The new tax court rules
10 November 2014
Posted by: Author: Alan Lewis
Author: Alan Lewis (ACBS)
article considers some of the new rules, and their possible impact, on the
future litigation process in the tax court.
11 July 2014, the Minister of Finance promulgated new rules, governing the
procedures to lodge an objection and appeal against an assessment, and related
matters ("the new rules”). These rules replaced the previous rules, which had
been promulgated on 1 April 2003.
retaining the some structure as the previous rules, the new rules introduce new
procedures, such as regular discovery of documents, into the litigation process
of the tax court. It also introduces some new terms such as "statement of grounds of assessment and
opposing appeal”, which replaces the Commissioner's "statement of grounds
of appeal”, as contained in the previous rules.
The date of delivery of documents
aspect is dealt with as follows by rule 3(2) of the new rules:
purposes of these rules, the date of delivery of a document-
in the case of delivery by SARS, the clerk or the registrar, is regarded as the
the document in the manner referred to in the definition of "deliver"
1, but subject to section 253; and
in the case of delivery by the taxpayer, appellant or applicant (other than
SARS), is regarded
as the date of the receipt of the document by SARS, the clerk or the registrar.”
first glance, it appears that there are two different dates of delivery. Where
SARS, the clerk, or registrar, deliver a document, that date, is the date of
delivery, while on the other hand, where the taxpayer delivers a document, that
date is the date of receipt of the document, by SARS, the clerk, or registrar.
term "receipt” is not defined in the rules. What does it mean? What is the
difference between the date of receipt, on the one hand, and the date of
delivery, on the other hand? Why must this distinction be made? Why do the same
rules of delivery, not apply to all parties in an action, as it does in the
rules of the High Court?
appears that these questions will require the attention of the tax court. They
could have been avoided, by applying the same date of delivery, to all parties
in any trial or application.
appears that the term "date of receipt” may set a more stringent
requirement, which must be met by a taxpayer, as far as the delivery of
documents is concerned. If this is so, then this requirement may discriminate
against taxpayers, and be unconstitutional.
Reasons for assessment
terms of rule 6, of the new rules, a taxpayer who is aggrieved by an assessment
may, prior to lodging an objection, request SARS to provide the reasons for the
assessment required to enable the taxpayer to formulate an objection in the
form and manner referred to in rule 7, of the new rules.
what must SARS provide to the taxpayer, in response to a request for reasons
for assessment? In my opinion, rule 7 is not helpful to answer this question.
simply states that "A taxpayer who
lodges an objection to an assessment must specify the grounds of the objection
in detail including-
the part or specific amount of the disputed assessment objected to;
which of the grounds of assessment are disputed; and
the documents required to substantiate the grounds of objection that the taxpayer
has not previously delivered to SARS for purposes of the disputed assessment.”
assessment is based on the particular facts of a transaction, and the
applicable legal principles of the governing fiscal legislation. These details,
must be set out in SARS' reasons for assessment, and it is inconceivable that
anything less would be acceptable. This would be the only sensible manner, to
interpret SARS' obligation, to provide reasons for its assessments.
Notice of appeal
SARS disallows the taxpayer's objection, the taxpayer may note an appeal
against that decision. However, in terms of rule 10 (3), the taxpayer may not
appeal on a ground that constitutes a new objection, against a part or amount
of the disputed assessment not objected to under rule 7.
may be various reasons why a taxpayer did not object to a particular part, or
amount of an assessment. It seems unfair and unreasonable, to deprive that
taxpayer of the right to fully and properly formulate an object to that part,
or amount, at a later stage, and in its present form, this rule may be found to
is settled law, that a taxpayer may object to an assessment, which was issued
as a result of an error, which that taxpayer made, in completing the relevant
return. If a taxpayer made an error in formulating the objection, the same
reasoning should apply, to allow the taxpayer to amend that error, by appealing
on a ground that does, in fact, constitute a new objection.
This article first appeared on the November/December edition on Tax Talk.