A taxpayer had approximately R70 000 deducted by SARS from his bank account. After conducting a review on his tax profile, it was found that there was an issue with his 2013 tax return which was submitted. SARS did not allow certain business expenses with no clear reason as to why it was not being allowed. As per the taxpayer, he advised that his previous practitioner just left without any word. Is there any concession that can be granted to correct this return, as this return is over 3 years now since the last assessment letter was issued? Please advise as to the process that can be taken.
Important:
This answer is based on tax law year ending 28 February 2021.
Answer:
We accept that the date of the additional assessment is during 2013 (possibly 2014). The rules doesn’t provide for an appeal to be delivered outside these periods. Condonation for late delivery, due to exceptional circumstances, may well have been granted, but that request should have been made before the end of the three year period (as you correctly pointed out).
We don’t know what is meant with “the problem … on 2013 tax return … was … also disputed”. If this means that an objection was made and disallowed, and no appeal was lodged, that the dispute is dead. If an appeal was made one must find out what the status of that is (unless the alternate dispute proceedings were opted for).
Based on the information provided, the only option available to the taxpayer may well be to do a section 98 request. It doesn’t have the three-year limit, but we fear it may not be available to the taxpayer. Section 98(1) reads as follows: 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
(c) was issued as a result of an incorrect payment allocation.
Section 93(1) may also be an option. It allows for SARS to may make a reduced assessment if –
(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.
ut, it may also not be applicable here or available.
You state that SARS erred here. In any event, the taxpayer bears the onus to prove that SARS made a processing error. So, if the taxpayer can prove that the error by SARS is a processing error, a request can be (or should be) made under section 93(1)(e) of the Tax Administration Act.
Section 93(1)(d) also has a three-year limit and can’t be used to correct the capital allowances not claimed. The Tax Ombud can actually not deal with this either.