Chapter 9 - Administration, Returns And Assessments Flashcards
Assessment
Determination of the amount of tax liability or refund either by way of Self assessment ( VAT, provisional tax , dividends tax) or an assessment by SARS ( income tax or estate duty)
A self assessment
Is any return in which the Amoy of tax due appears on the return.
Business day
Any day other than a Saturday, Sunday or public holiday and for the purposes of “dispute resolution “ it also excludes the days from 16/12 to 15/01 of the next year.
Company
Bears the meaning per the Income Tax Act
Date of assessment
For a self assessment it is the date the return is submitted
For a SARS assessment it is the date of the issue of the notice of assessment.
Return
Is a form, declaration, document or other manner of submitting info to SARS by the taxpayer or a third party
SARS official
a) the commissioner
b) an employee of SARS
C) a person contracted by SARS, other than an external legal representative, for purposes of the administration of the tax act and who carries out the provisions of the act under the control, direction and supervision of the commissioner
Persons from other organs of state whose services are obtained by SARS
Are also included in the definition of SARS official
Shareholder
Person who (or which) holds a beneficial interest in a share in a company as defined by the Income Tax Act
Tax period
Defined in the particular tax Act for that tax
Thing
Corporeal or incorporeal.
Corporeal–> chairs
Incorporeal–> share
Official publication
1) a binding general ruling
2) an interpretation note
3) a Practice note
4) a public notice issued by a senior SARS official, or by the commissioner
Section 8 of the TAA
States that a SARS official must have an identity card.
Reference number
Allocated by SARS to a person who registers. This number has to be used in all correspondence with SARS
Section 25 of the TAA
A person who submits a return must do so in the prescribed form and manner. The date of submission is usually set out in terms of the particular tax act. If no date is set, the commissioner will set a date by public notice.
Any extension of time to submit a return
Does not affect the deadline for paying the tax
A return must be signed
By the taxpayer or representative and contain all the information required
Section 26 of the TAA
Enables the commissioner, by public notice, to require 3rd parties to submit returns for a person with whom the 3rd party transacts
Section 27 of the TAA
Enables SARS to require a person to submit further or more detailed returns
Section 28 of the TAA
Require a person who submits financial statements or accounts prepared by someone else to submit a certificate issued by that other person setting out their examination of the books and documents of the taxpayer.
Section 29 ( records)
5 years
Section 32 (audit or investigation )
Records must be kept until the audit is completed or the assessment or decision finalized
Section 30
Records have to be kept in their original form or in a form specified by SARS
Section 31
Records have to always be available for inspection
Reportable arrangements
Is one in terms of which a “ tax benefit “ is or will be derived or is assumed to be derived by any participant and certain other factors are present , as specified in the section.
Section 36 of the TAA
Excluded arrangements . CSARS can exclude an arrangement by public notice. So far the Minister has excluded arrangements where the tax benefit doesn’t exceed R1 mil , or where the tax benefit is not one of the main benefits of the arrangement.
Section 37 of the TAA- disclosure obligation
The promoter of the arrangement has the primary responsibility.
Section 39 ( reportable arrangement reference number)
SARS must issue a reportable arrangement reference number to each participant.
Government notice 787 in Gazette 35733 effective 1/10/2012 sets out
The electronic form in which records should be kept.
An acceptable electronic form
Is one which satisfies the standard contained in section 14 of the Electronic Communications and Transactions Act ( ECT ACT)
Does the electronic copy have to stay in the Republic?
Yes , unless permission is obtained from a senior SARS official to keep them outside RSA
Section 14 of the Electronic communications and Transactions act states
That the integrity of the record must pass assessment. This is done by considering whether the info has remained complete and unaltered. Except for the addition of any endorsement and any charge which arises in the normal course of communication, storage and display.
