Dispute resolution process and Provisional tax Prof Jackie Arendse August 2015

Provisional tax

Outline Who is a "provisional taxpayer"? What is required of a provisional taxpayer? How to calculate estimated taxable income and provisional tax liability? When are penalties charged? References Income Tax Act: Fourth Schedule Tax Administration Act SARS Guide to Provisional Tax 2014

Who is a provisional taxpayer Who is a provisional taxpayer? Definition: para 1 of the Fourth Schedule any person (other than a company) who derives any income other than remuneration or a s 8(1) allowance or advance Excluding: persons exempt from payment of provisional tax under para 18 any company Excluding: PBOs (s 30(3)), recreational clubs (s 30A(2)), body corporate, share block company or association of persons contemplated in s 10(1)(e) any person who is notified by the Commissioner

Para 18 exclusions: individuals No income from carrying on any business AND - taxable income for the year of assessment will not exceed the tax threshold (R73650/R114800/R128500 for 2015/6); or taxable income from [interest, foreign dividends and rental from letting fixed property] will not exceed R30000 (previously R20000) for the year. Amended with effect from 1 March 2015

Directors and members In terms of the definitions of “employee” and “provisional taxpayer” in paragraph 1 of the Fourth Schedule, as well as the provisions of paragraph 11C, directors of private companies and members of close corporations are regarded as employees. They are not considered to be provisional taxpayers unless they have income that falls within the scope of provisional tax income. SARS Guide to Provisional Tax

Example: Person under 65 years of age: Salary income R 84 000 Local Interest Income R 22 000 Less: Exempt portion R 23 800 R 0 Total Taxable Income R 84 000 This person will not be a provisional taxpayer as there is no taxable portion of investment income after taking into account the applicable interest exemption, resulting in only ‘remuneration’ remaining.

Provisional tax calculations Para 19 of the Fourth Schedule Every provisional taxpayer is required to submit an estimate of TI (should the Commissioner so require) The estimate excludes any retirement fund lump sum benefit, retirement fund lump sum withdrawal benefit or severance benefit The estimate for the 1st period may not be less than the basic amount (see next slide) unless the Commissioner agrees to accept a lower estimate If a taxpayer fails to submit an estimate, the Commissioner may determine an estimate The Commissioner may require a provisional taxpayer to justify an estimate and, if dissatisfied, may increase the amount

Basic amount Para 19(d) of the Fourth Schedule Basic amount = TI (excluding taxable capital gains and certain lump sums) Assessed for the latest preceding year of assessment i.e. the latest year Preceding the year of assessment in respect of which the estimate is made; and In respect of which an assessment has been issued not less than 14 days before the date on which the estimate is submitted * Last assessed TI must be increased by 8% a year if the estimate must be made more than 18months after the end of the latest preceding year of assessment AND The estimate relates to a year that ends more than 1 year after the end of the latest preceding year of assessment (amended with effect from 1 March 2015)

Example 1 from SARS Guide to Provisional Tax The notice of assessment for 2015 tax year of assessment was issued on 15 August 2015. The IRP6 for the 2016 tax year 1st period was due on 31 August 2015. The notice of assessment for the 2014 tax year of assessment was issued on 1 February 2015. RESULT The 2015 assessment was issued 16 days prior to submission of provisional tax estimate. Due to the 14 day criteria being met, the latest preceding year is the 2015 tax year. The 201601 estimate must be made less than 18 months after the end of the 2015 tax year. Therefore, the 8% basic amount increase will not apply. The basic amount for the 201601 return will be the taxable income as per the 2015 assessment (excluding taxable capital gains, etc). Notice of assessment for 2014 year issued 1/2/15 Notice of assessment for 2015 year issued 15/8/15 201601 IRP6 due 31/8/2015

Example 2 from SARS Guide to Provisional Tax (amended) The notice of assessment for the 2012 tax year was issued on 30 June 2012 and reflected taxable income of R170 000, which included a taxable gain of R10 000 and severance benefit of R20 000 The 201601 IRP6 is due by 31 August 2015 The 2013, 2014 and 2015 tax returns have not been submitted The 2012 assessment was issued more than 14 days before the date on which the 201601 provisional tax estimate was submitted and 2012 is therefore the latest preceding year for which an assessment has been issued The 201601 estimate is due more than 18 months after the end of the latest preceding year (2012) The 8% per annum adjustment will apply (see next slide)

