Category: Tax Administration Act No. 28 of 2011

Section 79 (TAA) – Applications for advance rulings

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79.    Applications for advance rulings

 

(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 identification 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 financial 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 final ruling before publication in order to protect the confidentiality of the ‘applicant’ or ‘class members’;

 

(l)      the ‘applicant’s’ consent to the publication of the ruling by SARS in accordance with section 87;

 

(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’.

 

(n)     a statement confirming that the ‘applicant’ complied with any registration requirements under a tax Act, with regard to any tax for which the ‘applicant’ is liable, unless the ‘application’ concerns a ruling to determine if the ‘applicant’ must register under a tax Act; and

 

(o)     a statement confirming that all returns required to be rendered by that ‘applicant’ in terms of a tax Act have been rendered and any tax has been paid or arrangements acceptable to SARS have been made for the submission of any outstanding returns or for the payment of any outstanding tax debt.

 

(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.

Section 94 (TAA) – Jeopardy assessments

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94.    Jeopardy assessments

 

(1)     SARS may make a jeopardy assessment in advance of the date on which the return is normally due, if the Commissioner is satisfied 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.

Section 104 (TAA) – Objection against assessment or decision

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104.    Objection against assessment or decision

(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.

(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 for-


(a)     30 business days, if satisfied that reasonable grounds exist for the delay in lodging the objection; or


(b)     a period exceeding 30 business days, if satisfied that exceptional circumstances exist which gave rise to the delay in lodging the objection.

[Subsection (4) substituted by section 22(1)(a) of Act 43 of 2024]

(5)     The period for objection must not be extended under subsection (4)-


(a)     for more than three years from the date of assessment or the ‘decision’; or


(b)     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’.

[Subsection (5) amended by section 57 of Act 16 of 2016 and substituted by section 22(1)(a) of Act 43 of 2024]

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.

Section 95 (TAA) – Estimation of assessments

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95.    Estimation of assessments

(1)     SARS may make an original, additional, reduced or jeopardy assessment based in whole or in part on an estimate, if the taxpayer—

(a)     does not submit a return;

(b)     submits a return or relevant material that is incorrect or inadequate; or

(c)     does not submit a response to a request for relevant material under section 46, in relation to the taxpayer, after delivery of more than one request for such material.

[Subsection (1) substituted by section 29(a) of Act 24 of 2020]

(2)     SARS must make the estimate based on information readily available to it.

(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.

(4)     The making of an assessment under subsection (1) does not detract from the obligation to submit a return or the relevant material.

[Subsection (4) added by section 29(b) of Act 24 of 2020]

(5)     An assessment under subsection (1)(a) or (c) is only subject to objection and appeal if SARS decides not to make a reduced or additional assessment after the taxpayer submits the return or relevant material under subsection (6).

[Subsection (5) added by section 29(b) of Act 24 of 2020 and substituted by section 19(a) of Act 21 of 2021]

(6)     The taxpayer in relation to whom the assessment under subsection (1)(a) or (c) has been issued may, within 40 business days from the date of assessment, or a longer period as the Commissioner may prescribe by public notice, request SARS to make a reduced or additional assessment by submitting a true and full return or the relevant material.

[Subsection (6) added by section 29(b) of Act 24 of 2020, substituted by section 19(b) of Act 21 of 2021 and by section 29(a) of Act 18 of 2023 deemed effective on 31 July 2023]

(7)     If reasonable grounds for an extension are submitted by the taxpayer, a senior SARS official may extend the period referred to in subsection (6) within which the return or relevant material must be submitted, for a period not exceeding the relevant period referred to in section 99(1) or forty business days, whichever is the longest.

[Subsection (7) added by section 29(b) of Act 24 of 2020 and substituted by section 19(c) of Act 21 of 2021]

(8)     If SARS decides not to make a reduced or additional assessment as requested under subsection (6), the date of the assessment made under subsection (1)(a) or (1)(c), for purposes of Chapter 9, is extended to the date of the written notice of the decision.

[Subsection (8) added by section 19(d) of Act 21 of 2021 and substituted by section 29(b) of Act 18 of 2023]

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’.