal the ‘appellant’s’ identity.
Part E
Appeal against tax court decision
Appeal against decision of tax court
133. (1) The taxpayer or SARS may in the manner provided for in this Act appeal against a decision of the tax court under sections 129 and 130.
(2) An appeal against a decision of the tax court lies— (a) to the full bench of the Provincial Division of the High Court which has
jurisdiction in the area in which the tax court sitting is held; or (b) to the Supreme Court of Appeal, without an intermediate appeal to the
Provincial Division, if— (i) the president of the tax court has granted leave under the ‘rules’; or
(ii) the appeal was heard by the tax court constituted under section 118(5).
Notice of intention to appeal tax court decision
134. (1) A party who intends to lodge an appeal against a decision of the tax court (hereinafter in this Part referred to as the appellant) must, within 21 business days after the date of the notice by the ‘registrar’ notifying the parties of the tax court’s decision under section 131, or within a further period as the president of the tax court may on good cause shown allow, lodge with the ‘registrar’ and serve upon the opposite party or the opposite party’s attorney or agent, a notice of intention to appeal against the decision.
(2) A notice of intention to appeal must state— (a) in which division of the High Court the appellant wishes the appeal to be
heard; (b) whether the whole or only part of the judgment is to be appealed against (if in
part only, which part), and the grounds of the intended appeal, indicating the ndings of fact or rulings of law to be appealed against; and
(c) whether the appellant requires a transcript of the evidence given at the tax court’s hearing of the case in order to prepare the record on appeal (or if only a part of the evidence is required, which part).
(3) If the appellant is the taxpayer and requires a— (a) transcript of the evidence or a part thereof from the ‘registrar’, the appellant
must pay the fees prescribed by the Commissioner by public notice; or (b) copy of the recording of the evidence or a part thereof from the ‘registrar’ for
purposes of private transcription, the appellant must pay the fees prescribed by the Commissioner in the public notice.
(4) A fee paid under subsection (3) constitutes funds of SARS within the meaning of section 24 of the SARS Act.
Leave to appeal to Supreme Court of Appeal against tax court decision
135. (1) If an intending appellant wishes to appeal against a decision of the tax court, the ‘registrar’ must submit the notice of intention to appeal lodged under section 134(1)
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to the president of the tax court, who must make an order granting or refusing leave to appeal having regard to the grounds of the intended appeal as indicated in the notice.
(2) If the president of the tax court cannot act in that capacity or it is inconvenient for the president to act in that capacity for purposes of this section, the Judge-President of the relevant Division of the High Court may nominate and second another judge or acting judge to act as president of the tax court for that purpose.
(3) Subject to the right to petition the Chief Justice for leave to appeal to the Supreme Court of Appeal in terms of section 21 of the Supreme Court Act, 1959 (Act No. 59 of 1959), an order made by the president of the tax court under subsection (1) is nal.
Failure to lodge notice of intention to appeal tax court decision
136. (1) A person entitled to appeal against a decision of the tax court, who has not lodged a notice of intention to appeal within the time and in the manner required by section 134, abandons, subject to any right to note a cross appeal, the right of appeal against the decision.
(2) A person who under section 134 lodged a notice of intention to appeal against a decision of the tax court but who has subsequently withdrawn the notice, abandons the right to note an appeal or cross-appeal against the decision.
Notice by registrar of period for appeal of tax court decision
137. (1) After the expiry of the time allowed under section 134(1) for the lodging of a notice of intention to appeal, the ‘registrar’ must—
(a) give notice to a person who has lodged a notice of intention to appeal which has not been withdrawn, that if the person decides to appeal, the appeal must be noted within 21 business days after the date of the ‘registrar’s’ notice; and
(b) supply to the person referred to in paragraph (a) a certi ed copy of an order that the president of the tax court made under section 135 which is the subject of the intended appeal.
(2) The ‘registrar’may not give notice under subsection (1)(a) until the order has been made or the transcript has been completed if—
(a) it appears that the president of the tax court will make an order under section 135; or
(b) an intending appellant requires a transcript of evidence given at the hearing of the case by the tax court as envisaged in section 134(2)(c).
(3) If the opposite party is not also an intending appellant in the same case, the ‘registrar’ must provide to the opposite party copies of the notice and any order referred to in subsection (1)(a) and (b).
Notice of appeal to Supreme Court of Appeal against tax court decision
138. (1) If a person has— (a) appealed to the Supreme Court of Appeal from a court established under
section 118(5); (b) been granted leave to appeal to the Supreme Court of Appeal under
section 135; or (c) successfully petitioned to the Supreme Court of Appeal for leave to appeal,
the appeal which a party must note against a decision given in the relevant case must be noted to that Court.
(2) If the notice of intention to appeal was noted to the High Court or leave to appeal to the Supreme Court of Appeal has been refused under section 135, the party who lodged the notice of intention to appeal must note an appeal to the appropriate Provincial Division of the High Court.
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(3) The notice of appeal must be lodged within the period referred to in section 137(1)(a) or within a longer period as may be allowed under the rules of the court to which the appeal is noted.
(4) A notice of appeal must be in accordance with the requirements in the rules of the relevant higher court.
Notice of cross-appeal of tax court decision
139. (1) A cross-appeal against a decision of the tax court in a case in which an appeal has been lodged under section 138, must be noted by lodging a written notice of cross-appeal with the ‘registrar’, serving it upon the opposite party or the opposite party’s attorney and lodging it with the registrar of the court to which the cross-appeal is noted.
(2) The notice of cross-appeal must be lodged within 21 business days after the date the appeal is noted under section 138 or within a longer period as may be allowed under the rules of the court to which the cross-appeal is noted.
(3) A notice of cross-appeal must state— (a) whether the whole or only part of the judgment is appealed against, and if a
part, which part; (b) the grounds of cross-appeal specifying the ndings of fact or rulings of law
appealed against; and (c) any further particulars that may be required under the rules of the court to
which the cross-appeal is noted.
Record of appeal of tax court decision
140. (1) The record lodged with a court to which an appeal against a decision of a tax court is noted, includes all documents placed before the tax court under the ‘rules’.
(2) Documents submitted in the tax court which do not relate to the matters in dispute in the appeal may be excluded from the record with the consent of the parties.
Abandonment of judgment
141. (1) A party may by notice in writing lodged with the ‘registrar’ and the opposite party or the opposite party’s attorney or agent, abandon the whole or a part of a judgment in the party’s favour.
(2) A notice of abandonment becomes part of the record.
Part F
Settlement of dispute
De nitions
142. In this Part, unless the context indicates otherwise, the following terms, if in single quotation marks, have the following meanings:
‘dispute’ means a disagreement on the interpretation of either the relevant facts involved or the law applicable thereto, or of both the facts and the law, which arises pursuant to the issue of an assessment or the making of a ‘decision’; and ‘settle’ means, after the lodging of an appeal under this Chapter, to resolve a ‘dispute’ by compromising a disputed liability, otherwise than by way of either SARS or the person concerned accepting the other party’s interpretation of the facts or the law applicable to those facts or of both the facts and the law, and ‘settlement’ must be construed accordingly.
Purpose of Part
143. (1) A basic principle in tax law is that it is the duty of SARS to assess and collect tax according to the laws enacted by Parliament and not to forgo a tax which is properly chargeable and payable.
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(2) Circumstances may require that the strictness and rigidity of this basic principle be tempered, if such exibility is to the best advantage of the State.
(3) The purpose of this Part is to prescribe the circumstances in which it is appropriate for SARS to temper the basic principle and ‘settle’ a ‘dispute’.
Initiation of settlement procedure
144. (1) Either party to a ‘dispute’ may initiate a ‘settlement’ procedure by communication with the other party.
(2) Neither SARS nor the taxpayer has the right to require the other party to engage in a ‘settlement’ procedure.
Circumstances where settlement is inappropriate
145. It is inappropriate and not to the best advantage of the State to ‘settle’ a ‘dispute’ if in the opinion of SARS—
(a) no circumstances envisaged in section 146 exist and— (i) the action by the person concerned that relates to the ‘dispute’ constitutes
intentional tax evasion or fraud; (ii) the ‘settlement’ would be contrary to the law or a practice generally
prevailing and no exceptional circumstances exist to justify a departure from the law or practice; or
(iii) the person concerned has not complied with the provisions of a tax Act and the non-compliance is of a serious nature;
(b) it is in the public interest to have judicial clari cation of the issue and the case is appropriate for this purpose; or
(c) the pursuit of the matter through the courts will signi cantly promote taxpayer compliance with a tax Act and the case is suitable for this purpose.
Circumstances where settlement is appropriate
146. The Commissioner may, if it is to the best advantage of the state, ‘settle’ a ‘dispute’, in whole or in part, on a basis that is fair and equitable to both the person concerned and to SARS, having regard to—
(a) whether the ‘settlement’ would be in the interest of good management of the tax system, overall fairness, and the best use of SARS’ resources;
(b) SARS’ cost of litigation in comparison to the possible bene ts with reference to— (i) the prospects of success in court;
(ii) the prospects of the collection of the amounts due; and (iii) the costs associated with collection;
(c) whether there are any— (i) complex factual issues in contention; or
(ii) evidentiary difficulties, which are sufficient to make the case problematic in outcome or unsuitable for resolution through the alternative ‘dispute’ resolution procedures or the courts;
(d) a situation in which a participant or a group of participants in a tax avoidance arrangement has accepted SARS’ position in the ‘dispute’, in which case the ‘settlement’ may be negotiated in an appropriate manner required to unwind existing structures and arrangements; or
(e) whether ‘settlement’ of the ‘dispute’ is a cost-effective way to promote compliance with a tax Act by the person concerned or a group of taxpayers.
Procedure for settlement
147. (1) A person participating in a ‘settlement’ procedure must disclose all relevant facts during the discussion phase of the process of ‘settling’ a ‘dispute’.
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(2) A ‘settlement’ is conditional upon full disclosure of material facts known to the person concerned at the time of ‘settlement’.
(3) A dispute ‘settled’ in whole or in part must be evidenced by an agreement in writing between the parties in the prescribed format and must include details on—
(a) how each particular issue is ‘settled’; (b) relevant undertakings by the parties; (c) treatment of the issue in future years; (d) withdrawal of objections and appeals; and (e) arrangements for payment.
(4) The agreement must be signed by a senior SARS official. (5) SARS must, if the ‘dispute’ is not ultimately ‘settled’, explain to the person
concerned the further rights of objection and appeal. (6) The agreement and terms of a ‘settlement’ agreement must remain con dential,
unless their disclosure is authorised by law or SARS and the person concerned agree otherwise.
Finality of settlement agreement
148. (1) The settlement agreement represents the nal agreed position between the parties and is in full and nal ‘settlement’ of all or the speci ed aspects of the ‘dispute’ in question between the parties.
(2) SARS must adhere to the terms of the agreement, unless material facts were not disclosed as required by section 147(1) or there was fraud or misrepresentation of the facts.
(3) If the person concerned fails to pay the amount due pursuant to the agreement or otherwise fails to adhere to the agreement, a senior SARS official may—
(a) regard the agreement as void and proceed with the matter in respect of the original disputed amount; or
(b) enforce collection of the ‘settlement’ amount under the collection provisions of this Act in full and nal ‘settlement’ of the ‘dispute’.
Register of settlements and reporting
149. (1) SARS must— (a) maintain a register of all ‘disputes’ that are ‘settled’ under this Part; and (b) document the process under which each ‘dispute’ is ‘settled’.
(2) The Commissioner must provide an annual summary of ‘settlements’ to the Auditor-General and to the Minister.
(3) The summary referred to in subsection (2) must be submitted by no later than the date on which the annual report for SARS is submitted to Parliament for the year and must—
(a) be in a format which, subject to section 70(5), does not disclose the identity of the person concerned; and
(b) contain details, arranged by main classes of taxpayers or sections of the public, of the number of ‘settlements’, the amount of tax forgone, and the estimated savings in litigation costs.
Alteration of assessment or decision on settlement
150. (1) If a ‘dispute’ between SARS and the person aggrieved by an assessment or ‘decision’ is ‘settled’ under this Part, SARS may, despite anything to the contrary contained in a tax Act, alter the assessment or ‘decision’ to give effect to the ‘settlement’.
