‘advance ruling’ means a ‘binding general ruling’, a ‘binding private ruling’ or a ‘binding class ruling’;
Category: Tax Administration Act No. 28 of 2011
Section 80 (TAA) – Rejection of application for advance ruling
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
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 105 (TAA) – Forum for dispute of assessment or decision
105. Forum for dispute of assessment or decision
A taxpayer may only dispute an assessment or “decision” as described in section 104 in proceedings under this Chapter, unless a High Court otherwise directs.
[Section 105 substituted by section 52 of Act 23 of 2015 effective on 8 January 2016]
“Applicant” definition of section 75 of TAA
‘applicant’ means a person who submits an ‘application’ for a ‘binding private ruling’ or a ‘binding class ruling’;
Section 81 (TAA) – Fees for advance rulings
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 96 (TAA) – Notice of assessment
96. Notice of assessment
(1) SARS must issue to the taxpayer assessed a notice of the assessment made by SARS stating-
(a) the name of the taxpayer;
(b) the taxpayer’s taxpayer reference number, or if one has not been allocated, any other form of identification;
(c) the date of the assessment;
(d) the amount of the assessment;
(e) the tax period in relation to which the assessment is made;
(f) the date for paying the amount assessed; and
(g) a summary of the procedures for lodging an objection to the assessment.
(2) In addition to the information provided in terms of subsection (1) SARS must give the person assessed-
(a) in the case of an assessment described in section 95 or an assessment that is not fully based on a return submitted by the taxpayer, a statement of the grounds for the assessment; and
(b) in the case of a jeopardy assessment, the grounds for believing that the tax would otherwise be in jeopardy.
Section 106 (TAA) – Decision on objection
106. Decision on objection
(1) SARS must consider a valid objection in the manner and within the period prescribed under this Act and the ‘rules’.
(2) SARS may disallow the objection or allow it either in whole or in part.
(3) If the objection is allowed either in whole or in part, the assessment or ‘decision’ must be altered accordingly.
(4) SARS must, by notice, inform the taxpayer objecting or the taxpayer’s representative of the decision referred to in subsection (2), unless the objection is stayed under subsection (6) in which case notice of this must be given in accordance with the ‘rules’.
(5) The notice must state the basis for the decision and a summary of the procedures for appeal.
(6) If a senior SARS official considers that the determination of the objection or an appeal referred to in section 107, whether on a question of law only or on both a question of fact and a question of law, is likely to be determinative of all or a substantial number of the issues involved in one or more other objections or appeals, the official may-
(a) designate that objection or appeal as a test case; and
(b) stay the other objections or appeals by reason of the taking of a test case on a similar objection or appeal before the tax court,
in the manner, under the terms, and within the periods prescribed in the ‘rules’.
“Application” definition of section 75 of TAA
‘application’ means an application for a ‘binding private ruling’ or a ‘binding class ruling’;
Section 82 (TAA) – Binding effect of advance rulings
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’.