Reproduced under Goverment Printer’s Authorisation (Authorisation No. 11779) dated 25 August 2017.

Please remember to periodically “Check for Updates”!

TAX ADMINISTRATION ACT 28 OF 2011

(English text signed by the President)

[Assented to: 2 July 2012]

as amended by:

Tax Administration Laws Amendment Act 21 of 2012

Employment Tax Incentive Act 26 of 2013

Tax Administration Laws Amendment Act 39 of 2013

Tax Administration Laws Amendment Act 44 of 2014

Tax Administration Laws Amendment Act 23 of 2015

Tax Administration Laws Amendment Act 16 of 2016

Tax Administration Laws Amendment Act 13 of 2017

Tax Administration Laws Amendment Act 22 of 2018

Tax Administration Laws Amendment Act 33 of 2019

Tax Administration Laws Amendment Act 24 of 2020

Latest 2024 Live Updates: COMPLETED!

Tax Administration Laws Amendment Act 18 of 2023

To report an issue, please contact us at service@hApp-e-tax.co.za

ACT

To provide for the effective and efficient collection of tax; to provide for the alignment of the administration provisions of tax Acts and the consolidation of the provisions into one piece of legislation to the extent practically possible; to determine the powers and duties of the South African Revenue Service and officials; to provide for the delegation of powers by the Commissioner; to provide for the authority to act in legal proceedings; to determine the powers and duties of the Minister of Finance; to provide for the establishment of the office of the Tax Ombud; to determine the powers and duties of the Tax Ombud; to provide for registration requirements; to provide for the submission of returns and the duty to keep records; to provide for reportable arrangements; to provide for the request for information; to provide for the carrying out of an audit or investigation by the South African Revenue Service; to provide for inquiries; to provide for powers of the South African Revenue Service to carry out searches and seizures; to provide for the confidentiality of information; to provide for the South African Revenue Service to issue advance rulings; to make provision in respect of tax assessments; to provide for dispute resolution; to make provision for the payment of tax; to provide for the recovery of tax; to provide for the South African Revenue Service to recover interest on outstanding tax debts; to provide for the refund of excess payments; to provide for the write-off and compromise of tax debts; to provide for the imposition and remittance of administrative non-compliance penalties; to provide for the imposition of understatement penalties; to provide for a voluntary disclosure programme; to provide for criminal offences and sanctions; to provide for the reporting of unprofessional conduct by tax practitioners; and to provide for matters connected therewith.

BE IT ENACTED by the Parliament of the Republic of South Africa, as follows:-

ARRANGEMENT OF SECTIONS

Sections

CHAPTER 1

DEFINITIONS

Section 1 – Definitions

CHAPTER 2

GENERAL ADMINISTRATION PROVISIONS

 

Part A

In general

Section 2 – Purpose of Act

Section 3 – Administration of tax Acts

Section 4 – Application of Act

Section 5 – Practice generally prevailing

Part B

Powers and duties of SARS and SARS officials

Section 6 – Powers and duties

Section 7 – Conflict of interest

Section 8 – Identity cards

Section 9 – Decision or notice by SARS

Part C

Delegations

Section 10 – Delegations by the Commissioner

Part D

Authority to act in legal proceedings

Section 11 – Legal proceedings involving Commissioner

Section 12 – Right of appearance in proceedings

Part E

Powers and duties of Minister

Section 13 – Powers and duties of Minister

Section 14 – Power of Minister to appoint Tax Ombud

Part F

Powers and duties of Tax Ombud

Section 15 – Office of Tax Ombud

Section 16 – Mandate of Tax Ombud

Section 17 – Limitations on authority

Section 18 – Review of complaint

Section 19 – Reports by Tax Ombud

Section 20 – Resolution and recommendations

Section 21 – Confidentiality

CHAPTER 3

REGISTRATION

Section 22 – Registration requirements

Section 23 – Communication of changes in particulars

Section 24 – Taxpayer reference number

CHAPTER 4

RETURNS AND RECORDS

 

Part A

General

Section 25 – Submission of return

Section 26 – Third party returns

Section 27 – Other returns required

Section 28 – Statement concerning accounts

Section 29 – Duty to keep records

Section 30 – Form of records kept or retained

Section 31 – Inspection of records

Section 32 – Retention period in case of audit, objection or appeal

Section 33 – Translation

Part B

Reportable arrangements

Section 34 – Definitions

Section 35 – Reportable arrangements

Section 36 – Excluded arrangements

Section 37 – Disclosure obligation

Section 38 – Information to be submitted

Section 39 – Reportable arrangement reference number

CHAPTER 5

INFORMATION GATHERING

 

Part A

General rules for inspection, verification, audit and criminal investigation

Section 40 – Selection for inspection, verification or audit

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

Section 42 – Keeping taxpayer informed

Section 42A – Procedure where legal professional privilege is asserted

Section 43 – Referral for criminal investigation

Section 44 – Conduct of criminal investigation

Part B

Inspection, request for relevant material, audit and criminal investigation

Section 45 – Inspection

Section 46 – Request for relevant material

Section 47 – Production of relevant material in person

Section 48 – Field audit or criminal investigation

Section 49 – Assistance during field audit or criminal investigation

Part C

Inquiries

Section 50 – Authorisation for inquiry

Section 51 – Inquiry order

Section 52 – Inquiry proceedings

Section 53 – Notice to appear

Section 54 – Powers of presiding officer

Section 55 – Witness fees

Section 56 – Confidentiality of proceedings

Section 57 – Incriminating evidence

Section 58 – Inquiry not suspended by civil or criminal proceedings

Part D

Search and seizure

Section 59 – Application for warrant

Section 60 – Issuance of warrant

Section 61 – Carrying out search

Section 62 – Search of premises not identified in warrant

Section 63 – Search without warrant

Section 64 – Legal professional privilege

Section 65 – Person’s right to examine and make copies

Section 66 – Application for return of seized relevant material or costs of damages

CHAPTER 6

CONFIDENTIALITY OF INFORMATION

Section 67 – General prohibition of disclosure

Section 68 – SARS confidential information and disclosure

Section 69 – Secrecy of taxpayer information and general disclosure

Section 70 – Disclosure to other entities

Section 71 – Disclosure in criminal, public safety or environmental matters

Section 72 – Self-incrimination

Section 73 – Disclosure to taxpayer of own record

Section 74 – Publication of names of offenders

CHAPTER 7

ADVANCE RULINGS

Section 75 – Definitions

Section 76 – Purpose of advance rulings

Section 77 – Scope of advance rulings

Section 78 – Private rulings and class rulings

Section 79 – Applications for advance rulings

Section 80 – Rejection of application for advance ruling

Section 81 – Fees for advance rulings

Section 82 – Binding effect of advance rulings

Section 83 – Applicability of advance rulings

Section 84 – Rulings rendered void

Section 85 – Subsequent changes in tax law

Section 86 – Withdrawal or modification of advance rulings

Section 87 – Publication of advance rulings

Section 88 – Non-binding private opinions

Section 89 – General rulings

Section 90 – Procedures and guidelines for advance rulings

CHAPTER 8

ASSESSMENTS

Section 91 – Original assessments

Section 92 – Additional assessments

Section 93 – Reduced assessments

Section 94 – Jeopardy assessments

Section 95 – Estimation of assessments

Section 96 – Notice of assessment

Section 97 – Recording of assessments

Section 98 – Withdrawal of assessments

Section 99 – Period of limitations for issuance of assessments

Section 100 – Finality of assessment or decision

CHAPTER 9

DISPUTE RESOLUTION

 

Part A

General

Section 101 – Definitions

Section 102 – Burden of proof

Section 103 – Rules for dispute resolution

Part B

Objection and appeal

Section 104 – Objection against assessment or decision

Section 105 – Forum for dispute of assessment or decision

Section 106 – Decision on objection

Section 107 – Appeal against assessment or decision

Part C

Tax board

Section 108 – Establishment of tax board

Section 109 – Jurisdiction of tax board

Section 110 – Constitution of tax board

Section 111 – Appointment of chairpersons

Section 112 – Clerk of tax board

Section 113 – Tax board procedure

Section 114 – Decision of tax board

Section 115 – Referral of appeal to tax court

Part D

Tax court

Section 116 – Establishment of tax court

Section 117 – Jurisdiction of tax court

Section 118 – Constitution of tax court

Section 119 – Nomination of president of tax court

Section 120 – Appointment of panel of tax court member

Section 121 – Appointment of registrar of tax court

Section 122 – Conflict of interest of tax court members

Section 123 – Death, retirement or incapability of judge or member

Section 124 – Sitting of tax court not public

Section 125 – Appearance at hearing of tax court

Section 126 – Subpoena of witness to tax court

Section 127 – Non-attendance by witness or failure to give evidence

Section 128 – Contempt of tax court

Section 129 – Decision by tax court

Section 130 – Order for costs by tax court

Section 131 – Registrar to notify parties of judgment of tax court

Section 132 – Publication of judgment of tax court

Part E

Appeal against tax court decision

Section 133 – Appeal against decision of tax court

Section 134 – Notice of intention to appeal tax court decision

Section 135 – Leave to appeal to Supreme Court of Appeal against tax court decision

Section 136 – Failure to lodge notice of intention to appeal tax court decision

Section 137 – Notice by registrar of period for appeal of tax court decision

Section 138 – Notice of appeal to Supreme Court of Appeal against tax court decision

Section 139 – Notice of cross-appeal of tax court decision

Section 140 – Record of appeal of tax court decision

Section 141 – Abandonment of judgment

Part F

Settlement of dispute

Section 142 – Definitions

Section 143 – Purpose of Part

Section 144 – Initiation of settlement procedure

Section 145 – Circumstances where settlement is inappropriate

Section 146 – Circumstances where settlement is appropriate

Section 147 – Procedure for settlement

Section 148 – Finality of settlement agreement

Section 149 – Register of settlements and reporting

Section 150 – Alteration of assessment or decision on settlement

CHAPTER 10

TAX LIABILITY AND PAYMENT

 

Part A

Taxpayers

Section 151 – Taxpayer

Section 152 – Person chargeable to tax

Section 153 – Representative taxpayer

Section 154 – Liability of representative taxpayer

Section 155 – Personal liability of representative taxpayer

Section 156 – Withholding agent

Section 157 – Personal liability of withholding agent

Section 158 – Responsible third party

Section 159 – Personal liability of responsible third party

Section 160 – Taxpayer’s right to recovery

Section 161 – Security by taxpayer

Part B

Payment of tax

Section 162 – Determination of time and manner of payment of tax

Section 163 – Preservation order

Section 164 – Payment of tax pending objection or appeal

Part C

Taxpayer account and allocation of payments

Section 165 – Taxpayer account

Section 166 – Allocation of payments

Part D

Deferral of payment

Section 167 – Instalment payment agreement

Section 168 – Criteria for instalment payment agreement

CHAPTER 11

RECOVERY OF TAX

 

Part A

General

Section 169 – Debt due to SARS

Section 170 – Evidence as to assessment

Section 171 – Period of limitation on collection of tax

Part B

Judgment procedure

Section 172 – Application for civil judgment for recovery of tax

Section 173 – Jurisdiction of Magistrates’ Court in judgment procedure

Section 174 – Effect of statement filed with clerk or registrar

Section 175 – Amendment of statement filed with clerk or registrar

Section 176 – Withdrawal of statement and reinstitution of proceedings

Part C

Sequestration, liquidation and winding-up proceedings

Section 177 – Institution of sequestration, liquidation or winding-up proceedings

Section 178 – Jurisdiction of court in sequestration, liquidation or winding-up proceedings

Part D

Collection of tax debt from third parties

Section 179 – Liability of third party appointed to satisfy tax debts

Section 180 – Liability of financial management for tax debts

Section 181 – Liability of shareholders for tax debts

Section 182 – Liability of transferee for tax debts

Section 183 – Liability of person assisting in dissipation of assets

Section 184 – Recovery of tax debts from other persons

Part E

Assisting foreign governments

Section 185 – Tax recovery on behalf of foreign governments

Part F

Remedies with respect to foreign assets

Section 186 – Compulsory repatriation of foreign assets of taxpayer

CHAPTER 12

INTEREST

Section 187 – General interest rules

Section 188 – Period over which interest accrues

Section 189 – Rate at which interest is charged

CHAPTER 13

REFUNDS

Section 190 – Refunds of excess payments

Section 191 – Refunds subject to set-off and deferral

CHAPTER 14

WRITE OFF OR COMPROMISE OF TAX DEBTS

 

Part A

General provisions

Section 192 – Definitions

Section 193 – Purpose of Chapter

Section 194 – Application of Chapter

Part B

Temporary write off of tax debt

Section 195 – Temporary write off of tax debt

Section 196 – Tax debt uneconomical to pursue

Part C

Permanent write off of tax debt

Section 197 – Permanent write off of tax debt

Section 198 – Tax debt irrecoverable at law

Section 199 – Procedure for writing off tax debt

Part D

Compromise of tax debt

Section 200 – Compromise of tax debt

Section 201 – Request by debtor for compromise of tax debt

Section 202 – Consideration of request to compromise tax debt

Section 203 – Circumstances where not appropriate to compromise tax debt

Section 204 – Procedure for compromise of tax debt

Section 205 – SARS not bound by compromise of tax debt

Part E

Records and reporting

Section 206 – Register of tax debts written off or compromised

Section 207 – Reporting by Commissioner of tax debts written off or compromised

CHAPTER 15

ADMINISTRATIVE NON-COMPLIANCE PENALTIES

Part A

General

Section 208 – Definitions

Section 209 – Purpose of Chapter

Part B

Fixed amount penalties

Section 210 – Non-compliance subject to penalty

Section 211 – Fixed amount penalty table

Section 212 – Reportable arrangement and mandatory disclosure penalty

Part C

Percentage based penalty

Section 213 – Imposition of percentage based penalty

Part D

Procedure

Section 214 – Procedures for imposing penalty

Section 215 – Procedure to request remittance of penalty

Part E

Remedies

Section 216 – Remittance of penalty for failure to register

Section 217 – Remittance of penalty for nominal or first incidence of non-compliance

Section 218 – Remittance of penalty in exceptional circumstances

Section 219 – Penalty incorrectly assessed

Section 220 – Objection and appeal against decision not to remit penalty

CHAPTER 16

UNDERSTATEMENT PENALTY

 

Part A

Imposition of understatement penalty

Section 221 – Definitions

Section 222 – Understatement penalty

Section 223 – Understatement penalty percentage table

Section 224 – Objection and appeal against imposition of understatement penalty

Part B

Voluntary disclosure programme

Section 225 – Definitions

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

Section 227 – Requirements for valid voluntary disclosure

Section 228 – No-name voluntary disclosure

Section 229 – Voluntary disclosure relief

Section 230 – Voluntary disclosure agreement

Section 231 – Withdrawal of voluntary disclosure relief

Section 232 – Assessment or determination to give effect to agreement

Section 233 – Reporting of voluntary disclosure agreements

CHAPTER 17

CRIMINAL OFFENCES

Section 234 – Criminal offences relating to non-compliance with tax Acts

Section 235 – Evasion of tax and obtaining undue refunds by fraud or theft

Section 236 – Criminal offences relating to secrecy provisions

Section 237 – Criminal offences relating to filing return without authority

Section 238 – Jurisdiction of courts in criminal matters

CHAPTER 18

REGISTRATION OF TAX PRACTITIONERS AND REPORTING OF UNPROFESSIONAL CONDUCT

Section 239 – Definitions

Section 240 – Registration of tax practitioners

Section 240A – Recognition of controlling bodies

Section 241 – Complaint to controlling body

Section 242 – Disclosure of information regarding complaint and remedies of taxpayer

Section 243 – Complaint considered by controlling body

CHAPTER 19

GENERAL PROVISIONS

Section 244 – Deadlines

Section 245 – Power of Minister to determine date for submission of returns and payment of tax

Section 246 – Public officers of companies

Section 247 – Company address for notices and documents

Section 248 – Public officer in event of liquidation, winding-up or business rescue

Section 249 – Default in appointing public officer or address for notices or documents

Section 250 – Authentication of documents

Section 251 – Delivery of documents to persons other than companies

Section 252 – Delivery of documents to companies

Section 253 – Documents delivered deemed to have been received

Section 254 – Defect does not affect validity

Section 255 – Rules for electronic communication

Section 256 – Tax compliance status

Section 257 – Regulations by Minister

CHAPTER 20

TRANSITIONAL PROVISIONS

Section 258 – New taxpayer reference number

Section 259 – Appointment of Tax Ombud

Section 260 – Provisions relating to secrecy

Section 261 – Public officer previously appointed

Section 262 – Appointment of chairpersons of tax board

Section 263 – Appointment of members of tax court

Section 264 – Continuation of tax board, tax court and court rules

Section 265 – Continuation of appointment to a post or office or delegation by Commissioner

Section 266 – Continuation of authority to audit

Section 267 – Conduct of inquiries and execution of search and seizure warrants

Section 268 – Application of Chapter 15

Section 269 – Continuation of authority, rights and obligations

Section 270 – Application of Act to prior or continuing action

Section 271 – Amendment of legislation

Section 272 – Short title and commencement

SCHEDULE 1

CHAPTER 1

DEFINITIONS

1.    Definitions

 

In this Act, unless the context indicates otherwise, a term which is assigned a meaning in another tax Act has the meaning so assigned, and the following terms have the following meaning:

“additional assessment” is an assessment referred to in section 92;

“administration of a tax Act” has the meaning assigned in section 3(2);

“administrative non-compliance penalty” has the meaning assigned in section 208;

“assessment” means the determination of the amount of a tax liability or refund, by way of self-assessment by the taxpayer or assessment by SARS;

“asset” includes-

 

(a)     property of whatever nature, whether movable or immovable, corporeal or incorporeal; and

 

(b)     a right or interest of whatever nature to or in the property;

“beneficial owner”-

(a)     of a company, has the meaning assigned to it by section 1 of the Companies Act, 2008 (Act 71 of 2008);

(b)     of a partnership, means a natural person who, directly or indirectly, ultimately owns, or exercises effective control of, the partnership, and includes—

(i)      every partner, including every member of a partnership en commandite, an anonymous partnership or any similar partnership;

(ii)     if a partner in the partnership is a legal person or a natural person acting on behalf of a partnership or in pursuance of the provisions of a trust agreement, the beneficial owner of that legal person, partnership or trust; and

(iii)     the natural person who exercises executive control over the partnership; and

(c)     of a trust, has the meaning assigned to it by section 1 of the Trust Property Control Act, 1988 (Act 57 of 1988).