(2) An altered assessment or ‘decision’ referred to in subsection (1) is not subject to objection and appeal.
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CHAPTER 10
TAX LIABILITY AND PAYMENT
Part A
Taxpayers
Taxpayer
151. In this Act, taxpayer means— (a) a person chargeable to tax; (b) a representative taxpayer; (c) a withholding agent; (d) a responsible third party; or (e) a person who is the subject of a request to provide assistance under an
international tax agreement.
Person chargeable to tax
152. A person chargeable to tax is a person upon whom the liability for tax due under a tax Act is imposed and who is personally liable for the tax.
Representative taxpayer
153. (1) In this Act, a representative taxpayer means a person who is responsible for paying the tax liability of another person as an agent, other than as a withholding agent, and includes a person who—
(a) is a representative taxpayer in terms of the Income Tax Act; (b) is a representative employer in terms of the Fourth Schedule to the Income
Tax Act; or (c) is a representative vendor in terms of section 46 of the Value-Added Tax Act.
(2) Every person who becomes or ceases to be a representative taxpayer (except a public officer of a company) under a tax Act, must notify SARS accordingly in such form as the Commissioner may prescribe, within 21 business days after becoming or ceasing to be a representative taxpayer, as the case may be.
(3) A taxpayer is not relieved from any liability, responsibility or duty imposed under a tax Act by reason of the fact that the taxpayer’s representative—
(a) failed to perform such responsibilities or duties; or (b) is liable for the tax payable by the taxpayer.
Liability of representative taxpayer
154. (1) A representative taxpayer is, as regards— (a) the income to which the representative taxpayer is entitled; (b) moneys to which the representative taxpayer is entitled or has the manage-
ment or control; (c) transactions concluded by the representative taxpayer; and (d) anything else done by the representative taxpayer,
in such capacity— (i) subject to the duties, responsibilities and liabilities of the taxpayer repre-
sented; (ii) entitled to any abatement, deduction, exemption, right to set off a loss, and
other items that could be claimed by the person represented; and (iii) liable for the amount of tax speci ed by a tax Act.
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(2) A representative taxpayer may be assessed in respect of any tax under sub- section (1), but such assessment is regarded as made upon the representative taxpayer in such capacity only.
Personal liability of representative taxpayer
155. A representative taxpayer is personally liable for tax payable in the representa- tive taxpayer’s representative capacity, if, while it remains unpaid—
(a) the representative taxpayer alienates, charges or disposes of amounts in respect of which the tax is chargeable; or
(b) the representative taxpayer disposes of or parts with funds or moneys, which are in the representative taxpayer’s possession or come to the representative taxpayer after the tax is payable, if the tax could legally have been paid from or out of the funds or moneys.
Withholding agent
156. In this Act, withholding agent means a person who must under a tax Act withhold an amount of tax and pay it to SARS.
Personal liability of withholding agent
157. (1) A withholding agent is personally liable for an amount of tax— (a) withheld and not paid to SARS; or (b) which should have been withheld under a tax Act but was not so withheld.
(2) An amount paid or recovered from a withholding agent in terms of subsection (1) is an amount of tax which is paid on behalf of the relevant taxpayer in respect of his or her liability under the relevant tax Act.
Responsible third party
158. In this Act, responsible third party means a person who becomes otherwise liable for the tax liability of another person, other than as a representative taxpayer or as a withholding agent, whether in a personal or representative capacity.
Personal liability of responsible third party
159. A responsible third party is personally liable to the extent described in Part D of Chapter 11.
Right to recovery of taxpayer
160. (1) A representative taxpayer, withholding agent or responsible third party who, as such, pays a tax is entitled—
(a) to recover the amount so paid from the person on whose behalf it is paid; or (b) to retain out of money or assets in that person’s possession or that may come
to that person in that representative capacity, an amount equal to the amount so paid.
(2) Unless otherwise provided for in a tax Act, a taxpayer on whose behalf an amount deducted or withheld has been paid to SARS by a withholding agent is not entitled to recover from the withholding agent the amount so deducted or withheld.
Security by taxpayer
161. (1) A senior SARS official may require security from a taxpayer to safeguard the collection of tax by SARS, if the taxpayer—
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(a) is a representative taxpayer, withholding agent or responsible third party who was previously held liable in the taxpayer’s personal capacity under a tax Act;
(b) has been convicted of a tax offence; (c) has frequently failed to pay amounts of tax due; (d) has frequently failed to carry out other obligations imposed under any tax Act
which constitutes non-compliance referred to in Chapter 15; or (e) is under the management or control of a person who is or was a person
contemplated in paragraphs (a) to (d). (2) If security is required, SARS must by written notice to the taxpayer require the
taxpayer to furnish to or deposit with SARS, within such period that SARS may allow, security for the payment of any tax which has or may become payable by the taxpayer in terms of a tax Act.
(3) The security must be of the nature, amount and form that the senior SARS official directs.
(4) If the security is in the form of cash deposit and the taxpayer fails to make such deposit, it may—
(a) be collected as if it were a tax debt of the taxpayer recoverable under this Act; or
(b) be set-off against any refund due to the taxpayer. (5) A senior SARS official may, in the case of a taxpayer which is not a natural person
and cannot provide the security required under subsection (1), require of any or all of the members, shareholders or trustees who control or are involved in the management of the taxpayer to enter into a contract of suretyship in respect of the taxpayer’s liability for tax which may arise from time to time.
Part B
Payment of tax
Determination of time and manner of payment of tax
162. (1) Tax must be paid by the day and at the place noti ed by SARS or as speci ed in a tax Act, and must be paid as a single amount or in terms of an instalment payment agreement under section 167.
(2) SARS may prescribe the method of payment of tax, including electronically. (3) Despite sections 96(1)(f) and 167, a senior SARS official may, if there are
reasonable grounds to believe that— (a) a taxpayer will not pay the full amount of tax; (b) a taxpayer will dissipate the taxpayer’s assets; or (c) that recovery may become difficult in the future,
require the taxpayer to— (i) pay the full amount immediately upon receipt of the notice of assessment or a
notice described in section 167(6) or within the period as the official deems appropriate under the circumstances; or
(ii) provide such security as the official deems necessary.
Preservation order
163. (1) A senior SARS official may authorise an ex parte application to the High Court for an order for the preservation of any assets of a taxpayer or other person prohibiting any person, subject to the conditions and exceptions as may be speci ed in the preservation order, from dealing in any manner with the assets to which the order relates.
(2) (a) SARS may, in anticipation of the application and in order to prevent any realisable assets from being disposed of or removed which may frustrate the collection of the full amount of tax due, seize the assets pending the outcome of an application for a preservation order, which application must commence within 24 hours from the time of seizure of the assets or the further period that SARS and the taxpayer or other person may agree on.
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(b) Until a preservation order is made in respect of the seized assets, SARS must take reasonable steps to preserve and safeguard the assets.
(3) A preservation order may be made if required to secure the collection of tax and in respect of—
(a) realisable assets seized by SARS under subsection (2); (b) the realisable assets as may be speci ed in the order and which are held by the
person against whom the preservation order is being made; (c) all realisable assets held by the person, whether it is speci ed in the order or
not; or (d) all assets which, if transferred to the person after the making of the
preservation order, would be realisable assets. (4) The court to which an application for a preservation order is made may—
(a) make a provisional preservation order having immediate effect; (b) simultaneously grant a rule nisi calling upon the taxpayer or other person upon
a business day mentioned in the rule to appear and to show cause why the preservation order should not be made nal; and
(c) upon application by the taxpayer or other person, anticipate the return day for the purpose of discharging the provisional preservation order if 24 hours’ notice of the application has been given to SARS.
(5) A preservation order must provide for notice to be given to the taxpayer and a person from whom the assets are seized.
(6) For purposes of the notice or rule required under subsection (4)(b) or (5), if the taxpayer or other person has been absent for a period of 21 business days from his or her usual place of residence or business within the Republic, the court may direct that it will be sufficient service of that notice or rule if a copy thereof is affixed to or near the outer door of the building where the court sits and published in the Gazette, unless the court directs some other mode of service.
(7) The court, in granting a preservation order, may make any ancillary orders regarding how the assets must be dealt with, including—
(a) authorising the seizure of all movable assets; (b) appointing a curator bonis in whom the assets of that taxpayer or another
person liable for tax vest; (c) realising the assets in satisfaction of the tax debt; (d) making provision as the court may think t for the reasonable living expenses
of a person against whom the preservation order is being made and his or her legal dependants, if the court is satis ed that the person has disclosed under oath all direct or indirect interests in assets subject to the order and that the person cannot meet the expenses concerned out of his or her unrestrained assets; or
(e) any other order that the court considers appropriate for the proper, fair and effective execution of the order.
(8) The court making a preservation order may also make such further order in respect of the discovery of any facts including facts relating to any asset over which the taxpayer or other person may have effective control and the location of the assets as the court may consider necessary or expedient with a view to achieving the objects of the preservation order.
(9) The court which made a preservation order may on application by a person affected by that order vary or rescind the order or an order authorising the seizure of the assets concerned or other ancillary order if it is satis ed that—
(a) the operation of the order concerned will cause the applicant undue hardship; and
(b) the hardship that the applicant will suffer as a result of the order outweighs the risk that the assets concerned may be destroyed, lost, damaged, concealed or transferred.
(10) A preservation order remains in force— (a) pending the setting aside thereof on appeal, if any, against the preservation
order; or (b) until the assets subject to the preservation order are no longer required for
purposes of the satisfaction of the tax debt. (11) In order to prevent any realisable assets that were not seized under subsection (2)
from being disposed of or removed contrary to a preservation order under this section,
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a senior SARS official may seize the assets if the official has reasonable grounds to believe that the assets will be so disposed of or removed.
(12) Assets seized under this section must be dealt with in accordance with the directions of the High Court which made the relevant preservation order.
Payment of tax pending objection or appeal
164. (1) Unless a senior SARS official otherwise directs in terms of subsection (3)— (a) the obligation to pay tax; and (b) the right of SARS to receive and recover tax,
will not be suspended by an objection or appeal or pending the decision of a court of law pursuant to an appeal under section 133.
(2) A taxpayer may request a senior SARS official to suspend the payment of tax or a portion thereof due under an assessment if the taxpayer intends to dispute or disputes the liability to pay that tax under Chapter 9.
(3) A senior SARS official may suspend payment of the disputed tax having regard to—
(a) the compliance history of the taxpayer; (b) the amount of tax involved; (c) the risk of dissipation of assets by the taxpayer concerned during the period of
suspension; (d) whether the taxpayer is able to provide adequate security for the payment of
the amount involved; (e) whether payment of the amount involved would result in irreparable nancial
hardship to the taxpayer; (f) whether sequestration or liquidation proceedings are imminent; (g) whether fraud is involved in the origin of the dispute; or (h) whether the taxpayer has failed to furnish information requested under this
Act for purposes of a decision under this section. (4) If the payment of tax which the taxpayer intended to dispute was suspended under
subsection (3) and subsequently— (a) no objection is lodged; (b) an objection is disallowed and no appeal is lodged; or (c) an appeal to the tax board or court is unsuccessful and no further appeal is
noted, the suspension is revoked with immediate effect from the date of the expiry of the relevant prescribed time period or any extension of the relevant time period under this Act.
(5) A senior SARS official may deny a request in terms of subsection (2) or revoke a decision to suspend payment in terms of that subsection with immediate effect if satis ed that—
(a) after the lodging of the objection or appeal, the objection or appeal is frivolous or vexatious;
(b) the taxpayer is employing dilatory tactics in conducting the objection or appeal;
(c) on further consideration of the factors referred to in subsection (3), the suspension should not have been given; or
(d) there is a material change in any of the factors referred to in subsection (3), upon which the decision to suspend the amount involved was based.
(6) During the period commencing on the day that— (a) SARS receives a request for suspension under subsection (2); or (b) a suspension is revoked under subsection (5),
and ending 10 business days after notice of SARS’ decision or revocation has been issued to the taxpayer, no recovery proceedings may be taken unless SARS has a reasonable belief that there is a risk of dissipation of assets by the person concerned.
