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More than one way to skin a cat? High Court considers SARS' power to issue reduced assessments
- 26 October 2018
- Tax Administration
- Louis Botha
Important:
This article is based on tax law for the tax year ending 28 February 2019.
Author: Louis Botha
Introduction
Under Section 93 of the Tax Administration Act (28/2011), there are five circumstances under which the South African Revenue Service (SARS) may issue a reduced assessment in order to reduce a person's tax liability. While Section 93 makes it possible to 'skin a cat' (ie, reduce tax liability) in more ways than one, taxpayers should be mindful of the requirements that must be met and the correct process to follow in order to achieve the desired result.
In Rampersadh v Commissioner of the South African Revenue Service ((5493/2017) [2018] ZAKZPHC 36 (27 August 2018)), the KwaZulu-Natal Division of the High Court had to consider the provisions of Section 93 of the act, where the applicant taxpayers lodged a review application. Specifically, the taxpayers requested the High Court to review SARS's decision not to issue reduced assessments under Section 93(1)(d).
This update focuses on the High Court's pronouncements regarding Section 93 and other provisions of the Tax Administration Act but will also briefly discuss the High Court's findings regarding the application of the Promotion of Administrative Justice Act (3/2000) to the facts of the case.
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; 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 in good time and instead of lodging the appeal and requesting condonation for the late filing, the taxpayers submitted three requests under Section 93(1)(d) of the Tax Administration Act, 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, under the Promotion of Administrative Justice Act. 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 internationallawoffice.com.