The Advanced Tax Ruling Process
04 April 2013
Posted by: Author: Charl Geldenhuys
Source: Charl Geldenhuys
The purpose of the advanced tax ruling system is to promote clarity, consistency and certainty regarding the interpretation and application of the tax Acts by creating a framework for the issuance of an advanced ruling. The advanced ruling process is a formal process with specific rules and procedures to follow in order to obtain a ruling.
The application Process
The application process will start by completing and submitting an online application form through the SARS e-filing system. It will be beneficial for the applicant to file the application in advance as complex transactions may undergo numerous changes or modifications. Filing it in advance will provide the ruling specialist with sufficient time to get familiar with the proposed transaction and get you a position in the queue. Late filing of an application may not be accepted unless extraordinary circumstances can be motivated with appropriate reasons.
The second part that needs to be completed will be the pre-screening checklist. This checklist will determine if the application will be accepted or rejected. If the application is subject to an exclusion, refusal or rejection then the process will not be continued. This checklist also provides the terms and conditions that needs to be accepted by the applicant. Next, the applicant should submit the applicable contact details and basic information. This information will consist of the tax types and other issues to be covered in the proposed transaction. It will help to ensure that the appropriate ruling specialist is assigned for the advanced ruling.
The information submitted should contain a statement where the applicant states that he is not subject to any audit, investigation, objection or appeal. The applicant should also provide a declaration in which he states that all his tax affairs are in order and that he has no outstanding tax returns. The applicant’s consent to the publication of the advanced ruling should also be provided.
An application fee will become payable within 10 business days after all the necessary documents have been submitted. The application fee for small, medium and micro enterprises will be R2 500. All other taxpayers will pay an application fee of R14 000.
After submitting the applicable documents and paying the application fee, the applicant will receive an electronic confirmation and will be issued with a reference number. At this point the applicant will have 5 business days to submit all the necessary documents regarding the proposed transaction. The applicant will be notified within 5 business days, after evaluating the documents, if the ruling will be accepted or rejected.
The applicant will become liable for the cost recovery fee after the acceptance. An estimated fee will be determined depending on the complexity of the proposed transaction and number of days it will take to complete the ruling. This estimated fee should be accepted by the applicant and a 20 percent advance payment must be made before the ruling will commence.
A letter of engagement will be drawn up that should be signed by both the applicant and the Commissioner. This letter will outline the basic rights, obligations, terms and conditions associated with the application and ruling process. The ruling specialist may request any additional documentation or call a meeting to discuss and clarify any issues that may arise in a complex application. The applicant can check the status of the ruling during the process through the e-filing system.
The applicant will be notified online of the Commissioner’s proposed ruling after the review process has been completed. The ruling may be positive or negative. In the instance where a positive ruling is given, the applicant will receive a draft of the proposed ruling.. The applicant should review the draft carefully for accuracy and inform the Commissioner of any errors or omissions. The applicant will be notified of the Commissioner’s intent and be given an opportunity to discuss the matter with the ruling specialist when the ruling outcome is negative. If the final ruling is negative, the applicant will have the opportunity to amend the application in an attempt to change the outcome to a positive ruling.
The final step in the ruling process will be the online issuance of the ruling and publication of the ruling in edited form. Therefore, careful consideration and care should be taken when it comes to applying for an advanced tax ruling as it can become a complex and tedious process to start and follow through.
List of References
Anon. 2013. Comprehensive Guide to Advance Tax Rulings. [Online] Available from: http://www.sars.gov.za/home.asp?pid=4109
South Africa. 2012.
Tax Administration Act, No.289 of 2011. Government