(7) If an assessment or a decision referred to in section 104(2) is altered in accordance with—
(a) an objection or appeal;
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(b) a decision of a court of law pursuant to an appeal under section 133; or (c) a decision by SARS to concede the appeal to the tax board or the tax court or
other court of law, a due adjustment must be made, amounts paid in excess refunded with interest at the prescribed rate, the interest being calculated from the date that excess was received by SARS to the date the refunded tax is paid, and amounts short-paid are recoverable with interest calculated as provided in section 187(1).
(8) The provisions of section 191 apply with the necessary changes in respect of an amount refundable and interest payable by SARS under this section.
Part C
Taxpayer account and allocation of payments
Taxpayer account
165. (1) SARS must maintain one or more taxpayer accounts for each taxpayer. (2) The taxpayer account must re ect the tax due in respect of each tax type included
in the account. (3) The taxpayer account must record details for all tax periods of—
(a) the tax owed; (b) any penalty imposed; (c) the interest payable on outstanding amounts due; (d) any other amount owed; (e) tax payments made by or on behalf of the taxpayer; and (f) any credit for amounts paid that the taxpayer is entitled to have set off against
the taxpayer’s tax liability. (4) From time to time, or when requested by the taxpayer, SARS must send to the
taxpayer a statement of account, re ecting the amounts currently due and the details that SARS considers appropriate.
Allocation of payments
166. (1) Despite anything to the contrary contained in a tax Act, SARS may allocate any payment made in terms of a tax Act against the oldest amount of tax outstanding at the time of the payment, other than amounts—
(a) for which payment has been suspended under this Act; or (b) that are payable in terms of an instalment payment agreement under section
167. (2) SARS may apply the rst-in- rst-out principle described in subsection (1) in
respect of a speci c tax type or a group of tax types in the manner that may be prescribed by the Commissioner by public notice.
(3) In the event that a payment in subsection (1) is insufficient to extinguish all tax debts of the same age, the amount of the payment may be allocated among these tax debts in the manner prescribed by the Commissioner by public notice.
(4) The age of a tax debt for purposes of subsection (1) is determined according to the duration from the date the debt became payable in terms of the applicable Act.
Part D
Deferral of Payment
Instalment payment agreement
167. (1) A senior SARS official may enter into an agreement with a taxpayer in the prescribed form under which the taxpayer is allowed to pay a tax debt in one sum or in
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instalments, within the agreed period if satis ed that— (a) criteria or risks that may be prescribed by the Commissioner by public notice
have been duly taken into consideration; and (b) the agreement facilitates the collection of the debt.
(2) The agreement may contain such conditions as SARS deems necessary to secure collection of tax.
(3) Except as provided in subsections (4) and (5), the agreement remains in effect for the term of the agreement.
(4) SARS may terminate an instalment payment agreement if the taxpayer fails to pay an instalment or to otherwise comply with its terms and a payment prior to the termination of the agreement must be regarded as part payment of the tax debt.
(5) A senior SARS official may modify or terminate an instalment payment agreement if satis ed that—
(a) the collection of tax is in jeopardy; (b) the taxpayer has furnished materially incorrect information in applying for the
agreement; or (c) the nancial condition of the taxpayer has materially changed.
(6) A termination or modi cation— (a) referred to in subsection (4) or (5)(a) takes effect as at the date stated in the
notice of termination or modi cation sent to the taxpayer; and (b) referred to in subsection (5)(b) or (c) takes effect 21 business days after notice
of the termination or modi cation is sent to the taxpayer.
Criteria for instalment payment agreement
168. A senior SARS official may enter into an instalment payment agreement only if—
(a) the taxpayer suffers from a de ciency of assets or liquidity which is reasonably certain to be remedied in the future;
(b) the taxpayer anticipates income or other receipts which can be used to satisfy the tax debt;
(c) prospects of immediate collection activity are poor or uneconomical but are likely to improve in the future;
(d) collection activity would be harsh in the particular case and the deferral or instalment agreement is unlikely to prejudice tax collection; or
(e) the taxpayer provides the security as may be required by the official.
CHAPTER 11
RECOVERY OF TAX
Part A
General
Debt due to SARS
169. (1) An amount of tax due or payable in terms of a tax Act is a tax debt due to SARS for the bene t of the National Revenue Fund.
(2) A tax debt due to SARS is recoverable by SARS under this Chapter, and is recoverable from—
(a) in the case of a representative taxpayer who is not personally liable under section 155, any assets belonging to the person represented which are in the representative taxpayer’s possession or under his or her management or control; or
(b) in any other case, any assets of the taxpayer.
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(3) SARS is regarded as the creditor for the purposes of an amount referred to in subsection (1) as well as any other amount if SARS has entered into an agreement under section 4(1)(a)(ii) of the SARS Act in terms of which SARS is the creditor for the State or the organ of state or institution concerned.
(4) SARS need not recover an amount under this Chapter if the amount is less than R100 or any other amount that the Commissioner may determine by public notice, but the amount must be carried forward in the relevant taxpayer account.
Evidence as to assessment
170. The production of a document issued by SARS purporting to be a copy of or an extract from an assessment is conclusive evidence—
(a) of the making of the assessment; and (b) except in the case of proceedings on appeal against the assessment, that all the
particulars of the assessment are correct.
Period of limitation on collection of tax
171. Proceedings for recovery of a tax debt may not be initiated after the expiration of 15 years from the date the assessment of tax, or a decision referred to in section 104(2) giving rise to a tax liability, becomes nal.
Part B
Judgment procedure
Application for civil judgment for recovery of tax
172. (1) If a person fails to pay tax when it is payable, SARS may, after giving the person at least 10 business days notice, le with the clerk or registrar of a competent court a certi ed statement setting out the amount of tax payable and certi ed by SARS as correct.
(2) SARS may le the statement irrespective of whether or not the amount of tax is subject to an objection or appeal under Chapter 9, unless the obligation to pay the amount has been suspended under section 164.
(3) SARS is not required to give the taxpayer prior notice under subsection (1) if SARS is satis ed that giving notice would prejudice the collection of the tax.
Jurisdiction of Magistrates’ Court in judgment procedure
173. Despite anything to the contrary in the Magistrates’Courts Act, 1944 (Act No. 32 of 1944), the certi ed statement referred to in section 172 may be led with the clerk of the Magistrate’s Court that has jurisdiction over the taxpayer named in the statement.
Effect of statement led with clerk or registrar
174. A certi ed statement led under section 172 must be treated as a civil judgment lawfully given in the relevant court in favour of SARS for a liquid debt for the amount speci ed in the statement.
Amendment of statement led with clerk or registrar
175. (1) SARS may amend the amount of the tax due speci ed in the statement led under section 172 if, in the opinion of SARS, the amount in the statement is incorrect.
(2) The amendment of the statement is not effective until it is initialled by the clerk or the registrar of the court concerned.
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Withdrawal of statement and reinstitution of proceedings
176. (1) SARS may withdraw a certi ed statement led under section 172 by sending a notice of withdrawal to the relevant clerk or registrar upon which the statement ceases to have effect.
(2) SARS may le a new statement under section 172 setting out tax included in a withdrawn statement.
Part C
Sequestration, liquidation and winding-up proceedings
Institution of sequestration, liquidation or winding-up proceedings
177. (1) SARS may institute proceedings for the sequestration, liquidation or winding-up of a person for a tax debt.
(2) SARS may institute the proceedings whether or not the person— (a) is present in the Republic; or (b) has assets in the Republic.
(3) If the tax debt is subject to an objection or appeal under Chapter 9 or a further appeal against a decision by the tax court under section 129, the proceedings may only be instituted with leave of the court before which the proceedings are brought.
Jurisdiction of court in sequestration, liquidation or winding-up proceedings
178. Despite any law to the contrary, a proceeding referred to in section 177 may be instituted in any competent court and that court may grant an order that SARS requests, whether or not the taxpayer is registered, resident or domiciled, or has a place of effective management or a place of business, in the Republic.
Part D
Collection of tax debt from third parties
Liability of third party appointed to satisfy tax debts
179. (1) A senior SARS official may by notice to a person who holds or owes or will hold or owe any money, including a pension, salary, wage or other remuneration, for or to a taxpayer, require the person to pay the money to SARS in satisfaction of the taxpayer’s tax debt.
(2) A person that is unable to comply with a requirement of the notice, must advise the senior SARS official of the reasons for the inability to comply within the period speci ed in the notice and the official may withdraw or amend the notice as is appropriate under the circumstances.
(3) A person receiving the notice must pay the money in accordance with the notice and, if the person parts with the money contrary to the notice, the person is personally liable for the money.
(4) SARS may, on request by a person affected by the notice, amend the notice to extend the period over which the amount must be paid to SARS, to allow the taxpayer to pay the basic living expenses of the taxpayer and his or her dependants.
Liability of nancial management for tax debts
180. A person is personally liable for any tax debt of the taxpayer to the extent that the person’s negligence or fraud resulted in the failure to pay the tax debt if—
(a) the person controls or is regularly involved in the management of the overall nancial affairs of a taxpayer; and
(b) a senior SARS official is satis ed that the person is or was negligent or fraudulent in respect of the payment of the tax debts of the taxpayer.
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Liability of shareholders for tax debts
181. (1) This section applies where a company is wound up other than by means of an involuntary liquidation without having satis ed its tax debt, including its liability as a responsible third party, withholding agent, or a representative taxpayer, employer or vendor.
(2) The persons who are shareholders of the company within one year prior to its winding up are jointly and severally liable to pay the unpaid tax to the extent that—
(a) they receive assets of the company in their capacity as shareholders within one year prior to its winding-up; and
(b) the tax debt existed at the time of the receipt of the assets or would have existed had the company complied with its obligations under a tax Act.
(3) The liability of the shareholders is secondary to the liability of the company. (4) Persons who are liable for tax of a company under this section may avail
themselves of any rights against SARS as would have been available to the company. (5) This section does not apply—
(a) in respect of a ‘‘listed company’’ within the meaning of the Income Tax Act; or
(b) in respect of a shareholder of a company referred to in paragraph (a).
Liability of transferee for tax debts
182. (1) A person (referred to as a transferee) who receives an asset from a taxpayer who is a connected person in relation to the transferee without consideration or for consideration below the fair market value of the asset is liable for the tax debt of the taxpayer.
(2) The liability is limited to the lesser of— (a) the tax debt that existed at the time of the receipt of the asset or would have
existed had the transferor complied with the transferor’s obligations under a tax Act; and
(b) the fair market value of the asset at the time of the transfer, reduced by the fair market value of any consideration paid, at the time of payment.
(3) Subsection (1) applies only to an asset received by the transferee within one year before SARS noti es the transferee of liability under this section.
Liability of person assisting in dissipation of assets
183. If a person knowingly assists in dissipating a taxpayer’s assets in order to obstruct the collection of a tax debt of the taxpayer, the person is jointly and severally liable with the taxpayer for the tax debt to the extent that the person’s assistance reduces the assets available to pay the taxpayer’s tax debt.
Recovery of tax debts from responsible third parties
184. (1) SARS has the same powers of recovery against the assets of a person referred to in this Part as SARS has against the assets of the taxpayer and the person has the same rights and remedies as the taxpayer has against such powers of recovery.
(2) SARS must provide a responsible third party with an opportunity to make representations—
(a) before the responsible third party is held liable for the tax debt of the taxpayer in terms of section 180, 181, 182 or 183, if this will not place the collection of tax in jeopardy; or
(b) as soon as practical after the responsible third party is held liable for the tax debt of the taxpayer in terms of section 180, 181, 182 or 183.
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Part E
Assisting foreign governments
Tax recovery on behalf of foreign governments
185. (1) If SARS has, in accordance with an international tax agreement, received— (a) a request for conservancy of an amount alleged to be due by a person under the
tax laws of the other country where there is a risk of dissipation or concealment of assets by the person, a senior SARS official may apply for a preservation order under section 163 as if the amount were a tax payable by the person under a tax Act; or
(b) a request for the collection from a person of an amount alleged to be due by the person under the tax laws of the other country, a senior SARS official may, by notice, call upon the person to state, within a period speci ed in the notice, whether or not the person admits liability for the amount or for a lesser amount.
