Category: Part A – General rules for inspection, verification, audit and criminal investigation (TAA)

Section 42A (TAA) – Procedure where legal professional privilege is asserted

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42A.  Procedure where legal professional privilege is asserted

(1)     For purposes of Parts B, C and D, if a person alleges the existence of legal professional privilege in respect of relevant material required by SARS, during an inquiry or during the conduct of a search and seizure by SARS, the person must provide the following information to SARS and, if applicable, the presiding officer designated under section 51 or the legal practitioner referred to in section 64:

(a)     a description and purpose of each item of the material in respect of which the privilege is asserted;

(b)     the author of the material and the capacity in which the author was acting;

(c)     the name of the person for whom the author referred to in paragraph (b) was acting in providing the material;

(d)     confirmation in writing that the person referred to in paragraph (c) is claiming privilege in respect of each item of the material;

(e)     if the material is not in possession of the person referred to in paragraph (d), from whom did the person asserting privilege obtain the material; and

(f)     if the person asserting privilege is not the person referred to in paragraph (d), under what circumstances and instructions regarding the privilege did the person obtain the material.

[Subsection (1) amended by section 29 of Act 33 of 2019]

(2)     A person must submit the information required under Part B to SARS at the place, in the format and within the time specified by SARS, unless SARS extends the period based on reasonable grounds submitted by the person.

(3)     If SARS disputes the assertion of privilege upon receipt of the information-

(a)     SARS must make arrangements with a practitioner from the panel appointed under section 111 to take receipt of the material;

(b)     the person asserting privilege must seal and hand over the material in respect of which privilege is asserted to the practitioner;

(c)     the practitioner must within 21 business days after being handed the material make a determination of whether the privilege applies and may do so in the manner the practitioner deems fit, including considering representations made by the parties;

(d)     if a determination of whether the privilege applies is not made by the practitioner or a party is not satisfied with the determination, the practitioner must retain the relevant material pending final resolution of the dispute by the parties or an order of court; and

(e)     any application to a High Court must be instituted within 30 days of the expiry of the period of 21 business days, failing which the material must be handed to the party in whose favour the determination, if any, was made.

(4)     The appointed practitioner-

(a)     is not regarded as acting on behalf of either party;

(b)     must personally take responsibility for the safekeeping of the material;

(c)     must give grounds for the determination under subsection (3)(d); and

(d)     must be compensated in the same manner as if acting as chairperson of the tax board.

[Section 42A inserted by section 41 of Act 23 of 2015 effective on 8 January 2016]

Section 41 (TAA) – Authorisation for SARS official to conduct audit or criminal investigation

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41.  Authorisation for SARS official to conduct audit or criminal investigation

 

(1)     A senior SARS official may grant a SARS official written authorisation to conduct a field audit or criminal investigation, as referred to in Part B.

 

(2)     When a SARS official exercises a power or duty under a tax Act in person, the official must produce the authorisation.

 

(3)     If the official does not produce the authorisation, a member of the public is entitled to assume that the official is not a SARS official so authorised.

Section 42 (TAA) – Keeping taxpayer informed

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42.  Keeping taxpayer informed

(1) A SARS official involved in or responsible for an audit under this Chapter must, in the form and in the manner as may be prescribed by the Commissioner by public notice, provide the taxpayer with a notice of commencement of an audit and, thereafter, a report indicating the stage of completion of the audit.

[Subsection (1) substituted by section 48(a) of Act 21 of 2012 and by section 16 of Act 22 of 2018.]

(2)     Upon conclusion of the audit or a criminal investigation, and where-

(a)     the audit or investigation was inconclusive, SARS must inform the taxpayer accordingly within 21 business days; or

(b)     the audit identified potential adjustments of a material nature, SARS must within 21 business days, or the further period that may be required based on the complexities of the audit, provide the taxpayer with a document containing the outcome of the audit, including the grounds for the proposed assessment or decision referred to in section 104(2).

(3)     Upon receipt of the document described in subsection (2)(b), the taxpayer must within 21 business days of delivery of the document, or the further period requested by the taxpayer that may be allowed by SARS based on the complexities of the audit, respond in writing to the facts and conclusions set out in the document.

(4)     The taxpayer may waive the right to receive the document.

(5)     Subsections (1) and (2)(b) do not apply if a senior SARS official has a reasonable belief that compliance with those subsections would impede or prejudice the purpose, progress or outcome of the audit.

(6)     SARS may under the circumstances described in subsection (5) issue the assessment or make the decision referred to in section 104(2) resulting from the audit and the grounds of the assessment or decision must be provided to the taxpayer within 21 business days of the assessment or the decision, or the further period that may be required based on the complexities of the audit or the decision.

Section 43 (TAA) – Referral for criminal investigation

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43.  Referral for criminal investigation

 

(1)     If at any time before or during the course of an audit it appears that a taxpayer may have committed a serious tax offence, the investigation of the offence must be referred to a senior SARS official responsible for criminal investigations for a decision as to whether a criminal investigation should be pursued.

 

(2)     Relevant material obtained under this Chapter from the taxpayer after the referral, must be kept separate from the criminal investigation.

 

(3)     If an investigation is referred under subsection (1) the relevant material and files relating to the case must be returned to the SARS official responsible for the audit if-

 

(a)     it is decided not to pursue a criminal investigation;

 

(b)     it is decided to terminate the investigation; or

 

(c)     after referral of the case for prosecution, a decision is made not to prosecute.

Section 44 (TAA) – Conduct of criminal investigation

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44.  Conduct of criminal investigation

(1)     During a criminal investigation, SARS must apply the information gathering powers in terms of this Chapter with due recognition of the taxpayer’s constitutional rights as a suspect in a criminal investigation.

(2)     In the event that a decision is taken to pursue the criminal investigation of a serious tax offence, SARS may make use of relevant material obtained prior to the referral referred to in section 43.

(3)   Relevant material obtained during a criminal investigation may be used for purposes of audit as well as in subsequent civil and criminal proceedings.

[Subsection (3) substituted by section 17 of Act 22 of 2018.]