SARS has been asking for supporting documents for my client for the 2015 and 2016 tax years. The documents were all sent but SARS kept coming up with something extra to ask even though the documents were in the previous uploads. They started deducting fun
Important:
This answer is based on tax law year ending 28 February 2017.
Answer:
We start with the tax debt. The relevant law is found in the Tax Administration Act.
We accept, for purposes of the guidance that follows, that no previous request to suspend the debt due was made and there is no instalment agreement.
The law enables SARS to collect the tax debt even if it is under dispute and the vendor would only be able to prevent that if a suspension of debt request was made. In terms of the Tax Administration Act an objection doesn’t suspend the obligation to make payment – the vendor must request suspension. See section 164.
Section 179(1) allows a senior SARS official to authorise the issue of a notice to a person who holds or owes or will hold or owe any money, including a pension, salary, wage or other remuneration, for or to a taxpayer, requiring the person to pay the money to SARS in satisfaction of the taxpayer’s outstanding tax debt. This would include the taxpayer’s bank.
SARS may only issue this notice after delivery to the tax debtor of a final demand for payment which must be delivered at the latest 10 business days before the issue of the notice, which demand must set out the recovery steps that SARS may take if the tax debt is not paid and the available debt relief mechanisms under this Act, including, in respect of recovery steps that may be taken under this section—
(a) if the tax debtor is a natural person, that the tax debtor may within five business days of receiving the demand apply to SARS for a reduction of the amount to be paid to SARS, based on the basic living expenses of the tax debtor and his or her dependants; and
(b) if the tax debtor is not a natural person, that the tax debtor may within five business days of receiving the demand apply to SARS for a reduction of the amount to be paid to SARS, based on serious financial hardship.
We don’t have enough information to comment on the invalid objections. If the new objection (the second one) also didn’t comply with rule 7(2), SARS would be entitled to treat it as invalid. If the last objection wasn’t delivered within the 20-days, the taxpayer may thereafter only submit a new and valid objection together with an application to SARS for an extension of the period for objection under section 104(4).
The current practice generally prevailing is that a senior SARS official may extend the date for lodging an appeal by –
• 21 business days, if satisfied that reasonable grounds exist for the delay; or
• up to 45 business days, if exceptional circumstances exist that justify an extension beyond 21 business days.
It appears that the objection was made after the 30 plus 21 days. According to that practice “each case must be considered according to its own merits in order to determine whether the reason for requesting an extension of more than 21 business days is exceptional and therefore justifies the requested extension.”
SARS believes that, “although not directly relevant to section 104(5), section 218 nevertheless provides an indication of the type of things which, taking into account the particular facts and circumstances, may constitute exceptional circumstances for purposes of section 104(5). For example, exceptional circumstances may include –
• a natural or human-made disaster;
• a civil disturbance or disruption in services;
• a serious illness or accident; and
• serious emotional or mental distress.
The mere existence of one of these factors is not sufficient. The taxpayer would need to demonstrate that the factor was the reason for the delay.”
It is on the strength of that that SARS didn’t accept the reasons provided. This in itself, constitutes a decision by SARS and can be objected to.
The problem is that the tax court recently agreed with SARS. The following is an extract from Judge Satchwell’s decision:
“The lapse of time from mid December 2014 to June 2015 is not satisfactorily explained – let alone sufficiently to discharge the onus of proving ‘exceptional circumstances’.”