Page 1108 - SAIT Compendium 2016 Volume2

MEMORANDUM ON THE OBJECTS OF TAX ADMINISTRATION LAWS AMENDMENT BILL, 2015
2.44 Tax Administration Act, 2011: Amendment of section 49
This amendment allows SARS to request a person being questioned during a eld audit to provide information under oath or solemn declaration, similar to SARS’s power to do so under section 46(7). The obtaining and use of information under oath or solemn declaration is common practice in most civil and criminal investigations, including in comparable jurisdictions (see, for example, the Australian Tax Of ce’s audit manual which provides for obtaining information in this manner). Providing information under oath or solemn declaration also protects a person by adding evidentiary value to what was said and protects the person from allegations that he or she provided different information. In the context of criminal matters, the person is protected under section 44, which obliges SARS to conduct the investigation with due recognition of the taxpayer’s constitutional rights as a suspect in a criminal investigation.
2.45 Tax Administration Act, 2011: Amendment of section 51
The proposed amendments will allow SARS to use inquiry proceedings under Part C of the Tax Administration Act to trace assets that may be executed against to satisfy an outstanding tax debt without having to rst sequestrate or liquidate a taxpayer and then follow the insolvency enquiry route, which generally takes a very long time to conclude and is not under the control of SARS. The amendment furthermore corrects an incorrect cross-reference.
2.46 Tax Administration Act, 2011: Amendment of section 68
Section 21 of the Customs Control Act, 2014, is broadened to include a similar provision to that of section 68(1)(g), hence the reference to the ‘Customs and Excise Act’ in section 68 can be deleted.
2.47 Tax Administration Act, 2011: Amendment of section 69
The proposed amendment provides that taxpayer information obtained by a current or former SARS of cial in the course of performance of duties under a tax Act may be disclosed by that of cial for purposes of the administration of customs legislation. See also paragraph 2.33 ad para (a).
2.48 Tax Administration Act, 2011: Amendment of section 70 The proposed amendment is a technical correction.
2.49 Tax Administration Act, 2011: Amendment of section 93
Section 93(1)(d) of the Tax Administration Act was inserted to allow taxpayers a less formal mechanism to request corrections to their returns and so reduced assessments, without having to follow the objection and appeal route to do so. However, taxpayers have attempted to use these requests for correction to raise substantive issues that would more properly be the subject of an objection under section 104, so as to bypass the timeframes and procedures for an objection. Furthermore, taxpayers and unregistered tax practitioners have also attempted to use the requests for correction to obtain fraudulent refunds for multiple years. For these reasons, the wording has been amended to provide that SARS must be satis ed that there is a ‘readily apparent’ error to clarify the nature of the errors anticipated here. The purpose of section 98 was a prescription override remedy for the taxpayer in speci ed circumstances — see full discussion in paragraph 2.50. However, the outcome of exercising the remedy will not necessarily result in a withdrawal of the assessment but rather the issue of a reduced assessment. Hence this remedy should not have been included in section 98 but in the section that provides for reduced assessments i.e. section 93. The remedy provided under section 98(1)(d) has now been included under the taxpayer’s actual remedy in the case of readily apparent errors i.e. to request a reduce assessment (see the proposed new section 93(1)(e)). In addition, section 99(2) was amended to allow for the circumstances in the new section 93(1)(e) to constitute an exception to prescription, hence prescription does not apply. In addition section 99(2)(d) (iii) was also amended to cater for the circumstances where SARS becomes aware of the problem but is unable to issue the reduced assessment before expiry of the period for the issue of reduced assessments under section 99(1).
2.50 Tax Administration Act, 2011: Amendment of section 98
Finality in a tax assessment is important for both taxpayers and SARS, which is why there is a period within which a SARS may revise an assessment to the bene t or otherwise of a taxpayer. This period, which is commonly known as the prescription period, is either three years for taxes assessed by SARS or ve years for taxes that are self-assessed by taxpayers. Limited exceptions to prescription apply where fraud, misrepresentation or material non-disclosure exists in a tax return, in order to give effect to the outcome of a dispute resolution process—such as an objection or appeal to a court. The original purpose of the insertion of section 98(1)(d) was to address problems with erroneous assessments which are often only discovered after all prescription periods and remedies have expired and it becomes apparent that it would be inequitable to recover the tax due under such assessments. An example would be that of a retiree who was assessed in error based on incorrect information supplied by an employer or a retirement fund, who fell below the tax threshold after retirement and thus ceased to submit returns to SARS and was only traced some years later in order to recover the outstanding tax debt as a result of the incorrect assessment. The insertion of the new paragraph aimed to address this problem by allowing for the withdrawal of assessments in speci ed narrow circumstances, which were the following:
• The assessment must be based on a readily apparent factual error by the
• taxpayer in a return; a processing error by SARS; or a return fraudulently
• submitted by a person not authorised by the taxpayer;
• The assessment imposes an unintended tax debt in respect of an amount that
• the taxpayer should not have been taxed on;
• The recovery of the tax debt under the assessment would produce an
• anomalous or inequitable result;
• There is no other remedy available to the taxpayer; and
• It is in the interest of the good management of the tax system.
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