[Definition of “beneficial owner” inserted by section 25 of Act 18 of 2023]

“biometric information” means biological data used to authenticate the identity of a natural person by means of-

(a)     facial recognition;

(b)     fingerprint recognition;

(c)     voice recognition;

(d)     iris or retina recognition; and

(e)     other, less intrusive biological data, as may be prescribed by the Minister in a regulation issued under section 257;

“business day” means a day which is not a Saturday, Sunday or public holiday, and for purposes of determining the days or a period allowed for complying with the provisions of Chapter 9, excludes the days between 16 December of each year and 15 January of the following year, both days inclusive;

“Commissioner” means the Commissioner for the South African Revenue Service appointed in terms of section 6 of the SARS Act or the Acting Commissioner designated in terms of section 7 of that Act;

“company” has the meaning assigned in section 1 of the Income Tax Act;

“connected person” means a connected person as defined in section 1 of the Income Tax Act;

“Customs and Excise Act” ………..

[Definition of “Customs and Excise Act” substituted by the definition of “customs and excise legislation” by section 33 of Act 23 of 2015 effective on 8 January 2016]

“customs and excise legislation” means the Customs and Excise Act, 1964 (Act No. 91 of 1964), the Customs Duty Act, 2014 (Act No. 30 of 2014), or the Customs Control Act, 2014 (Act No. 31 of 2014);

[Definition of “customs and excise legislation” added as substitition of the definition of “Customs and Excise Act” by section 33 of Act 23 of 2015 effective on 8 January 2016]

“date of assessment” means-

(a)     in the case of an assessment by SARS, the date of the issue of the notice of assessment; or

(b)     in the case of self-assessment by the taxpayer-

(i)      if a return is required, the date that the return is submitted; or

(ii)     if no return is required, the date of the last payment of the tax for the tax period or, if no payment was made in respect of the tax for the tax period, the effective date;

“date of sequestration” means-

(a)     the date of voluntary surrender of an estate, if accepted by a court; or

(b)     the date of provisional sequestration of an estate, if a final order of sequestration is granted by a court;

“Diamond Export Levy Act” means the Diamond Export Levy Act, 2007 (Act No. 15 of 2007);

“Diamond Export Levy (Administration) Act” means the Diamond Export Levy (Administration) Act, 2007 (Act No. 14 of 2007);

“document” means anything that contains a written, sound or pictorial record, or other record of information, whether in physical or electronic form;

“effective date” is the date described in section 187(3), (4) and (5) of this Act, or the date from when interest is otherwise calculated under a tax Act;

“Estate Duty Act” means the Estate Duty Act, 1955 (Act No. 45 of 1955);

“fair market value” means the price which could be obtained upon a sale of an asset between a willing buyer and a willing seller dealing at arm’s length in an open market;

“income tax” means normal tax referred to in section 5 of the Income Tax Act;

“Income Tax Act” means the Income Tax Act, 1962 (Act No. 58 of 1962);

“information” includes information generated, recorded, sent, received, stored or displayed by any means;

“international tax agreement” means-

(a)     an agreement entered into with the government of another country in accordance with a tax Act; or

(b)     any other agreement entered into between the competent authority of the Republic and the competent authority of another country relating to the automatic exchange of information under an agreement referred to in paragraph (a);

“international tax standard” means-

(a)     the OECD Standard for Automatic Exchange of Financial Account Information in Tax Matters;

(b)     the Country-by-Country Reporting Standard for Multinational Enterprises specified by the Minister; or

(c)     any other international standard for the exchange of tax-related information between countries specified by the Minister,

subject to such changes as specified by the Minister in a regulation issued under section 257;

[Definition of “international tax standard” inserted by section 33 of Act 23 of 2015 effective on 8 January 2016]

“jeopardy assessment” is an assessment referred to in section 94;

“judge” means a judge of the High Court of South Africa, whether in chambers or otherwise;

“magistrate” means a judicial officer as defined in section 1 of the Magistrates’ Courts Act, 1944 (Act No. 32 of 1944), whether in chambers or otherwise;

“Mineral and Petroleum Resources Royalty (Administration) Act” means the Mineral and Petroleum Resources Royalty (Administration) Act, 2008 (Act No. 29 of 2008);

“Minister” means the Minister of Finance;

“official publication” means a binding general ruling, interpretation note, practice note or public notice issued by a senior SARS official or the Commissioner;

“original assessment” is an assessment referred to in section 91;

“outstanding tax debt” means a tax debt not paid by the day referred to in section 162;

“practice generally prevailing” has the meaning assigned in section 5;

“premises” includes a building, aircraft, vehicle, vessel or place;

“prescribed rate” has the meaning assigned in section 189(3);

“presiding officer” is the person referred to in section 50(1);

“Promotion of Access to Information Act” means the Promotion of Access to Information Act, 2000 (Act No. 2 of 2000);

“public notice” means a notice published in the Government Gazette;

“public officer” is an officer referred to in section 246(1), (2) and (3);

“reduced assessment” is an assessment referred to in section 93;

“registered tax practitioner” means a person registered under section 240;

“relevant material” means any information, document or thing that in the opinion of SARS is foreseeably relevant for the administration of a tax Act as referred to in section 3;

“reportable arrangement” has the meaning assigned in section 35;

“representative taxpayer” has the meaning assigned in section 153(1);

“responsible third party” has the meaning assigned under section 158;

“return” means a form, declaration, document or other manner of submitting information to SARS that incorporates a self-assessment, is a basis on which an assessment is to be made by SARS or incorporates relevant material required under section 25, 26 or 27 or a provision under a tax Act requiring the submission of a return;

“SARS” means the South African Revenue Service established under the SARS Act;

“SARS Act” means the South African Revenue Service Act, 1997 (Act No. 34 of 1997);

“SARS confidential information” has the meaning assigned under section 68(1);

“SARS official” means-

(a)     the Commissioner;

(b)     an employee of SARS; or

(c)     a person contracted or engaged by SARS, other than an external legal representative, for purposes of the administration of a tax Act and who carries out the provisions of a tax Act under the control, direction or supervision of the Commissioner;

 [Definition of “SARS official” amended by section 36 of Act 21 of 2012 and substituted by section 47 of Act 16 of 2016 effective on 19 January 2017]

“Securities Transfer Tax Act” means the Securities Transfer Tax Act, 2007 (Act No. 25 of 2007);

“Securities Transfer Tax Administration Act” means the Securities Transfer Tax Administration Act, 2007 (Act No. 26 of 2007);

“self-assessment” means a determination of the amount of tax payable under a tax Act by a taxpayer and-

(a)     submitting a return which incorporates the determination of the tax; or

(b)     if no return is required, making a payment of the tax;

“senior SARS official” is a SARS official referred to in section 6(3);

“serious tax offence” means a tax offence for which a person may be liable on conviction to imprisonment for a period exceeding two years without the option of a fine or to a fine exceeding the equivalent amount of a fine under the Adjustment of Fines Act, 1991 (Act No. 101 of 1991);

“shareholder” means a person who holds a beneficial interest in a company as defined in the Income Tax Act;

“Skills Development Levies Act” means the Skills Development Levies Act, 1999 (Act No. 9 of 1999);

“tax”, for purposes of administration under this Act, includes a tax, duty, levy, royalty, fee, contribution, penalty, interest and any other moneys imposed under a tax Act;

“taxable event” means an occurrence which affects or may affect the liability of a person to tax;

“tax Act” means this Act or an Act, or portion of an Act, referred to in section 4 of the SARS Act, excluding customs and excise legislation;

[Definition of “tax Act” substituted by section 37 of Act 44 of 2014 effective on 1 October 2012 and section 33 of Act 23 of 2015 effective on 8 January 2016]

“tax board” means a tax board established under section 108;

“tax court” means a court established under section 116;

“tax debt” means an amount referred to in section 169(1);

“tax offence” means an offence in terms of a tax Act or any other offence involving-

(a)     fraud on SARS or on a SARS official relating to the administration of a tax Act; or

(b)     theft of moneys due or paid to SARS for the benefit of the National Revenue Fund;

“Tax Ombud” is the person appointed by the Minister under section 14;

“tax period” means, in relation to-

(a)     income tax, a year of assessment as defined in section 1 of the Income Tax Act;

(b)     provisional tax or employees’ tax, skills development levies as determined in section 3 of the Skills Development Levies Act, and contributions as determined in section 6 of the Unemployment Insurance Contributions Act, the period in respect of which the amount of tax payable must be determined under the relevant tax Act;

(c)     value-added tax, a tax period determined under section 27 of the Value-Added Tax Act or the period or date of the taxable event in respect of which the amount of tax payable must be determined under that Act;

(d)     royalty payable on the transfer of mineral and petroleum resources, a year of assessment as defined in section 1 of the Mineral and Petroleum Resources Royalty (Administration) Act;

  

(e)     the levy on diamond exports as determined under section 2 of the Diamond Export Levy Act, the assessment period referred to in section 1 of the Diamond Export Levy (Administration) Act;

(f)      securities transfer tax, the period referred to in section 3 of the Securities Transfer Tax Administration Act;

(g)     any other tax, the period or date of the taxable event in respect of which the amount of tax payable must be determined under a tax Act; or

(h)     a jeopardy assessment, the period determined under this Act;

“taxpayer” has the meaning assigned under section 151;

“taxpayer information” has the meaning assigned under section 67(1)(b);

“taxpayer reference number” is the number referred to in section 24;

“thing” includes a corporeal or incorporeal thing;

“this Act” includes the regulations and a public notice issued under this Act;

“Transfer Duty Act” means the Transfer Duty Act, 1949 (Act No. 40 of 1949);

“understatement penalty” means a penalty imposed by SARS in accordance with Part A of Chapter 16;

“Unemployment Insurance Contributions Act” means the Unemployment Insurance Contributions Act, 2002 (Act No. 4 of2002);

“Value-Added Tax Act” means the Value-Added Tax Act, 1991 (Act No. 89 of 1991);

“withholding agent” has the meaning assigned under section 156.

CHAPTER 2

 GENERAL ADMINISTRATION PROVISIONS

Part A

In general

2.    Purpose of Act

 

The purpose of this Act is to ensure the effective and efficient collection of tax by-

 

(a)     aligning the administration of the tax Acts to the extent practically possible;

 

(b)     prescribing the rights and obligations of taxpayers and other persons to whom this Act applies;

 

(c)     prescribing the powers and duties of persons engaged in the administration of a tax Act; and

 

(d)     generally giving effect to the objects and purposes of tax administration.

3.    Administration of tax Acts

(1)     SARS is responsible for the administration of this Act under the control or direction of the Commissioner.

(2)     Administration of a tax Act means to-

(a)     obtain full information in relation to-

(i)      anything that may affect the liability of a person for tax in respect of a previous, current or future tax period;

(ii)     a taxable event; or

(iii)    the obligation of a person (whether personally or on behalf of another person) to comply with a tax Act;

(b)     ascertain whether a person has filed or submitted correct returns, information or documents in compliance with the provisions of a tax Act;

(c)     establish the identity of a person for purposes of determining liability for tax;

(d)     determine the liability of a person for tax;

(e)     collect tax debts and refund tax overpaid;

(f)      investigate whether a tax offence has been committed, and, if so-

(i)      to lay criminal charges; and

(ii)     to provide the assistance that is reasonably required for the investigation and prosecution of the tax offence;

(g)     enforce SARS’ powers and duties under a tax Act to ensure that an obligation imposed by or under a tax Act is complied with;

(h)     perform any other administrative function necessary to carry out the provisions of a tax Act;

[Paragraph (h) amended by section 34 of Act 23 of 2015 effective on 8 January 2016] 

(i)      give effect to the obligation of the Republic to provide assistance under an international tax agreement; and

[Paragraph (i) amended by section 34 of Act 23 of 2015 effective on 8 January 2016] 

(j)      give effect to an international tax standard.

[Paragraph (j) added by section 34 of Act 23 of 2015 effective on 8 January 2016] 

(3)     If SARS, in accordance with-

(a)     an international tax agreement-

(i)      received a request for, is obliged to exchange or wishes to spontaneously exchange information, SARS may disclose or obtain the information for transmission to the competent authority of the other country as if it were relevant material required for purposes of a tax Act and must treat the information obtained as taxpayer information;

(ii)     received a request for the conservancy or the collection of an amount alleged to be due by a person under the tax laws of the requesting country, SARS may deal with the request under the provisions of section 185; or

(iii)    received a request for the service of a document which emanates from the requesting country, SARS may effect service of the document as if it were a notice, document or other communication required under a tax Act to be issued, given, sent or served by SARS; or

(b)     an international tax standard, obtained information of a person, SARS may retain the information as if it were relevant material required for purposes of a tax Act and must treat the information obtained as taxpayer information.

[Subsection (3) amended by sectoin 37 of Act 21 of 2012, substituted by section 38 of Act 44 of 2014 effective on 1 October 2012 and section 34 of Act 23 of 2015 effective on 8 January 2016]

4.    Application of Act

 

(1)     This Act applies to every person who is liable to comply with a provision of a tax Act (whether personally or on behalf of another person) and binds SARS.

 

(2)     If this Act is silent with regard to the administration of a tax Act and it is specifically provided for in the relevant tax Act, the provisions of that tax Act apply.

 

(3)     In the event of any inconsistency between this Act and another tax Act, the other Act prevails.

5.  Practice generally prevailing

 

(1)     A practice generally prevailing is a practice set out in an official publication regarding the application or interpretation of a tax Act.

 

(2)     Despite any provision to the contrary contained in a tax Act, a practice generally prevailing set out in an official publication, other than a binding general ruling, ceases to be a practice generally prevailing if-

 

(a)     the provision of the tax Act that is the subject of the official publication is repealed or amended to an extent material to the practice, from the date the repeal or amendment becomes effective;

 

(b)     a court overturns or modifies an interpretation of the tax Act which is the subject of the official publication to an extent material to the practice from the date of judgment, unless-

 

(i)      the decision is under appeal;

 

(ii)     the decision is fact-specific and the general interpretation upon which the official publication was based is unaffected; or

 

(iii)    the reference to the interpretation upon which the official publication was based was obiter dicta; or

 

(c)     the official publication is withdrawn or modified by the Commissioner, from the date of the official publication of the withdrawal or modification.

 

(3)     A binding general ruling ceases to be a practice generally prevailing in the circumstances described in section 85 or 86.

Part B

Powers and duties of SARS and SARS officials

6.    Powers and duties

(1)     The powers and duties of SARS under this Act may be exercised for purposes of the administration of a tax Act.

(2)     Powers and duties which are assigned to the Commissioner by this Act must be exercised by the Commissioner personally but he or she may delegate such powers and duties in accordance with section 10.

(3)     Powers and duties required by this Act to be exercised by a senior SARS official must be exercised by-

(a)     the Commissioner;

(b)     a SARS official who has specific written authority from the Commissioner to do so; or

(c)     a SARS official occupying a post designated by the Commissioner in writing for this purpose.

(4)     The execution of a task ancillary to a power or duty under subsection (2) or (3) may be done by a SARS official under the control of an official referred to in subsection (3)(a), (b) or (c).

[Subsection (4) amended by section 38 of Act 21 of 2012 effective on 1 October 2012, substituted by section 35 of Act 23 of 2015 effective on 8 January 2016]

(5)     Powers and duties not specifically required by this Act to be exercised by the Commissioner or by a senior SARS official, may be exercised by a SARS official.

(6)     The Commissioner may by public notice specify that a power or duty in a tax Act other than this Act must be exercised by the Commissioner personally or a senior SARS official.

7.    Conflict of interest

 

The Commissioner or a SARS official may not exercise a power or become involved in a matter pertaining to the administration of a tax Act, if-

 

(a)     the power or matter relates to a taxpayer in respect of which the Commissioner or the official has or had, in the previous three years, a personal, family, social, business, professional, employment or financial relationship presenting a conflict of interest; or

 

(b)     other circumstances present a conflict of interest,

 

that will reasonably be regarded as giving rise to bias.

8.    Identity cards

 

(1)     SARS may issue an identity card to each SARS official exercising powers and duties for purposes of the administration of a tax Act.

 

(2)     When a SARS official exercises a power or duty for purposes of the administration of a tax Act in person outside SARS premises, the official must produce the identity card upon request by a member of the public.

 

(3)     If the official does not produce the identity card, a member of the public is entitled to assume that the person is not a SARS official.

9.    Decision or notice by SARS

(1)     A decision made by a SARS official or a notice to a specific person issued by SARS under a tax Act, excluding a decision given effect to in an assessment or a notice of assessment that is subject to objection and appeal, may in the discretion of a SARS official described in paragraph (a), (b) or (c) or at the request of the relevant person, be withdrawn or amended by-

(a)     the SARS official;

(b)     a SARS official to whom the SARS official reports; or

(c)     a senior SARS official.

[Subsection (1) substituted by section 22 of Act 13 of 2017 effective on 18 December 2017]

(2)     If all the material facts were known to the SARS official at the time the decision was made, a decision or notice referred to in subsection (1) may not be withdrawn or amended with retrospective effect, after three years from the later of the-

(a)     date of the written notice of that decision; or

(b)     date of assessment or the notice of assessment giving effect to the decision (if applicable).

(3)     A decision made by a SARS official or a notice to a specific person issued by SARS under a tax Act is regarded as made by a SARS official authorised to do so or duly issued by SARS, until proven to the contrary.

[Subsection (3) added by section 22 of Act 13 of 2017 effective on 18 December 2017]

Part C

Delegations

10.    Delegations by the Commissioner

 

(1)     A delegation by the Commissioner under section 6(2)-

 

(a)     must be in writing;

 

(b)     becomes effective only when signed by the Commissioner;

 

(c)     is subject to the limitations and conditions the Commissioner may determine in making the delegation;

 

(d)     may either be to-

 

(i)      a specific individual; or

 

(ii)     the incumbent of a specific post; and

 

(e)     may be amended or withdrawn by the Commissioner.

 

(2)     A delegation does not divest the Commissioner of the responsibility for the exercise of the delegated power or the performance of the delegated duty.

Part D

Authority to act in legal proceedings

11.    Legal proceedings involving Commissioner

(1)     No SARS official may institute or defend civil proceedings on behalf of the Commissioner unless authorised to do so under this Act or by the Commissioner or by the person delegated by the Commissioner under section 6(2).

[Subsection (1) substituted by section 36 of Act 23 of 2015 effective on 8 January 2016]

(2)     For purposes of subsection (1), a SARS official who, on behalf of the Commissioner, institutes litigation, or performs acts which are relied upon by the Commissioner in litigation, is regarded as duly authorised until proven to the contrary.

(3)     An amount due or payable as a result of a cost order in favour of SARS recovered by the State Attorney resulting from any civil proceedings under this Act must be paid to the National Revenue Fund.

