Category: Chapter 7 – Advance rulings (TAA)

Section 78 (TAA) – Private rulings and class rulings

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78.    Private rulings and class rulings

 

(1)     SARS may issue a ‘binding private ruling’ upon ‘application’ by a person in accordance with section 79.

 

(2)     SARS may issue a ‘binding class ruling’ upon ‘application’ by a person in accordance with section 79.

 

(3)     SARS may make a ‘binding private ruling’ or ‘binding class ruling’ subject to the conditions and assumptions as may be prescribed in the ruling.

 

(4)     SARS must issue the ruling to the ‘applicant’ at the address shown in the ‘application’ unless the ‘applicant’ provides other instructions, in writing, before the ruling is issued.

 

(5)     A ‘binding private ruling’ or ‘binding class ruling’ may be issued in the prescribed form and manner, must be signed by a senior SARS official and must contain the following:

 

(a)     a statement identifying it as a ‘binding private ruling’ or as a ‘binding class ruling’ made under this section;

 

(b)     the name, tax reference number (if applicable), and postal address of the ‘applicant’;

 

(c)     in the case of a ‘binding class ruling’, a list or a description of the affected ‘class members’;

 

(d)     the relevant statutory provisions or legal issues;

 

(e)     a description of the ‘proposed transaction’;

 

(f)      any assumptions made or conditions imposed by SARS in connection with the validity of the ruling;

 

(g)     the specific ruling made; and

 

(h)     the period for which the ruling is valid.

 

(6)     In the case of a ‘binding class ruling’, the ‘applicant’ alone is responsible for communicating with the affected ‘class members’ regarding the ‘application’ for the ruling, the issuance, withdrawal or modification of the ruling, or any other information or matter pertaining to the ruling.

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 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 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’.