Example 2 (cont) The basic amount for the 201601 return is calculated as follows: Taxable income assessed in 2012 R170 000 Less: Taxable capital gain (10 000) Less: Severance benefit (20 000) R 140 000 The basic amount of R140 000 must be increased by 8% for each year from 2012: 2013, 2014, 2015 and 2016, ie the basic amount for 201601 return is [R140 000 + (R140 000 x 8% x 4)] = R184 800

Calculating the first provisional tax payment Para 21(1)(a)/ 23(a) Estimated taxable income for the year of assessment (see rule on basic amount) Normal tax on estimated taxable income Less: Primary, secondary and tertiary rebates Less: Tax credit for medical scheme fees (s 6A) Less: Additional medical expenses tax credit (s 6B) Normal Tax Payable (A) Half of the normal tax payable on estimated table income (A/2) Less: Employees’ tax deducted from remuneration during the first period Less: Foreign tax credit (s 6quat) for the first 6 months = FIRST PROVISIONAL TAX PAYMENT

2nd provisional payment: Small taxpayers (TI up to R1m) Estimated TI must not be less than the lower of - the basic amount (adjusted) or 90% of actual taxable income for the year Large taxpayers (TI > R1m) Estimated TI must be equal to at least 80% of actual taxable income for the year

Calculating the second provisional tax payment Para 21(1)(b)/ 23(b) Estimated taxable income for the year of assessment Normal tax on estimated taxable income Less: Primary, secondary and tertiary rebates Less: Tax credit for medical scheme fees (s 6A) Less: Additional medical expenses tax credit (s 6B) Normal Tax Payable Less: First provisional payment Less: Employees’ tax deducted from remuneration during the year Less: Foreign tax credit (s 6quat) for the year = SECOND PROVISIONAL TAX PAYMENT

Third provisional payment Voluntary topping-up payment May reduce s 89quat interest No reduction in penalties

S 89quat interest Interest is either levied on an underpayment of tax or paid on an overpayment of tax from the ‘effective date S 89quat(2) interest is payable by a provisional taxpayer if the normal tax exceeds the ‘credit amount’ (i.e. an underpayment of tax) and if in the case of - an individual or trust, the taxable income for the year of assessment exceeds R50 000; or a company, the taxable income for the year exceeds R20 000. Levied at the prescribed rate (9,25 % since 1/11/14), calculated from the day following the ‘effective date’ to the day before the first due date on the relevant assessment notice Interest on underpayment paid by a taxpayer is not tax deductible Where the credit amount exceeds the normal tax payable, ie a refund is payable, interest will be paid (@ 5,25% since 1/11/14) IF the excess exceeds R10 000 AND the taxable income exceeds the thresholds above

Turnover tax (TT) on micro businesses Sixth Schedule 1st interim payment Within 6 moths from the beginning of the year of assessment 50% of TT payable on the estimated taxable turnover for the year Estimated taxable turnover must not be less than the taxable turnover for the previous year of assessment unless SARS accepts the lower estimate 2nd interim payment By the end of the year of assessment 100% of TT payable on the estimated taxable turnover for the year less the first interim payment Where the estimate of the taxable turnover for the second interim payment is less than 80% of the actual taxable turnover for the year of assessment, additional tax will be charged: 20% of the difference between [TT on the estimated taxable turnover] and [TT on 80% of actual taxable turnover for the year of assessment] The additional tax may be waived in certain circumstances. Final payment where the assessed turnover tax exceeds the interim payments Interest at the prescribed rate on all late payments and underpayments

Provisional tax penalties Late payment – 1st or 2nd Underestimate – 2nd (amended from 1 March 2015) Failure to submit – 2nd (amended from 1 March 2015)

Underestimate penalty para 20 of the Fourth Schedule If: final assessed taxable income is >R1m: 20% of the difference between tax (after rebates) calculated on TI equal to 80% of actual taxable income; and employees’ tax and provisional tax in respect of such year of assessment paid by the end of the year of assessment If: final assessed taxable income is < or = R1m: the lesser of Normal tax (after rebates) on TI equal to 90% of actual TI; and tax (after rebates) on the basic amount Deemed to be a penalty charged under Ch 15 of the TAA