[Subsection (3) substituted by section 40 of Act 21 of 2012, section 33 of Act 39 of 2013 and section 48 of Act 16 of 2016 effective on 19 January 2017]

(4)     Unless the court otherwise directs, no legal proceedings may be instituted in the High Court against the Commissioner, unless the applicant has given the Commissioner written notice of at least 10 business days of the applicant’s intention to institute the legal proceedings.

[Subsection (4) added by section 33(c) of Act 39 of 2013 and substituted by section 27 of Act 33 of 2019]

(5)     The notice or any process by which the legal proceedings referred to in subsection (4) are instituted, must be served at the address specified by the Commissioner by public notice.

12.    Right of appearance in proceedings

(1)     Despite any law to the contrary, a senior SARS official may, on behalf of SARS or the Commissioner in proceedings referred to in a tax Act, appear ex parte in a judge’s chambers, in the tax court or in a High Court.

[Subsection (1) substituted by section 24 of Act 24 of 2020]

(2)     A senior SARS official may appear in the tax court or a High Court only if the person is a legal practitioner duly admitted and enrolled under the Legal Practice Act, 2014 (Act 28 of 2014).

[Subsection (2) substituted by section 28 of Act 33 of 2019]

Part E 

Powers and duties of Minister

13.    Powers and duties of Minister

 

(1)     The powers conferred and the duties imposed upon the Minister by or under the provisions of a tax Act may-

 

(a)     be exercised or performed by the Minister personally; and

 

(b)     except for the powers under sections 14 and 257, be delegated by the Minister to the Deputy Minister or Director-General of the National Treasury.

 

(2)     The Director-General may in turn delegate the powers and duties delegated to the Director-General by the Minister to a person under the control, direction or supervision of the Director-General.

14.    Power of Minister to appoint Tax Ombud

(1)     The Minister must appoint a person as Tax Ombud-

(a)     for a term of five years, which term may be renewed; and

[Paragraph (a) substituted by section 49 of Act 16 of 2016 effective on 19 January 2017]

(b)     under such conditions regarding remuneration and allowances as the Minister may determine.

(2)     The person appointed under subsection (1) or (3) may be removed by the Minister for misconduct, incapacity or incompetence.

(3)     During a vacancy in the office of Tax Ombud, the Minister may designate a person in the office of the Tax Ombud to act as Tax Ombud.

(4)     No person may be designated in terms of subsection (3) as acting Tax Ombud for a period longer than 90 days at a time.

(5)     A person appointed as Tax Ombud-

(a)     is accountable to the Minister;

(b)     must have a good background in customer service as well as tax law; and

(c)     may not at any time during the preceding five years have been convicted (whether in the Republic or elsewhere) of-

(i)      theft, fraud, forgery or uttering a forged document, perjury, an offence under the Prevention and Combating of Corrupt Activities Act, 2004 (Act No. 12 of 2004); or

(ii)     any other offence involving dishonesty,

for which the person has been sentenced to a period of imprisonment exceeding two years without the option of a fine or to a fine exceeding the amount prescribed in the Adjustment of Fines Act, 1991 (Act No. 101 of 1991).

Part F

Powers and duties of Tax Ombud

15.    Office of Tax Ombud

(1)     The Tax Ombud must appoint the staff of the office of the Tax Ombud who must be employed in terms of the SARS Act.

[Subsection (1) substituted by section 50 of Act 16 of 2016 effective on 19 January 2017]

(2)     When the Tax Ombud is absent or otherwise unable to perform the functions of office, the Tax Ombud may designate another person in the office of the Tax Ombud as acting Tax Ombud.

(3)     No person may be designated in terms of subsection (2) as acting Tax Ombud for a period longer than 90 days at a time.

(4)     The expenditure connected with the functions of the office of the Tax Ombud is paid in accordance with a budget approved by the Minister for the office.

[Subsection (4) substituted by section 50 of Act 16 of 2016 effective on 19 January 2017]

16.    Mandate of Tax Ombud

(1)     The mandate of the Tax Ombud is to-

(a)     review and address any complaint by a taxpayer regarding a service matter or a procedural or administrative matter arising from the application of the provisions of a tax Act by SARS; and

(b)     review, at the request of the Minister or at the initiative of the Tax Ombud with the approval of the Minister, any systemic and emerging issue related to a service matter or the application of the provisions of this Act or procedural or administrative provisions of a tax Act.

[Subsection (1) substituted by section 51 of Act 16 of 2016 effective on 19 January 2017]

(2)     In discharging his or her mandate, the Tax Ombud must-

(a)     review a complaint and, if necessary, resolve it through mediation or conciliation;

(b)     act independently in resolving a complaint;

(c)     follow informal, fair and cost-effective procedures in resolving a complaint;

(d)     provide information to a taxpayer about the mandate of the Tax Ombud and the procedures to pursue a complaint;

(e)     facilitate access by taxpayers to complaint resolution mechanisms within SARS to address complaints; and

(f)      identify and review systemic and emerging issues related to service matters or the application of the provisions of this Act or procedural or administrative provisions of a tax Act that impact negatively on taxpayers.

17.    Limitations on authority

 

The Tax Ombud may not review-

 

(a)     legislation or tax policy;

 

(b)     SARS policy or practice generally prevailing, other than to the extent that it relates to a service matter or a procedural or administrative matter arising from the application of the provisions of a tax Act by SARS;

 

(c)     a matter subject to objection and appeal under a tax Act, except for an administrative matter relating to such objection and appeal; or

 

(d)     a decision of, proceeding in or matter before the tax court.

18.    Review of complaint

 

(1)     The Tax Ombud may review any issue within the Tax Ombud’s mandate on receipt of a request from a taxpayer.

 

(2)     The Tax Ombud may-

 

(a)     determine how a review is to be conducted; and

 

(b)     determine whether a review should be terminated before completion.

 

(3)     In exercising the discretion set out in subsection (2), the Tax Ombud must consider such factors as-

 

(a)     the age of the request or issue;

 

(b)     the amount of time that has elapsed since the requester became aware of the issue;

 

(c)     the nature and seriousness of the issue;

 

(d)     the question of whether the request was made in good faith; and

 

(e)     the findings of other redress mechanisms with respect to the request.

 

(4)     The Tax Ombud may only review a request if the requester has exhausted the available complaints resolution mechanisms in SARS, unless there are compelling circumstances for not doing so.

 

(5)     To determine whether there are compelling circumstances, the Tax Ombud must consider factors such as whether-

 

(a)     the request raises systemic issues;

 

(b)     exhausting the complaints resolution mechanisms will cause undue hardship to the requester; or

 

(c)     exhausting the complaints resolution mechanisms is unlikely to produce a result within a period of time that the Tax Ombud considers reasonable.

 

(6)     The Tax Ombud must inform the requester of the results of the review or any action taken in response to the request, but at the time and in the manner chosen by the Tax Ombud.

19.    Reports by Tax Ombud

 

(1)     The Tax Ombud must-

 

(a)     report directly to the Minister;

(b)     submit an annual report to the Minister within five months of the end of SARS’ financial year; and

(c)     submit a report to the Commissioner quarterly or at such other intervals as may be agreed.

 

(2)     The reports must-

 

(a)     contain a summary of at least ten of the most serious issues encountered by taxpayers and identified systemic and emerging issues referred to in section 16(2)f), including a description of the nature of the issues;

(b)     contain an inventory of the issues described in subparagraph (a) for which-

(i)      action has been taken and the result of such action;

(ii)     action remains to be completed and the period during which each item has remained on such inventory; or

(iii)    no action has been taken, the period during which each item has remained on such inventory and the reasons for the inaction; and

(c)     contain recommendations for such administrative action as may be appropriate to resolve problems encountered by taxpayers.

 

(3)     The Minister must table the annual report of the Tax Ombud in the National Assembly.

20.    Resolution and recommendations

(1)     The Tax Ombud must attempt to resolve all issues within the Tax Ombud’s mandate at the level at which they can most efficiently and effectively be resolved and must, in so doing, communicate with SARS officials identified by SARS.

(2)     The Tax Ombud’s recommendations are not binding on a taxpayer or SARS, but if not accepted by a taxpayer or SARS, reasons for such decision must be provided to the Tax Ombud within 30 days of notification of the recommendations and may be included by the Tax Ombud in a report to the Minister or the Commissioner under section 19.

[Subsection (2) substituted by section 52 of Act 16 of 2016 effective on 19 January 2017]

21.    Confidentiality

 

(1)     The provisions of Chapter 6 apply with the changes required by the context for the purpose of this Part.

 

(2)     SARS must allow the Tax Ombud access to information in the possession of SARS that relates to the Tax Ombud’s powers and duties under this Act.

 

(3)     The Tax Ombud and any person acting on the Tax Ombud’s behalf may not disclose information of any kind that is obtained by or on behalf of the Tax Ombud, or prepared from information obtained by or on behalf of the Tax Ombud, to SARS, except to the extent required for the purpose of the performance of functions and duties under this Part.

CHAPTER 3

REGISTRATION

22.    Registration requirements

(1)     A person-

(a)     obliged to apply to; or

(b)     who may voluntarily,

register with SARS under a tax Act must do so in terms of the requirements of this Chapter or, if applicable, the relevant tax Act.

(2)     A person referred to in subsection (1) must-

(a)     apply for registration within the period provided for in a tax Act or, if no such period is provided for, 21 business days of so becoming obliged or within the further period as SARS may approve in the prescribed form and manner;

(b)     apply for registration for one or more taxes or under section 26(3) in the prescribed form and manner; and

[Paragraph (b) substituted by section 37 of Act 23 of 2015 effective on 8 January 2016]

(c)     provide SARS with the further particulars and any documents as SARS may require for the purpose of registering the person for the tax or taxes or under section 26(3).

[Paragraph (c) substituted by section 37 of Act 23 of 2015 effective on 8 January 2016]

(3)     A person registered or applying for registration under a tax Act may be required to submit biometric information in the prescribed form and manner if the information is required to ensure-

(a)     proper identification of the person; or

(b)     counteracting identity theft or fraud.

(4)     A person who applies for registration in terms of this Chapter and has not provided all particulars and documents required by SARS, may be regarded not to have applied for registration until all the particulars and documents have been provided to SARS.

(5)     Where a person that is obliged to register with SARS under a tax Act fails to do so, SARS may register the person for one or more tax types as is appropriate under the circumstances or for purposes of section 26(3).

[Subsection (5) substituted by section 37 of Act 23 of 2015 effective on 8 January 2016]

23.    Communication of changes in particulars

 

A person who has been registered under section 22 must communicate to SARS within 21 business days any change that relates to-

 

(a)     postal address;

 

(b)     physical address;

 

(c)     representative taxpayer;

 

(d)     banking particulars used for transactions with SARS;

 

(e)     electronic address used for communication with SARS; or

 

(f)      such other details as the Commissioner may require by public notice.

24.    Taxpayer reference number

 

(1)     SARS may allocate a taxpayer reference number in respect of one or more taxes to each person registered under a tax Act or this Chapter.

 

(2)     SARS may register and allocate a taxpayer reference number to a person who is not registered.

 

(3)     A person who has been allocated a taxpayer reference number by SARS must include the relevant reference number in all returns or other documents submitted to SARS.

 

(4)     SARS may regard a return or other document submitted by a person to be invalid if it does not contain the reference number referred to in subsection (3) and must inform the person accordingly if practical.

CHAPTER 4

RETURNS AND RECORDS

Part A

General

25.    Submission of return

 

(1)     A person required under a tax Act or by the Commissioner to submit or who voluntarily submits a return must do so-

 

(a)     in the prescribed form and manner; and

 

(b)     by the date specified in the tax Act or, in its absence, by the date specified by the Commissioner in the public notice requiring the submission.

 

(2)     A return must contain the information prescribed by a tax Act or the Commissioner and be a full and true return.

 

(3)     A return must be signed by the taxpayer or by the taxpayer’s duly authorised representative and the person signing the return is regarded for all purposes in connection with a tax Act to be cognisant of the statements made in the return.

 

(4)     Non-receipt by a person of a return form does not affect the obligation to submit a return.

 

(5)     SARS may, prior to the issue of an original assessment by SARS, request a person to submit an amended return to correct an undisputed error in a return.

 

(6)     SARS may extend the time period for filing a return in a particular case, in accordance with procedures and criteria in policies published by the Commissioner.

 

(7)     The Commissioner may also extend the filing deadline generally or for specific classes of persons by public notice.

 

(8)     An extension under subsection (6) or (7) does not affect the deadline for paying the tax.

26.    Third party returns

(1)     The Commissioner may by public notice, at the time and place and by the due date specified, require a person who employs, pays amounts to, receives amounts on behalf of or otherwise transacts with another person, or has control over assets of another person, to submit a return by the date specified in the notice.

(2)     A person required under subsection (1) to submit a return must do so in the prescribed form and manner and the return must-

(a)     contain the information prescribed by the Commissioner;

(b)     be a full and true return; and

(c)     for purposes of providing the information required in the return, comply with the due diligence requirements as may be prescribed in a tax Act, an international tax agreement, an international tax standard or by the Commissioner in a public notice consistent with the international tax agreement or the international tax standard.

[Paragraph (c) substituted by section 38 of Act 23 of 2015 effective on 8 January 2016]

(3)     The Commissioner may, by public notice, require a person to apply to register as a person required to submit a return under this section, an international tax agreement or an international tax standard.

[Subsection (3) added by section 38 of Act 23 of 2015 effective on 8 January 2016]

(4)     If, in order to submit a return under subsection (1) and to comply with the requirements of this section, a person requires information, a document or thing from another person, the other person must provide the information, document or thing so required within a reasonable time.

[Subsection (4) added by section 38 of Act 23 of 2015 effective on 8 January 2016]

27.    Other returns required

 

(1)     A senior SARS official may require a person to submit further or more detailed returns regarding any matter for which a return under section 25 or 26 is required or prescribed by a tax Act.

 

(2)     A person required under subsection (1) to submit a return must do so in the prescribed form and manner and the return must contain the information prescribed by the official and must be a full and true return.

28.  Statement concerning accounts

 

(1)     SARS may require a person who submits financial statements or accounts prepared by another person in support of that person’s submitted return, to submit a certificate or statement by the other person setting out the details of-

 

(a)     the extent of the other person’s examination of the books of account and of the documents from which the books of account were written up; and

 

(b)     whether or not the entries in those books and documents disclose the true nature of the transactions, receipts, accruals, payments or debits in so far as may be ascertained by that examination.

 

(2)     A person who prepares financial statements or accounts for another person must, at the request of that other person, submit to that other person a copy of the certificate or statement referred to in subsection (1).

29.  Duty to keep records

 

(1)     A person must keep the records, books of account or documents that-

 

(a)     enable the person to observe the requirements of a tax Act;

 

(b)     are specifically required under a tax Act or by the Commissioner by public notice; and

 

(c)     enable SARS to be satisfied that the person has observed these requirements.

 

(2)     The requirements of this Act to keep records, books of account or documents for a tax period apply to a person who-

 

(a)     has submitted a return for the tax period;

 

(b)     is required to submit a return for the tax period and has not submitted a return for the tax period; or

 

(c)     is not required to submit a return but has, during the tax period, received income, has a capital gain or capital loss, or engaged in any other activity that is subject to tax or would be subject to tax but for the application of a threshold or exemption.

 

(3)     Records, books of account or documents need not be retained by the person described in-

 

(a)     subsection (2)(a), after a period of five years from the date of the submission of the return; and

 

(b)     subsection (2)(c), after a period of five years from the end of the relevant tax period.

30.  Form of records kept or retained

 

(1)     The records, books of account, and documents referred to in section 29, must be kept or retained-

 

(a)     in their original form in an orderly fashion and in a safe place;

 

(b)     in the form, including electronic form, as may be prescribed by the Commissioner in a public notice; or

 

(c)     in a form specifically authorised by a senior SARS official in terms of subsection (2).

 

(2)     A senior SARS official may, subject to the conditions as the official may determine, authorise the retention of information contained in records, books of account or documents referred to in section 29 in a form acceptable to the official.

31.  Inspection of records

 

The records, books of account and documents referred to in section 29  whether in the form referred to in section 30(1) or in a form authorised under section 30(2), must at all reasonable times during the required periods under section 29, be open for inspection by a SARS official in the Republic for the purpose of-

 

(a)     determining compliance with the requirements of sections 29  and 30; or

 

(b)     an inspection, audit or investigation under Chapter 5.

32.  Retention period in case of audit, objection or appeal

 

Despite section 29(3), if-

 

(a)     records, books of account or documents are relevant to an audit or investigation under Chapter 5 which the person subject to the audit or investigation has been notified of or is aware of; or

 

(b)     a person lodges an objection or appeal against an assessment or decision under section 104(2),

 

the person must retain the records, books of account or documents relevant to the audit, investigation, objection or appeal until the audit or investigation is concluded or the assessment or the decision becomes final.

33.  Translation

 

(1)     In the case of information that is not in one of the official languages of the Republic, a senior SARS official may by notice require a person who must furnish the information to SARS, to produce a translation in one of the official languages determined by the official within a reasonable period.

 

(2)     A translation referred to in subsection (1) must-

 

(a)     be produced at a time and at the place specified by the notice; and

 

(b)     if required by SARS, be prepared and certified by a sworn and accredited translator or another person approved by the senior SARS official.

Part B

Reportable arrangements

34.  Definitions

 

In this Part and in section 212, unless the context indicates otherwise, the following terms, if in single quotation marks, have the following meanings:

‘arrangement’ means any transaction, operation, scheme, agreement or understanding (whether enforceable or not);

‘financial benefit’ means a reduction in the cost of finance, including interest, finance charges, costs, fees and discounts on a redemption amount;

‘financial reporting standards’ means, in the case of a company required to submit financial statements in terms of the Companies Act, 2008 (Act No. 71 of 2008), financial reporting standards prescribed by that Act, or, in any other case, the International Financial Reporting Standards or appropriate financial reporting standards that provide a fair presentation of the financial results and position of the taxpayer;

“participant”, in relation to an ‘arrangement’, means-

(a)     a “promoter”;

(b)     a person who directly or indirectly will derive or assumes that the person will derive a “tax benefit” or “financial benefit” by virtue of an “arrangement”; or

(c)     any other person who is party to an “arrangement” listed in a public notice referred to in section 35(2);

[Definition of “participant” substituted by section 40 of Act 44 of 2014 effective on 20 January 2015 and section 39 of Act 23 of 2015 effective on 8 January2016]

‘pre-tax profit’, in relation to an ‘arrangement’, means the profit of a ‘participant’ resulting from that ‘arrangement’ before deducting normal tax, which profit must be determined in accordance with ‘financial reporting standards’ after taking into account all costs and expenditure incurred by the ‘participant’ in connection with the ‘arrangement’ and after deducting any foreign tax paid or payable by the ‘participant’ in connection with the ‘arrangement’;

“promoter”, in relation to an “arrangement”, means a person who is principally responsible for organising, designing, selling, financing or managing the “arrangement”;

“reportable arrangement” means an “arrangement” referred to in section 35(1) or 35(2) that is not an excluded “arrangement” referred to in section 36;

‘tax benefit’ means the avoidance, postponement, reduction or evasion of a liability for tax.

