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More than one way to skin a cat?
- 10 September 2018
- Tax Administration
- Louis Botha
Important:
This article is based on tax law for the tax year ending 28 February 2019.
Author: Louis Botha
More than one way to skin a cat? The High Court considers the power of SARS to issue reduced assessments
In terms of s93 of the Tax Administration Act, No 28 of 2011 (TAA), there are five circumstances under which SARS may issue a reduced assessment, so as to reduce a person’s tax liability. While s93, therefore, makes it possible to “skin a cat”, ie reduce a tax liability, in more ways than one, taxpayers should be mindful of the requirements that need to be met and the correct process to follow, in order to achieve the desired result.
In Rampersadh and Another v Commissioner of the South African Revenue Service and Others (5493/2017) [2018] ZAKZPHC 36 (27 August 2018), the KwaZulu-Natal Division of the High Court had to consider the provisions of s93 of the TAA, where the applicant taxpayers (Taxpayers) lodged a review application. Specifically, the Taxpayers requested the High Court to review SARS’s decision not to issue reduced assessments in terms of s93(1)(d) of the TAA.
We will focus mainly on the High Court’s pronouncements regarding s93 and other provisions of the TAA but will also briefly discuss the High Court’s findings regarding the application of the Promotion of Administrative Justice Act, No 3 of 2000 (PAJA) to the facts of the case.
Facts
The Taxpayers are members of a close corporation, which was audited in respect of its 2011 to 2013 years of assessment. The Taxpayers had loan accounts in the close corporation and pursuant to these loan accounts, the audit was extended to the Taxpayers. The Taxpayers made representations to SARS and provided it with revised loan accounts. SARS issued revised assessments on 23 March 2015, to which the Taxpayers objected on 15 May 2015 and after SARS then requested further information arising from the loan accounts, the Taxpayers produced further revised loan accounts, followed by another objection on 20 July 2015. In all, the Taxpayers submitted three different versions of the loan accounts. After SARS disallowed some of the objections on 1 December 2015, the Taxpayers were told that they could appeal SARS’s decision within 30 (business) days.
The Taxpayers failed to appeal SARS’s decision timeously and instead of lodging the appeal and requesting condonation for the late filing, the Taxpayers submitted three requests under s93(1)(d) of the TAA, that the revised assessments issued by SARS, be reduced. The requests were dated 13 July 2016, 19 October 2016 and 17 January 2017. After SARS refused all three requests, the Taxpayers brought this review application, to review some of SARS’s decisions, in terms of PAJA. Prior to the hearing, the Taxpayers had amended the relief sought and at the hearing, the Taxpayers indicated that the only relief sought was against SARS’s decision to refuse the third request, which decision SARS handed down on 10 March 2017.
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This article first appeared on cliffedekkerhofmeyr.com.