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How SA Taxpayer’s Rights Match up to OECD Standards

24 August 2016   (0 Comments)
Posted by: Author: Graham Crocker
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Author: Graham Crocker (Bowman Gilfillan)

We investigate some of the rights that South African taxpayers have in terms or the constitution and legislation and how they match up to OECD standards.

Although your initial reaction may be to hide when SARS comes knocking, a more sensible approach is to know your rights and obligations as a taxpayer. 

It is always in a taxpayer’s interests to co-operate when faced with an enquiry from SARS. Taxpayers should be aware of their rights and assert them when necessary. In terms of the South African constitution and various acts, taxpayers already have certain guaranteed rights.

Legislative framework 

Some points to consider in terms of South African taxpayers’ rights: 

  • the right to information in terms of the Constitution largely given effect to in terms of the Promotion of Access to Information Act (PAIA); 
  • the right to just administrative action in terms of the Constitution, largely given effect to in terms of the Promotion of Administrative Justice Act (PAJA);
  • the right to privacy in terms of section 14 of the Constitution; 
  • the right not to incriminate oneself and to a fair trial in terms of section 35 of the Constitution; and
  • the provisions of the Tax Administration Act (TAA), including those empowering SARS to effectively and efficiently collect tax. 

The constitutional rights outlined above are not absolute. The so called "limitation clause” in the Constitution allows a law of general application (the TAA for example) to limit a constitutional right if such limitation is reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom. If these rights were not limited at all, SARS’ ability to collect tax would have been greatly frustrated.

The right to be informed, assisted and heard 

The Organisation for Economic Co-operation and Development (OECD) outlined taxpayer’s rights and corresponding obligations in a practice note called "Taxpayer’s Rights and Obligations”. Although the note was published in 2003, a number of the rights and obligations discussed below remain relevant today. 

The OECD’s practice note states that taxpayers are entitled"to have up-to-date information on the operation of the tax system and the way in which their tax is assessed” and "to be informed of their rights, including their rights of appeal.” 

In South Africa this right is promoted in the following ways:

  • Access to information is provided on SARS’ website. This includes Interpretation Notes, Binding Rulings, and Guides. Guidance documents are not legally binding but are aimed at keeping taxpayers informed, including a description of the procedure in terms of which information can be requested from SARS under PAIA. 
  • Taxpayers being able to query tax related matters by telephone (through SARS’ contact centre) and in person at one of SARS’ branch offices. 
  • The creation of the Office of the Tax Ombud to review and address any complaint regarding a service, procedural or administrative matter arising from the administration of a tax Act by SARS (section 15 of the TAA).
  • SARS provides reports on the progress of an audit and, upon conclusion of an audit, a document containing the outcome of the audit, including the grounds for any proposed assessment (section 42 of the TAA).  This is consistent with the provisions of PAJA - a taxpayer is entitled to request reasons about any administrative action taken by SARS. If no reasons are provided, taxpayers are entitled to request such in terms of both PAJA and the TAA.
  • SARS has to request any relevant material from a taxpayer with reasonable specificity (section 46 of the TAA). A non-specific request from SARS may justifiably be met with a response from a taxpayer requesting SARS to be more specific about the information requested. If SARS requests information which is clearly irrelevant, a taxpayer should be entitled to tell SARS that they are not entitled to the information.
  • A taxpayer’s right to object to an assessment (in accordance with the dispute resolution provisions in the TAA and the Rules). Any dispute between SARS and a taxpayer has to be heard by a competent independent court. Taxpayers may also exercise their right to remain silent (section 35 of the Constitution). 

The right to certainty 

"Taxpayers also have a right to a high degree of certainty as to the tax consequences of their actions. Of course, certainty is not always possible. … However, it is clearly a goal that taxpayers should be able to anticipate the consequences of their ordinary personal and business affairs. Achieving this goal is often difficult because modern tax systems are complex and evolving,” according to the results on an OECD survey conducted in 1990.  This is valid for South Africa; however it is more of a goal to achieve rather than a realised right for both South African taxpayers and SARS. While there is an advance tax ruling system in place designed to promote "clarity, consistency and certainty regarding the interpretation and application of a tax Act,” according to section 76 of the TAA, recent amendments to the TAA and practices of SARS can frustrate taxpayers’ right to certainty.

Ordinarily prescription periods should provide taxpayers with a degree of certainty about their tax liability. However, the TAA was recently amended to give SARS a unilateral discretion to extend original periods of prescription (usually three years in respect of assessment by SARS and five years in respect of self-assessments) arising from: 

  • a failure to provide "all relevant material requested”; or 
  • "resolving an information entitlement dispute, including legal proceedings”. 

Reliance on prescription periods is based on the assumption that there was a full disclosure of material facts to SARS, amongst other things. In practice SARS often alleges that a taxpayer did not fully disclose all material facts and that the prescription period does not apply for this reason. As mentioned earlier, such amendments and practices by SARS can frustrate taxpayers’ right to certainty.

The right to privacy 

"Taxpayers have the right to expect that the tax authorities will not intrude unnecessarily upon their privacy… In all countries very strict rules apply to the entry into a person’s dwelling or business premises by a tax official in the course of a tax investigation and on obtaining information from third parties,” according to the OECD document. 

This is true in a South African context – the TAA contains a number of provisions limiting SARS’ right to conduct inspections and audits on taxpayers’ premises. These include:

  • SARS may only enter a dwelling-house or domestic premises, except any part thereof used for trade, with the consent of the occupant (section 63(4)). 
  • A SARS is official is obliged to produce written authorisation when exercising a power under the TAA. Failure to do so entitles taxpayers to assume that the SARS official is not authorised (section 41). 
  • A SARS official may, without notice, arrive at a premise to carry out an inspection if he has a reasonable belief that trade or enterprise is being carried on. Such inspection is limited and can only determine: 
    • the identity of the person occupying the premises; 
    • whether such person is registered for tax; and 
    • whether such person is complying with the duty to keep records in the prescribed format (section 45).
  • SARS can only search premises and seize relevant material if a warrant has been issued by a judge or a magistrate (section 59). The warrant should only be issued in specific circumstances, including: 
    • reasonable grounds or belief that there has been a material failure to comply with an obligation imposed under a tax act or a tax offence has been committed; and 
    • relevant material is likely to be found on the premises evidencing the failure to comply with a tax act or the tax offence (section 60). 
  • SARS may only search premises without a warrant if: 
    • the owner or person in control of the premises consents in writing to the search; or  
    • if there are reasonable grounds for believing that: 
      • imminent removal or destruction of relevant material is likely; 
      • a warrant would be issued if it was applied for; and
      • the delay caused in applying for a warrant would defeat the object of the search (section 63). 
  • All searches conducted by SARS must be in accordance with prescribed guidelines (section 61).

The right to confidentiality 

"Another basic taxpayers’ right is that the information available to the tax authorities on the affairs of a taxpayer is confidential and will only be used for the purposes specified in tax legislation,” according to the OECD.  It suffices to say there is a general prohibition on both SARS and taxpayers from disclosing confidential information of the other. 


Although this is by no means an in depth analysis of all taxpayer’s rights, it is intended to provide an overview of how taxpayers’ basic rights are protected in South Africa. While such rights must be considered in the light of their corresponding obligations, taxpayers should know their rights and ensure that they are not unjustifiably infringed upon. 

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This article first appeared on the July/August 2016 edition on Tax Talk.


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