35.  Reportable arrangements

 

(1)     An “arrangement” is a reportable arrangement if a person is a “participant” in the “arrangement” and the “arrangement”–

 

(a)     contains provisions in terms of which the calculation of interest as defined in section 24J of the Income Tax Act, finance costs, fees or any other charges is wholly or partly dependent on the assumptions relating to the tax treatment of that ‘arrangement’ (otherwise than by reason of any change in the provisions of a tax Act);

 

(b)     has any of the characteristics contemplated in section 80C(2)(b) of the Income Tax Act, or substantially similar characteristics;

 

(c)     gives rise to an amount that is or will be disclosed by any ‘participant’ in any year of assessment or over the term of the ‘arrangement’ as-

 

(i)      a deduction for purposes of the Income Tax Act but not as an expense for purposes of ‘financial reporting standards’; or

 

(ii)     revenue for purposes of ‘financial reporting standards’ but not as gross income for purposes of the Income Tax Act;

 

(d)     does not result in a reasonable expectation of a ‘pre-tax profit’ for any ‘participant’; or

 

(e)     results in a reasonable expectation of a ‘pre-tax profit’ for any ‘participant’ that is less than the value of that ‘tax benefit’ to that ‘participant’ if both are discounted to a present value at the end of the first year of assessment when that ‘tax benefit’ is or will be derived or is assumed to be derived, using consistent assumptions and a reasonable discount rate for that ‘participant’.

 

(2)     An “arrangement” is a “reportable arrangement” if the Commissioner has listed the “arrangement” in a public notice.

36.  Excluded arrangements

(1)     An ‘arrangement’ is an excluded ‘arrangement’ if it is-

(a)     a debt in terms of which-

(i)      the borrower receives or will receive an amount of cash and agrees to repay at least the same amount of cash to the lender at a determinable future date; or

(ii)     the borrower receives or will receive a fungible asset and agrees to return an asset of the same kind and of the same or equivalent quantity and quality to the lender at a determinable future date;

(b)     a lease;

(c)     a transaction undertaken through an exchange regulated in terms of the Financial Markets Act, 2012 (Act 19 of 2012); or

[Paragraph (c) substituted by section 40 of Act 23 of 2015]

(d)     a transaction in participatory interests in a scheme regulated in terms of the Collective Investment Schemes Control Act, 2002 (Act No. 45 of 2002).

(2)     Subsection (1) applies only to an ‘arrangement’ that-

(a)     is undertaken on a stand-alone basis and is not directly or indirectly connected to any other ‘arrangement’ (whether entered into between the same or different parties); or

(b)     would have qualified as having been undertaken on a stand-alone basis as required by paragraph (a), were it not for a connected ‘arrangement’ that is entered into for the sole purpose of providing security and if no ‘tax benefit’ is obtained or enhanced by virtue of the security ‘arrangement’.

(3)     Subsection (1) does not apply to an ‘arrangement’ that is entered into-

(a)     with the main purpose or one of its main purposes of obtaining or enhancing a ‘tax benefit’; or

(b)     in a specific manner or form that enhances or will enhance a ‘tax benefit’.

(4)     The Commissioner may determine an “arrangement” to be an excluded “arrangement” by public notice.

37.  Disclosure obligation

 

(1)     The information referred to in section 38 in respect of a “reportable arrangement” must be disclosed by a person who-

 

(a)     is a “participant” in an “arrangement” on the date on which it qualifies as a “reportable arrangement”, within 45 business days after that date; or

 

(b)     becomes a “participant” in an “arrangement” after the date on which it qualifies as a “reportable arrangement”, within 45 business days after becoming a “participant”.

 

(2)     ……….

 

(3)     A “participant” need not disclose the information if the “participant” obtains a written statement from any other “participant” that the other “participant” has disclosed the “reportable arrangement”.

 

(4)     ……….

 

(5)     SARS may grant extension for disclosure for a further 45 business days, if reasonable grounds exist for the extension.

38.  Information to be submitted

 

The following information in relation to a “reportable arrangement”, must be submitted in the prescribed form and manner and by the date specified:

 

(a)     a detailed description of all its steps and key features, including, in the case of an ‘arrangement’ that is a step or part of a larger ‘arrangement’, all the steps and key features of the larger ‘arrangement’;

 

(b)     a detailed description of the assumed ‘tax benefits’ for all ‘participants’, including, but not limited to, tax deductions and deferred income;

 

(c)     the names, registration numbers, and registered addresses of all ‘participants’;

 

(d)     a list of all its agreements; and

 

(e)     any financial model that embodies its projected tax treatment.

39.  Reportable arrangement reference number

 

SARS must, after receipt of the information contemplated in section 38, issue a “reportable arrangement” reference number to each “participant” for administrative purposes only.

CHAPTER 5

INFORMATION GATHERING

Part A

General rules for inspection, verification, audit and criminal investigation

40.    Selection for inspection, verification or audit

 

SARS may select a person for inspection, verification or audit on the basis of any consideration relevant for the proper administration of a tax Act, including on a random or a risk assessment basis.

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.

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.

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]

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.

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.]

Part B

Inspection, request for relevant material, audit and criminal investigation

45.  Inspection

 

(1)     A SARS official may, for the purposes of the administration of a tax Act and without prior notice, arrive at a premises where the SARS official has a reasonable belief that a trade or enterprise is being carried on and conduct an inspection to determine only-

 

(a)     the identity of the person occupying the premises;

 

(b)     whether the person occupying the premises is registered for tax; or

 

(c)     whether the person is complying with sections 29 and 30.

 

(2)     A SARS official may not enter a dwelling-house or domestic premises, except any part thereof used for the purposes of trade, under this section without the consent of the occupant.

46.    Requeset for relevant material

(1)     SARS may, for the purposes of the administration of a tax Act in relation to a taxpayer, whether identified by name or otherwise objectively identifiable, require the taxpayer or another person to, within a reasonable period, submit relevant material (whether orally or in writing) that SARS requires.

(2)     A senior SARS official may require relevant material in terms of subsection (1) –

(a)     in respect of taxpayers in an objectively identifiable class of taxpayers; or

(b)     held or kept by a connected person, as referred to in paragraph (d)(i) of the definition of “connected person” in the Income Tax Act, in relation to the taxpayer, located outside the Republic.

[Subsection (2) substituted by section 42 of Act 23 of 2015 effective on 8 January 2016]

(3)   A request by SARS for relevant material from a person other than the taxpayer is limited to material maintained or kept or that should reasonably be maintained or kept by the person in relation to the taxpayer.

[Subsection (3) substituted by section 50(a) of Act 21 of 2012, by section 42(a) of Act 23 of 2015 and by section 30 of Act 33 of 2019]

(4)     A person or taxpayer receiving from SARS a request for relevant material under this section must submit the relevant material to SARS at the place, in the format (which must be reasonably accessible to the person or taxpayer) and-

(a)     within the time specified in the request; or

(b)     if the material is held by a connected person referred to in subsection (2)(b), within 90 days from the date of the request, which request must set out the consequences referred to in subsection (9) of failing to do so.

[Subsection (4) substituted by section 46 of Act 44 of 2014 effective on 1 October 2012 and section 42 of Act 23 of 2015 effective on 8 January 2016] 

(5)     If reasonable grounds for an extension are submitted by the person or taxpayer, SARS may extend the period within which the relevant material must be submitted.

[Subsection (5) substituted by section 50 of Act 21 of 2012 effective on 1 October 2012 and section 42 of Act 23 of 2015 effective on 8 January 2016]

(6)     Relevant material required by SARS under this section must be referred to in the request with reasonable specificity.

(7)     A senior SARS official may direct that relevant material-

(a)     be provided under oath or solemn declaration; or

(b)     if required for purposes of a criminal investigation, be provided under oath or solemn declaration and, if necessary, in accordance with the requirements of section 212 or 236 of the Criminal Procedure Act, 1977 (Act No. 51 of 1977).

(8)     A senior SARS official may request relevant material that a person has available for purposes of revenue estimation.

(9)     If a taxpayer fails to provide material referred to in subsection (2)(b), the material may not be produced by the taxpayer in any subsequent proceedings, unless a competent court directs otherwise on the basis of circumstances outside the control of the taxpayer and any connected person referred to in paragraph (d)(i) of the definition of “connected person” in the Income Tax Act, in relation to the taxpayer.

[Subsection (9) added by section 42 of Act 23 of 2015 effective on 8 January 2016]

47.    Production of relevant material in person

(1)     A senior SARS official may, by notice, require a person, whether or not chargeable to tax, an employee of the person or a person who holds an office in the person to attend in person at the time and place designated in the notice for the purpose of being interviewed by a SARS official concerning the tax affairs of the person, if the interview-

(a)     is intended to clarify issues of concern to SARS-

(i)      to render further verification or audit unnecessary; or

(ii)     to expedite a current verification or audit; and

(b)     is not for purposes of a criminal investigation.

[Subsection (1) substituted by section 43 of Act 23 of 2015 effective on 8 January 2016]

(2)     The senior SARS official issuing the notice may require the person interviewed to produce relevant material under the control of the person during the interview.

(3)     Relevant material required by SARS under subsection (2) must be referred to in the notice with reasonable specificity.

(4)     A person may decline to attend an interview, if the distance between the place designated in the notice and the usual place of business or residence of the person exceeds the distance prescribed by the Commissioner by public notice.

48.    Field audit or criminal investigation

 

(1)     A SARS official named in an authorisation referred to in section 41 may require a person, with prior notice of at least 10 business days, to make available at the person’s premises specified in the notice relevant material that the official may require to audit or criminally investigate in connection with the administration of a tax Act in relation to the person or another person.

 

(2)     The notice referred to in subsection (1) must-

 

(a)     state the place where and the date and time that the audit or investigation is due to start (which must be during normal business hours); and

  

(b)     indicate the initial basis and scope of the audit or investigation.

 

(3)     SARS is not required to give the notice if the person waives the right to receive the notice.

 

(4)     If a person at least five business days before the date listed in the notice advances reasonable grounds for varying the notice, SARS may vary the notice accordingly, subject to conditions SARS may impose with regard to preparatory measures for the audit or investigation.

 

(5)     A SARS official may not enter a dwelling-house or domestic premises, except any part thereof used for the purposes of trade, under this section without the consent of the occupant.

49.    Assistance during field audit or criminal investigation

(1)     The person on whose premises an audit or criminal investigation is carried out and any other person on the premises, must provide such reasonable assistance as is required by SARS to conduct the audit or investigation, including-

(a)     making available appropriate facilities, to the extent that such facilities are available;

(b)     answering questions relating to the audit or investigation including, if so required, in the manner referred to in section 46(7); and

[Paragraph (b) substituted by section 44 of Act 23 of 2015 effective on 8 January 2016]

(c)     submitting relevant material as required.

(2)     No person may without just cause-

(a)     obstruct a SARS official from carrying out the audit or investigation; or

(b)     refuse to give the accessor assistance as maybe required under subsection(1).

(3)     The person may recover from SARS after completion of the audit or criminal investigation (or, at the person’s request, on a monthly basis) the costs for the use of photocopying facilities in accordance with the fees prescribed in section 92(1)(b) of the Promotion of Access to Information Act.

Part C

Inquiries

50.    Authorisation for inquiry

 

(1)     A judge may, on application made ex parte and authorised by a senior SARS official grant an order in terms of which a person described in section 51(3) is designated to act as presiding officer at the inquiry referred to in this section.

 

(2)     An application under subsection (1) must be supported by information supplied under oath or solemn declaration, establishing the facts on which the application is based.

 

(3)     A senior SARS official may authorise a person to conduct an inquiry for the purposes of the administration of a tax Act.

51.    Inquiry order

(1)     A judge may grant the order referred to in section 50(1) if satisfied that there are reasonable grounds to believe that-

(a)     a person has-

(i)     failed to comply with an obligation imposed under a tax Act;

(ii)    committed a tax offence; or

(iii)    disposed of, removed or concealed assets which may fully or partly satisfy an outstanding tax debt; and

(b)     relevant material is likely to be revealed during the inquiry which may provide proof of the failure to comply, of the commission of the offence or of the disposal, removal or concealment of the assets.

[Subsection (1) substituted by section 45 of Act 23 of 2015 effective on 8 January 2016]

(2)     The order referred to in subsection (1) must-

(a)     designate a presiding officer before whom the inquiry is to be held;

(b)     identify the person referred to in subsection (1)(a);

(c)     refer to the alleged non-compliance, the commission of the offence or the disposal, removal or concealment of assets to be inquired into;

(d)     be reasonably specific as to the ambit of the inquiry; and

(e)     be provided to the presiding officer.

[Subsection (2) substituted by section 45 of Act 23 of 2015 effective on 8 January 2016]

(3)     A presiding officer must be a person appointed to the panel described in section 111.

52.    Inquiry proceedings

 

(1)     The presiding officer determines the conduct of the inquiry as the presiding officer thinks fit.

 

(2)     The presiding officer must ensure that the recording of the proceedings and evidence at the inquiry is of a standard that would meet the standard required for the proceedings and evidence to be used in a court of law.

 

(3)     A person has the right to have a representative present when that person appears as a witness before the presiding officer.

53.    Notice to appear

 

(1)     The presiding officer may, by notice in writing, require a person, whether or not chargeable to tax, to-

 

(a)     appear before the inquiry, at the time and place designated in the notice, for the purpose of being examined under oath or solemn declaration, and

 

(b)     produce any relevant material in the custody of the person.

 

(2)     If the notice requires the production of relevant material, it is sufficient if the relevant material is referred to in the notice with reasonable specificity.

54.    Powers of presiding officer

 

The presiding officer has the same powers regarding witnesses at the inquiry as are vested in a president of the tax court under sections 127 and 128.

55.    Witness fees

 

The presiding officer may direct that a person receive witness fees to attend an inquiry in accordance with the tariffs prescribed in terms of section 51 bis of the Magistrates’ Courts Act, 1944 (Act No. 32 of 1944).

56.    Confidentiality of proceedings

 

(1)     An inquiry under this Part is private and confidential.

 

(2)     The presiding officer may, on request, exclude a person from the inquiry if the person’s attendance is prejudicial to the inquiry.

 

(3)     Section 69 applies with the necessary changes to persons present at the questioning of a person, including the person being questioned.

 

(4)     Subject to section 57(2), SARS may use evidence given by a person under oath or solemn declaration at an inquiry in a subsequent proceeding involving the person or another person.

57.    Incriminating evidence

 

(1)     A person may not refuse to answer a question during an inquiry on the grounds that it may incriminate the person.

 

(2)     Incriminating evidence obtained under this section is not admissible in criminal proceedings against the person giving the evidence, unless the proceedings relate to-

 

(a)     the administering or taking of an oath or the administering or making of a solemn declaration;

 

(b)     the giving of false evidence or the making of a false statement; or

 

(c)     the failure to answer questions lawfully put to the person, fully and satisfactorily.

58.    Inquiry not suspended by civil or criminal proceedings

 

Unless a court orders otherwise, an inquiry relating to a person referred to in section 51(1)(a) must proceed despite the fact that a civil or criminal proceeding is pending or contemplated against or involves the person, a witness or potential witness in the inquiry, or another person whose affairs may be investigated in the course of the inquiry.

Part D

Search and seizure

59.    Application for warrant

 

(1)     A senior SARS official may, if necessary or relevant to administer a tax Act, authorise an application for a warrant under which SARS may enter a premises where relevant material is kept to search the premises and any person present on the premises and seize relevant material.

 

(2)     SARS must apply ex parte to a judge for the warrant, which application must be supported by information supplied under oath or solemn declaration, establishing the facts on which the application is based.

 

(3)     Despite subsection (2), SARS may apply for the warrant referred to in subsection (1) and in the manner referred to in subsection (2), to a magistrate, if the matter relates to an audit or investigation where the estimated tax in dispute does not exceed the amount determined in the notice issued under section 109(1)(a).

60.    Issuance of warrant

 

(1)     A judge or magistrate may issue the warrant referred to in section 59(1) if satisfied that there are reasonable grounds to believe that-

 

(a)     a person failed to comply with an obligation imposed under a tax Act, or committed a tax offence; and

 

(b)     relevant material likely to be found on the premises specified in the application may provide evidence of the failure to comply or commission of the offence.

 

(2)     A warrant issued under subsection (1) must contain the following:

 

(a)     the alleged failure to comply or offence that is the basis for the application;

 

(b)     the person alleged to have failed to comply or to have committed the offence;

 

(c)     the premises to be searched; and

 

(d)     the fact that relevant material as defined in section 1 is likely to be found on the premises.

 

(3)     The warrant must be exercised within 45 business days or such further period as a judge or magistrate deems appropriate on good cause shown.

61.    Carrying out search

 

(1)     A SARS official exercising a power under a warrant referred to in section 60 must produce the warrant, and if the owner or person in control of the premises is not present, the SARS official must affix a copy of the warrant to the premises in a prominent and visible place.

 

(2)     Subject to section 63, a SARS official’s failure to produce a warrant entitles a person to refuse access to the official.

 

(3)     The SARS official may-

 

(a)     open or cause to be opened or removed in conducting a search, anything which the official suspects to contain relevant material;

 

(b)     seize any relevant material;

 

(c)     seize and retain a computer or storage device in which relevant material is stored for as long as it is necessary to copy the material required;

 

(d)     make extracts from or copies of relevant material, and require from a person an explanation of relevant material; and

 

(e)     if the premises listed in the warrant is a vessel, aircraft or vehicle, stop and board the vessel, aircraft or vehicle, search the vessel, aircraft or vehicle or a person found in the vessel, aircraft or vehicle, and question the person with respect to a matter dealt with in a tax Act.

 

(4)     The SARS official must make an inventory of the relevant material seized in the form, manner and at the time that is reasonable under the circumstances and provide a copy thereof to the person.

 

(5)     The SARS official must conduct the search with strict regard for decency and order, and may search a person if the official is of the same gender as the person being searched.

 

(6)     The SARS official may, at any time, request such assistance from a police officer as the official may consider reasonably necessary and the police officer must render the assistance.

 

(7)     No person may obstruct a SARS official or a police officer from executing the warrant or without reasonable excuse refuse to give such assistance as may be reasonably required for the execution of the warrant.