(2) A request described in subsection (1) must be in the prescribed form and must include a formal certi cate issued by the competent authority of the other country stating—
(a) the amount of the tax due; (b) whether the liability for the amount is disputed in terms of the laws of the
other country; (c) if the liability for the amount is so disputed, whether such dispute has been
entered into solely to delay or frustrate collection of the amount alleged to be due; and
(d) whether there is a risk of dissipation or concealment of assets by the person. (3) In any proceedings, a certi cate referred to in subsection (2) is—
(a) conclusive proof of the existence of the liability alleged; and (b) prima facie proof of the other statements contained therein.
(4) If, in response to the notice issued under subsection (1)(b), the person— (a) admits liability; (b) fails to respond to the notice; or (c) denies liability but a senior SARS official, based on the statements in the
certi cate described in subsection (2) or, if necessary, after consultation with the competent authority of the other country, is satis ed that— (i) the liability for the amount is not disputed in terms of the laws of the
other country; (ii) although the liability for the amount is disputed in terms of the laws of
the other country, such dispute has been entered into solely to delay or frustrate collection of the amount alleged to be due; or
(iii) there is a risk of dissipation or concealment of assets by the person, the official may, by notice, require the person to pay the amount for which the person has admitted liability or the amount speci ed, on a date speci ed, for transmission to the competent authority in the other country.
(5) If the person fails to comply with the notice under subsection (4), SARS may recover the amount in the certi cate for transmission to the foreign authority as if it were a tax payable by the person under a tax Act.
(6) No steps taken in assistance in collection by any other country under an international tax agreement for the collection of an amount alleged to be due by a person under a tax Act, including a judgment given against a person in the other country for the amount in pursuance of the agreement, may affect the person’s right to have the liability for the amount determined in the Republic in accordance with the relevant law.
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Part F
Remedies with respect to foreign assets
Compulsory repatriation of foreign assets of taxpayer
186. (1) To collect a tax debt, a senior SARS official may apply for an order referred to in subsection (2), if—
(a) the taxpayer concerned does not have sufficient assets located in the Republic to satisfy the tax debt in full; and
(b) the senior SARS official believes that the taxpayer— (i) has assets outside the Republic; or
(ii) has transferred assets outside the Republic for no consideration or for consideration less than the fair market value,
which may fully or partly satisfy the tax debt. (2) A senior SARS official may apply to the High Court for an order compelling the
taxpayer to repatriate assets located outside the Republic within a period prescribed by the court in order to satisfy the tax debt.
(3) In addition to issuing the order described in subsection (2), the court may— (a) limit the taxpayer’s right to travel outside the Republic and require the
taxpayer to surrender his or her passport to SARS; (b) withdraw a taxpayer’s authorisation to conduct business in the Republic, if
applicable; (c) require the taxpayer to cease trading; or (d) issue any other order it deems t.
(4) An order made under subsection (2) applies until the tax debt has been satis ed or the assets have been repatriated and utilised in satisfaction of the tax debt.
CHAPTER 12
INTEREST
General interest rules
187. (1) If a tax debt or refund payable by SARS is not paid in full by the effective date, interest accrues on the amount of the outstanding balance of the tax debt or refund—
(a) at the rate provided under section 189; and (b) for the period provided under section 188.
(2) Interest payable under a tax Act is calculated on the daily balance owing and compounded monthly, and the Commissioner may prescribe by public notice from which date this method of determining interest will apply to a tax type.
(3) The effective date for purposes of the calculation of interest in relation to— (a) tax other than income tax or estate duty for any tax period, is the date by which
tax for the tax period is due and payable under a tax Act; (b) income tax for any year of assessment, is the date falling seven months after
the last day of that year in the case of a taxpayer that has a year of assessment ending on the last day of February, and six months in any other case;
(c) estate duty for any period, is the earlier of the date of assessment or 12 months after the date of death;
(d) a xed amount penalty referred to in section 210, is the date for payment speci ed in the notice of assessment of the penalty, and in relation to an increment of the penalty under section 211(2), the date of the increment;
(e) a percentage based penalty referred to in section 213, is the date by which tax for the tax period should have been paid; and
(f) an understatement penalty, is the effective date for the tax understated. (4) The effective date in relation to an additional assessment or reduced assessment is
the effective date in relation to the tax payable under the original assessment.
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(5) The effective date in relation to a jeopardy assessment is the date for payment speci ed in the jeopardy assessment.
(6) If a senior SARS official is satis ed that interest payable by a taxpayer under subsection (1) is payable as a result of circumstances beyond the taxpayer’s control, the official may, unless prohibited by a tax Act, direct that so much of the interest as is attributable to the circumstances is not payable by the taxpayer.
(7) The circumstances referred to in subsection (6) are limited to— (a) a natural or human-made disaster; (b) a civil disturbance or disruption in services; or (c) a serious illness or accident.
Period over which interest accrues
188. (1) Unless otherwise provided in a tax Act, interest payable under section 187 is imposed for the period from the effective date of the tax to the date the tax is paid.
(2) Interest payable in respect of the— (a) rst payment of provisional tax, is imposed from the effective date for the rst
payment of provisional tax until the earlier of the date on which the payment is made or the effective date for the second payment of provisional tax; and
(b) second payment of provisional tax, is imposed from the effective date for the second payment of provisional tax until the earlier of the date on which the payment is made or the effective date for income tax for the relevant year of assessment.
(3) Unless otherwise provided under a tax Act— (a) interest on an amount refundable under section 190 is calculated from the later
of the effective date or the date that the excess was received by SARS to the date the refunded tax is paid; and
(b) for this purpose, if a refund is offset against a liability of the taxpayer under section 191, the date on which the offset is effected is considered to be the date of payment of the refund.
Rate at which interest is charged
189. (1) The rate at which interest is payable under section 187 is the prescribed rate. (2) In the case of interest payable with respect to refunds on assessment of provisional
tax and employees’ tax paid for the relevant year of assessment, the rate payable by SARS is four percentage points below the prescribed rate.
(3) The prescribed rate is the interest rate that the Minister may from time to time x by notice in the Gazette under section 80(1)(b) of the Public Finance Management Act, 1999 (Act No. 1 of 1999).
(4) If the Minister xes a different interest rate referred to in subsection (3) the new rate comes into operation on the rst day of the second month following the month in which the new rate becomes effective for purposes of the Public Finance Management Act, 1999.
(5) If interest is payable under this Chapter and the rate at which the interest is payable has with effect from any date been altered, and the interest is payable in respect of any tax period or portion thereof which commenced before the said date, the interest to be determined in respect of—
(a) the tax period or portion thereof which ended immediately before the said date; or
(b) the portion of the tax period which was completed before the said date, must be calculated as if the rate had not been altered.
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CHAPTER 13
REFUNDS
Refunds of excess payments
190. (1) A person is entitled to a refund of— (a) an amount properly refundable under a tax Act and if so re ected in an
assessment; or (b) the amount erroneously paid in respect of an assessment in excess of the
amount payable in terms of the assessment. (2) SARS need not authorise a refund as referred to in subsection (1) until such time
that a veri cation, inspection or audit of the refund in accordance with Chapter 5 has been nalised.
(3) SARS must authorise the payment of a refund before the nalisation of the veri cation, inspection or audit if security in a form acceptable to a senior SARS official is provided by the taxpayer.
(4) A person is entitled to a refund under subsection (1)(b) only if the refund is claimed by the person within three years, in the case of an assessment by SARS, or ve years, in the case of self-assessment, from the date of the assessment.
(5) If SARS pays to a person by way of a refund any amount which is not properly payable to the person under a tax Act, the amount is regarded as tax that is payable by the person to SARS from the date on which it is paid to the person.
(6) A decision not to authorise a refund under this section is subject to objection and appeal.
Refunds subject to set-off and deferral
191. (1) If a taxpayer has an outstanding tax debt, an amount that is refundable under section 190, including interest thereon under section 188(3)(a), must be treated as a payment by the taxpayer that is recorded in the taxpayer’s account under section 165, to the extent of the amount outstanding, and any remaining amount must be set off against any outstanding debt under the Customs and Excise Act.
(2) Subsection (1) does not apply to a tax debt— (a) that is disputed under Chapter 9 and for which suspension of payment under
section 164 exists; or (b) in respect of which an instalment payment agreement under section 167 or a
compromise agreement under section 204 applies. (3) An amount is not refundable if the amount is less than R100 or any other amount
that the Commissioner may determine by public notice, but the amount must be carried forward in the taxpayer account.
CHAPTER 14
WRITE OFF OR COMPROMISE OF TAX DEBTS
Part A
General provisions
De nitions
192. In this Chapter, unless the context indicates otherwise, the following terms, if in single quotation marks, have the following meanings:
‘asset’ includes— (a) property of whatever nature, whether movable or immovable, corporeal or
incorporeal; and (b) a right or interest of whatever nature to or in the property;
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‘Companies Act’ means the Companies Act, 2008 (Act No. 71 of 2008); ‘compromise’ means an agreement entered into between SARS and a ‘debtor’ in terms of which— (a) the ‘debtor’ undertakes to pay an amount which is less than the full amount of
the tax debt due by that ‘debtor’ in full satisfaction of the tax debt; and (b) SARS undertakes to permanently ‘write off’ the remaining portion of the tax
debt on the condition that the ‘debtor’ complies with the undertaking referred to in paragraph (a) and any further conditions as may be imposed by SARS;
‘debtor’ means a taxpayer with an outstanding tax debt; and ‘write off’ means to reverse a tax debt either in whole or in part.
Purpose of Chapter
193. (1) As a general rule, it is the duty of SARS to assess and collect all tax debts according to a tax Act and not to forgo any tax debts.
(2) SARS may, when required by circumstances, deviate from the strictness and rigidity of the general rule referred to in subsection (1) if it would be to the best advantage of the State.
(3) The purpose of this Chapter is to prescribe the circumstances under which SARS may deviate from the general rule and take a decision to ‘write off’ a tax debt or not to pursue its collection.
Application of Chapter
194. This Chapter applies only in respect of a tax debt owed by a ‘debtor’ if the liability to pay the tax debt is not disputed by the ‘debtor’.
Part B
Temporary write off of tax debt
Temporary write off of tax debt
195. (1) A senior SARS official may decide to temporarily ‘write off’ an amount of tax debt if satis ed that the tax debt is uneconomical to pursue as described in section 196 at that time.
(2) A decision by the senior SARS official to temporarily ‘write off’ an amount of tax debt does not absolve the ‘debtor’ from the liability for that tax debt.
(3) A senior SARS official may at any time withdraw the decision to temporarily ‘write off’ a tax debt if satis ed that the tax debt is no longer uneconomical to pursue as referred to in section 196 and that the decision to temporarily ‘write off’ would jeopardise the general tax collection effort.
Tax debt uneconomical to pursue
196. (1) A tax debt is uneconomical to pursue if a senior SARS official is satis ed that the total cost of recovery of that tax debt will in all likelihood exceed the anticipated amount to be recovered in respect of the outstanding tax debt.
(2) In determining whether the cost of recovery is likely to exceed the anticipated amount to be recovered as referred to in subsection (1), a senior SARS official must have regard to—
(a) the amount of the tax debt; (b) the length of time that the tax debt has been outstanding; (c) the steps taken to date to recover the tax debt and the costs involved in those
steps, including steps taken to locate or trace the ‘debtor’;
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(d) the likely costs of continuing action to recover the tax debt and the anticipated return from that action, including the likely recovery of costs that may be awarded to SARS;
(e) the nancial position of the ‘debtor’, including that ‘debtor’s’ ‘assets’ and liabilities, cash ow, and possible future income streams; and
(f) any other information available with regard to the recoverability of the tax debt.
Part C
Permanent write off of tax debt
Permanent write off of tax debt
197. (1) A senior SARS official may authorise the permanent ‘write off’ of an amount of tax debt—
(a) to the extent satis ed that the tax debt is irrecoverable at law as referred to in section 198; or
(b) if the debt is ‘compromised’ in terms of Part D. (2) SARS must notify the ‘debtor’ in writing of the amount of tax debt ‘written off’.