EG Company: Assessed taxable income for 2015 year of assessment = 1 500 000 x 80% = 1 200 000 X 28% = 336 000 (no rebates) 1st and 2nd provisional tax payment (based on Taxable income estimated in 201502 return) 1 000 000 X 28% = 280 000 Shortfall in tax paid by year end 56 000 Penalty @ 20% X 20% = R11 200

Underestimate penalty: administrative provisions %-based penalty under Ch 15 of the TAA SARS may remit if the estimate was seriously calculated with regard to relevant factors and not deliberately or negligently understated (para 20(2)); OR SARS may remit under Ch 15 No penalty if SARS has increased the 2nd estimate (deleted with effect from 1 March 2014) A para 20 penalty must be reduced by any late-payment (para27) penalty in respect of a second provisional tax payment (para 20(2B)) (effective from 1 March 2014)

Failure to submit para 20(2A) If a provisional taxpayer fails to submit the second estimate of taxable income by the last day of the year of assessment the non-submission is deemed to be a Nil submission Effective for years of assessment commencing on/after 1 March 2014 Para 20 underestimate penalty provisions then apply SARS may remit part or all of the para 20 penalty is satisfied that the failure to submit an estimate was not due to any intent to evade or postpone the payment of tax (para 20(2C)) (effective from 1 March 2015)

Late payment penalty Para 27 of the Fourth Schedule If a provisional taxpayer fails pay any amount of provisional tax on time (including additional payment on an increased estimate) Penalty = 10% of the amount not paid Deemed to be a percentage-based penalty under Ch 15 of the TAA SARS may remit under Ch 15

Payment rules SARS The following methods to effect payments to SARS are available: at a SARS branch, Mondays to Fridays, 08:00 - 15:30, excluding public holidays. by mail, via the bank or ATM: sufficient time for mailing or processing must be taken into account. Electronically: provision must be made for your bank’s cut-off times and for a clearance period that could take between two and five days. If the last day for payment falls on a public holiday or weekend, the payment must be made on the last working day prior to the public holiday or weekend.

Administrative penalties: Chapter 15 Recourse (TAA s 214 -220) Penalty incorrectly imposed Submit a: completed return RFR with the reason “Not Liable”. Penalty correctly imposed Submit a completed Request for Remission of Penalty (RFR1) form the application will only be considered if the non-compliance has been remedied on or before the due date as per the AP34 Include an explanation of the exceptional circumstances which led to the non-compliance SARS: The request can either be ALLOWED, PARTIALLY ALLOWED or DISALLOWED, and will be communicated to the taxpayer by means of a dispute outcome letter (AP34D). This letter will be viewable on eFiling if the RFR1 form was submitted via eFiling or posted to the taxpayer if the RFR1 form was submitted manually. When the request for remission outcome is allowed, all the penalties in relation to the dispute will be reversed. The partially allowed option will be applied to transgressions that relate to PAYE missing certificates or incorrect / incomplete / inaccurate data on employee certificates. When the request for remission outcome is disallowed, the reasons will be given on the “dispute outcome” letter i.e. AP34D. The taxpayer has the right to lodge an objection (NOO) against the outcome of his / her request for remission

Grounds for remittance (s 217) Fixed amount penalties SARS may remit up to R2 000 (R100 000 for Reportable Arrangement penalties) if ‘First incidence’ of non-compliance; or Duration of the non-compliance is less than 5 business days; and Reasonable grounds for the non-compliance exist; and The non-compliance has been remedied. S 208: ‘first incidence’ means an incidence of non-compliance by a person if no ‘penalty assessment’ under this Chapter was issued during the preceding 36 months, whether involving an incidence of non-compliance of the same or a different kind, and for purposes of this definition a ‘penalty assessment’ that was fully remitted under section 218 must be disregarded; NB: s 218 refers to remittance on the grounds of ‘exceptional circumstances’ ‘business day’ is defined in s 1 (for the purpose of this provision) as – a day which is not a Saturday, Sunday or public holiday. Note: under the regulations issued in respect of s75B of the ITA, SARS had a discretion to remit the whole or a portion of an administrative non-compliance penalty imposed for a first incidence of non-compliance or if the incidence of non-compliance was remedied within 7 days; however under s 217 of the TAA, SARS may only remit administrative non-compliance penalties up to an amount of R2,000 IF this is the first instance of non-compliance OR the duration of the non-compliance is less than five business days. ‘Reasonable grounds’ is not defined.