 

(8)     If the SARS official seizes relevant material, the official must ensure that the relevant material seized is preserved and retained until it is no longer required for-

 

(a)     the investigation into the non-compliance or the offence described under section 60(1)(a);or

 

(b)     the conclusion of any legal proceedings under a tax Act or criminal proceedings in which it is required to be used.

62.    Search of premises not identified in warrant

 

(1)     If a senior SARS official has reasonable grounds to believe that-

 

(a)     the relevant material referred to in section 60(1)(b) and included in a warrant is at premises not identified in the warrant and may be removed or destroyed;

 

(b)     a warrant cannot be obtained in time to prevent the removal or destruction of the relevant material; and

 

(c)     the delay in obtaining a warrant would defeat the object of the search and seizure,

 

a SARS official may enter and search the premises and exercise the powers granted in terms of this Part, as if the premises had been identified in the warrant.

 

(2)     A SARS official may not enter a dwelling-house or domestic premises, except any part thereof used for purposes of trade, under this section without the consent of the occupant.

63.    Search without warrant

 

(1)     A senior SARS official may without a warrant exercise the powers referred to in section 61(3)-

 

(a)     if the owner or person in control of the premises so consents in writing; or

 

(b)     if the senior SARS official on reasonable grounds is satisfied that-

 

(i)      there may be an imminent removal or destruction of relevant material likely to be found on the premises;

 

(ii)     if SARS applies for a search warrant under section 59, a search warrant will be issued; and

 

(iii)    the delay in obtaining a warrant would defeat the object of the search and seizure.

 

(2)     A SARS official must, before carrying out the search, inform the owner or person in control of the premises-

 

(a)     that the search is being conducted under this section; and

 

(b)     of the alleged failure to comply with an obligation imposed under a tax Act or tax offence that is the basis for the search.

 

(3)     Section 61(4) to (8) applies to a search conducted under this section.

 

(4)     A SARS official may not enter a dwelling-house or domestic premises, except any part thereof used for purposes of trade, under this section without the consent of the occupant.

 

(5)     If the owner or person in control of the premises is not present, the SARS official must inform such person of the circumstances referred to in subsection (2) as soon as reasonably possible after the execution of the search and seizure.

64.    Legal professional privilege

(1)     If SARS foresees the need to search and seize relevant material that may be alleged to be subject to legal professional privilege, SARS must arrange for a legal practitioner from the panel appointed under section 111 to be present during the execution of the warrant.

[Subsection (1) substituted by section 31 of Act 33 of 2019]

(2)     A legal practitioner with whom SARS has made an arrangement in terms of subsection (1) may appoint a substitute legal practitioner to be present on the appointing legal practitioner’s behalf during the execution of a warrant.

[Subsection (2) substituted by section 31 of Act 33 of 2019]

(3)     If, during the carrying out of a search and seizure by SARS, a person alleges the existence of legal professional privilege in respect of relevant material and a legal practitioner is not present under subsection (1) or (2), SARS must seal the material, make arrangements with a legal practitioner from the panel appointed under section 111 to take receipt of the material and, as soon as is reasonably possible, hand over the material to the legal practitioner.

[Subsection (3) substituted by section 31 of Act 33 of 2019]

(4)     A legal practitioner referred to in subsections (1), (2) and (3)-

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

(b)       must personally take responsibility-

(i)      in the case of a warrant issued under section 60, for the removal from the premises of relevant material in respect of which legal privilege is alleged;

(ii)     in the case of a search and seizure carried out under section 63, for the receipt of the sealed information; and

(iii)     if a substitute legal practitioner in terms of subsection (2), for the delivery of the information to the appointing legal practitioner for purposes of making the determination referred to in subsection (5).

[Subsection (4) substituted by section 31 of Act 33 of 2019]

(5)     The legal practitioner referred to in subsection (1) or (3) must, within 21 business days, make a determination of whether the privilege applies and may do so in the manner the legal practitioner deems fit, including considering representations made by the parties.

[Subsection (5) substituted by section 31 of Act 33 of 2019]

(6)     If a determination of whether the privilege applies is not made under subsection (5) or a party is not satisfied with the determination, the legal practitioner must retain the relevant material pending final resolution of the dispute by the parties or an order of court.

[Subsection (6) substituted by section 31 of Act 33 of 2019]

(7)     The legal practitioner from the panel appointed under section 111 and any legal practitioner acting on behalf of that legal practitioner referred to in subsection (1) must be compensated in the same manner as if acting as Chairperson of the tax board.

[Subsection (7) substituted by section 31 of Act 33 of 2019]

65.    Person’s right to examine and make copies

 

(1)     The person to whose affairs relevant material seized relates, may examine and copy it.

 

(2)     Examination and copying must be made-

 

(a)     at the person’s cost in accordance with the fees prescribed in accordance with section 92(1)(b) of the Promotion of Access to Information Act;

 

(b)     during normal business hours; and

 

(c)     under the supervision determined by a senior SARS official.

66.    Application for return of seized relevant material or costs of damages

 

(1)     A person may request SARS to-

 

(a)     return some or all of the seized material; and

 

(b)     pay the costs of physical damage caused during the conduct of a search and seizure.

 

(2)     If SARS refuses the request, the person may apply to a High Court for the return of the seized material or payment of compensation for physical damage caused during the conduct of the search and seizure.

 

(3)     The court may, on good cause shown, make the order as it deems fit.

 

(4)     If the court sets aside the warrant issued in terms of section 60(1) or orders the return of the seized material, the court may nevertheless authorise SARS to retain the original or a copy of any relevant material in the interests of justice.

CHAPTER 6

CONFIDENTIALITY OF INFORMATION

67.    General prohibition of disclosure

 

(1)     This Chapter applies to-

 

(a)     SARS confidential information as referred to in section 68(1); and

 

(b)     taxpayer information, which means any information provided by a taxpayer or obtained by SARS in respect of the taxpayer, including biometric information.

 

(2)     An oath or solemn declaration undertaking to comply with the requirements of this Chapter in the prescribed form, must be taken before a magistrate, justice of the peace or commissioner of oaths by-

 

(a)     a SARS official and the Tax Ombud, before commencing duties or exercising any powers under a tax Act; and

 

(b)     a person referred to in section 70 who performs any function referred to in that section, before the disclosure described in that section may be made.

 

(3)     In the event of the disclosure of SARS confidential information or taxpayer information contrary to this Chapter, the person to whom it was so disclosed may not in any manner disclose, publish or make it known to any other person who is not a SARS official.

 

(4)     A person who receives information under section 68, 69, 70 or 71, must preserve the secrecy of the information and may only disclose the information to another person if the disclosure is necessary to perform the functions specified in those sections.

 

(5)     The Commissioner may, for purposes of protecting the integrity and reputation of SARS as an organisation and after giving the taxpayer at least 24 hours’ notice, disclose taxpayer information to the extent necessary to counter or rebut false allegations or information disclosed by the taxpayer, the taxpayer’s duly authorised representative or other person acting under the instructions of the taxpayer and published in the media or in any other manner.

68.    SARS confidential information and disclosure

 

(1)     SARS confidential information means information relevant to the administration of a tax Act that is-

 

(a)     personal information about a current or former SARS official, whether deceased or not;

 

(b)     information subject to legal professional privilege vested in SARS;

 

(c)     information that was supplied in confidence by a third party to SARS the disclosure of which could reasonably be expected to prejudice the future supply of similar information, or information from the same source;

 

(d)     information related to investigations and prosecutions described in section 39 of the Promotion of Access to Information Act;

 

(e)     information related to the operations of SARS, including an opinion, advice, report, recommendation or an account of a consultation, discussion or deliberation that has occurred, if-

 

(i)      the information was given, obtained or prepared by or for SARS for the purpose of assisting to formulate a policy or take a decision in the exercise of a power or performance of a duty conferred or imposed by law; and

 

(ii)     the disclosure of the information could reasonably be expected to frustrate the deliberative process in SARS or between SARS and other organs of state by-

 

(aa)   inhibiting the candid communication of an opinion, advice, report or recommendation or conduct of a consultation, discussion or deliberation; or

 

(bb)   frustrating the success of a policy or contemplated policy by the premature disclosure thereof;

 

(f)      information about research being or to be carried out by or on behalf of SARS, the disclosure of which would be likely to prejudice the outcome of the research;

 

(g)     information, the disclosure of which could reasonably be expected to prejudice the economic interests or financial welfare of the Republic or the ability of the government to manage the economy of the Republic effectively in the best interests of the Republic, including a contemplated change or decision to change a tax or a duty, levy, penalty, interest and similar moneys imposed under a tax Act or the Customs and Excise Act;

  

(h)     information supplied in confidence by or on behalf of another state or an international organisation to SARS;

 

(i)      a computer program, as defined in section 1(1) of the Copyright Act, 1978 (Act No. 98 of 1978), owned by SARS;

 

(j)      information relating to the security of SARS buildings, property, structures or systems; and

 

(k)     information relating to the verification or audit selection procedure or method used by SARS, the   disclosure of which could reasonably be expected to jeopardise the effectiveness thereof.

 

(2)     A person who is a current or former SARS official-

 

(a)     may not disclose SARS confidential information to a person who is not a SARS official;

 

(b)     may not disclose SARS confidential information to a SARS official who is not authorised to have access to the information; and

 

(c)     must take the precautions that may be required by the Commissioner to prevent a person referred to in paragraph (a) or (b) from obtaining access to the information.

 

(3)     A person who is a SARS official or former SARS official may disclose SARS confidential information if-

 

(a)     the information is public information;

 

(b)     authorised by the Commissioner;

 

(c)     disclosure is authorised under any other Act which expressly provides for the disclosure of the information despite the provisions in this Chapter;

 

(d)     access has been granted for the disclosure of the information in terms of the Promotion of Access to Information Act; or

 

(e)     required by order of a High Court.

69.    Secrecy of taxpayer information and general disclosure

 

(1)     A person who is a current or former SARS official must preserve the secrecy of taxpayer information and may not disclose taxpayer information to a person who is not a SARS official.

 

(2)     Subsection (1) does not prohibit the disclosure of taxpayer information by a person who is a current or former SARS official-

 

(a)     in the course of performance of duties under a tax Act or customs and excise legislation such as-

[Words preceding subparagraph (i) substituted by section 47 of Act 23 of 2015 effective on 8 January 2016]

 

(i)      to the South African Police Service or the National Prosecuting Authority, if the information relates to, and constitutes material information for the proving of, a tax offence;

 

(ii)     as a witness in civil or criminal proceedings under a tax Act; or

 

(iii)    the taxpayer information necessary to enable a person to provide such information as may be required by SARS from that person;

 

(b)     under any other Act which expressly provides for the disclosure of the information despite the provisions in this Chapter;

 

(c)     by order of a High Court; or

 

(d)     if the information is public information.

 

(3)     An application to the High Court for the order referred to in subsection (2)(c) requires prior notice to SARS of at least 15 business days unless the court, based on urgency, allows a shorter period.

 

(4)     SARS may oppose the application on the basis that the disclosure may seriously prejudice the taxpayer concerned or impair a civil or criminal tax investigation by SARS.

 

(5)     The court may not grant the order unless satisfied that the following circumstances apply:

 

(a)     the information cannot be obtained elsewhere;

 

(b)     the primary mechanisms for procuring evidence under an Act or rule of court will yield or yielded no or disappointing results;

 

(c)     the information is central to the case; and

 

(d)     the information does not constitute biometric information.

 

(6)     Subsection (1) does not prohibit the disclosure of information-

 

(a)     to the taxpayer; or

 

(b)     with the written consent of the taxpayer, to another person.

 

(7)     Biometric information of a taxpayer may not be disclosed by SARS except under the circumstances described in subsection (2)(a)(i).

 

(8)     The Commissioner may, despite the provisions of this section, disclose-

 

(a)     the name and taxpayer reference number of a taxpayer;

 

(b)     a list of-

 

(i)      pension funds, pension preservation funds, provident funds, provident preservation funds and retirement annuity funds as defined in section 1(1) of the Income Tax Act; and

 

(ii)     organisations approved under sections 18A and 30 of the Income Tax Act and the type of approval;

[Subparagraph (ii) substituted by section 26 of Act 18 of 2023]

[Pararagraph (b) substituted by section 53 of Act 16 of 2016] 

 

(c)     the name and tax practitioner registration number of a registered tax practitioner; and

 

(d)     taxpayer information in an anonymised form.

70.    Disclosure to other entities

(1)     A senior SARS official may provide to the Director-General of the National Treasury taxpayer information or SARS confidential information in respect of-

(a)     a taxpayer which is an-

(i)      institution referred to in section 3(1) of the Public Finance Management Act, 1999 (Act No. 1 of 1999); or

(ii)     entity referred to in section 3 of the Local Government: Municipal Finance Management Act, 2003 (Act No. 56 of 2003),

to the extent necessary for the Director-General to perform the functions and exercise the powers of the National Treasury under those Acts; and

(b)     a class of taxpayers to the extent necessary for the purposes of tax policy design or revenue estimation.

(2)     A senior SARS official may disclose to-

(a)     the Statistician-General the taxpayer information as may be required for the purpose of carrying out the Statistician-General’s duties to publish statistics in an anonymous form;

(b)     the Chairperson of the Board administering the National Student Financial Aid Scheme, the name and address of the employer of a person to whom a loan or bursary has been granted under that scheme, for use in performing the Chairperson’s functions under the National Student Financial Aid Scheme Act, 1999 (Act No. 56 of 1999);

(c)     a commission of inquiry established by the President of the Republic of South Africa under a law of the Republic, the information to which the Commission is authorised by law to have access;

(d)     to an employer (as defined in the Fourth Schedule to the Income Tax Act) of an employee (as defined in the Fourth Schedule), but only the income tax reference number, identity number, physical and postal address of that employee and such other non-financial information in relation to that employee, as that employer may require in order to comply with its obligations in terms of a tax Act; and

(e)     a recognised controlling body (as defined in section 239) of a registered tax practitioner, such information in relation to the tax practitioner as may be required to verify that sections 240A(2)(a) and 240A(3) are being given effect to.

(f)      the Department of Labour, the name and contact details of all employers registered for employees’ tax and eligible to receive the employment tax incentive in terms of section 2 of the Employment Tax Incentive Act, 2013.

(3)     A senior SARS official may disclose to-

(a)     the Governor of the South African Reserve Bank, or other person to whom the Minister delegates powers, functions and duties under the Regulations issued under section 9 of the Currency and Exchange Act, 1933 (Act 9 of 1933), the information as may be required to exercise a power or perform a function or duty under the South African Reserve Bank Act, 1989 (Act 90 of 1989), or those Regulations;

[Paragraph (a) substituted by section 25 of Act 24 of 2020]

(b) the Financial Sector Conduct Authority, the information as may be required for the purpose of carrying out the Financial Sector Conduct Authority’s duties and functions under the Financial Sector Regulation Act, 2017 (Act 9 of 2017);

[Paragraph (b) substituted by section 18(1) of Act 22 of 2018 effective on 1 April 2018.]

(c)     the Financial Intelligence Centre, the information as may be required for the purpose of carrying out the Centre’s duties and functions under the Financial Intelligence Centre Act, 2001 (Act 38 of 2001);

[Paragraph (c) amended by section 27(a) of Act 18 of 2023]

(d)     the National Credit Regulator, the information as may be required for the purpose of carrying out the Regulator’s duties and functions under the National Credit Act, 2005 (Act 34 of 2005); and

[Paragraph (d) amended by section 27(b) of Act 18 of 2023]

(e)     the Companies and Intellectual Property Commission, the information as may be required for the purpose of carrying out the Commission’s duties and functions under the Companies Act, 2008 (Act 71 of 2008);

[Paragraph (e) added by section 27(c) of Act 18 of 2023]

(f)      the Directorate for Nonprofit Organisations, the information as may be required for the purpose of carrying out the Directorate’s duties and functions under the Nonprofit Organisations Act, 1997 (Act 71 of 1997); and

[Paragraph (f) added by section 27(c) of Act 18 of 2023]

(g)     the Master as defined in section 1 of the Trust Property Control Act, 1988 (Act 57 of 1988), the information as may be required for the purpose of carrying out the Master’s duties and functions under that Act.

[Paragraph (g) added by section 27(c) of Act 18 of 2023]

(4)     A senior SARS official may disclose to an organ of state or institution listed in a regulation issued by the Minister under section 257, information to which the organ of state or institution is otherwise lawfully entitled to and for the purposes only of verifying the correctness of the following particulars of a taxpayer:

(a)     name and taxpayer reference number;

(b)     any identifying number;

(c)     physical and postal address and other contact details;

(d)     employer’s name, address and contact details; and

(e)     other non-financial information as the organ of state or institution may require for purposes of verifying paragraphs (a) to (d).

(5)     The information disclosed under subsection (1), (2) or (3) may only be disclosed by SARS or the persons or entities referred to in subsection (1), (2) or (3) to the extent that it is-

(a)     necessary for the purpose of exercising a power or performing a regulatory function or duty under the legislation referred to in subsection (1), (2) or (3); and

(b)     relevant and proportionate to what the disclosure is intended to achieve as determined under the legislation.

[Subsection (5) substituted by section 48 of Act 23 of 2015 effective on 8 January 2016]

(6)     SARS must allow the Auditor-General to have access to information in the possession of SARS that relates to the performance of the Auditor-General’s duties under section 4 of the Public Audit Act, 2004 (Act No. 25 of 2004).

(7)     Despite subsections (1) to (5), a senior SARS official may not disclose information under this section if satisfied that the disclosure would seriously impair a civil or criminal tax investigation.

71.    Disclosure in criminal, public safety or environmental matters

 

(1)     If so ordered by a judge under this section, a senior SARS official must disclose the information described in subsection (2) to-

 

(a)     the National Commissioner of the South African Police Service, referred to in section 6(1) of the South African Police Service Act, 1995 (Act No. 68 of 1995); or

 

(b)     the National Director of Public Prosecutions, referred to in section 5(2)(a) of the National Prosecuting Authority Act, 1998 (Act No. 32 of 1998).

 

(2)     Subsection (1) applies to information which may reveal evidence-

 

(a)     that an offence (other than a tax offence) has been or may be committed in respect of which a court may impose a sentence of imprisonment exceeding five years;

 

(b)     that may be relevant to the investigation or prosecution of the offence; or

 

(c)     of an imminent and serious public safety or environmental risk.

 

(3)     A senior SARS official may, if of the opinion that-

 

(a)     SARS has information referred to in subsection (2);

 

(b)     the information will likely be material to the prosecution of the offence or avoidance of the risk; and

 

(c)     the disclosure of the information would not seriously impair a civil or criminal tax investigation,

 

make an ex parte application to a judge in chambers for an order authorising SARS to disclose the information under subsection (1).

