In 2006, SARS assessed a taxpayer for a lump sum he received in 2007. The IRP5 also states that the amount was received in 2007, and the IRP5 also states that the PAYE of R17 000 was paid. In 2007, the lump sum is not stated at all in the tax return. The taxpayer therefore never received credit for the R17 000 PAYE paid on the lump sum. The taxpayer attempted to do a request for correction for 2006, but the message received on SARS e-filing states: “Please note that SARS will not process the return, there is a finalised tax directive processed but no lump sum amount is declared on the return. Please contact the Fund administrator/Employer to rectify the error and submit the rectified return.” Please advise as to how the taxpayer can resolve this matter, as the time to object has long passed.


Important:

This answer is based on tax law year ending 28 February 2020.

Answer:

From the information provided it is clear that this is more than three years after the date of the original assessment and SARS would not be able to make or issue ‘revised’ assessments – see section 99 of the Tax Administration Act. Section 93(1)(d) also has a three year limit and can’t be used to correct this. Section 93(1) of the Tax Administration Act may be the only option here. 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. The taxpayer bears the onus to prove that section 93(1)(e) applies.

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