Grounds for remittance (cont) Percentage-based late payment penalties SARS may remit the penalty or a portion thereof if ‘first incidence’ of noncompliance, or involved an amount of less than R2 000; and Reasonable grounds for the non-compliance exist; and The non-compliance has been remedied.

Remittance in exceptional circumstances (s 218) SARS must remit a penalty if any of the following rendered the person incapable of complying: natural or human-made disaster civil disturbance or disruption in services serious illness or accident serious emotional or mental distress errors by SARS serious financial hardship, such as – lack of basic living requirements; or immediate danger that the continuity of business operations and the continued employment of its employees are jeopardised; or any other circumstance of equal seriousness. SARS SHORT GUIDE TO THE TAA: The exceptional circumstances are limited to those listed in s 218(2) and one or more of the circumstances must have rendered the person incapable of complying with the obligation.  External factors - if there was a natural or human-made disaster, or a civil disturbance, or a disruption in services.  Factors personal to the taxpayer - if the non-compliance was due to a serious illness or accident; or to serious emotional or mental distress.  Serious financial hardship- o For an individual, if the reason for non-compliance was connected to depriving the person of basic living requirements. o In the case of a business, if there was an immediate danger that the continuity of business operations and the continued employment of its employees were jeopardised.  SARS’s fault - if the reason for non-compliance is connected to SARS’s fault or error, involving one of the following: o SARS made a capturing error; o there was a processing delay; o incorrect information was contained in an official publication or media release issued by the office of the Commissioner; o SARS delayed providing information; or o SARS did not provide sufficient time for an adequate response to be made to a request for information.  Any other circumstance of analogous seriousness.

Remittance What are the requirements for an objection to be valid? If a penalty was incorrectly assessed, SARS may issue a revised assessment within 3 years of the original penalty assessment (s 219). A request for remission (RFR) can be Allowed, Partially Allowed or Disallowed If the taxpayer disputes the outcome of the RFR he / she may object on the prescribed Notice of Objection form (NOO) )(s 220) s 215(3): When a taxpayer requests remittance an automatic suspension of the duty to pay and SARS’s right to collect from the day the application is submitted until 21 business days after a decision is taken not to remit the administrative non-compliance penalty (unless there is a risk of a taxpayer not paying or if fraud was a factor in the underlying non-compliance). Note: in circumstances where an administrative non-compliance penalty is levied for an instance of non-compliance which is not a first incidence or which did not occur under the listed or analogous exceptional circumstances, the taxpayer will have to follow the objection procedures as provided for in section 104 of the TAA. SARS: It is important that an objection is submitted on the correct form as failure to do so will result with an objection being rejected. Two forms are prescribed for objections, namely, Notice of Objection form (NOO) and ADR1. The (NOO) is applicable to the following tax types: PIT (Administrative Penalties and Assessed Tax including additional / understatement  tax) CIT (Assessed Tax including additional tax only) PAYE (Administrative Penalties only) The ADR1 is applicable to the following tax types: VAT PAYE assessment Income Tax for Trusts STC prior to 1 April 2011 and Other taxes. The objection must be submitted within 30 business days after date of the assessment or SARS decision. Where the lodging on an objection was preceded by the request for reasons, the objection must be submitted within 30 business days after: the date of the notice by SARS that adequate reasons have been provided or the date SARS furnished you with the reasons. What are the requirements for an objection to be valid? It must be submitted on the prescribed form namely Notice of Objection (NOO) or Alternative Dispute Resolution (ADR1). It must be submitted within the prescribed period; It must specify in detail the grounds upon which it is made; It must specify the address at which the taxpayer will accept notice and delivery of SARS’s decision in respect of such objection and all documents (in terms of the proceedings contemplated in rule 26); It must be signed by the taxpayer.