 

(4)     The National Commissioner of the South African Police Service, the National Director of Public Prosecutions or a person acting under their respective direction and control, if-

 

(a)     carrying out an investigation relating to an offence or a public safety or environmental risk referred to in subsection (2); and

 

(b)     of the opinion that SARS may have information that is relevant to that investigation,

 

may make an ex parte application to a judge in chambers for an order requiring SARS to disclose the information referred to in subsection (2).

 

(5)     SARS must be given prior notice of at least 10 business days of an application under subsection (4) unless the judge, based on urgency, allows a shorter period and SARS may oppose the application on the basis that the disclosure would seriously impair or prejudice a civil or criminal tax investigation or other enforcement of a tax Act by SARS.

72.    Self-incrimination

 

(1)     A taxpayer may not refuse to comply with his or her obligations in terms of legislation to complete and file a return or an application on the grounds that to do so might incriminate him or her, and an admission by the taxpayer contained in a return, application, or other document submitted to SARS by a taxpayer is admissible in criminal proceedings against the taxpayer for a tax offence, unless a competent court directs otherwise.

 

(2)     An admission by the taxpayer of the commission of a tax offence obtained from a taxpayer under Chapter 5 is not admissible in criminal proceedings against the taxpayer, unless a competent court directs otherwise.

73.    Disclosure to taxpayer of own record

 

(1)     A taxpayer or the taxpayer’s duly authorised representative is entitled to obtain-

 

(a)     a copy, certified by SARS, of the recorded particulars of an assessment or decision referred to in section 104(2) relating to the taxpayer;

 

(b)     access to information submitted to SARS by the taxpayer or by a person on the taxpayer’s behalf;

 

(c)     information, other than SARS confidential information, on which the taxpayer’s assessment is based; and

 

(d)     other information relating to the tax affairs of the taxpayer.

 

(2)     A request for information under subsection (1)(d) must be made under the Promotion of Access to Information Act.

74.    Publication of names of offenders

 

(1)     The Commissioner may publish for general information the particulars specified in subsection (2), relating to a tax offence committed by a person, if-

 

(a)     the person was convicted of the offence; and

 

(b)     all appeal or review proceedings relating to the offence have been completed or were not instituted within the period allowed.

 

(2)     The publication referred to in subsection (1) may specify-

 

(a)     the name and area of residence of the offender;

 

(b)     any particulars of the offence that the Commissioner thinks fit; and

 

(c)     the particulars of the fine or sentence imposed.

CHAPTER 7

ADVANCE RULINGS

75.    Definitions

 

In this Chapter, unless the context indicates otherwise, the following terms, if in single quotation marks, have the following meanings:

‘advance ruling’ means a ‘binding general ruling’, a ‘binding private ruling’ or a ‘binding class ruling’;

‘applicant’ means a person who submits an ‘application’ for a ‘binding private ruling’ or a ‘binding class ruling’;

‘application’ means an application for a ‘binding private ruling’ or a ‘binding class ruling’;

‘binding class ruling’ means a written statement issued by SARS regarding the application of a tax Act to a specific ‘class’ of persons in respect of a ‘proposed transaction’;

‘binding effect’ means the requirement that SARS interpret or apply the applicable tax Act in accordance with an ‘advance ruling’ under section 82;

‘binding general ruling’ means a written statement issued by a senior SARS official under section 89 regarding the interpretation of a tax Act or the application of a tax Act to the stated facts and circumstances;

‘binding private ruling’ means a written statement issued by SARS regarding the application of a tax Act to one or more parties to a ‘proposed transaction’, in respect of the ‘transaction’;

‘class’ means-

 

(a)     shareholders, members, beneficiaries or the like in respect of a company, association, pension fund, trust, or the like; or

 

(b)     a group of persons, that may be unrelated and-

 

(i)      are similarly affected by the application of a tax Act to a ‘proposed transaction’; and

 

(ii)     agree to be represented by an ‘applicant’;

‘class member’ and ‘class members’ means a member or members of the ‘class’ to which a ‘binding class ruling’ applies;

‘non-binding private opinion’ means informal guidance issued by SARS in respect of the tax treatment of a particular set of facts and circumstances or ‘transaction’, but which does not have a ‘binding effect’ within the meaning of section 88;

‘proposed transaction’ means a ‘transaction’ that an ‘applicant’ proposes to undertake, but has not agreed to undertake, other than by way of an agreement that is subject to a suspensive condition or is otherwise not binding; and

‘transaction’ means any transaction, deal, business, arrangement, operation or scheme and includes a series of transactions.

76.    Purpose of advance rulings

 

The purpose of the ‘advance ruling’ system is to promote clarity, consistency and certainty regarding the interpretation and application of a tax Act by creating a framework for the issuance of ‘advance rulings’.

77.    Scope of advance rulings

 

SARS may make an ‘advance ruling’ on any provision of a tax Act.

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.

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.

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.

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’.

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’.

83.    Applicability of advance rulings

 

A ‘binding private ruling’ or ‘binding class ruling’ applies to a person only if-

 

(a)     the provision or provisions of the Act at issue are the subject of the ‘advance ruling’;

 

(b)     the person’s set of facts or ‘transaction’ are the same as the particular set of facts or ‘transaction’ specified in the ruling;

 

(c)     the person’s set of facts or ‘transaction’ falls entirely within the effective period of the ruling;

 

(d)     any assumptions made or conditions imposed by SARS in connection with the validity of the ruling have been satisfied or carried out;

 

(e)     in the case of a ‘binding private ruling’, the person is an ‘applicant’ identified in the ruling; and

 

(f)      in the case of a ‘binding class ruling’, the person is a ‘class member’ identified in the ruling.

84.    Rulings rendered void

 

(1)     A ‘binding private ruling’ or ‘binding class ruling’ is void ab initio if-

 

(a)     the ‘proposed transaction’ as described in the ruling is materially different from the ‘transaction’ actually carried out;

 

(b)     there is fraud, misrepresentation or non-disclosure of a material fact; or

 

(c)     an assumption made or condition imposed by SARS is not satisfied or carried out.

 

(2)     For purposes of this section, a fact described in subsection (1) is considered material if it would have resulted in a different ruling had SARS been aware of it when the original ruling was made.

85.    Subsequent changes in tax law

 

(1)     Despite any provision to the contrary contained in a tax Act, an ‘advance ruling’ ceases to be effective if-

 

(a)     a provision of the tax Act that was the subject of the ‘advance ruling’ is repealed or amended in a manner that materially affects the ‘advance ruling’, in which case the ‘advance ruling’ will cease to be effective from the date that the repeal or amendment is effective; or

 

(b)     a court overturns or modifies an interpretation of the tax Act on which the ‘advance ruling’ is based, in which case the ‘advance ruling’ will cease to be effective from the date of judgment unless-

 

(i)      the decision is under appeal;

 

(ii)     the decision is fact-specific and the general interpretation upon which the ‘advance ruling’ was based is unaffected; or

 

(iii)    the reference to the interpretation upon which the ‘advance ruling’ was based was obiter dicta.

 

(2)     An ‘advance ruling’ ceases to be effective upon the occurrence of any of the circumstances described in subsection (1), whether or not SARS publishes a notice of withdrawal or modification.

86.    Withdrawal or modification of advance rulings

(1)     SARS may withdraw or modify an ‘advance ruling’ at any time.

(2)     If the ‘advance ruling’ is a ‘binding private ruling’ or ‘binding class ruling’, SARS must first provide the ‘applicant’ with notice of the proposed withdrawal or modification and a reasonable opportunity to make representations prior to the decision whether to withdraw or modify the ‘advance ruling’.

[Subsection (2) substituted by section 26 of Act 24 of 2020]

(3)     SARS must specify the date the decision to withdraw or modify the ‘advance ruling’ becomes effective, which date may not be earlier than the date-

(a)     the decision is delivered to an ‘applicant’, unless the circumstances in subsection (4) apply; or

(b)     in the case of a ‘binding general ruling’, the decision is published.

(4)     SARS may withdraw or modify a ‘binding private ruling’ or a ‘binding class ruling’ retrospectively if the ruling was made in error and if-

(a)     the ‘applicant’ or ‘class member’ has not yet commenced the ‘proposed transaction’ or has not yet incurred significant costs in respect of the arrangement;

(b)     a person other than the ‘applicant’ or ‘class member’ will suffer significant tax disadvantage if the ruling is not withdrawn or modified retrospectively and the ‘applicant’ will suffer comparatively less if the ruling is withdrawn or modified retrospectively; or

(c)     the effect of the ruling will materially erode the South African tax base and it is in the public interest to withdraw or modify the ruling retrospectively.

87.    Publication of advance rulings

 

(1)     A person applying for a ‘binding private ruling’ or ‘binding class ruling’ must consent to the publication of the ruling in accordance with this section.

 

(2)     A ‘binding private ruling’ or ‘binding class ruling’ must be published by SARS for general information in the manner and in the form that the Commissioner may prescribe, but without revealing the identity of an ‘applicant’, ‘class member’ or other person identified or referred to in the ruling.

 

(3)     Prior to publication, SARS must provide the ‘applicant’ with a draft copy of the edited ruling for review and comment.

 

(4)     SARS must consider, prior to publication, any comments and proposed edits and deletions submitted by the ‘applicant’, but is not required to accept them.

 

(5)     An ‘applicant’ for a ‘binding class ruling’ may consent in writing to the inclusion of information identifying it or the ‘proposed transaction’ in order to facilitate communication with the ‘class members’.

 

(6)     The application or interpretation of the relevant tax Act to a ‘transaction’ does not constitute information that may reveal the identity of an ‘applicant’, ‘class member’ or other person identified or referred to in the ruling.

 

(7)     SARS must treat the publication of the withdrawal or modification of a ‘binding private ruling’ or ‘binding class ruling’ in the same manner and subject to the same requirements as the publication of the original ruling.

 

(8)     Subsection (2) does not-

 

(a)     require the publication of a ruling that is materially the same as a ruling already published; or

 

(b)     apply to a ruling that has been withdrawn before SARS has had occasion to publish it.

 

(9)     If an ‘advance ruling’ has been published, notice of the withdrawal or modification thereof must be published in the manner and media as the Commissioner may deem appropriate.

88.    Non-binding private opinions

 

(1)     A ‘non-binding private opinion’ does not have ‘binding effect’ upon SARS.

 

(2)     A ‘non-binding private opinion’ may not be cited in any proceedings including court proceedings, other than proceedings involving the person to whom the opinion was issued.

89.    Binding general rulings

 

(1)     A senior SARS official may issue a ‘binding general ruling’ that is effective for either-

 

(a)     a particular tax period or other definite period; or

 

(b)     an indefinite period.

 

(2)     A ‘binding general ruling’ must state-

 

(a)     that it is a ‘binding general ruling’ made under this section;

 

(b)     the provisions of a tax Act which are the subject of the ‘binding general ruling’; and

 

(c)     either-

 

(i)      the tax period or other definite period for which it applies; or

 

(ii)     in the case of a ‘binding general ruling’ for an indefinite period, that it is for an indefinite period and the date or tax period from which it applies.

 

(3)     A ‘binding general ruling’ may be issued as an interpretation note or in another form and may be issued in the manner that the Commissioner prescribes.

 

(4)     A publication or other written statement does not constitute and may not be considered or treated as a ‘binding general ruling’ unless it contains the information prescribed by subsection (2).

90.    Procedures and guidelines for advance rulings

 

The Commissioner may issue procedures and guidelines, in the form of ‘binding general rulings’, for implementation and operation of the ‘advance ruling’ system.

CHAPTER 8

ASSESSMENTS

91.    Original assessments

(1)     If a tax Act requires a taxpayer to submit a return which does not incorporate a determination of the amount of a tax liability, SARS must make an original assessment based on the return submitted by the taxpayer or other information available or obtained in respect of the taxpayer.

(2)     If a tax Act requires a taxpayer to submit a return which incorporates a determination of the amount of a tax liability, the submission of the return is an original self-assessment of the tax liability.

(3)     If a tax Act requires a taxpayer to make a determination of the amount of a tax liability and no return is required, the payment of the amount of tax due is an original assessment.

(4)     . . . . . .

[Subsection (4) substituted by section 32 of Act 33 of 2019 and deleted by section 27 of Act 24 of 2020]

(5)     . . . . . .

[Subsection (5) substituted by section 58(a) of Act 21 of 2012 and deleted by section 27 of Act 24 of 2020]

(6)     . . . . . .

[Subsection (6) added by section 58(b) of Act 21 of 2012 and deleted by section 27 of Act 24 of 2020]

92.    Additional assessments

 

If at any time SARS is satisfied that an assessment does not reflect the correct application of a tax Act to the prejudice of SARS or the fiscus, SARS must make an additional assessment to correct the prejudice.

93.    Reduced assessments

(1)     SARS may make a reduced assessment if-

(a)     the taxpayer successfully disputed the assessment under Chapter 9;

(b)     necessary to give effect to a settlement under Part F of Chapter 9;

(c)     necessary to give effect to a judgment pursuant to an appeal under Part E of Chapter 9 and there is no right of further appeal;

[Paragraph (c) amended by section 49 of Act 23 of 2015 effective on 8 January 2016]

(d)     SARS is satisfied that there is a readily apparent undisputed error in the assessment by-

(i)     SARS; or

(ii)     the taxpayer in a return;

[Paragraph (d) substituted by section 49 of Act 23 of 2015 and amended by section 18 of Act 21 of 2021]

(e)     a senior SARS official is satisfied that an assessment was based on-

(i)      the failure to submit a return or submission of an incorrect return by a third party under section 26 or by an employer under a tax Act;

(ii)     a processing error by SARS; or

(iii)    a return fraudulently submitted by a person not authorised by the taxpayer; or

[Paragraph (e) inserted by section 49 of Act 23 of 2015 and amended by section 28(a) of Act 24 of 2020. Subparagraph (iii) amended by section 18 of Act 21 of 2021]

(f)      the taxpayer in respect of whom an assessment has been issued under section 95(1), requests SARS to issue a reduced assessment under section 95(6).

[Paragraph (f) added by section 28(b) of Act 24 of 2020]

(2)     SARS may reduce an assessment despite the fact that no objection has been lodged or appeal noted.

94.    Jeopardy assessments

 

(1)     SARS may make a jeopardy assessment in advance of the date on which the return is normally due, if the Commissioner is satisfied that it is required to secure the collection of tax that would otherwise be in jeopardy.

 

(2)     In addition to any rights under Chapter 9, a review application against an assessment made under this section may be made to the High Court on the grounds that-

 

(a)     its amount is excessive; or

 

(b)     circumstances that justify a jeopardy assessment do not exist.

 

(3)     In proceedings under subsection (2), SARS bears the burden of proving that the making of the jeopardy assessment is reasonable under the circumstances.

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]

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.

97.    Recording of assessments

(1)     The particulars of an assessment and the amount of tax payable thereon must be recorded and kept by SARS.

(2)     A notice of assessment issued by SARS is regarded as made by a SARS official authorised to do so or duly issued by SARS, until proven to the contrary.

(3)     The record of an assessment is not open to public inspection.

(4)     The record of an assessment, including the return or records on which it was based, whether in electronic format or otherwise, may be destroyed by SARS after seven years from the date of assessment or the expiration of a further period that may be required-

(a)     by the Auditor-General;

(b)     as a result of the application of section 99(2)(c); or

(c)     for purposes of a verification, audit or criminal investigation under Chapter 5 or a dispute under Chapter 9.

[Subsection (4) substituted by section 54 of Act 16 of 2016 effective on 19 January 2017]

98.    Withdrawal of assessments

(1)     SARS may, despite the fact that no objection has been lodged or appeal noted, withdraw an assessment which-

(a)     was issued to the incorrect taxpayer;

(b)     was issued in respect of the incorrect tax period; or

[Paragraph (b) amended by section 46 of Act 39 of 2013 effective on 1 October 2012 and section 50 of Act 23 of 2015 effective on 8 January 2016] 

(c)     was issued as a result of an incorrect payment allocation.

[Paragraph (c) amended by section 46 of Act 39 of 2013 effective on 1 October 2012 and section 50 of Act 23 of 2015 effective on 8 January 2016] 

(d)     ……….

[Paragraph (d) added by section 46 of Act 39 of 2013 effective on 1 October 2012, deleted by section 50 of Act 23 of 2015 effective on 8 January 2016]

(2)     An assessment withdrawn under this section is regarded not to have been issued, unless a senior SARS official agrees in writing with the taxpayer as to the amount of tax properly chargeable for the relevant tax period and accordingly issues a revised original, additional or reduced assessment, as the case may be, which assessment is not subject to objection or appeal.

99.    Period of limitations for issuance of assessments

(1)     An assessment may not be made in terms of this Chapter-

[Words preceding paragraph (a) substituted by section 51 of Act 23 of 2015 effective on 8 January 2016]

(a)     three years after the date of assessment of an original assessment by SARS;

(b)     in the case of self-assessment for which a return is required, five years after the date of assessment of an original assessment-

(i)      by way of self-assessment by the taxpayer; or

(ii)     if no return is received, by SARS;

(c)     in the case of a self-assessment for which no return is required, after the expiration of five years from the-

(i)      date of the last payment of the tax for the tax period; or

(ii)     effective date, if no payment was made in respect of the tax for the tax period;

(d)     in the case of-

(i)      an additional assessment if the-

(aa)   amount which should have been assessed to tax under the preceding assessment was, in accordance with the practice generally prevailing at the date of the preceeding  assessment, not assessed to tax; or

(bb)   full amount of tax which should have been assessed under the preceding assessment was, in accordance with the practice, not assessed;

(ii)     a reduced assessment, if the preceding assessment was made in accordance with the practice generally prevailing at the date of that assessment; or

(iii)    a tax for which no return is required, if the payment was made in accordance with the practice generally prevailing at the date of that payment; or

(e)     in respect of a dispute that has been resolved under Chapter 9.

(2)     Subsection (1) does not apply to the extent that-

(a)     in the case of assessment by SARS, the fact that the full amount of tax chargeable was not assessed, was due to-

(i)      fraud;

(ii)     misrepresentation; or

(iii)    non-disclosure of material facts;

(b)     in the case of self-assessment, the fact that the full amount of tax chargeable was not assessed, was due to-

(i)      fraud;

(ii)     intentional or negligent misrepresentation;

(iii)    intentional or negligent non-disclosure of material facts; or

(iv)    the failure to submit a return or, if no return is required, the failure to make the required payment of tax;

(c)     SARS and the taxpayer so agree prior to the expiry of the limitations period;

[Paragraph (c) amended by section 51 of Act 23 of 2015 effective on 8 January 2016]

(d)     it is necessary to give effect to-

(i)      the resolution of a dispute under Chapter 9; or

[Subparagraph (i) amended by section 55 of Act 16 of 2016 effective on 19 January 2017]

(ii)     ……….