Tax debt irrecoverable at law
198. (1) A tax debt is irrecoverable at law if— (a) it cannot be recovered by action and judgment of a court; or (b) it is owed by a ‘debtor’ that is in liquidation or sequestration and it represents
the balance outstanding after notice is given by the liquidator or trustee that no further dividend is to be paid or a nal dividend has been paid to the creditors of the estate; or
(c) it is owed by a ‘debtor’ that is subject to a business rescue plan referred to in Part D of Chapter 6 of the ‘Companies Act’, to the extent that it is not enforceable in terms of section 154 of that Act.
(2) A tax debt is not irrecoverable at law if SARS has not rst explored action against or recovery from the ‘assets’ of the persons who may be liable for the debt under Part D of Chapter 11.
Procedure for writing off tax debt
199. (1) Before deciding to ‘write off’ a tax debt, a senior SARS official must— (a) determine whether there are any other tax debts owing to SARS by the
‘debtor’; (b) reconcile amounts owed by and to the ‘debtor’, including penalties, interest
and costs; (c) obtain a breakdown of the tax debt and the periods to which the outstanding
amounts relate; and (d) document the history of the recovery process and the reasons for deciding to
‘write off’ the tax debt. (2) In deciding whether to support a business rescue plan referred to in Part D of
Chapter 6 of the ‘Companies Act’ or ‘compromise’ made to creditors under section 155 of the ‘Companies Act’ a senior SARS official must, in addition to considering the information as referred to in section 150 or 155 of that Act, take into account the information and aspects covered in the provisions of sections 200, 201(1), 202 and 203 with the necessary changes.
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Part D
Compromise of tax debt
Compromise of tax debt
200. A senior SARS official may authorise the ‘compromise’ of a portion of a tax debt upon request by a ‘debtor’, which complies with the requirements of section 201, if—
(a) the purpose of the ‘compromise’ is to secure the highest net return from the recovery of the tax debt; and
(b) the ‘compromise’ is consistent with considerations of good management of the tax system and administrative efficiency.
Request by debtor for compromise of tax debt
201. (1) A request by a ‘debtor’ for a tax debt to be ‘compromised’ must be signed by the ‘debtor’ and be supported by a detailed statement setting out—
(a) the ‘assets’ and liabilities of the ‘debtor’ re ecting their current fair market value;
(b) the amounts received by or accrued to, and expenditure incurred by, the ‘debtor’ during the 12 months immediately preceding the request;
(c) the ‘assets’ which have been disposed of in the preceding three years, or such longer period as a senior SARS official deems appropriate, together with their value, the consideration received or accrued, the identity of the person who acquired the ‘assets’ and the relationship between the ‘debtor’ and the person who acquired the ‘assets’, if any;
(d) the ‘debtor’s’ future interests in any ‘assets’, whether certain or contingent or subject to the exercise of a discretionary power by another person;
(e) the ‘assets’ over which the ‘debtor’, either alone or with other persons, has a direct or indirect power of appointment or disposal, whether as trustee or otherwise;
(f) details of any connected person in relation to that ‘debtor’; (g) the ‘debtor’s’ present sources and level of income and the anticipated sources
and level of income for the next three years, with an outline of the ‘debtor’s’ nancial plans for the future; and
(h) the ‘debtor’s’ reasons for seeking a ‘compromise’. (2) The request must be accompanied by the evidence supporting the ‘debtor’s’claims
for not being able to make payment of the full amount of the tax debt. (3) The ‘debtor’ must warrant that the information provided in the application is
accurate and complete. (4) A senior SARS official may require that the application be supplemented by such
further information as may be required.
Consideration of request to compromise tax debt
202. (1) In considering a request for a ‘compromise’, a senior SARS official must have regard to the extent that the ‘compromise’ may result in—
(a) savings in the costs of collection; (b) collection at an earlier date than would otherwise be the case without the
‘compromise’; (c) collection of a greater amount than would otherwise have been recovered; or (d) the abandonment by the ‘debtor’ of some claim or right, which has a monetary
value, arising under a tax Act, including existing or future tax bene ts, such as carryovers of losses, deductions, credits and rebates.
(2) In determining the position without the ‘compromise’, a senior SARS official must have regard to—
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(a) the value of the ‘debtor’s’ present ‘assets’; (b) future prospects of the ‘debtor’, including arrangements which have been
implemented or are proposed which may have the effect of diverting income or ‘assets’ that may otherwise accrue to or be acquired by the ‘debtor’ or a connected person in relation to the ‘debtor’;
(c) past transactions of the ‘debtor’; and (d) the position of any connected person in relation to the ‘debtor’.
Circumstances where not appropriate to compromise tax debt
203. A senior SARS official may not ‘compromise’ any amount of a tax debt under section 200 if—
(a) the ‘debtor’ was a party to an agreement with SARS to ‘compromise’ an amount of tax debt within the period of three years immediately before the request for the ‘compromise’;
(b) the tax affairs of the ‘debtor’ (other than the outstanding tax debt) are not up to date;
(c) another creditor has communicated its intention to initiate or has initiated liquidation or sequestration proceedings;
(d) the ‘compromise’ will prejudice other creditors (unless the affected creditors consent to the ‘compromise’) or if other creditors will be placed in a position of advantage relative to SARS;
(e) it may adversely affect broader taxpayer compliance; or (f) the ‘debtor’ is a company or a trust and SARS has not rst explored action
against or recovery from the personal ‘assets’ of the persons who may be liable for the debt under Part D of Chapter 11.
Procedure for compromise of tax debt
204. (1) To ‘compromise’ a tax debt, a senior SARS official and the ‘debtor’ must sign an agreement setting out—
(a) the amount payable by the ‘debtor’ in full satisfaction of the debt; (b) the undertaking by SARS not to pursue recovery of the balance of the tax debt;
and (c) the conditions subject to which the tax debt is ‘compromised’ by SARS.
(2) The conditions referred to in subsection (1)(c) may include a requirement that the ‘debtor’ must—
(a) comply with subsequent obligations imposed in terms of a tax Act; (b) pay the tax debt in the manner prescribed by SARS; or (c) give up speci ed existing or future tax bene ts, such as carryovers of losses,
deductions, credits and rebates.
SARS not bound by compromise of tax debt
205. SARS is not bound by a ‘compromise’ if— (a) the ‘debtor’ fails to disclose a material fact to which the ‘compromise’ relates; (b) the ‘debtor’ supplies materially incorrect information to which the ‘compro-
mise’ relates; (c) the ‘debtor’ fails to comply with a provision or condition contained in the
agreement referred to in section 204; or (d) the ‘debtor’ is liquidated or the ‘debtor’s’ estate is sequestrated before the
‘debtor’ has fully complied with the conditions contained in the agreement referred to in section 204.
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Part E
Records and reporting
Register of tax debts written off or compromised
206. (1) SARS must maintain a register of the tax debts ‘written off’ or ‘compromised’ in terms of this Chapter.
(2) The register referred to in subsection (1) must contain— (a) the details of the ‘debtor’, including name, address and taxpayer reference
number; (b) the amount of the tax debt ‘written off’ or ‘compromised’ and the periods to
which the tax debt relates; and (c) the reason for ‘writing off’ or ‘compromising’ the tax debt.
Reporting by Commissioner of tax debts written off or compromised
207. (1) The amount of tax debts ‘written off’ or ‘compromised’ during a nancial year must be disclosed in the annual nancial statements of SARS relating to administered revenue for that year.
(2) The Commissioner must on an annual basis provide to the Auditor-General and to the Minister a summary of the tax debts which were ‘written off’ or ‘compromised’ in whole or in part during the period covered by the summary, which must—
(a) be in a format which, subject to section 70(5), does not disclose the identity of the ‘debtor’ concerned;
(b) be submitted by the end of the month following the end of the scal year; and (c) contain details of the number of tax debts ‘written off’ or ‘compromised’, the
amount of revenue forgone, and the estimated amount of savings in costs of recovery, which must be re ected in respect of main classes of taxpayers or sections of the public.
CHAPTER 15
ADMINISTRATIVE NON-COMPLIANCE PENALTIES
Part A
General
De nitions
208. In this Chapter, unless the context indicates otherwise, the following terms, if in single quotation marks, have the following meanings:
‘administrative non-compliance penalty’ or ‘penalty’ means a ‘‘penalty’’ imposed by SARS in accordance with this Chapter, and excludes an understate- ment penalty referred to in Chapter 16; ‘ rst incidence’ means an incidence of non-compliance by a person if no ‘penalty assessment’ under this Chapter was issued during the preceding 36 months, whether involving an incidence of non-compliance of the same or a different kind, and for purposes of this de nition a ‘penalty assessment’ that was fully remitted under section 218 must be disregarded; ‘penalty assessment’ means an assessment in respect of— (a) a ‘penalty’ only; or (b) tax and a ‘penalty’ which are assessed at the same time; ‘preceding year’ means the year of assessment immediately prior to the year of assessment during which a ‘penalty’ is assessed; ‘remittance request’ means a request for remittance of a ‘penalty’ submitted in accordance with section 215.
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Ad No. 18 oHOH Tu Adnunttotr.-rion A(.l, lOll
Purpose of Cbnpter
209. Tin: purpos~..: of this Clmpter is to ensure- { a) the widest possible compliance with the provisions of a tax Act nnd the
ctTcclivc admini.slmlion of tax Acts; Ami (b) that an 'administ.mtive non-compliance penalty' is imposed impartially. .5
consistently, and proponionately ro the setionsness and dm·ation of the uou-complis.ncc.
Pmt B
Nou- 8 cumpHny listed on u n.o.coguisL'fl stock ~'tclumgc us n:rcn-cc-l lo in parngmpb 1 of the Eighth Schedule to the Income Tax Act:
(b) a company wh~ gros.,. receipts or accntals for 1he •preceding year' exceed R500 million: 50
(c) a company that tOnus part of a ••group of companies'' as defined in section 1 of1he Tnc()me T:l.X Act, which group includes a company described in irem (n) or (b) ; or
162 No. 35491 GOVERNMENT GAZETTE, 4 JULY 2012 Act No. 28 of 2011 Tax Administration Act, 2011
(d) a person or entity, exempt from income tax under the Income Tax Act but liable to tax under another tax Act, whose gross receipts or accruals exceed R30 million.
(4) SARS may, except in the case of persons referred to in subsection (3)(a) to (c), if the taxable income of the relevant person for the ‘preceding year’ is unknown or that person was not a taxpayer in that year—
(a) impose a ‘penalty’ in accordance with item (ii) of column 1 of the Table; or (b) estimate the amount of taxable income of the relevant person for the
‘preceding year’ based on available relevant material and impose a ‘penalty’ in accordance with the applicable item in column 1 of the Table.
(5) Where, upon determining the actual taxable income or assessed loss of the person in respect of whom a ‘penalty’ was imposed under subsection (4), it appears that the person falls within another item in column 1 of the Table, the ‘penalty’ must be adjusted in accordance with the applicable item in that column with effect from the date of the imposition of the ‘penalty’ issued under subsection (4).
Reportable arrangement penalty
212. (1) A ‘participant’ who fails to disclose the information in respect of a reportable arrangement as required by section 37 is liable to a ‘penalty’, for each month that the failure continues (up to 12 months), in the amount of—
(a) R50 000, in the case of a ‘participant’ other than the ‘promoter’; or (b) R100 000, in the case of the ‘promoter’.
(2) The amount of ‘penalty’ determined under subsection (1) is doubled if the amount of anticipated ‘tax bene t’ for the ‘participant’ by reason of the arrangement (within the meaning of section 35) exceeds R5 000 000, and is tripled if the bene t exceeds R10 000 000.
Part C
Percentage based penalty
Imposition of percentage based penalty
213. (1) If SARS is satis ed that an amount of tax was not paid as and when required under a tax Act, SARS must, in addition to any other ‘penalty’ or interest for which a person may be liable under this Chapter, impose a ‘penalty’ equal to the percentage of the amount of unpaid tax as prescribed in the tax Act.
(2) In the event of a change to the amount of tax in respect of which a ‘penalty’ was imposed under subsection (1), the ‘penalty’ must be adjusted accordingly with effect from the date of the imposition of the ‘penalty’.
Part D
Procedure
Procedures for imposing penalty
214. (1) A ‘penalty’ imposed under Part B or C is imposed by way of a ‘penalty assessment’, and if a ‘penalty assessment’ is made, SARS must give notice of the assessment in the format as SARS may decide to the person, including the following:
(a) the non-compliance in respect of which the ‘penalty’ is assessed and its duration;
(b) the amount of the ‘penalty’ imposed; (c) the date for paying the ‘penalty’; (d) the automatic increase of the ‘penalty’; and (e) a summary of procedures for requesting remittance of the ‘penalty’.
