Section 230 (TAA) – Voluntary disclosure agreement

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230.    Voluntary disclosure agreement

 

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

 

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

 

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

 

(c)     the arrangements and dates for payment; and

 

(d)     relevant undertakings by the parties.

Section 229 (TAA) – Voluntary disclosure relief

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229.    Voluntary disclosure relief

Despite the provisions of a tax Act, SARS must, pursuant to the making of a valid voluntary disclosure by the applicant and the conclusion of the voluntary disclosure agreement under section 230–

[Words preceding paragraph (a) substituted by section 67 of Act 23 of 2015 effective on 8 January 2016]

(a)     not pursue criminal prosecution for a tax offence arising from the ‘default’;

(b)     grant the relief in respect of any understatement penalty to the extent referred to in column 5 or 6 of the understatement penalty percentage table in section 223; and

(c)     grant 100 per cent relief in respect of an administrative non-compliance penalty that was or may be imposed under Chapter 15 or a penalty imposed under a tax Act, excluding a penalty imposed under that Chapter or in terms of a tax Act for the late submission of a return.

[Paragraph (c) substituted by section 67 of Act 23 of 2015 effective on 8 January 2016]

Section 227 (TAA) – Requirements for valid voluntary disclosure

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227.    Requirements for valid voluntary disclosure

The requirements for a valid voluntary disclosure are that the disclosure must-

(a)     be voluntary;

(b)     involve a “default” which has not occurred within five years of the disclosure of a similar “default” by the applicant or a person referred to in section 226(3);

[Paragraph (b) substituted by section 66 of Act 23 of 2015 effective on 8 January 2016]

(c)     be full and complete in all material respects;

(d)     involve a behaviour referred to in column 2 of the understatement penalty  percentage table in section 223;

[Paragraph (d) substituted by section 66 of Act 23 of 2015 effective on 8 January 2016]

(e)     not result in a refund due by SARS;

[Paragraph (e) amended by section 22(a) of Act 4 of 2026]

(f)      be made in the prescribed form and manner; and

[Paragraph (f) amended by section 22(b) of Act 4 of 2026]

(g)     not constitute an “underpayment” as defined in section 77Z of the Customs and Excise Act, 1964.

[Paragraph (g) added by section 22(c) of Act 4 of 2026]

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

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

(1)     A person may apply, whether in a personal, representative, withholding or other capacity, for voluntary disclosure relief.

(2)     If the person seeking relief has been given notice of the commencement of an audit or criminal investigation into the affairs of the person, which has not been concluded and is related to the disclosed ‘default’, the disclosure of the ‘default’ is regarded as not being voluntary for purposes of section 227, unless a senior SARS official is of the view, having regard to the circumstances and ambit of the audit or investigation, that-

(a)     ……….

(b)     the ‘default’ in respect of which the person has sought relief would not otherwise have been detected during the audit or investigation; and

(c)     the application would be in the interest of good management of the tax system and the best use of SARS’ resources.

(3)     A person is deemed to have been notified of an audit or criminal investigation, if-

(a)     a representative of the person;

(b)     an officer, shareholder or member of the person, if the person is a company;

(c)     a partner in partnership with the person;

(d)     a trustee or beneficiary of the person, if the person is a trust; or

(e)     a person acting for or on behalf of or as an agent or fiduciary of the person,

has been given notice of the audit or investigation.

[Section 226 amended by section 65 of Act 23 of 2015 and substituted by section 63 of Act 16 of 2016 effective on 19 January 2017]

“Default” definition of section 225 of TAA

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“default” means the submission of inaccurate or incomplete information to SARS, or the failure to submit information or the adoption of a “tax position”, where such submission, non-submission, or adoption resulted in an understatement.

[Definition of “default” substituted by section 64 of Act 23 of 2015 effective on 8 January 2016]

Section 224 (TAA) – Objection and appeal against imposition of understatement penalty

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224.    Objection and appeal against imposition of understatement penalty

 

The imposition of an understatement penalty under section 222 or a decision by SARS not to remit an understatement penalty under section 223(3), is subject to objection and appeal under Chapter 9.

Section 223 (TAA) – Understatement penalty percentage table

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223.    Understatement penalty percentage table

 

(1)     The understatement penalty percentage table is as follows:

 

1

Item

2

Behaviour

3

Standard Case

4

If obstructive, or if it is a ‘repeat case’

5

Voluntary disclosure after notification of audit or criminal investigation

6

Voluntary disclosure before notification of audit or criminal investigation

(i)

‘Substantial under-statement’

10%

20%

5%

0%

(ii)

Reasonable care not taken in completing return

25%

50%

15%

0%

(iii)

No reasonable grounds for ‘tax position’ taken

50%

75%

25%

0%

(iv)

“Impermissible avoidance arrangement”

75%

100%

35%

0%

(v)

Gross negligence

100%

125%

50%

5%

(vi)

Intentional tax evasion

150%

200%

75%

10%

[Subsection (1) substituted by section 76 of Act 39 of 2013 and section 62 of Act 16 of 2016 effective on 19 January 2017]

 

(2)     An understatement penalty for which provision is made under this Chapter is also chargeable in cases where-

 

(a)     an assessment based on an estimation under section 95 is made; or

 

(b)     an assessment agreed upon with the taxpayer under section 95(3) is issued.

 

(3)     SARS must remit a ‘penalty’ imposed for a ‘substantial understatement’ if—

 

(a)     the ‘understatement’ results from a bona fide inadvertent error; or

 

(b)     SARS is satisfied that the taxpayer-

 

(i)      made full disclosure to SARS of the arrangement, as defined in section 34, that gave rise to the prejudice to SARS or the fiscus by no later than the date that the relevant return was due; and

 

(ii)     was in possession of an opinion by an independent registered tax practitioner that-

 

(aa)   was issued by no later than the date that the relevant return was due;

 

(bb)   was based upon full disclosure of the specific facts and circumstances of the arrangement and, in the case of any opinion regarding the applicability of the substance over form doctrine or the anti-avoidance provisions of a tax Act, this requirement cannot be met unless the taxpayer is able to demonstrate that all of the steps in or parts of the arrangement were fully disclosed to the tax practitioner, whether or not the taxpayer was a direct party to the steps or parts in question; and

 

(cc)   confirmed that the taxpayer’s position is more likely than not to be upheld if the matter proceeds to court.

[Subsection (3) amended by section 73 of Act 21 of 2012, by section 76(1)(b) of Act 39 of 2013 and by section 42 of Act 33 of 2019 and substituted by section 21 of Act 4 of 2026]