[Subparagraph (ii) deleted by section 55 of Act 16 of 2016 effective on 19 January 2017]

(iii)    an assessment referred to in section 93(1)(d) if SARS becomes aware of the error referred to in that subsection before expiry of the period for the assessment under subsection (1); or

[Paragraph (d) amended by section 47 of Act 39 of 2013 effective on 1 October 2012, substituted by section 51 of Act 23 of 2015 effective on 8 January 2016]

(iv)    a reduced or additional assessment under section 95(6); or

[Subparagraph (iv) inserted by section 20 of Act 21 of 2021]

(e)     SARS receives a request for a reduced assessment under section 93(1)(e).

[Paragraph (e) added by section 51 of Act 23 of 2015 effective on 8 January 2016]

(3)     The Commissioner may, by prior notice of at least 30 days to the taxpayer, extend a period under subsection (1) or an extended period under this section, before the expiry thereof, by a period approximate to a delay arising from:

(a)     failure by a taxpayer to provide all the relevant material requested within the period under section 46(1) or the extended period under section 46(5); or

(b)     resolving an information entitlement dispute, including legal proceedings.

[Subsection (3) added by section 51 of Act 23 of 2015 effective on 8 January 2016]

(4)     The Commissioner may, by prior notice of at least 60 days to the taxpayer, extend a period under subsection (1), before the expiry thereof, by three years in the case of an assessment by SARS or two years in the case of self-assessment, where an audit or investigation under Chapter 5 relates to-

(i)      the application of the doctrine of substance over form;

(ii)     the application of Part IIA of Chapter III of the Income Tax Act, section 73 of the Value-Added Tax Act or any other general anti-avoidance provision under a tax Act;

(iii)    the taxation of hybrid entities or hybrid instruments; or

(iv)    section 31 of the Income Tax Act.

[Subsection (4) added by section 51 of Act 23 of 2015 effective on 8 January 2016]

100.    Finality of assessment or decision

(1)     An assessment or a decision referred to in section 104(2) is final if, in relation to the assessment or decision-

(a)     it is an assessment described-

(i)      in section 95(1)(a) or (c), and no return or response described in section 95(6) has been received by SARS; or

[Subparagraph (i) substituted by section 30 of Act 24 of 2020]

(ii)     in section 95(3);

(b)     no objection has been made, or an objection has been withdrawn;

(c)     after the decision of an objection, no notice of appeal has been filed or a notice has been filed and is withdrawn;

[Paragraph (c) substituted by section 33 of Act 33 of 2019]

(d)     the dispute has been settled under Part F of Chapter 9;

(e)     an appeal has been determined by the tax board and there is no referral to the tax court under section 115;

(f)      an appeal has been determined by the tax court and there is no right of further appeal; or

(g)     an appeal has been determined by a higher court and there is no right of further appeal.

(2)     Subsection (1) does not prevent SARS from making an additional assessment, but in respect of an amount of tax that has been dealt with in a disputed assessment referred to in-

(a)     subsection (1)(d), (e) and (f), if the relevant period under section 99(1)(a), (b) or (c) has expired, SARS may only make an additional assessment under the circumstances referred to in section 99(2)(a) and (b); and

[Paragraph (a) substituted by section 56 of Act 16 of 2016 effective on 19 January 2017]

(b)     subsection (1)(g), SARS may not make an additional assessment.

CHAPTER 9

DISPUTE RESOLUTION

Part A

General

101.    Definitions

 

In this Chapter, unless the context indicates otherwise, the following terms, if in single quotation marks, have the following meanings:

‘appellant’, except in Part E of this Chapter, means a person who has noted an appeal against an assessment or ‘decision’ under section 107;

‘decision’ means a decision referred to in section 104(2);

‘registrar’ means the registrar of the tax court; and ‘rules’ mean the rules made under section 103.

102.    Burden of proof

(1)     A taxpayer bears the burden of proving-

(a)     that an amount, transaction, event or item is exempt or otherwise not taxable;

(b)     that an amount or item is deductible or may be set off;

[Para. (b) substituted by section 23 of Act 13 of 2017 effective on 18 December 2017]

(c)     the rate of tax applicable to a transaction, event, item or class of taxpayer;

(d)     that an amount qualifies as a reduction of tax payable;

(e)     that a valuation is correct; or

(f)      whether a ‘decision’ that is subject to objection and appeal under a tax Act, is incorrect.

(2)     The burden of proving whether an estimate under section 95 is reasonable or the facts on which SARS based the imposition of an understatement penalty under Chapter 16, is upon SARS.

103.    Rules for dispute resolution

 

(1)     The Minister may, after consultation with the Minister of Justice and Constitutional Development, by public notice make ‘rules’ governing the procedures to lodge an objection and appeal against an assessment or ‘decision’, and the conduct and hearing of an appeal before a tax board or tax court.

 

(2)     The ‘rules’ may provide for alternative dispute resolution procedures under which SARS and the person aggrieved by an assessment or ‘decision’ may resolve a dispute.

 

(3)     The Commissioner may prescribe the form of a document required to be completed and delivered under the “rules”.

Part B

Objection and appeal

104.    Objection against assessment or decision

(1)     A taxpayer who is aggrieved by an assessment made in respect of the taxpayer may object to the assessment.

(2)     The following decisions may be objected to and appealed against in the same manner as an assessment:

(a)     a decision under subsection (4) not to extend the period for lodging an objection;

(b)     a decision under section 107(2) not to extend the period for lodging an appeal; and

(c)     any other decision that may be objected to or appealed against under a tax Act.

(3)     A taxpayer entitled to object to an assessment or ‘decision’ must lodge an objection in the manner, under the terms, and within the period prescribed in the ‘rules’.

(4)     A senior SARS official may extend the period prescribed in the ‘rules’ within which objections must be made if satisfied that reasonable grounds exist for the delay in lodging the objection.

(5)     The period for objection must not be so extended-

(a)     for a period exceeding 30 business days, unless a senior SARS official is satisfied that exceptional circumstances exist which gave rise to the delay in lodging the objection;

[Paragraph (a) substituted by section 57 of Act 16 of 2016 effective on 19 January 2017]

(b)     if more than three years have lapsed from the date of assessment or the ‘decision’; or

(c)     if the grounds for objection are based wholly or mainly on a change in a practice generally prevailing which applied on the date of assessment or the ‘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]

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’.

107.    Appeal against assessment or decision

 

(1)     After delivery of the notice of the decision referred to in section 106(4), a taxpayer objecting to an assessment or ‘decision’ may appeal against the assessment or ‘decision’ to the tax board or tax court in the manner, under the terms and within the period prescribed in this Act and the ‘rules’.

 

(2)     A senior SARS official may extend the period within which an appeal must be lodged for-

 

(a)     21 business days, if satisfied that reasonable grounds exist for the delay; or

 

(b)     up to 45 business days, if exceptional circumstances exist that justify an extension beyond 21 business days.

 

(3)     A notice of appeal that does not satisfy the requirements of subsection (1) is not valid.

 

(4)     If an assessment or ‘decision’ has been altered under section 106(3), the assessment or ‘decision’ as altered is the assessment or ‘decision’ against which the appeal is noted.

 

(5)     By mutual agreement, SARS and the taxpayer making the appeal may attempt to resolve the dispute through alternative dispute resolution under procedures specified in the ‘rules’.

 

(6)     Proceedings on the appeal are suspended while the alternative dispute resolution procedure is ongoing.

 

(7)     SARS may concede an appeal in whole or in part before-

 

(a)      the matter is heard by the tax board or the tax court; or

  

(b)     an appeal against a judgment of the tax court or higher court is heard.

Part C

Tax board

108.    Establishment of tax board

 

(1)     The Minister may by public notice-

 

(a)     establish a tax board or boards for areas that the Minister thinks fit; and

 

(b)     abolish an existing tax board or establish an additional tax board as circumstances may require.

 

(2)     Tax boards are established under subsection (1) to hear appeals referred to in section 107 in the manner provided in this Part.

109.    Jurisdiction of tax board

 

(1)     An appeal against an assessment or ‘decision’ must in the first instance be heard by a tax board, if-

 

(a)     the tax in dispute does not exceed the amount the Minister determines by public notice; and

 

(b)     a senior SARS official and the ‘appellant’ so agree.

 

(2)     SARS must designate the places where tax boards hear appeals.

 

(3)     The tax board must hear an appeal at the place referred to in subsection (2) which is closest to the ‘appellant’s’ residence or place of business, unless the ‘appellant’ and SARS agree that the appeal be heard at another place.

 

(4)     In making a decision under subsection (1)(b), a senior SARS official must consider whether the grounds of the dispute or legal principles related to the appeal should rather be heard by the tax court.

 

(5)     If the chairperson prior to or during the hearing, considering the grounds of the dispute or the legal principles related to the appeal, believes that the appeal should be heard by the tax court rather than the tax board, the chairperson may direct that the appeal be set down for hearing de novo before the tax court.

110.    Constitution of tax board

(1)     A tax board consists of-

(a)     the chairperson, who must be a legal practitioner from the panel appointed under section 111; and

[Paragraph (a) substituted by section 34 of Act 33 of 2019]

(b)     if the chairperson, after considering any representations by a senior SARS official or the taxpayer, considers it necessary-

[Words preceding subpara. (i) substituted by section 24 of Act 13 of 2017 effective on 18 December 2017]

(i)      an accountant who is a member of the panel referred to in section 120; and

(ii)     a representative of the commercial community who is a member of the panel referred to in section 120.

(2)     Sections 122, 123, 124, 126, 127, 128 and 129 apply, with the necessary changes, and under procedures determined in the ‘rules’, to the tax board and the chairperson.

111.    Appointment of chairpersons

(1)     The Minister must, in consultation with the Judge­President of the Division of the High Court with jurisdiction in the area where the tax board is to sit, by public notice appoint legal practitioners to a panel from which a chairperson of the tax board must be nominated from time to time.

[Subsection (1) substituted by section 35 of Act 33 of 2019]

(2)     The persons appointed under subsection (1)-

(a)     hold office for five years from the date the notice of appointment is published in the public notice;

(b)     are eligible for re-appointment as the Minister thinks fit; and

(c)     must be persons of good standing who have appropriate experience.

[Subsection (2) substituted by section 53 of Act 23 of 2015 effective on 8 January 2016]

(3)     The Minister may terminate an appointment made under this section at any time for misconduct, incapacity or incompetence.

(4)     A member of the panel must be appointed as chairperson of a tax board.

(5)     A chairperson will not solely on account of his or her liability to tax be regarded as having a personal interest or a conflict of interest in any matter upon which he or she may be called upon to adjudicate.

(6)     A chairperson must withdraw from the proceedings as soon as the chairperson becomes aware of a conflict of interest which may give rise to bias which the chairperson may experience with the case concerned or other circumstances that may affect the chairperson’s ability to remain objective for the duration of the case.

(7)     Either party may ask for withdrawal of the chairperson on the basis of conflict of interest or other indications of bias, under procedures provided in the ‘rules’.

112.    Clerk of tax board

 

(1)     The Commissioner must appoint a clerk of the tax board.

 

(2)     The clerk acts as convenor of the tax board.

 

(3)     If no chairperson is available in the jurisdiction within which the tax board is to be convened, the clerk may convene the tax board with a chairperson from another jurisdiction.

 

(4)     The clerk of the tax board must, within the period and in the manner provided in the ‘rules’, submit a notice to the members of the tax board and the ‘appellant’ specifying the time and place for the hearing.

113.    Tax board procedure

(1)     Subject to the procedure provided for by the ‘rules’, the chairperson determines the procedures during the hearing of an appeal as the chairperson sees fit, and each party must have the opportunity to put the party’s case to the tax board.

(2)     The tax board is not required to record its proceedings.

(3)     The chairperson may, when the proceedings open, formulate the issues in the appeal.

(4)     The chairperson may adjourn the hearing of an appeal to a convenient time and place.

(5)     A senior SARS official must appear at the hearing of the appeal in support of the assessment or ‘decision’.

(6)     At the hearing of the appeal the ‘appellant’ must-

(a)     appear in person in the case of a natural person; or

(b)     in any other case, be represented by the representative taxpayer.

(7)     If a third party prepared the ‘appellant’s’ return involved in the assessment or ‘decision’, that third party may appear on the ‘appellant’s’ behalf.

(8)     The ‘appellant’ may, together with the notice of appeal, or within the further period as the chairperson may allow, request permission to be represented at the hearing otherwise than as referred to in subsection (6).

(9)     If neither the ‘appellant `nor anyone authorised to appear on the ‘appellant’s’ behalf appears before the tax board at the time and place set for the hearing, the tax board may confirm the assessment or ‘decision’ in respect of which the appeal has been lodged-

(a)     at the request of the senior SARS official; and

[Para. (a) substituted by section 25 of Act 13 of 2017 effective on 18 December 2017]

(b)     on proof that the ‘appellant’ was furnished with the notice of the sitting of the tax board.

(10)   If the tax board confirms an assessment or ‘decision’ under subsection (9), the ‘appellant’ may not thereafter request that the appeal be referred to the tax court under section 115.

(11)   If the senior SARS official fails to appear before the tax board at the time and place set for the hearing, the tax board may allow the ‘appellant’s’ appeal at the ‘appellant’s’ request.

(12)   If the tax board allows the appeal under subsection (11), SARS may not thereafter refer the appeal to the tax court under section 115.

(13)   Subsections (9), (10), (11) and (12) do not apply if the chairperson is satisfied that sound reasons exist for the non-appearance and the reasons are delivered by the ‘appellant’ or SARS to the clerk of the tax board within 10 business days after the date determined for the hearing or the longer period as may be allowed in exceptional circumstances.

114.    Decision of tax board

 

(1)     The tax board, after hearing the ‘appellant’s’ appeal against an assessment or ‘decision’, must decide the matter in accordance with this Chapter.

 

(2)     The Chairperson must prepare a written statement of the tax board’s decision that includes the tax board’s findings of the facts of the case and the reasons for its decision, within 60 business days after conclusion of the hearing.

 

(3)     The clerk must by notice in writing submit a copy of the tax board’s decision to SARS and the ‘appellant’.

115.    Referral of appeal to tax court

 

(1)     If the ‘appellant’ or SARS is dissatisfied with the tax board’s decision or the Chairperson fails to deliver the decision under section 114(2) within the prescribed 60 business day period, the ‘appellant’ or SARS may within 21 business days, or within the further period as the Chairperson may on good cause shown allow, after the date of the notice referred to in section 114(3) or the expiry of the period referred to in section 114(2), require, in writing, that the appeal be referred to the tax court for hearing.

 

(2)     The tax court must hear de novo a referral of an appeal from the tax board’s decision under subsection (1).

Part D

Tax court

116.    Establishment of tax court

 

(1)     The President of the Republic may by proclamation in the Gazette establish a tax court or additional tax courts for areas that the President thinks fit and may abolish an existing tax court as circumstances may require.

 

(2)     The tax court is a court of record.

117.    Jurisdiction of tax court

 

(1)     The tax court for purposes of this Chapter has jurisdiction over tax appeals lodged under section 107.

 

(2)     The place where an appeal is heard is determined by the ‘rules’.

 

(3)     The court may hear and decide an interlocutory application or an application in a procedural matter relating to a dispute under this Chapter as provided for in the “rules”.

118.    Constitution of tax court

(1)     A tax court established under this Act consists of-

(a)     a judge or an acting judge of the High Court, who is the president of the tax court;

(b)     an accountant selected from the panel of members appointed in terms of section 120; and

(c)     a representative of the commercial community selected from the panel of members appointed in terms of section 120.

(2)     If the appeal involves-

(a)     a complex matter that requires specific expertise and the president of the tax court so directs after considering any representations by a senior SARS official or the ‘appellant’, the representative of the commercial community referred to in subsection (1)(c) may be a person with the necessary experience in that field of expertise;

(b)     the valuation of assets and the president of the tax court, a senior SARS official or the ‘appellant’ so requests, the representative of the commercial community referred to in subsection (1)(c) must be a sworn appraiser.

[Subsection (2) amended by section 51 of Act 39 of 2013, substituted by section 58 of Act 16 of 2016 effective on 19 January 2017]

(3)     If an appeal to the tax court involves a matter of law only or is an interlocutory application or application in a procedural matter under the ‘rules’, the president of the court sitting alone must decide the appeal.

(4)     The president of the court alone decides whether a matter for decision involves a matter of fact or a matter of law.

(5)     The Judge-President of the Division of the High Court with jurisdiction in the area where the relevant tax court is situated, may direct that the tax court consist of three judges or acting judges of the High Court (one of whom is the president of the tax court) and the members of the court referred to in subsections (1)(b) and (c) and (2), where necessary, if-

(a)     the amount in dispute exceeds R50 million; or

(b)     SARS and the ‘appellant’ jointly apply to the Judge-President.

119.    Nomination of president of tax court

 

(1)     The Judge-President of the Division of the High Court with jurisdiction in the area for which a tax court has been constituted must nominate and second a judge or an acting judge of the division to be the president of that tax court.

 

(2)     The Judge-President must determine whether the secondment referred to in subsection (1) applies for a period, or for the hearing of a particular case.

 

(3)     A judge will not solely on account of his or her liability to tax be regarded as having a personal interest or a conflict of interest in any matter upon which he or she may be called upon to adjudicate.

120.    Appointment of panel of tax court members

 

(1)     The President of the Republic by proclamation in the Gazette must appoint the panel of members of a tax court for purposes of section 118(1)(b) and (c) for a term of office of five years from the date of the relevant proclamation.

 

(2)     A person appointed in terms of subsection (1) must be a person of good standing who has appropriate experience.

 

(3)     A person appointed in terms of subsection (1) is eligible for reappointment for a further period or periods as the President of the Republic may think fit.

 

(4)     The President of the Republic may terminate the appointment of a member under this section at any time for misconduct, incapacity or incompetence.

 

(5)     A member’s appointment lapses in the event that the tax court is abolished under section 116(1).

 

(6)     A member of the tax court must perform the member’s functions independently, impartially and without fear, favour or prejudice.

121.    Appointment of registrar of tax court

 

(1)     The Commissioner appoints the ‘registrar’ of the tax court.

 

(2)     A person appointed as ‘registrar’ and persons appointed in the ‘registrar’s’ office are SARS employees.

 

(3)     The ‘registrar’ and other persons referred to in subsection (2) must perform their functions under this Act and the ‘rules’ independently, impartially and without fear, favour or prejudice.

122.    Conflict of interest of tax court members

 

(1)     A member of the court must withdraw from the proceedings as soon as the member becomes aware of a conflict of interest which may give rise to bias which the member may experience with the case concerned or other circumstances that may affect the member’s ability to remain objective for the duration of the case.