Where a return made by a taxpayer does not incorporate a determination of the amount of tax liability
SARS has to make the original assessment
Where the tax return incorporates the taxpayer’s determination of the amount of the tax liability
E.g. VAT return. The submission of the return is an original ‘self assessment ‘
If no return is required
The payment of the amount of tax due is the original assessment
If the taxpayer is supposed to submit a return BUT DOES NOT
SARS may make the estimated assessment under section 95
If SARS issues a taxpayer with an estimated assessment
The taxpayer has 30 business days to request SARS to issue a reduced assessment/ additional assessment by submitting a complete and correct return
Limitations for issuing assessments
3 yrs for SARS assessment
5 yrs for self assessment
A assessment becomes final
- No objection has been made, or withdrawn
- After the objection is wholly or partially disallowed, no appeal filed.
- the dispute has been settled.
- an appeal has been settled by the court and no further appeal is made
Section 102 ( Burden of proof)
The taxpayer bears the burden of proving that the amount is not taxable.
The only burden of proof that rests on SARS
To prove that a estimated assessment is reasonable or that an understatement penalty is based on correct facts
When determining whether the burden of proof has been discharged
The courts will assess the balance of probability with regard to the particular circumstances surrounding the item in question.
If a taxpayer is aggrieved by an assessment
He may object to the assessment, in addition a taxpayer may also object to a decision (made by a SARS official)
Prior to lodging an objection
The taxpayer may write to the commissioner within 30 BD after the date of assessment and request written reasons for the assessment
The commissioner ( after request for written reasons ) has
30 days to show the taxpayer where he has already provided reasons, if he has not he has 45 days to give such reasons in writing. And request 45 more days if the case is very complex
The objection must
Be in writing and must specify in detail the grounds upon which it is made. And it must be signed by the taxpayer.
Which form is used for objection?
ADR1. And a separate ADR1 form must be used for each year if assessment
The ADR1 form contains
Details of the tax in dispute, any penalties, additional tax and interest.
When a taxpayer lodges their objection via efiling the form that has to be completed
Is the NOO notice of objection
Where the objection does not comply with the above requirements, the commissioner has
30 days to notify the taxpayer, if he does not do so the objection will be deemed valid
How many days after the objection does the commissioner have to decide on it
6 days ( or 45 after receiving the further information request)
On receipt of an objection from a taxpayer the commissioner may
Allow part of or the entire objection and issue a revised assessment. Or he may disallow it .
The notice of appeal
Must be in writing and must be made within 30 days of the notice of disallowing the objection.
The Notice of appeal is set out on the
ADR2 form, signed by taxpayer or 3rd party and contains details of the tax in dispute and the grounds of appeal.
Even though the taxpayer appeals against a disallowance of his objection
He is still required to pay the tax due
Where a taxpayer appeals against the disallowance of an objection, the matter can be dealt with in 3 ways
- Tax board and possibly to the tax court
- It goes directly to tax court
- It goes into the alternative dispute resolution process and thereafter to the TB or TC if not resolved
The steps followed after the objection is disallowed, and the does not accept the disallowance
- Notice of appeal must be made within 30 days
- In the notice of appeal the taxpayer may opt for the ADR procedure
- Of the taxpayer does not opt for the ADR, the commissioner has 20 days to ask him if he wants to make use of ADR
The ADR process
Has been developed as a less formal, more cost effective and speedier way to resolve tax disputes.
Does ADR apply to all forms of taxes?
Yes
The ADR process terminates
90 days after commencement (unless extended) or when either party delivers notice of termination to the other
If the ADR process is terminated without resolution or settlement
The taxpayer has 20 days to decide whether to continue with the appeal to either the TB/TC
Dispute is defined as
A disagreement on the interpretation of either relevant facts, or the law, or both .
Although SARS has a duty to collect taxes
There are circumstances where it will be to the best advantage of the state to compromise and settle a dispute
After terms of settlement have been reached
The taxpayer’s assessment is not subject to objection and appeal
Administrative non-compliance penalties
Are penalties, for example for the failure to keep proper records .
The amount for administrative noncompliance penalties depends on
The taxpayer’s taxable income or assessed loss for the preceding year of assessment.
A person can request that a penalty be remitted. This must be done
On the prescribed form. This request must contain grounds and supporting documents
