Can SARS compel a taxpayer to submit a tax return in respect of a tax period more than 5 years ago?
16 February 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
Q: A client was
requested in 2014 to file 2007 and 2008 tax returns, this is longer than 5
years and no IRP5s or any other supporting documents are available. I have
filed a notice of objection and SARS disallowed it, stating that the taxpayer
has to submit the return.
A:Time period for keeping records
regards to the number of years one may keep documentation for tax purposes,
please note section 29 of the Tax Administration Act (TAA):
It’s best you
begin by looking at section 29(3):
of account or documents need not be retained by the person described in—
(2) (a), after a period of five years from the date of the submission of the
(2) (c), after a period of five years from the end of the relevant tax
notice that section 29(3) makes no mention of a person described in section
29(2)(b) speaks of a person who "is required to submit a return for the tax
period and has not submitted a return for the tax period.”
The 5 year period
therefore doesn’t apply to someone who is required to submit a return but
hasn’t, which is exactly the position your client is in.
section 29(1)(a) does still require such a person to keep records to "enable
the person to observe the requirements of a tax Act…”; one such requirement is
to submit a tax return [see section 66 of the Income Tax Act].
this, one can infer that if one is required to submit a tax return, but
doesn’t; then he or she must retain records indefinitely.
in terms of section 171 of the TAA, proceedings for recovery of a tax debt may
not be initiated after the expiration of 15 years from the date the assessment
of tax, or a decision referred to in section 104 (2) giving rise to a tax
liability, becomes final. SARS is
therefore entitled to claim payment of an amount that is outstanding for a
period of less than 15 years.
No IRP5s available
To address this
issue, please see section 95(3) of the TAA, which states:
the taxpayer is unable to submit an accurate return, a senior SARS official may
agree in writing with the taxpayer as to the amount of tax chargeable and issue
an assessment accordingly, which assessment is not subject to objection or
Disclaimer: Nothing in this query and answer should be construed as
constituting tax advice or a tax opinion. An expert should be consulted for
advice based on the facts and circumstances of each transaction/case. Even
though great care has been taken to ensure the accuracy of the answer, SAIT do
not accept any responsibility for consequences of decisions taken based on this
query and answer. It remains your own responsibility to consult the relevant
primary resources when taking a decision.