Currently, in terms of section 9 of the Tax Administration Act, No 28 of 2011 (TAA) 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 is regarded as made by a SARS official, authorised to do so or duly issued by SARS, until proven to the contrary. Furthermore, s9 makes provision for such a decision to be withdrawn or amended by the SARS official, a SARS official to whom the SARS official reports or a senior SARS official, at the request of the relevant person.
Section 104 of the TAA
Section 104(2) of the TAA states that the following decisions may be objected and appealed against in the same manner as an assessment:
- A decision in terms of s104(4) of the TAA not to extend the period for lodging an objection;
- A decision under s107(2) of the TAA not to extend the period for lodging an appeal; and
- Any other appeal that may be objected or appealed against under a tax Act.
From the above, it appears that whereas s104 of the TAA defines the decisions against which a taxpayer may object and appeal, s9 deals with the scenario where a decision is made by a SARS official, but which is not subject to objection and appeal.
In the Memorandum on the Objects of the Draft Tax Administration Laws Amendment Bill, 2017 (Memorandum), it was noted with regard to decisions that are not subject to objection and appeal, that a taxpayer can potentially be prejudiced by not having access to other effective internal remedies that may provide relief. The Memorandum notes that under such circumstances, the taxpayer’s only remedy would then be to take the matter on review before the High Court in terms of the Promotion of Administrative Justice Act, No 2 of 2000 (PAJA). As we know, 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 in s9 of the TAA, in terms of which specified SARS officials may reconsider the decisions. Decisions that are given effect to in an assessment or notice of assessment are however excluded since assessments generally have the separate remedy of objection and appeal. During the public comment process on the 2016 legislation, Government identified a situation where a decision given effect to in a notice of assessment is not subject to objection and appeal. Under such circumstances and based on the current wording of s9 and s104 of the TAA, it would mean that neither the internal remedy in s9, nor the right to objection and appeal in s104, will be available to a taxpayer under 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 s9, one such example might be where a taxpayer applies for the suspension of payment of tax in terms of s164 of the TAA. SARS’s decision to reject an application brought in terms of s164 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 s9 of the TAA. This will afford the taxpayer an internal remedy before exercising the external remedy of a review application to the High Court under PAJA.
While 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, 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.