 

(2)     Either party may ask for withdrawal of a member on the basis of conflict of interest or other indications of bias, under procedures provided in the ‘rules’.

 

(3)     A member of the court will not solely on account of his or her liability to tax be regarded as having a personal interest or a conflict of interest in the case.

123.    Death, retirement or incapability of judge or member

 

(1)     If at any stage during the hearing of an appeal, or after hearing of the appeal but before judgment has been handed down, one of the judges dies, retires or becomes otherwise incapable of acting in that capacity, the hearing of an appeal must be heard de novo.

 

(2)     If the tax court has been constituted under section 118(5), the hearing of the appeal referred to in subsection (1) must proceed before the remaining judges and members, if the remaining judges constitute the majority of judges before whom the hearing was commenced.

 

(3)     If at any stage during or after the hearing of an appeal but before judgment has been handed down, a member of the tax court dies, retires or becomes incapable of acting in that capacity, the hearing of the appeal must proceed before the president of the tax court, any other judges, the remaining member, and, if the president deems it necessary, a replacement member.

 

(4)     The judgment of the remaining judges and members referred to in subsection (1) or (3) is the judgment of the court.

124.    Sitting of tax court not public

 

(1)     The tax court sittings for purposes of hearing an appeal under section 107 are not public.

 

(2)     The president of the tax court may in exceptional circumstances, on request of any person, allow that person or any other person to attend the sitting but may do so only after taking into account any representations that the ‘appellant’ and a senior SARS official, referred to in section 12 appearing in support of the assessment or ‘decision’, wishes to make on the request.

125.  Appearance at hearing of tax court

(1)     A senior SARS official referred to in section 12 may appear at the hearing of an appeal in support of the assessment or ‘decision’.

(2)     ……….

[Subsection (2) deleted by section 26 of Act 13 of 2017 effective on 18 December 2017]

126.    Subpoena of witness to tax court

 

SARS, the ‘appellant’ or the president of a tax court may subpoena any witness in the manner prescribed in the ‘rules’, whether or not that witness resides within the tax court’s area of jurisdiction.

127.    Non-attendance by witness or failure to give evidence

 

(1)     A person subpoenaed under section 126 is liable to the fine or imprisonment specified in subsection (2), if the person without just cause fails to-

 

(a)     give evidence at the hearing of an appeal;

 

(b)     remain in attendance throughout the proceedings unless excused by the president of the tax court; or

 

(c)     produce a document or thing in the person’s possession or under the person’s control according to the subpoena.

 

(2)     The president of the tax court may impose a fine or, in default of payment, imprisonment for a period not exceeding three months, on a person described in subsection (1) upon being satisfied by-

 

(a)     oath or solemn declaration; or

 

(b)     the return of the person by whom the subpoena was served,

 

that the person has been duly subpoenaed and that the person’s reasonable expenses have been paid or offered.

 

(3)     The president of the tax court may, in addition to imposing a fine or imprisonment under subsection (2), issue a warrant for the person to be apprehended and brought to give evidence or to produce the document or thing in accordance with the subpoena.

 

(4)     A fine imposed under subsection (2) is enforceable as if it were a penalty imposed by a High Court in similar circumstances and any laws applicable in respect of a penalty imposed by a High Court apply with the necessary changes in respect of the fine.

 

(5)     The president of the tax court may, on good cause shown, remit the whole or any part of the fine or imprisonment imposed under subsection (2).

 

(6)     The president of the tax court may order the costs of a postponement or adjournment resulting from the default of a witness, or a portion of the costs, to be paid out of a fine imposed under subsection (2).

128.    Contempt of tax court

 

(1)     If, during the sitting of a tax court, a person-

 

(a)     wilfully insults a judge or member of the tax court;

 

(b)     wilfully interrupts the tax court proceedings; or

 

(c)     otherwise misbehaves in the place where the hearing is held,

 

the president of a tax court may impose upon that person a fine or, in default of payment, imprisonment for a period not exceeding three months.

 

(2)     An order made under subsection (1) must be executed as if it were an order made by a Magistrate’s Court under similar circumstances, and the provisions of a law which apply in respect of such an order made by a Magistrate’s Court apply with the necessary changes in respect of an order made under subsection (1).

129.    Decision by tax court

(1)     The tax court, after hearing the ‘appellant’s’ appeal lodged under section 107 against an assessment or ‘decision’, must decide the matter on the basis that the burden of proof as described in section 102 is upon the taxpayer.

(2)     In the case of an assessment or “decision” under appeal or an application in a procedural matter referred to in section 117(3), the tax court may-

(a)     confirm the assessment or ‘decision’;

(b) order the assessment or ‘decision’ to be altered;

[Paragraph (b) amended by section 19(a) of Act 22 of 2018.]

(c) refer the assessment back to SARS for further examination and assessment; or

[Paragraph (c) amended by section 19(b) of Act 22 of 2018.]

(d) make an appropriate order in a procedural matter.

[Subsection (2) amended by section 52(a) of Act 39 of 2013 effective on 1 October, 2012. Paragraph (d) added by section 19(c) of Act 22 of 2018.]

(3)     In the case of an appeal against an understatement penalty imposed by SARS under a tax Act, the tax court must decide the matter on the basis that the burden of proof is upon SARS and may reduce, confirm or increase the understatement penalty.

(4)     If SARS alters an assessment as a result of a referral under subsection (2)(c), the assessment is subject to objection and appeal.

(5)     Unless a tax court otherwise directs, a decision by the tax court in a test case designated under section 106(6) is determinative of the issues in an objection or appeal stayed by reason of the test case under section 106(6)(b) to the extent determined under the “rules”.

130.    Order for costs by tax court

 

(1)     The tax court may, in dealing with an appeal under this Chapter and on application by an aggrieved party, grant an order for costs in favour of the party, if-

 

(a)     the SARS grounds of assessment or ‘decision’ are held to be unreasonable;

 

(b)     the ‘appellant’s’ grounds of appeal are held to be unreasonable;

 

(c)     the tax board’s decision is substantially confirmed;

 

(d)     the hearing of the appeal is postponed at the request of the other party; or

 

(e)     the appeal is withdrawn or conceded by the other party after the ‘registrar’ allocates a date of hearing.

 

(2)     The costs awarded by the tax court under this section must be determined in accordance with the fees prescribed by the rules of the High Court.

 

(3)     The tax court may make an order as to costs provided for in the “rules” in-

 

(a)     a test case designated under section 106(5); or

 

(b)     an interlocutory application or an application in a procedural matter referred to in section 117(3).

131.    Registrar to notify parties of judgment of tax court

 

The ‘registrar’ must notify the ‘appellant’ and SARS of the court’s decision within 21 business days of the date of the delivery of the written decision.

132.    Publication of judgment of tax court

 

A judgment of the tax court dealing with an appeal under this Chapter must be published for general information and, unless the sitting of the tax court was public under the circumstances referred to in section 124(2), in a form that does not reveal the ‘appellant’s’ identity.

Part E

Appeal against tax court decision

133.    Appeal against decision of tax court

 

(1)     The taxpayer or SARS may in the manner provided for in this Act appeal against a decision of the tax court under sections 129 and 130.

 

(2)     An appeal against a decision of the tax court lies-

 

(a)     to the full bench of the Provincial Division of the High Court which has jurisdiction in the area in which the tax court sitting is held; or

 

(b)     to the Supreme Court of Appeal, without an intermediate appeal to the Provincial Division, if-

 

(i)      the president of the tax court has granted leave under section 135; or

 

(ii)     the appeal was heard by the tax court constituted under section 118(5).

134.    Notice of intention to appeal tax court decision

(1)     A party who intends to lodge an appeal against a decision of the tax court (hereinafter in this Part referred to as the appellant) must, within 21 business days after the date of the notice by the ‘registrar’ notifying the parties of the tax court’s decision under section 131, or within  a further period as the president of the tax court may on good cause shown allow, lodge with the ‘registrar’ and serve upon the opposite party or the opposite party’s legal practitioner or agent, a notice of intention to appeal against the decision.

[Subsection (1) substituted by section 36 of Act 33 of 2019]

(2)     A notice of intention to appeal must state-

(a)     in which division of the High Court the appellant wishes the appeal to be heard;

(b)     whether the whole or only part of the judgment is to be appealed against (if in part only, which part), and the grounds of the intended appeal, indicating the findings of fact or rulings of law to be appealed against; and

(c)     whether the appellant requires a transcript of the evidence given at the tax court’s hearing of the case in order to prepare the record on appeal (or if only a part of the evidence is required, which part).

(3)     If the appellant is the taxpayer and requires a-

(a)     transcript of the evidence or a part thereof from the ‘registrar’, the appellant must pay the fees prescribed by the Commissioner by public notice; or

(b)     copy of the recording of the evidence or a part thereof from the ‘registrar’ for purposes of private transcription, the appellant must pay the fees prescribed by the Commissioner in the public notice.

(4)     A fee paid under subsection (3) constitutes funds of SARS within the meaning of section 24 of the SARS Act.

135.    Leave to appeal to Supreme Court of Appeal against tax court decision

(1)     If an intending appellant wishes to appeal against a decision of the tax court to the Supreme Court of Appeal, the ‘registrar’ must submit the notice of intention to appeal lodged under section 134(1) to the president of the tax court, who must make an order granting or refusing leave to appeal having regard to the grounds of the intended appeal as indicated in the notice.

(2)     If the president of the tax court cannot act in that capacity or it is inconvenient for the president to act in that capacity for purposes of this section, the Judge-President of the relevant Division of the High Court may nominate and second another judge or acting judge to act as president of the tax court for that purpose.

(3)     Subject to leave to appeal to the Supreme Court of Appeal in terms of section 17 of the Superior Courts Act, 2013 (Act No. 10 of 2013), an order made by the president of the tax court under subsection (1) is final.

[Subsection (3) substituted by section 54 of Act 23 of 2015 effective on 8 January 2016]

136.    Failure to lodge notice of intention to appeal tax court decision

 

(1)     A person entitled to appeal against a decision of the tax court, who has not lodged a notice of intention to appeal within the time and in the manner required by section 134, abandons, subject to any right to note a cross appeal, the right of appeal against the decision.

 

(2)     A person who under section 134 lodged a notice of intention to appeal against a decision of the tax court but who has subsequently withdrawn the notice, abandons the right to note an appeal or cross-appeal against the decision.

137.    Notice by registrar of period for appeal of tax court decision

 

(1)     After the expiry of the time allowed under section 134(1) for the lodging of a notice of intention to appeal, the ‘registrar’ must-

 

(a)     give notice to a person who has lodged a notice of intention to appeal which has not been withdrawn, that if the person decides to appeal, the appeal must be noted within 21 business days after the date of the ‘registrar’s’ notice; and

 

(b)     supply to the person referred to in paragraph (a) a certified copy of an order that the president of the tax court made under section 135 which is the subject of the intended appeal.

 

(2)     The ‘registrar’ may not give notice under subsection (1)(a) until the order has been made or the transcript has been completed if-

 

(a)     it appears that the president of the tax court will make an order under section 135; or

 

(b)     an intending appellant requires a transcript of evidence given at the hearing of the case by the tax court as envisaged in section 134(2)(c).

 

(3)     If the opposite party is not also an intending appellant in the same case, the ‘registrar’ must provide to the opposite party copies of the notice and any order referred to in subsection (1)(a) and (b).

138.    Notice of appeal to Supreme Court of Appeal against tax court decision

 

(1)     If a person has-

 

(a)     appealed to the Supreme Court of Appeal from a court established under section 118(5);

 

(b)     been granted leave to appeal to the Supreme Court of Appeal under section 135; or

 

(c)     successfully petitioned to the Supreme Court of Appeal for leave to appeal,

 

the appeal which a party must note against a decision given in the relevant case must be noted to that Court.

 

(2)     If the notice of intention to appeal was noted to the High Court or leave to appeal to the Supreme Court of Appeal has been refused under section 135, the party who lodged the notice of intention to appeal must note an appeal to the appropriate Provincial Division of the High Court.

 

(3)     The notice of appeal must be lodged within the period referred to in section 137(1)(a) or within a longer period as may be allowed under the rules of the court to which the appeal is noted.

 

(4)     A notice of appeal must be in accordance with the requirements in the rules of the relevant higher court.

139.    Notice of cross-appeal of tax court decision

(1)     A cross­appeal against a decision of the tax court in a case in which an appeal has been lodged under section 138, must be noted by lodging a written notice of cross­ appeal with the ‘registrar’, serving it upon the opposite party or the opposite party’s legal practitioner and lodging it with the registrar of the court to which the cross­appeal is noted.

[Subsection (1) substituted by section 37 of Act 33 of 2019]

(2)     The notice of cross-appeal must be lodged within 21 business days after the date the appeal is noted under section 138 or within a longer period as may be allowed under the rules of the court to which the cross-appeal is noted.

(3)     A notice of cross-appeal must state-

(a)     whether the whole or only part of the judgment is appealed against, and if a part, which part;

(b)     the grounds of cross-appeal specifying the findings of fact or rulings of law appealed against; and

(c)     any further particulars that may be required under the rules of the court to which the cross-appeal is noted.

140.    Record of appeal of tax court decision

 

(1)     The record lodged with a court to which an appeal against a decision of a tax court is noted, includes all documents placed before the tax court under the ‘rules’.

 

(2)     Documents submitted in the tax court which do not relate to the matters in dispute in the appeal may be excluded from the record with the consent of the parties.

141.    Abandonment of judgment

(1)     A party may, by notice in writing, lodged with the ‘registrar’ and the opposite party or the opposite party’s legal practitioner or agent, abandon the whole or a part of a judgment in the party’s favour.

[Subsection (1) substituted by section 38 of Act 33 of 2019]

(2)     A notice of abandonment becomes part of the record.

Part F

Settlement of dispute

142.    Definitions

 

In this Part, unless the context indicates otherwise, the following terms, if in single quotation marks, have the following meanings:

‘dispute’ means a disagreement on the interpretation of either the relevant facts involved or the law applicable thereto, or of both the facts and the law, which arises pursuant to the issue of an assessment or the making of a ‘decision’; and

‘settle’ means to resolve a ‘dispute’ by compromising a disputed liability, otherwise than by way of either SARS or the person concerned accepting the other party’s interpretation of the facts or the law applicable to those facts or of both the facts and the law, and ‘settlement’ must be construed accordingly.

143.    Purpose of Part

 

(1)     A basic principle in tax law is that it is the duty of SARS to assess and collect tax according to the laws enacted by Parliament and not to forgo a tax which is properly chargeable and payable.

 

(2)     Circumstances may require that the strictness and rigidity of this basic principle be tempered, if such flexibility is to the best advantage of the State.

 

(3)     The purpose of this Part is to prescribe the circumstances in which it is appropriate for SARS to temper the basic principle and ‘settle’ a ‘dispute’.

144.    Initiation of settlement procedure

 

(1)     Either party to a ‘dispute’ may initiate a ‘settlement’ procedure by communication with the other party.

 

(2)     Neither SARS nor the taxpayer has the right to require the other party to engage in a ‘settlement’ procedure.

145.    Circumstances where settlement is inappropriate

 

It is inappropriate and not to the best advantage of the State to ‘settle’ a ‘dispute’ if in the opinion of SARS-

 

(a)     no circumstances envisaged in section 146 exist and-

 

(i)      the action by the person concerned that relates to the ‘dispute’ constitutes intentional tax evasion or fraud;

 

(ii)     the ‘settlement’ would be contrary to the law or a practice generally prevailing and no exceptional circumstances exist to justify a departure from the law or practice; or

 

(iii)    the person concerned has not complied with the provisions of a tax Act and the non-compliance is of a serious nature;

 

(b)     it is in the public interest to have judicial clarification of the issue and the case is appropriate for this purpose; or

 

(c)     the pursuit of the matter through the courts will significantly promote taxpayer compliance with a tax Act and the case is suitable for this purpose.

146.    Circumstances where settlement is appropriate

The Commissioner may, if it is to the best advantage of the state, ‘settle’ a ‘dispute’, in whole or in part, on a basis that is fair and equitable to both the person concerned and to SARS, having regard to-

(a)     whether the ‘settlement’ would be in the interest of good management of the tax system, overall fairness, and the best use of SARS’ resources;

(b)     SARS’ cost of litigation in comparison to the possible benefits with reference to the prospects of success in court;

[Paragraph (b) substituted by section 55 of Act 23 of 2015 effective on 8 January 2016]

(c)     whether there are any-

(i)      complex factual issues in contention; or

(ii)     evidentiary difficulties,

which are sufficient to make the case problematic in outcome or unsuitable for resolution through the alternative ‘dispute’ resolution procedures or the courts;

(d)     a situation in which a participant or a group of participants in a tax avoidance arrangement has accepted SARS’ position in the ‘dispute’, in which case the ‘settlement’ may be negotiated in an appropriate manner required to unwind existing structures and arrangements; or

(e)     whether ‘settlement’ of the ‘dispute’ is a cost-effective way to promote compliance with a tax Act by the person concerned or a group of taxpayers.

147.    Procedure for settlement

 

(1)     A person participating in a ‘settlement’ procedure must disclose all relevant facts during the discussion phase of the process of ‘settling’ a ‘dispute’.

 

(2)     A ‘settlement’ is conditional upon full disclosure of material facts known to the person concerned at the time of ‘settlement’.

 

(3)     A dispute ‘settled’ in whole or in part must be evidenced by an agreement in writing between the parties in the prescribed format and must include details on-

 

(a)     how each particular issue is ‘settled’;

 

(b)     relevant undertakings by the parties;

 

(c)     treatment of the issue in future years;

 

(d)     withdrawal of objections and appeals; and

 

(e)     arrangements for payment.

 

(4)     The agreement must be signed by a senior SARS official.

 

(5)     SARS must, if the ‘dispute’ is not ultimately ‘settled’, explain to the person concerned the further rights of objection and appeal.

 

(6)     The agreement and terms of a ‘settlement’ agreement must remain confidential, unless their disclosure is authorised by law or SARS and the person concerned agree otherwise.

148.    Finality of settlement agreement

 

(1)     The settlement agreement represents the final agreed position between the parties and is in full and final ‘settlement’ of all or the specified aspects of the ‘dispute’ in question between the parties.

 

(2)     SARS must adhere to the terms of the agreement, unless material facts were not disclosed as required by section 147(1) or there was fraud or misrepresentation of the facts.

 

(3)     If the person concerned fails to pay the amount due pursuant to the agreement or otherwise fails to adhere to the agreement, a senior SARS official may-

 

(a)     regard the agreement as void and proceed with the matter in respect of the original disputed amount; or

 

(b)     enforce collection of the ‘settlement’ amount under the collection provisions of this Act in full and final ‘settlement’ of the ‘dispute’.