(2) A ‘penalty’ is due upon assessment and must be paid— (a) on or before the date for payment stated in the notice of the ‘penalty
assessment’; or
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164 No. 35491 GOVERNMENT GAZETTE, 4 JULY 2012 Act No. 28 of 2011 Tax Administration Act, 2011
(b) where the ‘penalty assessment’ is made together with an assessment of tax, on or before the deadline for payment stated in the notice of the assessment for tax.
(3) SARS must give the taxpayer notice of an adjustment to the ‘penalty’ in accordance with section 211(2) or 213(2).
Procedure to request remittance of penalty
215. (1) A person who is aggrieved by a ‘penalty assessment’ notice may, on or before the date for payment in the ‘penalty assessment’, in the prescribed form and manner, request SARS to remit the ‘penalty’ in accordance with Part E.
(2) The ‘remittance request’ must include— (a) a description of the circumstances which prevented the person from
complying with the relevant obligation under a tax Act in respect of which the ‘penalty’ has been imposed; and
(b) the supporting documents and information as may be required by SARS in the prescribed form.
(3) During the period commencing on the day that SARS receives the ‘remittance request’, and ending 21 business days after notice has been given of SARS’ decision, no collection steps relating to the ‘penalty’ amount may be taken unless SARS has a reasonable belief that there is—
(a) a risk of dissipation of assets by the person concerned; or (b) fraud involved in the origin of the non-compliance or the grounds for
remittance. (4) SARS may extend the period referred to in subsection (1) if SARS is satis ed
that— (a) the non-compliance in issue is an incidence of non-compliance referred to in
section 216 or 217, and that reasonable grounds exist for the late receipt of the ‘remittance request’; or
(b) a circumstance referred to in section 218(2) rendered the person incapable of submitting a timely request.
Part E
Remedies
Remittance of penalty for failure to register
216. If a ‘penalty’ is imposed on a person for a failure to register as and when required under this Act, SARS may remit the ‘penalty’ in whole or in part if—
(a) the failure to register was discovered because the person approached SARS voluntarily; and
(b) the person has led all returns required under a tax Act.
Remittance of penalty for nominal or rst incidence of non-compliance
217. (1) If a ‘penalty’ has been imposed in respect of— (a) a ‘ rst incidence’ of the non-compliance described in section 210, 212 or 213;
or (b) an incidence of non-compliance described in section 210 if the duration of the
non-compliance is less than ve business days, SARS may, in respect of a ‘penalty’ imposed under section 210 or 212, remit the ‘penalty’, or a portion thereof if appropriate, up to an amount of R2 000 if SARS is satis ed that—
(i) reasonable grounds for the non-compliance exist; and (ii) the non-compliance in issue has been remedied.
(2) In the case of a ‘penalty’ imposed under section 212, the R2 000 limit referred to in subsection (1) is changed to R100 000.
(3) In the case of a penalty imposed under section 213, SARS may remit the ‘penalty’, or a portion thereof, if SARS is satis ed that—
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166 No. 35491 GOVERNMENT GAZETTE, 4 JULY 2012 Act No. 28 of 2011 Tax Administration Act, 2011
(a) the ‘penalty’ has been imposed in respect of a ‘ rst incidence’ of the non-compliance described in section 210, 212 or 213, or involved an amount of less than R2 000;
(b) reasonable grounds for the non-compliance exist; and (c) the non-compliance in issue has been remedied.
Remittance of penalty in exceptional circumstances
218. (1) SARS must, upon receipt of a ‘remittance request’, remit the ‘penalty’ or if applicable a portion thereof, if SARS is satis ed that one or more of the circumstances referred to in subsection (2) rendered the person on whom the ‘penalty’ was imposed incapable of complying with the relevant obligation under the relevant tax Act.
(2) The circumstances referred to in subsection (1) are limited to— (a) a natural or human-made disaster; (b) a civil disturbance or disruption in services; (c) a serious illness or accident; (d) serious emotional or mental distress; (e) any of the following acts by SARS:
(i) a capturing error; (ii) a processing delay;
(iii) provision of incorrect information in an official publication or media release issued by the Commissioner;
(iv) delay in providing information to any person; or (v) failure by SARS to provide sufficient time for an adequate response to a
request for information by SARS; (f) serious nancial hardship, such as—
(i) in the case of an individual, lack of basic living requirements; or (ii) in the case of a business, an immediate danger that the continuity of
business operations and the continued employment of its employees are jeopardised; or
(g) any other circumstance of analogous seriousness.
Penalty incorrectly assessed
219. If SARS is satis ed that a ‘penalty’ was not assessed in accordance with this Chapter, SARS may, within three years of the ‘penalty assessment’, issue an altered assessment accordingly.
Objection and appeal against decision not to remit penalty
220. A decision by SARS not to remit a ‘penalty’ in whole or in part is subject to objection and appeal under Chapter 9.
CHAPTER 16
UNDERSTATEMENT PENALTY
Part A
Imposition of understatement penalty
De nitions
221. In this Chapter, unless the context indicates otherwise, the following terms, if in single quotation marks, have the following meanings:
‘repeat case’ means a second or further case of any of the behaviours listed under items (i) to (v) of the understatement penalty percentage table re ected in section 223 within ve years of the previous case; ‘substantial understatement’ means a case where the prejudice to SARS or the scus exceeds the greater of ve per cent of the amount of ‘tax’properly chargeable
or refundable under a tax Act for the relevant tax period, or R1 000 000;
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168 No. 3.5491 GOVERN.MEN'l' OAZE"n'E. 4 JULY 2012
Ad No. 18 oHOH Tu Adnunttotr.-rion A(.l, lOll
'ti1x" means tax as rlefinerl in section 1, excluding a penalty and interest; 'lOX position' mecms cut usswoptiou wu.lcrlyiutt ouc or 1uon: UlilJ(.:< scH>fl: 5 (c) a lower rate of tax than the ma"X.imtmt applicable 10 that class of taxpayer.
lnnL'i.Hclion. cvenl ur item »pplic1:1; or (d) an amount qualifies as a reduction of tax payable: and •muler~Latemenl • mean,; any prejudice to SARS or the fi.fctu in respect of a rax period us a rr whic.:b pmvi.siou is macle uucta this Cl1aptc:r i$ also chargeable in case.s wbere-
16 5
20
(nJ an a~se~~ment based on an e~timat1nn nnrler ~eclion 95 i~ m:.trle: or 25 (b) w• ussessmout agreed upou wilb lbo ta.xpay1 the '"P"Yc-cliou (I)
or the (oltO\\·iug sul):5Cdion: "( I) If MY duty in respect of an)·
lr.UlSOctioo eotered wto bofore t Mucla 2005. n:nuaimo WlpHid .r. ,.,. the dan! of the expiration of 1he period referred to in ~lion 3. [ there sball, subj('(lto the pro•i· s icu1S or suiiSfftion (3), in adill· don to the unpaid duty, he pay. oble] IlK: Cotlllllis>ioucr lllillol in accordance wilh Chopter I 5 of 1he 10.~ Administratioo Act impose o 1>lteed monllt couuuenctug before 1 July 198.2 thr p•nally p:tyablr In rr· :SI)«I or ~cb COutl'lt'lt:d lfiOUib nnd nny enrUer completed monlb or months shall bt'- the! ttmount of penalty wWch would han• Ueeu payablt In tenus of tbls subsec. lion before its nntendmeul by the Re,·enue Laws Amendment Arl, 1982. if LhP unpaid muowll of socb duty bnd hetn paid on tht day after the Clld of the only or latl'!ot of surh complrtrd months] ... : 31ld
( c I by the doh:tion of •ubscction (I A}. Am•ndnttnt or secdon 10
-'· Section I 0 of the Transfer Omy Ao. 1949. is hereby amended (a) by lhc substitution for "'b.l."liuu (2)
of 1he follo\\ri:n! substction· "(2) The powers conferred and
tb< duti Act may be cxcr· cised or performed by lheConunis- sioner [ptrsonnU~·J or by any [officer actiug under a dclegnliou from nrj SARS o fficial tmder the contro~ Lor] direction or suoet"i- siou of the Commissioner.'": and
204 No. 3.5491 GOVERN.MEN'l' OAZE"n'E. 4 JULY 2012
Ad No. 18 oHOH Tu Adnunttotr.-rion A(.l, lOll
No. nnd yC'..nr Short title Extt'nt of a.mcncbur.nt or repc~ll (11) l>y tbdusortiou af~s.-.;tiuu (2) of
I lie: rollowing subs~tlon; "(3) Administrative reguil"e-
meuts a.nd Erocedures for eurposes or the IX:rfonunncc of an:l dutt:. power or oblin;ation or the exercise of anv ri~u in leJUlS of this Act are. lo tlu.: ~'(t\!ut uot rc!!tlatcd in Lhis Acl resulated by the Tax Adminis· rrntion Ace.".
Amemtuwnt of section 11 5. Scotiou II of tho Transfer Duty Act.
I 9~9. is hereby amended by the substiht· lion in subsection (3) for paragraph (a) of the following paragraph:
"(a} Whcro iu l\:, and tl1f.1·c is g1\•en to the Commissioner sectu·ity 10 hls or her s.atis.f3ction for the payment of lillY l>alllllte of U1U1Sfet duly Lor sunup duty] which may ~rill he pay .. able. the Commissioner may in his or her discretion issue to the person liable to p~y the duly a CL'l'tificaJC lhAI ::i1.1Ch (lr::posi1 Juts IX!cn nutdr:: nud dml such IJieeurity has been given.''.
Rcpeol of Slc s been acquired and, if Lhc Cotwuissioau..:r ¥0 din:cts, abo by tlte agent, auctioneer, broker or other person who acted for or on behalf of eilher party to the trans- ac:tiou or, if the prop~o'fty hus been acquirect nrherwi"e rh;,n by way of a transaction., by the person who ac:quircd the propc:rty. H; aud
(b) by the deletion of• uhscctions(4). (6), (7) and (8).
AmcndlHNtt of section ·rs 10. Section 15 ofth< Transfer Duty Act.
1949. is lu.:n::by nmcm.led- (a) by tl1e substitution for subsection ( I)
of the followin~ subsection: "(I) [Enryl In adtlition to the
remtire.mem~ 11EQn 3 lttxpaver con· tained in sections 29. 30. 32 and 33 of lhc Tux Admiuistmtion Act. every :mctionee•· or othel' person
208 No. 3.5491 GOVERN.MEN'l' OAZE"n'E. 4 JULY 2012
Ad No. 18 oHOH Tu Adnunttotr.-rion A(.l, lOll
No. nnd yc-..nr Short title Extt'nt of a.mcndmr.nt or repc~ll who has 4:.fft:cct:d a soh: of proJX.'TlY 011 lxhalf of ~me o1hcr pi!Tl»on shnU. for a period of five ye= from the dale oo wb.ic:h tbe- sale was cffcc1C(~ keL-p ft record of the ~nJe including ::t cle.scription of the pi'OJ)• erty sold, the person by whom and tho person to whom lhe pruporty ha• been sold and the 1•ice paid for the propeny.1' : and
( IJ) by lhe dolotiou of sub..,ctiollli (2) aud (~).
Rcpral of srrlion.s 17, 17 A, 178, 18, 10, 20A. 20C mul 20D
11. SectioM I 7. I 7 A, 17B, 18, 20, 20A, 20C twd 200 uf Ute Tmru;fcr Duty Act. 1949, •re hereby repealed.
Acl No. -'5 of 1955 Eslnlr Duly Acl, Amrudmcnl of srclion1 1955
12. Stctiuu I of lhc Estutc Duly Act. 1955, i• hereby amended- (a) by the sut>stitution for !he definition of
"Conunissionc:r'' of the foUowin~ dcfi11itimt:
•• 'Couu:u.issiouer' m~an§ the Commissioner for the Soutlt Afii- cau Rcvcmu.: Sctvicc apoointcd in tenns of sec1ion 6 of the SmUh Africrut Revenue Service Act. 1997 {Act No. 34 of 1997). or ~Jc Actin• Commissioner rlesianatecl in tenns of section 7 ofthatAcr:";
(/I) by the insertion allo:r lhc definition of .. stock!:! or sh.an:s .. of the following definition:
" ·1h..l:Admiu.istcationAct'. means !he Tox Administmtion Act. 2011.":
(c) hy the rcnwnbcriug l.lf sccliun I In section 1(1): and
(d) by dte insertion after subseeRI of sections 8, SA, SB, SC, SD and RE
15. Soolions 8, SA. 88. 8C. 80 1u1d SE of the Ell: tate Duty Ac~ 1955, are hereby repealed.
Amemlmt'nt of Sedinn 9 16. Section 9 of tbc Estate Duty Act.