Remittance in exceptional circumstances TAA s 218 SARS must upon receipt of a RFR remit a penalty or portion thereof if any of the following circumstances rendered the person incapable of complying: natural or human-made disaster civil disturbance or disruption in services serious illness or accident serious emotional or mental distress errors by SARS serious financial hardship, such as – lack of basic living requirements; or immediate danger that the continuity of business operations and the continued employment of its employees are jeopardised; or any other circumstance of analogous seriousness. SARS SHORT GUIDE TO THE TAA: The exceptional circumstances are limited to those listed in s 218(2) and one or more of the circumstances must have rendered the person incapable of complying with the obligation. · External factors - if there was a natural or human-made disaster, or a civil disturbance, or a disruption in services. · Factors personal to the taxpayer - if the non-compliance was due to a serious illness or accident; or to serious emotional or mental distress. · Serious financial hardship- o For an individual, if the reason for non-compliance was connected to depriving the person of basic living requirements. o In the case of a business, if there was an immediate danger that the continuity of business operations and the continued employment of its employees were jeopardised. · SARS’s fault - if the reason for non-compliance is connected to SARS’s fault or error, involving one of the following: o SARS made a capturing error; o there was a processing delay; o incorrect information was contained in an official publication or media release issued by the office of the Commissioner; o SARS delayed providing information; or o SARS did not provide sufficient time for an adequate response to be made to a request for information. · Any other circumstance of analogous seriousness.

Deferral of payment: instalment agreements TAA s 167 A senior SARS official may (see s 168) enter into an agreement with a taxpayer in the prescribed form under which the taxpayer is allowed to pay a tax debt in one sum or in instalments, within the agreed period if satisfied that: Criteria or risks that may be prescribed by the Commissioner by public notice have been duly taken into consideration; and The agreement facilitates the collection of the debt. The agreement may contain such conditions as SARS deems necessary to secure collection of tax. SARS may terminate if the taxpayer fails to pay an instalment or to comply

Dispute resolution process

Resolving disputes with SARS Interpretation of the law Normal dispute resolution steps: Objection & appeal ADR Tax Board Tax Court Normal Court system Administration of the law Administrative issue resolution: Internal service issue resolution SSMO Tax Ombud Public Protector/normal Court system

What to do if you dispute your tax assessment SARS Guide Request reasons for assessment Objection Appeal Post-appeal Procedural applications Pre-hearing formalities

Dispute resolution process – rules TAA s 103 Minister may publish rules governing: Procedures to lodge an objection and appeal against an assessment or decision that is subject to objection and appeal The conduct and hearing of an appeal before a tax board or tax court Rules published July 2014 took effect from 11 July 2014

Burden of proof TAA s 102 Generally lies with a taxpayer SARS has the burden to prove - that an assessment based on an estimate is reasonable; and the basis for imposing an understatement penalty. When the Commissioner authorises a jeopardy assessment the taxpayer may approach a High Court for review on the basis that the assessment is excessive or there is no justification for the jeopardy assessment. SARS then bears the burden of proving that the making of the assessment was reasonable in the circumstances

Reasons for assessment - Rule 6 Any taxpayer who is aggrieved by an assessment may Prior to lodging an objection request SARS to provide reasons for the assessment to enable the taxpayer to formulate an objection Reason Sufficient to enable the taxpayer to properly understand the basis of the assessment and assist in the formulation of the grounds to object thereto (SARS website, based on CSARS v Sprigg Investment 117 CC, 2011 SCA) ) How Call centre (phone and/or email / letter)

Reasons for assessment - Rule 6 Requests must - Be in the prescribed form and manner (no form yet) Specify an address for delivery of reasons Be delivered to SARS within 30 days after the date of the assessment may be extended by SARS for up to 45 days if satisfied that reasonable grounds exist for the delay in complying within the specified period.

Reasons for assessment (cont.) Where in the opinion of a SARS official adequate reasons have already been provided SARS must, within 30 days after delivery of the taxpayer’s request, notify the taxpayer in writing, referring to the documents wherein the reasons were provided. Where in the opinion of a SARS official adequate reasons have not yet been provided SARS must provide written reasons within 45 days after delivery of the taxpayer’s request period may be extended by SARS if satisfied that more time is required due to exceptional circumstances, the complexity of the matter or the principle or the amount involved, Such extension may not exceed 45 days and SARS must deliver a notice of the extension to the taxpayer before the expiry of the 45-day period

‘Day’ means ‘Business day’ TAA S 1 definition: Excludes a Saturday, Sunday or public holiday For purposes of determining the days or a period allowed for complying with the dispute resolution provisions of Chapter 9 only, excludes 16 December - 15 January SARS Guide: TAA generally uses business days in the context of time periods for registration, OR submission of returns or requested relevant material and calendar days in the context of time periods for payment of tax or calculation of interest.

