Author: admin_kmos

Section 89 (TAA) – Binding general rulings

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89.    Binding general rulings

 

(1)     A senior SARS official may issue a ‘binding general ruling’ that is effective for either-

 

(a)     a particular tax period or other definite period; or

 

(b)     an indefinite 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 definite period for which it applies; or

 

(ii)     in the case of a ‘binding general ruling’ for an indefinite period, that it is for an indefinite 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).

Section 87 (TAA) – Publication of advance rulings

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87.    Publication of advance rulings

 

(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 identified 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.

 

(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 identified or referred to in the ruling.

 

(7)     SARS must treat the publication of the withdrawal or modification 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 modification thereof must be published in the manner and media as the Commissioner may deem appropriate.

Section 86 (TAA) – Withdrawal or modification of advance rulings

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86.    Withdrawal or modification of advance rulings

(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 first provide the ‘applicant’ with notice of the proposed withdrawal or modification and a reasonable opportunity to make representations prior to the decision whether to withdraw or modify the ‘advance ruling’.

[Subsection (2) substituted by section 26 of Act 24 of 2020]

(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 significant costs in respect of the arrangement;

(b)     a person other than the ‘applicant’ or ‘class member’ will suffer significant tax disadvantage if the ruling is not withdrawn or modified retrospectively and the ‘applicant’ will suffer comparatively less if the ruling is withdrawn or modified 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.

Section 85 (TAA) – Subsequent changes in tax law

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85.    Subsequent changes in tax law

 

(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 modifies 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-specific 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 modification.

Section 84 (TAA) – Rulings rendered void

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84.    Rulings rendered void

 

(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 satisfied 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.

Section 83 (TAA) – Applicability of advance rulings

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83.    Applicability of advance rulings

 

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’ specified 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 satisfied or carried out;

 

(e)     in the case of a ‘binding private ruling’, the person is an ‘applicant’ identified in the ruling; and

 

(f)      in the case of a ‘binding class ruling’, the person is a ‘class member’ identified in the ruling.

Section 82 (TAA) – Binding effect of advance rulings

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82.    Binding effect of advance rulings

 

(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’.

Section 81 (TAA) – Fees for advance rulings

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81.    Fees for advance rulings

 

(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’.

Section 80 (TAA) – Rejection of application for advance ruling

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80.    Rejection of application for advance ruling

(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 or associated enterprise, as defined in section 31 of the Income Tax Act, in relation to the ‘applicant’ or a ‘class member’;

[Subparagraph (iii) substituted by section 28 of Act 18 of 2023]

(iv)    the constitutionality of a tax Act;

(v)     a ‘proposed transaction’ that is hypothetical or not seriously contemplated;

(vi)    a matter which can be resolved by SARS issuing a directive under the Fourth Schedule or the Seventh 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 specific 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.