1955, is hereby amended- (a} by the inse.1ion after snbseclinn (I) of
the following subsection:
2'12 No. 3.5491 GOVERN.MEN'l' OAZE"n'E. 4 JULY 2012
Ad No. 18 oHOH Tu Adnunttotr.-rion A(.l, lOll
No. nnd yc-..nr Short title Extt'nt of a.mcndmr.nt or repc~ll
··~ lA) H the Couuuissioutr. Erior to lh.: i:s:;ue of a nolic~ of asse.'>SITI('nf in renns of subsecrion ~ l )- ( a ) is dissatisfied with anl:: Yalue 31
which nu:i p1ui:!£!t~ is .sliOW11 in nn:i remn1: nr
£b1 is of lhe o~inioo lhot lhe amount claimed tu n:E!rcscut the dutiable amonm M di.~dosed in anv remm. does n.ot re~resent tbe correct dutl- able amotwl.
rhe Commi"sioner shall adju.d such value or aruotwt and detemllne lhe dutiable nruotmt U2£U wlti• the meani.n2 assistned under section I of lhc Tlll< AdminislrBtioo Acl. •nd indttdeu detenniMrion by 1he COilllllissiooer _j. b~' way or n notice of asscssmcm (including n noticP of ~nent in rleclnmk fonu) sern•d in a manner con· lemplalt'd iu st'Ctiou 106(2)-- (a) of nn nmouut upon wWdJ
ony tax t~rlnblc wuiC'r this At·t is charge.Hblt"y the sul>stilutiou for lhc ddiuitiou of "tax' ' of 1he following definition:
" ·tax• means tax or a ~enaltv iniEOSCd in tr' me;"tn~ •ny person chargeable with auy mx leviable un· dcr this Act [and includes every pe.rsUII reCJuired by tltis Act ttl furul:sh ;-my rdu.ru)";
( 11 ) by the rcnuruborin~ of scotion 1 to m:cliou l{l); mul
( o) by the insertion after suberfor- moure of duties b y MiuistCI'
4A. 111e powers confemd and the duties in1p0sed upon lhe Minister by or wldaragroph (c).
230 No. 3.5491 GOVERN.MEN'l' OAZE"n'E. 4 JULY 2012
Ad No. 18 oHOH Tu Adnunttotr.-rion A(.l, lOll
No. nnd yc-..nr Short title Extt'nt of a.mcndmr.nt or repc~ll Amrudmcm ol' section 10
31. Section 10 of the Income Ta.x Act, 1962. is hon:by wuou~od by t11o dolcliou m the furtl1!!r proviso "' ~\LhJSCclion ( !)(SOSCS or suhscc-
tion< (9) and ( 10), d1e Conunis- siooer may. uotwithstaru:ting the provisions of •cctions [79, 81(5 ) and 83( 18)]99 and 100 of the Tax Administration Act. raise an addi- lioual f.JSSC-SSIUCUl for lWY )'CI~T of as.coessment where an additional in .. dustrial investment allowance wbidJ has lx:~u allowed in u.uy previnus year nnt'it he dis?~llowed in terms of S\tbsection (9) or (I 0). "; and
(b) hy the dclclinn ol subsection (12). Amembueut of secUou 121
.,6. Secrlon 121 of Lhe Income T:-tx Ac~ 1962. is hereby amended- (a) by the subt.tjtution for Ill< words
prccL"flittg pamgntltlt (u ) in subsection ( 13) of the following words:
u(13) The Commissioner may. uotwilb.shwdiuM, the provisions of [secUon 4] Cha2ter 6 of the Tax Administration Ac:t- ":
(11) by tbo substi1ution for subse pnsc.·ribed by ll1r Commissioner].".
Auumdmrut of St>ition of 'n:pn:scutativ~: tuxpayc.:r· in ~eclion romrl! [0 the income of nny person or to the gross il11:01Ut rc-~:civcd by or a~- Cnlccl lo Qr in fRVQur or any (>>~.-.;tion ( I) of the followin~ subsection:
"(I ) The Comm•ssioner miL" annually give public notice IUtal aU] of the ppri"Sf'nhttivt' G1J:mdty UuiJle to taxaHou umler this Ad or who] arc required by llec ConuuissiouCJ· lo fm11i..;ll n:· nuns for the assessment of uotuud rax[, mustl'urulsh returns] within ~ •• pidl!nt. A rclum SIUIII be mnclc (or the eeriod commencin!! on rhe first da:r: of that l!~ar of assessment and \!udiua ou U1c da;t ~rcccdius the date thAt the ~rsnn ceases to be a resident: orH;
(i) uy tbc addition of the following pro- v i!IO in subsection ( 13)(b):
": Provided that where a com- EUUV CCiiS\:S to be • n:sidcul. " remm shall be n,.de for !he ~rind conuuenci.og on the first di'IY ofthnt financial year and cndins: on tl1c day urccccline tl1c dale tJud the COIIIJ2ai1V cea&es to be a residem".
(j) by the ~ubstinniou tor subsection (J 3B) of tbc following subs."ital gain or a.g:gre.gate c-apita] loss.": and
(k) uy the dcl- •ioner accordingly and [funtisb] obtain and retain full pmticulars in regard to the livc:stock so sold." .
Amendment of parnl!rniJb 19 of Jilrst Schedule
75. Paragraph 19 of the First Schedule to
~'" In~omc TllX Acl. 1962. is hereby amended by the snb~tihtrion for !lnbparn .. graph (3) of the following subpamgraph:
"(3) Wl&ct\: the lnxpaycr's ossc.roucut for tt rciC.\1Wll period luas in lcnus of ""crion [81(5) of Utis A Jf of the taxpaver to the extenl thnc the polic:t; of iruur- tm-ul>stituliou for sui>PliJ·•l!I11Vh
(1) of 1he follnwin!'- ertod grancoo Itt tenus ol" paragraph 25{2),] submit to ~'" CnmmiJ;;sionel' r, in SUdl form as the Couuuissiouer may pre- scribe,] {should the Commissioner so require) a rcnun of no estimate ni lhc IUIAI IHxnblc income \\thich wiU be de-rived by the taxpayer in res peel of the year of assessment in rc.spcc:l of which provis-iotwl lax is or may he payable by [him I the taxpayer.
116 No J.).491
Act No, 23 or 2011
I No. nnd •·•nr Short till•
OOVERN.\t£NTOAZE"nc, 4JULY2UI2
T~ Aduuntdl"ilhon Ac:.t, lOll
F...xtC'nt of Amcncb:uC"nt or reptaJ
(b) by lho substitution iu 5ubparaJ011Vb (l) for itc::nt (b) or tile: follnwin! itc:ua:
"(b) Evh 25(2).] subntil to lhe CotUJUissiooer L, In such ronu as the Commissioner may ,,,.....ribe,] {!!hot~d the Com- missioner so regui.J!) a return of an estimate of ll.tC" total taxable iucowc which will be: derh cd hy tJac rom· p:my 1n rcspccl of lhc ye~tr of assessment in respect of wh.ich pro,·isional tax is or may be pay· ul>lt by the cowpuuy ... ,
(c) by the snbsritulion in subpara~ph (I) for item (c) of the following llem:
"(,·) The wuowat of WlY l.:) lUuutc so snhmitt:ect by ~ provi.sion:1l t~x­ payer (other lhan a company) durin& the p.-,iod r.:fcm;d to iu J.'Wli8Jllph 21(1)(a} ror auy t'..:.\:lt'll~iun uf ~udl f>t'riod SJ."i'tUlnJ i.u (t"-Oll!l of (JitrU- JII"Rpb 25(2)]. or by • company (as a pro,;simml taxptylO..'T} chuing tJac pe- riod referrrd to in paragrnph 23(a) lor :my extension of sudt !k'rlod grnntrd in trnns or (lllnlgrflpb 25(2)], Wll. unleu the Cornmi!- sioner. luning regard to the circum· stances of the case. ap-~ to ac~l au estimate or a lo"or Wl10WIL not be less than tbe ba.•ic amotun appli- C3ble to lhe estimate in qu a bi:wiug: ili~.;.•t\.'OU 01 wu~ uul deliberately or ne!'ligently understated. subject to the provisions of subparagraph (3). impose. in udditiuu to tl1e nonnat tax ch:ugeable in
1¥.1. No J.).491 Act No, 23 or 2011
I No. nnd •·•nr Shorr tltl•
OOVERN.\t£NTOAZE"nc. 4JULY 2UI2
T~ Aduuntdl"ilhon Ac:.t, lOll
F...xtC'nt of Amcncb:uC"nt or reptoJ n::;JX:~l of the ta.~vaycr"s taX· able income for bUch year of Mse-.ssment.! [au awounl b~ wuy or odd!Uoual tru:J ~ !!!!l [up) cq1ud to 20 pcra.•ll of me difference berween the amount of normal tax as oal· 11CU estimate md the amowu of uonml ta.' calculated. at 1M mles applicable iu rc>pc of &ubpamgropbs (2) and (3), bl: ~ublc to pay to the Commissioner~ in adrlhion to dtc: nonu..U t.\.'t c.hnr.gcablc: i.u re>pcct of hil; or bet' taxable income for ~11ch year ur llJ,o- s:essment. ! [:w :unouul by woy of odd!Uonal t:uj ~ !!l!x l to such basic amow1t. al lhc nu:u applicable in re'Jl«t
of sud! year of """" ' wcnt.·•:
{c) by the substitution for subpom@T.>ph (2) of lhe followilq< •ubvaru!'fliVb:
.. (2) Where~ Collllllissiooer" iUusficd that thI:uch ta.~bk income. l on nmoum by WAY or addifionnJ l.SL'\:} H penally equal to 20 per cent of the amo\Wt by which the oonnal tax payable by IWu or bUch raxable income exceed~ the .s1.un of any amounts of provisional ta.x paid by IWu or her iu n:svccl uf such r11xable income within any period aUowed for the payment of su:.t· pone the payment of pro'i'i"""l tax or normal ta.,. rerun the wbol~ or any part of tho [addltloonl tax) l!:£!!!!!!.x. imposed w1dcr Mtb)»u'U- graph ( I) ... , •od
(d) by the deletion of subparal'f'lpb (3).
lU No J.).491 OOVERN.\t£NTOAZE"nc. 4JULY 2UI2
Act No, 23 or 2011 T~ Aduuntdl"ilhon Ac:.t, lOll
I No. nnd •·•nr Short tltl• F...xtC'nt of Amcncb:uC"nt or reptal Amrndmcnt or pnrngropb l3A of Fourth Schedule
93. l'anll'l"'Pb Z3AoCthc FourtbSchc-d· ul.: lo l11e Income Tax Acl. 1962~ i.!o l1cn:Ly amended (a) by lhe substitunoo for •u~
( I) of du: folio\\ Ul!' >ubpam!!'"'J~O: "(I) Any pro1-ilrional taxpayor
may for !he purpose of anndinJt or mlu Cnmml't"iionPr for rt>g.i."i- rrntlon AS 811 ~mploy~r ns required by subparagraph (J) ofl beina a ret!;isrered em· J2lover under pi.U1'1graph 15ill,
292 No. 3.5491 GOVERN.MEN'l' OAZE"n'E. 4 JULY 2012
Ad No. 18 oHOH Tu Adnunttotr.-rion A(.l, lOll
No. nnd yc-..nr Short title Extt'nt of a.mcndmr.nt or repeal [or llnvlng so RJ>pUcdj Jails orm:glc:-cl" lo notiiy liu: Com• missioner of [:my dmnge of bls address or tile rart or blsj hav ing cc.ttscd lo be a:n t..'ln- player :\S requit-ed by [sub- paragraph (3) ol' Utnt pam- grnpb] pw·ampb 15(3): or": and
(d) by the deletion of item (k) in subpam- JU'IIph (I).
