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Can SARS disclose information about a taxpayer’s tax affairs to the state prosecuting authorities?

Monday, 31 October 2011   (0 Comments)
Posted by: SAIT Technical
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Can SARS disclose information about ataxpayer’s tax affairs to the state prosecuting authorities?

PWC Synopsis - RC Williams

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 section71(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 inquestion and that the disclosure would not seriously impair a civil or criminal tax investigation), such an official must disclose certain information to the National Commissioner of the South AfricanPolice Service or to the National Director of Public Prosecutions,namely, information that may reveal evidence that an offence, other thana tax offence, has been or may be committed for which a sentence ofmore than five years could beimposed, 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) theNational Commissioner of the SouthAfrican 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 anoffence or a public safety or environmental risk and if of theopinion that SARS may have relevantinformation) 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) provides that SARS may oppose such anapplication 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 s 72 of the TaxAdministration Bill, an admission bythe taxpayer of the commission of anoffence under a tax Act that iscontained in a return, application, orother document submitted by him toSARS or is obtained from a taxpayerunder chapter 5 of the Act (which deals with information gathering) isnot admissible in criminal proceedings against the taxpayer unless a competent court directs otherwise.

Disclosure to taxpayer of hisown records

The Tax Administration Bill providesin section 73(1) that a taxpayer or his duly authorised representative is entitled to obtain a copy of an assessment or certain stipulated"decisions” relating to him.A taxpayer is also entitled in terms ofsection 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 termsof the Promotion of Access to Information Act.

If taxpayers cannot rely on SARS totreat the information they furnishin their tax returns as secret, the integrity of the tax system would beseriously undermined.After all, taxpayers may reveal information in their tax returnsthat they may be keeping secretfrom everyone else – including theirspouses, their employers, theirtrade competitors and other organsof state.

And, of course, taxpayersmay disclose in their tax returnincome that they have receivedfrom illegal activities – such asbribes, backhanders, secret and irregular commissions, the proceeds from the sale of illegally imported goods or from insidertrading, or contraventions of exchange control regulations.It makes sense for the taxpayer to make such disclosures in his taxreturn (provided he is confidentthat they will be kept secret) for atleast he need then not fear that he will be subject to reprisals from theSouth African Revenue Service if his misdemeanours come to light.

The secrecy of informationcontained in tax returns cannot,however, be absolute. Some derogations from secrecy are uncontroversial, such as whereSARS provides anonymisedstatistical information to National Treasury or to theStatistician-General.



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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