Page 580 - Juta's Indirect Tax

IN 15 (4) TAX ADMINISTRATION ACT: INTERPRETATION NOTES IN 15 (4)
for the delay in lodging the objection. The extension may be granted after the 30 business day period has elapsed or alternatively, taxpayers can request an extension before the expiry date of that period if aware that the deadline will not be met. The extension will run from the expiry of the 30 business days stipulated in the rules irrespective of when it is requested. A taxpayer may, for example, request an extension if that taxpayer was not in a position to fully formulate and substantiate the grounds of objection within 30 business days because of outstanding information or documentation which will only be received after the expiry of that period.
The TA Act does not prescribe the manner in which the discretion to extend the period for lodging an objection under section 104(4) should be exercised. The senior SARS of cial’s decision must comply with the requirements for administrative justice which are contained in section 33 of the Constitution of the Republic of South Africa* read with the Promotion of Administrative Justice Act.† In particular, the senior SARS of cial’s decision must be reasonable. Essentially, for a decision to be reasonable, the senior SARS of cial is required to consider all relevant matters. In considering the limitation of constitutional rights, the Constitutional Court held that there is no absolute standard which can be laid down for determining reasonableness and necessity and that, although principles can be established, the application of those principles to particular circumstances can only be done on a case-by-case basis.‡
For the purpose of considering an extension to the period for lodging an objection, the senior SARS of cial is required to consider all relevant matters. These would include –
• the reasons for the delay;
• the length of the delay;
• the prospects of success on the merits; and
• any other relevant factor, for example, SARS’s interest in the determination of the nal tax liability in view of the
broader public interest relating to budgeting and scal planning.
Despite these factors being relevant to the exercise of a discretion, they are neither all-embracing nor individually decisive and each case must be considered on its own merits.
4.2 Factors relevant to the exercise of the senior SARS of cial’s discretion in considering a request to extend the period in which to lodge an objection
4.2.1 The reasons for the delay
A request for an extension of the period in which to lodge an objection must state the actual circumstances and the reasons for failure to lodge the objection within the time limit in full. Without detailed reasons being furnished the senior SARS of cial will not be in a position to exercise the discretion to extend the period in which to lodge the objection.
Generally speaking, the requirement of reasonable grounds will be met if the delay was caused as a result of circumstances beyond the taxpayer’s control. Such circumstances may include, for example, a delay as a result of illness of the taxpayer or the taxpayer’s representative, the taxpayer being abroad at the time of the issue of the notice of assessment or postal delays. The taxpayer will, however, still be required to satisfy the senior SARS of cial that under the speci c circumstances the objection was lodged as soon as possible.
The following are examples of situations which will not be regarded as a suf cient reason for failure to comply with the requirements of the TA Act in submitting an objection on time:
• Ignorance of the law with regard to the period within which an objection must be lodged.
• Failure without good cause by the taxpayer’s tax practitioner to lodge the objection on time. The use of a tax practitioner
does not absolve the taxpayer from the responsibility of complying with the TA Act.§
4.2.2 The length of the delay
In addition to the reasons for the delay (see 4.2.1), the taxpayer must justify the period of the delay and the extension sought. The longer the extension sought the more likely it is that the justi cation and supporting evidence will need to be more detailed. The extension of the period for lodging an objection is not a right and it is therefore incumbent upon the taxpayer to substantiate the request for the extension.
4.2.3 The prospects of success on the merits
A senior SARS of cial will take into consideration the fact that an objection may have a good prospect of success. However, the strength of a taxpayer’s case and the validity of the grounds of objection are not decisive factors and do not detract from the taxpayer’s obligation to furnish acceptable reasons for the delay in lodging an objection. In ITC 1777, Galgut DJP stated the following:¶
‘In an application to set aside a default judgment or for condonation of a party’s failure to comply with a rule of court in time, our law requires the party concerned to show ‘good cause’ for his failure to take the necessary step timeously. To show good cause he must not only explain the reason for his failure. He must also show that he has a reasonable prospect of success on the merits of the litigation at issue; he must have what is called a prima facie case ... In these regards the reported cases establish the approach that the stronger the party’s case is on his prospects of success, the more lenient the court will be in regard to the excuses for his default; and conversely, the weaker his explanation for his default, the stronger his prospects of success on the merits, in the abovesaid sense, must be.’
* No. 108 of 1996.
† No. 3 of 2000.
‡ S v Makwanyane 1995 6 BCLR 665 (CC), 1995 (3) SA 391(CC) at 436. § Section 153(3).
¶ (2004) 66 SATC 328 (N) at 333.
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