Re)>eal or paragraphs 31 nud 32 of f ourth Scbl'dulr
98. Paragrnphs 31 and 32 of the Fomth Schedule to tl1e Income TnxAct. 1962. are hcrcby ra.rngraph 11 of SLxt11 Srbedulc
99. Paragraph II of tl1e Sixth Schedule to tho Jucowc Ta.' Act, 1962, U; hereby amended- (a) by the. deletion of subparagraph (3): (I>) by the substitution for •ubpara)U'8ph
(6} o( lhc (Q!Iowiug $UbJHlrfl f..'TUJ1h: "(6) Where the estimate de-
sc-ribed in subpru:n~rapb 41 a) is less th•u 80 per cent of the tuxublc h1nlove1· for the ye::tr of assessment, [addlllonal tax] a pe11alty equal to 20 p~r ~cut of tlJI.' di.ffcrcuc~ be- rween the tax pl\yable on 80 per cem of the taxable turnover for the yc:ur of aSs(..-ssm~ul uud tlu: tax puyuiJI~ 011 tlull \:StinlHll: UUJSl lH.: ch~rgecl ... ; and
(c) by th• substirutiou for subparagrnph (8) of the follo"inll subpnmgroph:
•t(S} Whc1·c the Commi.ss inucr
has iss\ted an assessment in re!Eect of the ~nl:ment r~uired in tenus of sulmul'liJ!!:!!ph (4). u l!!iualtv must not be imposed in tenns of snbp;l1'11• era~b (6). " .
Repeal of )t:tragraph 12 of Sixtlt Sdted- ole
100. Parng.raph 12 of the Sixth Sched- ule to the Income Tax Act, 1962. is hereby n:pcnlod.
294 No. 3.5491
Ad No. 18 oHOH
No. nnd yc-..nr Short title
GOVERN.MEN'l' OAZE"n'E. 4 JULY 2012
Tu Adnunttotr.-rion A(.l, lOll
Extt'nt of a.mcndmr.nt or repeal Ameud mem or IIRtngrnph 14 ol' Slxtll Scheel niP
101. P!UliJ!fHph 14 oflioe Sixtl1 Schcd- nh: 10 Llu:•_ Tuct)mc Tax Acl, 1962, 1s hereby amended by We subStitution for the words pr..:edin~ subpam111·oph (a) of d1e follow- ing words:
"[A]Norwithsnmdino, the provi~ion~ of Pan A of Chapler 4 of lioe Tax Admiuistrnlion Atl. a rtgislcn:d uticro bm;iness must only retain " record of._10 •
Repeal or paragnoph 15 urSixUo Sdoed- nle
lOZ. P~tn~gruph 15 of tho SixUo Sched- ule to the Income Ta.x Act. 1962, is hereby repealed. Amemlmt"nt of panLgraph 12A of Seventh Schedule
103. Par.grnph 12A of the Sev.,nth Schedule to the Income Tax Act, 1962, is hc11.:by umcudcd by the dclctiou of sub- paragrnph (~)-
Ameod mcllt or pnrngrnph 17 or Stwtmlh SchedulP
104. PUI"dgt1Lph 17 of UlC S~V' the tenu 'oftic:er', where t~ in the c:ontext of a p('J'Sal or •whic:h any &a.'t whic:.h hu b«.ome payl\hl• in .-..pect of "" supply to the ,·eruJor or me importation by the vendor. IU the: C:a.K: DUlY be. of iUtb goods or .scrvit.-cs or in J"ClopL~I of such ~oods under section 7(3) or •ny amount dete:nnintd in accordnnct with pl1111J!ntph (b! or (C) of the de>Jinition of•input tax' in ~Lion 1, is input ta..'i:, shall be an amount which bears to the full IUJIOlwt of snch 1ax or amotutt, ::.s the c11.se mAy be. the same ratio {as detennined by Ute Couunissiom.-r m llt day uftlte vendor's
preceding f.~tx period; or (b) the fixed da:z: as ·~eroved
b~ the Commissioner in leJ11\S of J>•rnmtlh (ii). ".
Amrudmellt of section 28
12L Section 28 of the Value-Added Tax Aet. 1991. is hen: by mncuded- (a) by the neleriou in subsecrion (1) of
paragraph (i) of the proviso; (b) by Ute substitution iu subseuCs] elec- tronically [(other than by menns or n debit order), nnL~l furnl'ih tl1e rt>lurn] is deemed to have made Q3:i!!;teot within the f!!:riod coutscctious (3). (4). (5), (6), (7), (8) •nd (9).
Amendmrlll of section 29
122. Section 29 of the Value· Added Tax Act. 1991. is hereby BlliCUdcd uy tlte suhf\timtion in J>ar11graph (n) for tlte words preceding subparagraph (i) of tl1e lollow· iu~ words: "fumi~h the Commissioner with a re· tum [(In such form as the Conullls. s toner may t>rcsa·ibe)j n:Jkclin)L-'',
Repeal of section 30
l2.l. Section 30 of 1he Value-Added TilX Ac1. 1991, is hereby repealed.
Ameudment of sedion 31 124. Section 31 of the Value-Added
Tax Act. 1991. is hon:uy BlliCudcd- (n) by the •nh•titution for 1mh•ection (I)
of I be following subsection: "(!) [Wilere]TI•c Counnissiou·
e1· m11~ make an assessment of the amoum of •ax ~a:!able: b~- [(a) any person fnlls to furnish
nny t'('turn ns l'cquircd by St>eliou 28, 29 or30 or fails to furnish ru>~' declaration as rcquit·cd by section 14: or
(b) the CnuuuL amouul of lax so assessed sball ~ paid by lht person oourrrned to lhe Com- mi~oner] ... :
(b) by !he deletion in subsection (2) of paragraph (a);
(') by the deletion of SttbOn which tax Is payable, the runount or tax pay. a bit"_, tiJe amounl of any midi- llonnl tax payable tn tenus of section 60 and !Ito tax period (ir uny) in nola lion to whkh the nsstsstllfnt is made] must e,ive a uolkc of US\.'"SSillCul~ aud-.. i aud
(r.) by llu: delc:tiou of ~uhl'icclion'i (5) ami (SA).
Repeal of sections 31A nnd 3W
125. Sections 31A and 318 of the Volue·Addcd To.~ Ael. 1991, arc hereby n11calcd. Amcndrucnt of section 32
126. Section 32 of the Value· Added Tax Acl. 1991 , is hereby amended- (a) hy the subl:ililuliou for Lllc hcatling of
the following heading: " ObJections to certain dedslons lor nsscssmontsl":
(b) by tlte subsrinllion for subsecTion (I) of the following subsection:
"(!)[An y person who is dissnt. l~fird wilh-]'11Te followina deci· sions of The Commissioner nre ~ubjcct lo obj,-cLiou tmd HEEt:uJ: (a) auy dcdsiou JPv'-"11 iu writing
by 1he Commissioner- (i) in terms of section 23(7)
notifYing tbnl pc-clion (I)
or the (oltO\\·iug stdnwcdion: "( I) [(n)]lf any penon who is
liable for the p;lyment of tax and is rL-quircd lo nuakc l.~tclt 1•ymcnt (in thE' manner }JI'1:'!Srrilwd lu] in ac- cordance \\itb the pro\·isions of liCy the suh~i1utio11 for- subsection (6) of tl1c following •ubs«tion:
"(6) Notw•lb.131ldW)t the pre«diDJ> pru\-isimt$ of Uti subsscctiou in rcspec.:l or uuy utlu::r ,:;eparate emerprise. branch or division of the said vendor.··
Amrtuhnrnt of Sf'i'lion 5()A 139. Section 50A of lhc:rly be rcgartkd as those o( the Ctth.•s._ prise described in lhe [din-c:- tlon] decision. the other acthi~ tics of thai to rbo llrie:e or a.mount e:huged io 1he recipienl in relation 10 such s.upply ~:wy Ia.') by d1e suhlc.·ehtpe] hy the Conunlssloner, SETA or ap- proved body, as the case mny bel in Rce:ordance with the provisions of Chapter I Z of the Tax Adminis- trntion Acl. ": and
(b) l>y the deletion or subs,~cJjun (2).
.!54 No. 3.5491
Ad No. 18 oHOH
No. nnd yc-..nr Short title
GOVERN.MEN'l' OAZE"n'E. 4 JULY 2012
Tu Adnunttotr.-rion A(.l, lOll
Extt'nt of a.mcndmr.nt or repc~ll Amrudmcm ol' section 12
1.53. Soction 12 of the Skills De\'elop- wonl L subsection (2). ir
any levy remllins tutp~tid after 1he last day for payment thereof as ooutt'tions 16, ·11, 20, 20A nud 21
!.56. Section• 16. 17. 20. 20A and 2 1 of the Skills Development Le\'ies Act, 1999, aro hereby ropoaly utious in ro:>p) by the deletion Qf subsecliQn (2). R('penl or section t 2
162. Section 12 of the Unemployment JJt.~ltriUICC CoJllrihulioJtS Act .. 2002. ls hereby repealed.
Amendm('nt of seC"tion ·13
163. Section 13 of tlte Unemployment liiSUI'HJlCC Ccutti;Luliolt~ Ac~ 2002, ,. hereby t1menrled-- (n) hy ~te •nbstirution fot· .. ~>section ( I)
of the fOllowing. subsection: " ( I) If auy ooutributiou remains
unpaid after ~te last day for pay- me-ut thereof as conte-mplated in soction S(l ) or 9(1) . the Conuuis- sioner mn~, under Ch~pter 15 of the '!'axAdmi.nisb·arionAct. im~se • penalty of I 0 per cent of the nupnid l:nnomll fis pnynb1e in nd- diriou lo Ute iulerf'St coutt>m- plated In section 12.] but the Couuuissioucr or the Uucmploy- mem Insurance Commissioner. as the case may be, may[, ha\1llg due rrgord to the circwnstanccs of lhe ca~e,l rem it Lhe penalry or any portion thereof in accordance with the Erovis ioos of Cha2ter J 5 of the Tax Admit1btnlliou Ap1om.t1on 1~ght, miu.ing tight, mining pennit or pt'Oduction right gramed put'su-- ant to the Mineral and Petroleum Re- sow1:cs Dcvdoym\.1ll Act (or u Li;:USI.! or sublea~e mentioned in section 11 of(U1e Mln~rnl nud P~trolermt Rt'SOurces De- relopmrnt) that Atl in rcsp) by the" deletion of subsection (2). Ameurbtt(>llt of section 9
188. SS or a par. ticulnr trnnsnrtionl iu tenus of Chaprer 7 of the Tax Administration Act."; and
111) by tho ddctiuu of subscotiuus (2) uud (3).
Actl'io. 61 of 2008 Rc>·ruuc Laws Sec- Repeal of sections 3, 13 and 14 ond A lllf'IICllllf'lll Ad., 2008
193. s~ctious 3, 13 and I4 of the Revenue t..aws Second Amendment Act, 2008. are hereby repealed.
Alllf'Juburul uf ~ecliou 16 194. Scoliou 16 of !he Rcvouuo Laws
Second Amenrlmem Acr, 2008, is be1-eby amended by the deletion in subsection (I) ofpurugr•ph (11).
R~ptal or section 20 195. Sec1lon 20 of rhe Revenue l,.aws
Second Amendment Act. 2008. is hereby rcp1Icd.
No. 3.5491 GOVERN.MEN'l' OAZE"n'E. 4 JULY 2012
Ad No. 18 oHOH Tu Adnunttotr.-rion A(.l, lOl l
No. nnd yc-..nr Short title Extt'nt of a.mcndmr.nt or repeal Act No. 18 of!-009 Tnxndou Lows Src- Rcprnl or sections 12, l3, 1-1, 33, 3-1 nod
ond Amtnrlment 38 Acl, 2009
196. Sections 12, 13, 14. J3. 34 and 38 of the ·r."lx3tion Laws Second Amendment Act. 2009! nre hereby repealed.