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 be followed when an aggrieved taxpayer wants to take steps against SARS.
In this article, we highlight some of the proposed changes to the Rules that are welcomed and those that are cause for concern if it were to be accepted in the final amendments.
- Under the proposed changes, one of the first things to note is that the legislature deals with the form, manner and date of delivery. The legislature includes electronic delivery of documents, notice and requests in the rules. Although it has arguably always been possible to effect delivery electronically (when reading the Rules with Notice No. 294, GG 38666), the wording “including an electronic address” will be inserted.
- The Rules currently provide that a period under the rules may, under certain circumstances, be extended when there is agreement between the parties. The proposed change will include the words “or shortened”. The proposed change does not alter the rule excessively and could lead to issues being resolved at a faster pace.
- The current rules provide that an aggrieved taxpayer has 30 days from the date of the assessment or where reasons have been requested, from the date of the request for reasons, to deliver its notice of objection against an assessment or decision. The proposed rules intend to extend this period to 60 days. This gives the aggrieved taxpayer 30 days extra to formulate its defense.
- Currently, in terms of rule 7(5), a taxpayer has the opportunity to submit a new objection if a notice of invalidity is received, within 20 days after receipt of such a notice without having to apply for an extension to SARS in terms of section 104(4).
- The new proposed change completely deletes rule 7(5) and makes amendments to rule 7(6). In terms of the proposed new rule 7(6) a taxpayer who receives a notice of invalidity may submit a new valid objection together with an application to SARS requesting an extension of the period for objection under section 104(4). In other words, a request for condonation.
- Generally speaking, this would seem fair as SARS should only declare an objection invalid if the taxpayer did not do something correctly in the submission of the objection. However, it often happens in practice that SARS declares an objection invalid for invalid reasons.
- If the proposed change is finally accepted, taxpayers who find themselves in a position where SARS invalidly declares an objection invalid may be at pains explaining, to the satisfaction of SARS, why they are ostensibly late with the submission of their objection.
- While it is accepted that a decision by SARS not to condone an objection is subject to objection and appeal, forcing taxpayers to follow the route of objecting to a decision not to condone a late objection will, in our experience, inevitably delay the dispute resolution process.
The changes are, at this stage only proposed and while we commend the extended objection period, we are concerned that the rules associated with invalid objections will create problems in practice. We trust that the concerns will be addressed during the comments phase. Comments on the proposed changes will be due on 26 June 2018.
Author: N Theron