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SARS Confidential Information: Too Confidential?

Friday, 19 July 2013   (0 Comments)
Posted by: Author: Danielle Botha
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Author: Danielle Botha (Cliffe Dekker Hofmeyr)

The draft Taxation Administration Laws Amendment Bill, 2013 (TALAB) released on 5 July 2013 has extended the definition of 'SARS confidential information' to include information relating to the auditing procedures or methods used by SARS in a tax assessment.

Section 67 of the Tax Administration Act, No 28 of 2011 (TAA) contains a general prohibition on disclosure of certain information, including 'SARS confidential information'. Essentially, the secrecy of 'SARS confidential information', defined under s68(1) of the TAA, must be preserved and it may only be disclosed to another person if disclosure is necessary for performance of a function  under the relevant section. SARS officials are required to make a solemn declaration to uphold the secrecy of such information.

Presently, the definition of 'SARS confidential information' includes, personal information about SARS employees, information supplied by a third party to SARS, information that could be damaging to the economic interests or financial welfare of South Africa or certain security information related to SARS buildings. Section 30 of the TALAB proposes an amendment to the definition of 'SARS confidential information' contained in s68(1) of the TAA, to include as confidential information: "information relating to the examining or auditing procedure or method used by SARS, the disclosure of which could reasonably be expected to jeopardise the effectiveness thereof".

Therefore, this amendment would result in SARS not having to provide taxpayers with reasons for their determination of an assessment amount or the method behind the calculation which resulted in the tax amount assessed, should such disclosure jeopardise the effectiveness thereof. Essentially, it appears that SARS is seeking the power to refuse to provide the taxpayer with the procedural steps taken to arrive at the total on a tax assessment. The reason for such a refusal, when requested by the taxpayer, would then undoubtedly be that disclosure of audit or examination methods used to arrive at the assessment would jeopardise the effectiveness of such assessment in the hands of SARS. 

The Short Guide to the Tax Administration Act, 2011 (Short Guide), dated 5 June 2013, provides that one of the objects of the TAA is "to promote a better balance between the powers and duties of SARS and the rights and obligations of taxpayers and to make this relationship more transparent". The Short Guide reveals that international experience has demonstrated that if taxpayers perceive and experience the tax system as fair and equitable, they will be more inclined to fully and voluntarily comply with it.

The proposed amendment to s68(1) of the TAA seems to fly in the face of SARS’s intentions for transparency and fairness. On the contrary, it results in decreasing the rights of the taxpayer with regard to requests for information or reasons and withholds information necessary for expedient resolution of tax disputes. 

The TALAB is still in draft form and public comments have not yet been considered. We hope that SARS will be swayed to consider revising the amendment of s68(1) of the TAA, bringing it in line with their goal of building a tax system with which taxpayers will be more inclined to fully and voluntarily (if not happily) comply.



Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

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