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Can SARS Disclose Information on You to The State Prosecuting Authorities?

Thursday, 01 December 2011   (0 Comments)
Posted by: TaxFind™
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Can SARS Disclose Information on You to The State Prosecuting Authorities?

If  taxpayers cannot rely on SARS to treat the information they furnish in their tax returns as secret,the integrity of the tax system would be seriously undermined.After all, taxpayers may reveal information in their tax returns that they may be keeping secret from everyone else—including their spouses, their employers, their trade competitors and other organs of state.

And, of course, taxpayers may disclose in their tax return income that they have received from illegal activities—such as bribes, backhanders, secret and irregular commissions, the proceeds from the sale of illegally imported goods or from insider trading, or contraventions of exchange control regulations.Strange as it may seem to some, it makes sense for the taxpayer to make such disclosures in their tax return (provided they are confident that such disclosures will be kept secret), for at least the taxpayer need then not fear that they will be subject to reprisals from SARS if the taxpayer’s misdemeanours come to light.

The secrecy of information contained in tax returns cannot,however, be absolute. Some derogations from secrecy are uncontroversial,such as where SARS provides anonymised statistical information to National Treasury or to the Statistician-General.

The secrecy provisions of the Tax Administration Act

The Tax Administration Bill seeks to bring clarity and certainty to the more controversial aspects of revealing taxpayer information to other departments of state.Thus,the Act will provide in Section 71 (1)-(2) that, if so ordered by a judge in chambers on an ex parte application by a senior SARS official (if the latter is of the opinion that SARS has information critical to the prosecution of the offence in question and that the disclosure would not seriously impaira civil or criminal tax investigation), such an official must disclose certain information to the National Commissioner of the South African Police Service or to the National Director of Public Prosecutions, namely, information that may reveal evidence that an offence (other than a tax offence)has been or may be committed for which a sentence of more than five years could be imposed, or information which may reveal evidence that may be relevant to the investigation or prosecution of such an offence.

In terms of Section 70(4), the National Commissioner of the South African Police Service, the National Director of Public Prosecutions, or a person acting under their respective direction and control (if carrying out an investigation relating to an offence or a public safety or environmental risk and if they are of the opinion that SARS may have relevant information) may apply ex parte to a judge in chambers for an order requiring SARS to disclose information that an offence (other than a tax offence) has been committed for which the sentence could be imprisonment for more than five years.

Such an application requires prior notice to SARS of at least ten business days unless the judge, on the basis of urgency, allows a shorter period. Section 70(5) also provides that SARS may oppose such an application on the basis that such disclosure would seriously impair or prejudice a civil or criminal tax investigation or other enforcement of a tax Act by SARS.


In terms of Section 72 of the Tax Administration Bill, an admission by the taxpayer of the commission of an  offence  under  a tax Act that is contained in a return, application,or other document submitted by the taxpayer  to  SARS, or  is  obtained  from  a  taxpayer  under  Chapter  5  of  the  Act  ( which   deals   with information  gathering )  is  not   admissible  in  criminal  proceedings  against  the  taxpayer,  unless  a competent court directs otherwise.

Disclosure to taxpayer of the taxpayer’s own records

The Tax Administration Bill provides in Section 73(1) that a taxpayer or their duly authorised representative is entitled to obtain a copy of an assessment or certain stipulated "decisions" relating to the taxpayer.

A taxpayer is also entitled, in terms of Section 73(2), to access to information submitted by SARS by the taxpayer or by a person on the latter's behalf, but a request for such information must be made in terms of the Promotion of Access to Information Act.

Source: By PricewaterhouseCoopers (Tax breaks)



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