“impermissible avoidance arrangement” means an arrangement in respect of which Part IIA of Chapter III of the Income Tax Act is applied and includes, for purposes of this Chapter, any transaction, operation, scheme or agreement in respect of which section 73 of the Value-Added Tax Act or any other general anti-avoidance provision under a tax Act is applied;
[Definition of “impermissible avoidance arrangement” inserted by section 61 of Act 16 of 2016 effective on 19 January 2017]
“default” means the submission of inaccurate or incomplete information to SARS, or the failure to submit information or the adoption of a “tax position”, where such submission, non-submission, or adoption resulted in an understatement.
[Definition of “default” substituted by section 64 of Act 23 of 2015 effective on 8 January 2016]
226. Qualification of person subject to audit or investigation for voluntary disclosure
(1) A person may apply, whether in a personal, representative, withholding or other capacity, for voluntary disclosure relief.
(2) If the person seeking relief has been given notice of the commencement of an audit or criminal investigation into the affairs of the person, which has not been concluded and is related to the disclosed ‘default’, the disclosure of the ‘default’ is regarded as not being voluntary for purposes of section 227, unless a senior SARS official is of the view, having regard to the circumstances and ambit of the audit or investigation, that-
(a) ……….
(b) the ‘default’ in respect of which the person has sought relief would not otherwise have been detected during the audit or investigation; and
(c) the application would be in the interest of good management of the tax system and the best use of SARS’ resources.
(3) A person is deemed to have been notified of an audit or criminal investigation, if-
(a) a representative of the person;
(b) an officer, shareholder or member of the person, if the person is a company;
(c) a partner in partnership with the person;
(d) a trustee or beneficiary of the person, if the person is a trust; or
(e) a person acting for or on behalf of or as an agent or fiduciary of the person,
has been given notice of the audit or investigation.
[Section 226 amended by section 65 of Act 23 of 2015 and substituted by section 63 of Act 16 of 2016 effective on 19 January 2017]
CHAPTER 16
UNDERSTATEMENT PENALTY
227. Requirements for valid voluntary disclosure
The requirements for a valid voluntary disclosure are that the disclosure must-
(a) be voluntary;
(b) involve a “default” which has not occurred within five years of the disclosure of a similar “default” by the applicant or a person referred to in section 226(3);
[Paragraph (b) substituted by section 66 of Act 23 of 2015 effective on 8 January 2016]
(c) be full and complete in all material respects;
(d) involve a behaviour referred to in column 2 of the understatement penalty percentage table in section 223;
[Paragraph (d) substituted by section 66 of Act 23 of 2015 effective on 8 January 2016]
(e) not result in a refund due by SARS; and
(f) be made in the prescribed form and manner.
Part A
Imposition of understatement penalty
228. No-name voluntary disclosure
A senior SARS official may issue a non-binding private opinion, as defined in section 75, as to a person’s eligibility for relief under this Part, if the person provides sufficient information to do so, which information need not include the identity of any party to the ‘default’.
221. Definitions
In this Chapter, unless the context indicates otherwise, the following terms, if in single quotation marks, have the following meanings:
229. Voluntary disclosure relief
Despite the provisions of a tax Act, SARS must, pursuant to the making of a valid voluntary disclosure by the applicant and the conclusion of the voluntary disclosure agreement under section 230–
[Words preceding paragraph (a) substituted by section 67 of Act 23 of 2015 effective on 8 January 2016]
(a) not pursue criminal prosecution for a tax offence arising from the ‘default’;
(b) grant the relief in respect of any understatement penalty to the extent referred to in column 5 or 6 of the understatement penalty percentage table in section 223; and
(c) grant 100 per cent relief in respect of an administrative non-compliance penalty that was or may be imposed under Chapter 15 or a penalty imposed under a tax Act, excluding a penalty imposed under that Chapter or in terms of a tax Act for the late submission of a return.
[Paragraph (c) substituted by section 67 of Act 23 of 2015 effective on 8 January 2016]
“repeat case” means a second or further case of any of the behaviours listed under items (i) to (vi) of the understatement penalty 15 percentage table reflected in section 223 within five years of the previous case;
[Definition of “repeat case” substituted by section 61 of Act 16 of 2016 effective on 19 January 2017]