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What to do when you dispute your tax assessment

25 April 2013   (0 Comments)
Posted by: Author: Charl Geldenhuys
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Source: Charl Geldenhuys

Disputes with the South African Revenue Service (SARS) have always been a tricky issue. On the one hand, the taxpayer may have valid reasons for not paying the tax in question, and on the other hand, SARS  may be under pressure to collect the necessary taxes.

One may request, in writing, the reasons why an assessment has been raised within 30 days from the date of assessment. If you are not in agreement with the assessment raised, you may object to it. The objection will have to comply with the following:

  • It must be in the correct form, as prescribed by SARS (ADR 1);
  • It must specify in detail the grounds for the objection;
  • It must be signed; and
  • It must be delivered to SARS at the address specified on the assessment. 

An objection may be declared invalid if it does not comply with all the necessary requirements.

One may appeal against the decision by SARS if they disallowed an objection. The notice of appeal must be delivered to SARS within 30 business days from the date the notice of rejection was received. This appeal must be in the correct form as prescribed by SARS (ADR 2). One must indicate the grounds on which you want to appeal the objection.

One may use either of the following channels to resolve tax dispute:

  1. The Alternative Dispute Resolution (ADR); 
  2. The Tax Board, which has a jurisdiction in respect of those matters where the tax in dispute does not exceed R100 000; or
  3. The Tax Court, which has jurisdiction over matters where the tax in dispute is in excess of R100 000.

The ADR is a form of dispute resolution other than litigation or adjudication through the courts. It is a less formal, less burdensome and less adverse process. It further is a faster and more cost effective process to dispute with SARS. 

The tax types to be covered include:

  • Income tax; 
  • Pay as You Earn (PAYE);
  • Capital Gains Tax (CGT);
  • Value Added Tax (VAT);
  • Transfer duty;
  • Stamp duty;
  • Skills Development Levy;
  • Unemployment Insurance Contributions;
  • Estate Duty; and 
  • Donations Tax.

The ADR can be initiated by either the taxpayer or by SARS, but SARS will finally determine if the matter is suitable for the ADR process. The taxpayer will be informed within 20 business days whether or not the matter is suitable. SARS will appoint a facilitator to facilitate the appeal. This person will normally be a trained and experienced SARS Officer. The facilitator is bound by a code of conduct in performing his duties and he is obligated to seek a fair, equitable and legal resolution for this matter.

The ADR process has a prescribed structure that needs to be adhered to for completing an appeal. The process is as follows:

  1. SARS will determine the ADR process;
  2. The facilitator will arrange and ADR meeting and notify all the parties;
  3. The meeting will be held in an informal manner;
  4. Both parties will state their case and provide evidence during this meeting;
  5. The facilitator will try and resolve the dispute during this process.

One should disclose all the relevant facts during this process. The ADR proceedings may not be electronically recorded and the representations made during the meetings must be without prejudice.

If the ADR process was unsuccessful, the matter will proceed to be resolved by completing 4 stages.

Stage 1

  • There will be a meeting to define the issue in the dispute;
  • The taxpayer must provide a statement to define the grounds of his objection; and
  • The taxpayer must provide a statement to define the grounds of his appeal.

Stage 2: Discovery 

The aim of the discovery is for SARS and the taxpayer to obtain information or documentation relating to the issue in order to avoid any surprises and to present a proper case.

Stage 3: Pre-trail Conference

The pre-trail conference must be held within 60 business days after delivering the last discovery notices. At the conclusion of the pre-trail conference, SARS must deliver the minutes of the conference to the Registrar of the Tax Court.

Stage 4: Enrolment

After delivery of the pre-trail conference minutes, SARS will arrange a date for the hearing of the appeal and inform the Registrar of the Tax Court accordingly. The Registrar will then deliver to the taxpayer, and to SARS, a written notice of the time and place appointed for the hearing of the appeal. This notice must be delivered within 40 business days before the hearing of appeal.

Therefore, taxpayers now have clear guidelines when they find themselves in a potential dispute with SARS. This process should be applied fairly, objectively and consistently in order to remain effective and efficient.

List of References

Anon. 2013. Alternative Dispute Resolution, [Online] Available from: http://www.sars.gov.za/home.asp?pid=4&cx=009878640050894574201%3Aku-btv50zym&cof=FORID%3A10%3BNB%3A1&ie=UTF-8&q=ADR&sa= [Accessed: 24-04-2013].


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