Tax Season - Know your Remedies
20 June 2013
Posted by: Author: Nelisa Mali
Author: Nelisa Mali, Attorney (Taxtalk)
The 2013 tax season for individual
taxpayers will start on 1 July 2013. Individual taxpayers who submit their tax
returns manually must do so between 1 July 2013 and 30 September 2013, and
taxpayers who submit their tax returns via e-filing must do so between 01 July
2013 and 22 November 2013.
During the tax season, the taxpayers receive from, complete
and submit the tax returns (ITR12) to the South African Revenue Service (SARS)
for assessment. Even taxpayers who do not receive tax returns, they are
required to approach the SARS and obtain tax returns for submission.
After assessments, there
are various sections in the Tax Administration Act, Act 28 of 2011 (TAA) and
the Income Tax Act 58 of 1962 that provides for the taxpayers’ remedies with
regards to the outcomes of the assessments. In this note a few sections are
Submission of returns
In terms of section 25 of the Tax Administration Act,
persons who are required to submit tax returns are obligated to submit returns
in the form and manner prescribed by SARS, and on a date specified by the
Commissioner for SARS.
The Commissioner is by law required to notify the public
regarding the submission of returns for assessment, and the individuals who are
required to submit returns. Section 66 (1) of the Income Tax Act provides that:
commissioner must annually give public notice of the persons who are required
by the commissioner to furnish returns for the assessment of normal tax within
the period prescribed in that notice.”
Schedules 4 and 7 of the Income Tax Act authorise the
submission of individual tax returns to SARS for purposes of declaration of
income and stating of allowable deductions. Based on these declarations SARS
then issues original assessment as envisaged in section 91 of the TAA.
In certain instances the assessment may, depending on the declaration in the
returns, result in the taxpayer owing SARS or SARS owing the taxpayer. This note discusses instances where the
taxpayer owes SARS and disagrees with the outcome of the assessment.
The taxpayers’ remedies
In certain instances the taxpayer does not dispute owing
SARS, but is not in a position to satisfy the tax debt with SARS immediately or
all at once; in such instances the taxpayer has, inter alia, a right to apply for the payment of taxes in installments. If
successful, an installment payment agreement is then entered into with SARS in
terms of section 168 of the Tax Administration Act. The section provides as
"A senior SARS official may enter
into an installment payment agreement only if-
- The taxpayer
suffers from a deficiency of assets or liquidity which is reasonable certain to
be remedied in the future;
- The taxpayer
anticipates income or other receipts which can be used to satisfy the tax deb;
- Prospects of
immediate collection activity are poor or uneconomical but are likely to
improve in the future;
activity would be harsh in the particular case and the deferral or installment
payment is unlikely to prejudice tax collection; or
- The taxpayer
provides the security as may be
required by the official.
In instances where the taxpayer disputes tax indebtedness to
SARS, the taxpayer must file a notice of objection in terms of section 104 of
the TAA. This section provides a remedy for a taxpayer who is aggrieved by an
In such an instance, SARS then has an obligation to consider
a valid objection in the manner and within the period prescribed under the Tax
Administration Act and the ‘rules’(ie
the rules governing the procedures to be followed in lodging an objection and
appeal against an assessment or a decision subject to an objection and appeal).
This is provided for in section 106 of the Tax Administration Act.
The filing of an objection or appeal against an assessment by the
taxpayer does not suspend the taxpayer’s obligation for payment of tax, unless otherwise directed by a senior SARS official.
But still, hope is not lost. The taxpayer has the right to invoke
section 164 of the TAA only when the taxpayer disputes the assessment. However,
SARS may only consider the taxpayer’s section 164 application, if the taxpayer
has lodged an objection in terms of section 104 prior to filing an application
in terms of section 164 of the TAA. Section 164(2) provides that:
A taxpayer may
request a senior SARS official to suspend the payment of tax or a portion
thereof due under an assessment if the taxpayer intends to dispute or disputes
the liability to pay that tax.
As taxpayers or their representatives may currently be
preparing to file the returns, they are advised to familiarise themselves with
the relevant laws in order to deal with the outcomes of the tax season.
I therefore urge the tax practitioners to advise their
clients to be compliant to the provisions of the Act and the TAA in order to
avoid unnecessary inconsistencies with the law regulating the submission of
This not the time to sharpen our swords against SARS but to
show our compliance with the law. Most importantly, it is every taxpayer’s
responsibility to ensure that the information in the returns is accurate and
can be supported by documentary proof. Failure to render honest returns may
lead to criminal investigation being undertaken by SARS.
"ENJOY THE TAX SEASON”