Tax appeals – how long can SARS take?

Tax appeals – how long can SARS take?

SARS is known for taking their time when it comes to processing appeals against assessments, especially if the appeal is not destined for litigation from the outset. Whilst there may be various reasons for these delays, the fact of the matter is that there are prescribed timelines within which certain steps in the appeal process must be completed and SARS must abide by those timelines. In our experience, the SARS call centre will have taxpayers believe that SARS has 90 days from date of submission of the appeal to finalise it. This is simply incorrect. The time periods prescribed in...

SARS’ IT14SD, additional assessments and understatement penalties

Most companies would by now have filed their ITR14 for the 2018 tax year and many would have been selected for verification. This means they will have to file the dreaded IT14SD. The IT14SD is not particularly difficult to complete and should not be a problem per se (given that the required recons would ideally already have been prepared in anticipation of the verification). The headaches normally start after the IT14SD is submitted. Submission of the IT14SD is usually followed by either: a completion notice; or a request from SARS for an explanation of why certain expenses rank for deduction...

Bad idea: Tax objections drafted “On the back of a cigarette box”

Few taxpayers, in our experience, fully appreciate the importance and gravity of the early stages of the tax dispute resolution process with SARS – the objection stage. Too often, we see that objections are drafted in haste “on the back of a cigarette box” and important, often case-wining arguments, omitted from the grounds for objection or not properly formulated and substantiated. The importance of the objection stage was well illustrated in the case H R Computek (Pty) Ltd v Commissioner for the South African Revenue Services (830/2012) [2012] ZASCA 178 (29 November 2012) where the taxpayer did not include certain...

Is your tax objection late? Here’s what to do

SARS raises additional assessments all the time and for various reasons but mostly, an additional assessment, whether it be on VAT, income tax or PAYE is raised by SARS following an audit/verification. If a taxpayer is not satisfied with the assessment, the taxpayer can object against the additional assessment but has to do so within 30 business days (this 30-day period may change to 60 days sometime in 2019 but as of the date of publishing this article, it is still 30 days). This 30-day deadline is often missed. Are you dead in the water, so to speak, if you...

SA Tax Penalties on Companies

On 14 December 2018, the public notice that allows the South African Revenue Service (“SARS”) to impose penalties on companies for not submitting income tax returns was gazette. This is a new addition to the legion of penalties already faced by companies and permits the imposition of a monthly penalty on a company ranging from anything between R250 to R16 000 a month. Other penalties also faced by companies include: A 10% penalty for not filing a VAT return on time (if VAT registered); A 10% penalty for not filing a employees’ tax return on time (if registered as employer) A...

Should deposits be included in gross income?

The question of whether deposits should be included in a taxpayer’s gross income has become a contentious topic in recent months following SARS’ increased interest in deposits. Taxpayers are, typically following submission of the ITR14 and subsequent IT14SD, requested to explain why deposits should not be included in gross income. In our view, the rationale behind this special attention from SARS is that taxpayers are taxed on the earlier of receipt or accrual and since a deposit has been physically received, deposits are prima facie taxable. Deposits are therefore a ‘soft target’. However, the mere receipt of funds does not...

Tax objections: Welcomed proposals or proposed challenges?

The proposed changes to the Rules of the Tax Court (“the Rules’) promulgated under section 103 of the Tax Administration Act No, 28 of 2011 (“TAA”) have been published and, have been met with a mixed reaction – in our office at least. Most of the changes are welcomed. One proposed change in is however, worrying. The TAA and the Rules set out the prescribed manner, form and time periods within which an objection or appeal must be made. It also deals with the extension periods available to an aggrieved taxpayer and lays down the prescripts for steps that must...

Tax disputes: 3 years or 30 days?

If SARS did something a taxpayer is aggrieved by, the taxpayer has limited time within which to take action. The general rule is, when it comes to a dispute between a taxpayer and SARS involving an assessment, that limited period is 30 days (at the time of drafting this article, there is a proposal by SARS for the period to be extended to 60 days). If the taxpayer misses the 30-day period (or soon, possibly 60-day period) by more than 30 days (but less than three years), SARS can only consider the grievance/objection if the taxpayer can demonstrate to SARS...

The supreme court of appeal on late tax appeals

It was recently held by the SCA[1] that the tax court had no jurisdiction to hear an application by a taxpayer for condonation of a late tax appeal. It is respectfully submitted that the Tax Court and SCA judgments raises more questions than it gives guidance and makes what is already, in the SCA’s own words “hardly a model of clarity” even more obscure. Facts of the case The taxpayer in this case objected to an assessment raised by SARS, which objection was partly allowed. The taxpayer, not being satisfied with a partial win instructed its tax consultant to lodge...

When should SARS condone a late appeal?

In a recent application to the Johannesburg Tax Court (018/2016), the court was asked to condone an appeal submitted late by the taxpayer. The facts are simply that the taxpayer filed an appeal more than 75 business days after the notice of disallowance of the taxpayer’s objection. The reason for late submission is that the taxpayer’s representative thought that the appeal was filed on e-filing but later discovered that it was not filed due to an internet connection problem. SARS opposed the application stating that it has no discretion to extend the period for lodging an appeal beyond a period...