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Status of SARS interpretation notes
- 04 May 2018
- Tax Administration
- Ben Strauss
Important:
This article is based on tax law for the tax year ending 28 February 2019.
Author: Ben Strauss
From time to time, the South African Revenue Service (SARS) issues interpretation notes. According to the SARS website (www.sars.gov.za), interpretation notes “are intended to provide guidelines to stakeholders (both internal and external) on the interpretation and application of the provisions of the legislation administered by the Commissioner”.
To date, SARS has issued more than 90 interpretation notes, some of which have been withdrawn.
Previously, SARS issued practice notes. Most of the practice notes have been withdrawn. However, some important practice notes are still extant. Notably, for instance, Practice Note 31 dated 3 October 1994 is still around. Put simply, it states that, despite the fact that a taxpayer is not a moneylender by trade, the taxpayer may deduct interest incurred on borrowed money against interest incurred on money it has lent.
It appears as if SARS does not have specific powers to issue interpretation notes. The only references to the term ‘”interpretation note’ in the Tax Administration Act, No 28 of 2011 (TAA) are the following:
- Section 89(3) of the TAA states that a “binding general ruling” may be issued as an interpretation note.
- The term “official publication” is defined in s1 of the TAA to mean “a binding general ruling, interpretation note, practice note or public notice issued by a senior SARS official or the Commissioner”.
However, interpretation notes do have important statutory implications for taxpayers. A “practice generally prevailing” is “a practice set out in an official publication regarding the application or interpretation of a tax Act” (s1 of the TAA as read with s5(1) of the TAA).
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This article first appeared on cliffedekkerhofmeyr.com.