Under Section 9 of the Tax Administration Act (28/2011), a decision made by a South African Revenue Services (SARS) official and a notice to a specific person issued by SARS – excluding a decision given effect to in an assessment or notice of assessment – are regarded as made by a SARS official, authorised to do so or duly issued by SARS, until proven to the contrary. Further, Section 9 makes provision for such a decision to be withdrawn or amended by the SARS official, a SARS official to whom he or she reports or a senior SARS official, at the request of the relevant person.
Section 104(2) of the act states that the following decisions may be opposed and appealed against in the same manner as an assessment:
- a decision under Section 104(4) of the act not to extend the period for lodging an objection;
- a decision under Section 107(2) of the act not to extend the period for lodging an appeal; and
- any other appeal that may be opposed or appealed against under a tax act.
Therefore, it appears that whereas Section 104 of the act defines the decisions against which a taxpayer may object and appeal, Section 9 deals with situations where a decision is made by a SARS official but is not subject to objection and appeal.
The Memorandum on the Objects of the Draft Tax Administration Laws Amendment Bill 2017 noted with regard to decisions that are not subject to objection and appeal that a taxpayer could be disadvantaged by lack of access to other internal remedies that may provide relief. The memorandum notes that in such circumstances, the taxpayer's only remedy would be to take the matter on review before the High Court under the Promotion of Administrative Justice Act (2/2000). However, High Court litigation of this nature can be an expensive exercise.
The memorandum states that decisions by SARS are generally subject to the internal remedy available under Section 9 of the act, under which specified SARS officials may reconsider the decisions. However, decisions that are given effect to in an assessment or notice of assessment are excluded, since assessments generally have the separate remedy of objection and appeal. During the public comment process on the 2016 legislation, the government identified a situation where a decision given effect to in a notice of assessment is not subject to objection and appeal. In such circumstances, and based on Sections 9 and 104 of the act, it would mean that neither the internal remedy in Section 9 nor the right to objection and appeal in Section 104 would be available to a taxpayer in certain circumstances.
Although it is not entirely clear when a decision will be given effect to in an assessment or notice of assessment as envisaged in Section 9, one such example might be where a taxpayer applies for the suspension of payment of tax under Section 164 of the act. SARS's decision to reject an application brought under Section 164 will most likely not be given effect to in an assessment or notice of assessment.
In light of the above, it is proposed in the memorandum that such a decision – which is given effect to in a notice of assessment but is not subject to objection and appeal – be subject to the remedy under Section 9 of the act. This would afford the taxpayer an internal remedy before exercising the external remedy of a review application to the High Court under the act.
It always appears to be a positive development where legislation is amended to make it easier and cheaper for a taxpayer to exercise its rights. However, such an amendment will only have the desired effect if the SARS officials who are approached in terms of this section exercise their powers in a reasonable manner.
For further information on this topic please contact Louis Botha at Cliffe Dekker Hofmeyr by telephone (+27 115 621 000) or email ([email protected]). The Cliffe Dekker Hofmeyr website can be accessed at www.cliffedekkerhofmeyr.com.
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