A taxpayer has lodged an appeal against his 2018 ITA34 additional assessment including suspension of payment DISP01. The appeal has been acknowledged but no date has been set yet. SARS has responded to the DISP01 with the following: “Declined due to the following reason – Demonstrated history of non-compliance”. Where can a taxpayer find the exact definition of “history of non-compliance” per SARS?
Important:
This answer is based on tax law year ending 28 February 2021.
Answer:
We are not sure what you mean when you say that “SARS has responded to the DISP01 with the following: declined due to the following reason - Demonstrated history of non-compliance.” We suspect that it is a response to the request to suspend payment and is the a reference to section 164(3)(b). In terms of that provision, a SARS official, considering the section 164(2) request, must have regard to “the compliance history of the taxpayer with SARS”. Under section 210(2), non-compliance is failure to comply with an obligation that is imposed by or under a tax Act. Section 256(3), defines in a way what compliance is (for purposes of taxpayer’s tax compliance status). It reads as follows: The taxpayer’s tax compliance status may only be indicated as compliant if the taxpayer— (a) is registered for tax as required in terms of a tax Act; (b) does not have any outstanding tax debt, excluding a tax debt— (i) contemplated in section 167 or 204; or (ii) that has been suspended under section 164; or (iii) that may not be recovered for the period specified in section 164(6); or (iv) that does not exceed the amount referred to in section 169(4) or any higher amount that the Commissioner may determine by public notice; and (c) does not have any outstanding return, unless an arrangement with SARS has been made for the submission of the return.
Relevant law: Step 1: s 34 of the VAT Act No. 89 of 1991 (“VAT”) which has been repealed and replaced by s 161 of the TAA. Step 2: s 161(1)(c) of the Tax Administration Act No.28 of 2011 (“TTA”). Step 3: s 208 of the TAA. The first incidence is defined. Step 4: s 221 of the TAA. The repeat case is defined. Other resources: I can find no tax court cases where this expression has been ventilated Comment on member’s query: An interesting proposition. The tax industry often uses terms which are understood by the fraternity without being defined in law. We hope this guidance is helpful. Nothing stops you from asking SARS to spell out what they mean as the term is not defined in the TAA.