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An overview of the SARS dispute resolution process

Tuesday, 08 September 2015   (0 Comments)
Posted by: Author: Rozelle van Schaik
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Author: Rozelle van Schaik (BDO)

An overwiew of the Objection procedures outlined in the TAA

The recent increase in the number of verification audits, disallowance of input tax claims without sufficient disclosure of the legal basis on which the input tax claim was denied and the subsequent VAT assessments issued by SARS requires a revisit of the rules relating to dispute resolution. This article provides an overview of the objection procedures in the Tax Administration Act, 2011 ("the TAA”) and the relevant dispute resolution rules promulgated by section 103 of the TAA ("the Rules”), which came into effect on 11 July 2014.

The TAA provides for an aggrieved taxpayer to object to an assessment and certain decisions of the Commissioner. The decisions that may be objected to and appealed against are:

  • decisions not to extend the period for lodging an objection;
  • decisions not to extend the period for lodging an appeal and
  • any other decision that may be objected to or appealed against under a tax Act.

A day for purposes of the dispute resolution rules is defined as a business day as defined in section 1 of the TAA. A business day is defined in section 1 of the TAA as a day other than a Saturday, Sunday or public holiday. For purposes of dispute resolution, the definition of a business day excludes the days between 16 December of each year and 15 January of the following year. The 30 day period is calculated exclusive of the first day and inclusive of the last day.


Rule 6 of ‘the Rules’ deals with the request for reasons for an assessment. A taxpayer may request SARS to provide reasons for an assessment before lodging an objection, in order to enable the taxpayer to formulate a suitable objection. 

The request for reasons for an assessment must be made in the prescribed form and manner, specify the address at which the taxpayer will accept delivery of the reasons and must be delivered to SARS within 30 days from the date of assessment. If a SARS official is satisfied that reasonable grounds exist for an extension, the 30 day period may be extended for a period not exceeding 45 days.

If a SARS official is satisfied that the reasons for the objection were provided, , they must notify the taxpayer accordingly within 30 days after delivery of the request for reasons. This notice must refer to the document(s) wherein the reasons were provided. Alternatively, SARS must provide the reasons within 45 days after delivery of the request for reasons. This period for providing reasons may be extended by SARS due to exceptional circumstances; the complexity of the matter or the principle or the amount involved. The extension may not exceed 45 days. A notice of the extension must be delivered to the taxpayer before expiry of the initial 45 day period.

If a request for reasons was properly submitted, the taxpayer does not need to lodge an objection until a response is received from SARS.

In SARS v Pretoria East Motors (Pty) Ltd1 it was held as follows:

 "The raising of an additional assessment must be based on proper grounds for believing that, in the case of VAT, there has been an under declaration of supplies and hence of output tax, or an unjustified deduction of input tax. In the case of income tax it must be based on proper grounds for believing that there is undeclared income or a claim for a deduction or allowance that is unjustified. It is only in this way that SARS can engage the taxpayer in an administratively fair manner, as it is obliged to do. It is also the only basis upon which it can, as it must, provide grounds for raising the assessment to which the taxpayer must then respond by demonstrating that the assessment is wrong.”

Accordingly, the reasons provided by SARS must enable the taxpayer to formulate an objection. These reasons are SARS’s findings of fact and the law is applicable thereto. This does not include SARS’s reasoning. 

A taxpayer may also request reasons for an assessment in terms of section 5 of the Promotion of Administrative Justice Act, 2000 (‘PAJA’). If reasons for an assessment are requested in terms of PAJA, SARS must provide its reasoning process. This will enable the taxpayer to determine if the decision can be reviewed under PAJA on the bases of error in law, fact or irrationality. If a request is lodged in terms of PAJA, the period within which the taxpayer must lodge an objection is not extended, unless a court order to this effect is obtained.

In instances where SARS failed to supply proper reasons for the decision to issue the assessment, the taxpayer should insist that SARS complies with its statutory duty to provide the reasons. It is not possible to prepare a well-formulated objection to an assessment if the basis on which SARS has issued the assessment is not known.


Rule 7 of ‘the Rules’ deals with the procedure to object to an assessment. A taxpayer who objects to an assessment must deliver a notice of objection within 30 days after the delivery of the reasons requested under rule 6 or, where no reasons were requested, the date of the assessment. A taxpayer who lodges an objection to an assessment must complete the prescribed form and specify the grounds of the objection. The grounds of objection should include the part - or specific amount - of the disputed assessment; the grounds of assessment which are disputed and the documentation that substantiates the grounds of objection that the taxpayer has not previously delivered to SARS for purposes of the disputed assessment.

Unless the objection is lodged through SARS e-filing, the taxpayer must specify an address at which the taxpayer will accept delivery of SARS’s decision in respect of the objection and/or other documents that may be delivered under these rules. The taxpayer, or a duly authorised representative, must sign the prescribed form. The objection should be delivered to the address specified in the assessment or the address specified by the Commissioner by public notice as the address at which the documents must be delivered to SARS. In practice, objections relating to VAT matters cannot be submitted via SARS e-filing.

On 31 March 2015, the Commissioner issued Government Notice 295 (GG 38666). This Notice lists the addresses at which documents, notices and requests must be delivered for dispute resolution purposes.

A taxpayer may apply to SARS for an extension of the objection period.  The SARS official must be satisfied that reasonable grounds exist for the delay in lodging the objection. Interpretation Note 15 (issue 4 dated 20 November 2014) deals with the exercise of SARS’s discretion in case of a late objection or appeal. The TAA stipulates further conditions and the maximum extension periods for an extension of the period within which to object.

An objection that does not comply with the abovementioned requirements may be regarded as invalid by SARS. SARS must notify the taxpayer accordingly and state the grounds for the invalidity within 30 days of delivery of the invalid objection. A taxpayer who has received a notice of invalidity may submit a new objection within 20 days of delivery of the notice without having to apply for an extension to submit an objection. However, if the taxpayer fails to submit a new objection within the 20 day period, or again submits an objection that does not comply with the requirements for a valid objection, the taxpayer may only submit a new and valid objection together with an application for an extension of the period for objection.

The TAA determines that SARS must consider a valid objection in the manner and period prescribed in the TAA and the rules. SARS may disallow an objection or allow an objection in whole or in part and must, if applicable, adjust the assessment or decision accordingly. SARS must provide the taxpayer or the taxpayer’s representative with the basis for the decision regarding the objection and a summary of the procedures for an appeal.

A taxpayer who objects to an assessment should either pay the tax in dispute or apply for a suspension of payment. The requirements for a suspension of payment can be found in section 164 of the TAA.

Should the objection not be fully successful, the TAA provides for further remedies for an aggrieved taxpayer by prescribing the procedures for an appeal against an assessment or decision, the alternative dispute resolution process and an appeal to the tax board or the tax court.

1 SARS v Pretoria East Motors (Pty) Ltd (291/12) [2014] ZASCA 91 on 12 June 2014, at par [11]

This article first appeared on the July/August 2015 edition on Tax Talk.  



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