CLARITY FOR TAXPAYERS ON TAX DISPUTE RESOLUTION

CLARITY FOR TAXPAYERS ON TAX DISPUTE RESOLUTION

Taxpayers and businesses are under increased pressure as a result of the economic downturn and impact of COVID-19. On the flip side, the South African Revenue Service (SARS) is also under pressure to meet targets. A possible outcome of this double-sided scenario is, according to experts, the potential for an increased number of tax disputes in the near future, with SARS attempting to secure revenue and taxpayers wanting to reduce their tax burden. “Tax disputes have become increasingly complex,” says Nico Theron, tax expert and author of the newly released Practical Guide to Handling Tax Disputes published by LexisNexis South Africa. “There...

SARS, LIKE TAXPAYERS, MUST COMPLY WITH SPECIFIED TIME PERIODS

SARS, LIKE TAXPAYERS, MUST COMPLY WITH SPECIFIED TIME PERIODS

Most taxpayers know that the time periods that govern objections and appeals against assessments by SARS are very strict and, indeed, are very strictly applied by SARS. For example, a taxpayer must object and appeal within a prescribed time period. For the taxpayer, failing to comply with these time periods could have devastating consequences. The rigidity of the rules cut both ways, though – the rules also prescribe strict time periods within which SARS must do certain things. For example, SARS must decide on an objection within 60 business days. However, when SARS does not abide by these time periods,...

ABSA OPENS WAY TO AVOID TAX TIFF SLOG

ABSA OPENS WAY TO AVOID TAX TIFF SLOG

In a legal victory that could save companies time and possibly money, the high court in Pretoria affirmed Absa’s contention that it can bypass a mandated “protracted slog” through a dispute resolution mechanism to resolve a difference with the SA Revenue Service (Sars).Absa took two of the tax agency’s decisions directly on review before the North Gauteng High Court, arguing that Sars made errors in the application of the law when it accused it of being party to an impermissible tax avoidance scheme and issued it with an assessment of the tax liability arising from it. The victory could herald...

VDP: THE IRONY OF SARS’ MEDIA RELEASE OF 11 MARCH 2021

VDP: THE IRONY OF SARS’ MEDIA RELEASE OF 11 MARCH 2021

In a recent case[1] a taxpayer approached the High Court to review a decision by SARS to reject the taxpayer’s application for relief under the Voluntary Disclosure Program (VDP). SARS rejected the taxpayer’s application because, inter alia, the taxpayer’s application was not voluntary and one of the requirements for relief is that the application must be voluntary. The relevant background The taxpayer in this case had imported an aircraft and failed to account and pay over to SARS  the VAT applicable to the transaction. The taxpayer was advised by SARS that it will be liable for penalties.  It was after...

ABUSING TAX COURT PROCESSES WORK?

ABUSING TAX COURT PROCESSES WORK?

[Durban, 03 March 2021] The full bench of the Western Cape High court recently delivered judgment¹ (Cloete J dissenting) in a favour of a taxpayer who, according to the Tax Court, was simply abusing process. When studying the judgment of the Tax Court, it is difficult to see how the taxpayer’s approach was anything more than an abuse of process which begs the question: Why was the taxpayer successful on appeal to the full bench of the High Court? The taxpayer in question had agreed an assessment with SARS under section 95(3) of the Tax Administration Act, 28 of 2011...

VDP APPLICATION REJECTED: NOW WHAT?

VDP APPLICATION REJECTED: NOW WHAT?

Most taxpayers and tax practitioners are by now familiar with the Voluntary Disclosure Program  (VDP) process and the relief/incentive that the VDP offers.  Since taxpayers often bargain on getting VDP relief when they apply, a rejection by SARS of the VDP application is often not well received by taxpayers. If SARS rejects a VDP application, which they are entitled to do if the application does not satisfy the relevant requirements, it means SARS will not grant any relief from penalties. The question is – what to do next? Can the taxpayer decide not to disclose and “back out” of the...

PRESCRIPTION, ASSESSMENTS, SARS’ SUBJECTIVE SATISFACTION AND DISPUTES

PRESCRIPTION, ASSESSMENTS, SARS’ SUBJECTIVE SATISFACTION AND DISPUTES

150In a recent case[1], a taxpayer tried to defend himself against an assessment raised by SARS after the original assessment prescribed. The gist of the taxpayer’s defence, insofar relevant here, was that SARS was not allowed to have raised the assessment in question because the original assessment had prescribed and that SARS had not objectively satisfied themselves of the existence of the requisite fraud. What ensued was, amongst other things, an analysis by the court regarding the circumstances under which SARS may raise an assessment post prescription.  Whilst the analysis by the court of these circumstances relate to the now-repealed...

SOMETHING IS SERIOUSLY AMISS WITH THE TAX OBJECTION PROCESS

SOMETHING IS SERIOUSLY AMISS WITH THE TAX OBJECTION PROCESS

The Office of the Tax Ombud (OTO) recently released its 2020 Systemic Investigation Report in which the OTO published its findings regarding certain investigations the OTO conducted into SARS’s systems. One of the issues investigated was various areas of non-compliance by SARS with the rules that govern objections and appeals. Amongst the various findings by the OTO, there is one that for us at Unicus Tax Specialists SA stands out above the rest and which should be the single biggest cause for concern in the context of tax disputes. That finding is that over the period investigated by the OTO,...

COVID-19:  HOME OFFICES AND TAX DEDUCTIONS

COVID-19: HOME OFFICES AND TAX DEDUCTIONS

The media is rife with comments regarding the economic impact of the outbreak of the COVID-19 virus (the so-called “Coronavirus”) in South Africa. Many people have been asked, or is required, to work from home in order to curb the spread of the virus. Is there at least some form of tax break associated with working from home? Imagine Mr X. Mr X is a salaried employee who usually works at the offices of his employer, during normal office hours. Due to the outbreak of COVID-19, Mr X’s employer has requested or required Mr X to work from home for...

FINANCIAL EMIGRATION, TAX RESIDENCY AND SA BUDGET 2020: HAS THE CAT BEEN LET OUT OF THE BAG?

FINANCIAL EMIGRATION, TAX RESIDENCY AND SA BUDGET 2020: HAS THE CAT BEEN LET OUT OF THE BAG?

Many seem to be surprised by comments in the 2020 Budget Review documents released on 26 February 2020 to the effect that financial emigration status and tax residency status are not synonymous. There also seems to be confusion about the impact on a person’s tax residency status if, as mentioned in the 2020 Budget, the financial emigration process is phased out. The reason for the surprise and confusion appears to be the belief that financial emigration automatically results in and is directly connected to a change in tax residency status from resident to non-resident.  Nothing could be further from the...