Category: Part B – Voluntary disclosure programme (TAA)

“Default” definition of section 225 of TAA

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“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]

Section 226 (TAA) – Qualification of person subject to audit or investigation for voluntary disclosure

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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]

Section 227 (TAA) – Requirements for valid voluntary disclosure

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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.

Section 229 (TAA) – Voluntary disclosure relief

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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]

Section 230 (TAA) – Voluntary disclosure agreement

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230.    Voluntary disclosure agreement

 

The approval by a senior SARS official of a voluntary disclosure application and relief granted under section 229, must be evidenced by a written agreement between SARS and the qualifying person who is liable for the outstanding tax debt in the prescribed format and must include details on-

 

(a)     the material facts of the ‘default’ on which the voluntary disclosure relief is based;

 

(b)     the amount payable by the person, which amount must separately reflect the understatement penalty payable;

 

(c)     the arrangements and dates for payment; and

 

(d)     relevant undertakings by the parties.

Section 231 (TAA) – Withdrawal of voluntary disclosure relief

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231.    Withdrawal of voluntary disclosure relief

 

(1)     In the event that, subsequent to the conclusion of a voluntary disclosure agreement under section 230, it is established that the applicant failed to disclose a matter that was material for purposes of making a valid voluntary disclosure under section 227, a senior SARS official may-

 

(a)     withdraw any relief granted under section 229;

 

(b)     regard an amount paid in terms of the voluntary disclosure agreement to constitute part payment of any further outstanding tax debt in respect of the relevant ‘default’; and

 

(c)     pursue criminal prosecution for a tax offence.

 

(2)     Any decision by the senior SARS official under subsection (1) is subject to objection and appeal.

Section 232 (TAA) – Assessment or determination to give effect to agreement

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232.    Assessment or determination to give effect to agreement

 

(1)     If a voluntary disclosure agreement has been concluded under section 230, SARS may, despite anything to the contrary contained in a tax Act, issue an assessment or make a determination for purposes of giving effect to the agreement.

 

(2)     An assessment issued or determination made to give effect to an agreement under section 230 is not subject to objection and appeal.