What assessments and decisions may be objected to? TAA s 104 Any assessment where the taxpayer is aggrieved by the assessment A decision by SARS not to extend the period for lodging an objection (s 104(4)) or appeal (s 107(2)) Any decision that may be objected to or appealed against under a tax Act (eg s 3 of the ITA; s 32 of the VAT Act) A decision not to authorise a refund A decision not to remit an administrative non-compliance penalty A decision not to remit an understatement penalty

Rules for a valid objection Rule 7 A notice of objection must be: Delivered to SARS within 30 days after the date of assessment/ reasons Lodged in the prescribed form (NOO or ADR) Specify the grounds of objection in detail If the SARS eFiling is not used, specify an address at which the taxpayer will accept delivery of SARS decision and documents Signed by the taxpayer or duly authorised representative May be regarded as invalid if these requirements are not met SARS must notify the taxpayer and state the ground for invalidity within 30 days of delivery of the invalid objection Taxpayer must then submit a new objection within 20 days of delivery of SARS notice Thereafter, the taxpayer may only submit a new and valid objection with an application for an extension under s 104(4)

Extension of deadline TAA s 104(3) & (4); also See IN 15 (issue 3) A senior SARS official may authorise the extension of the period within which an objection must be filed if satisfied that there are reasonable grounds for the delay The period may not be extended - For more than 21 business days Unless a senior SARS official is satisfied that exceptional circumstances (see s 218) exist which gave rise to the delay; or If the application is submitted more than 3 years after the date of assessment or the decision; or If the grounds for objection are based wholly or mainly on a change in practice generally prevailing which applied on the date of assessment or the decision to qualify for an extension for a late objection, the taxpayer has to prove that - for an extension for less than 21 business days: reasonable grounds exist for the delay; or for an extension for more than 21 business days: exceptional circumstances exist for the delay.

SARS decision on an objection TAA s 106 SARS must consider a valid objection in the manner and within the period prescribed under the TAA and the ‘rules’. SARS may disallow the objection or allow it either in whole or in part. If allowed either in whole or in part, the assessment or ‘decision’ must be altered accordingly. SARS must, by notice, inform the taxpayer or representative of the decision. The notice must state the basis for the decision and a summary of the procedures for appeal.

Decision on an objection Rule 9 SARS must notify the taxpayer of the decision on the objection and the basis thereof within – 60 days after delivery of the taxpayer’s objection; or Where SARS has requested supporting documents under Rule 8, within 45 days after Delivery of the requested documents; or If the documents were not delivered, the expiry of the period within which the documents must be delivered SARS may extend the 60-day period for up to 45 days if, in the opinion of a senior SARS official, more time is needed to take a decision due to exceptional circumstances, complexity or amount If a period is extended the official must, before expiry of the 60-day period, inform the taxpayer

Requirements for a valid appeal Appeal Rule 10 After a taxpayer is notified of SARS’ decision on the objection, the taxpayer has the right to appeal against the assessment or the ‘decision’ in the prescribed form and manner. Requirements for a valid appeal must be in the prescribed form must be delivered to SARS within 30 days after delivery of the notice of the disallowance of an objection must be signed by the taxpayer or duly authorised representative must indicate in respect of which grounds specified in the objection the taxpayer is appealing may indicate whether or not the taxpayer wishes to make use of the ADR procedures to resolve the dispute, should these procedures be available

Post-appeal stage ADR Both the taxpayer and SARS agree to resolve a dispute outside of court Tax Board Tax Court

Pay now argue later principle s 164 TAA specifically provides that dispute (objection & appeal) does not automatically suspend obligation to pay Suspension of payment may be granted upon request Decision to suspend based on various factors – refer s 164(3) – taxpayer must motivate SARS collection steps are prohibited during consideration of a suspension request and 10 days after revocation notice, except in narrow circumstances If tax is paid and the objection/appeal is upheld interest is payable from the date of payment to the date of the refund (all taxes)

Suspension of payment SARS website  Can apply for suspension of payment for - Income Tax [including Corporate Income Tax (CIT)] Employees’ Tax [Pay-As-You-Earn (PAYE)] Value-Added Tax (VAT) Customs and Excise  Information to be provided in the request letter: Registered Details (Name, ID/Registration Number, etc.) All tax reference numbers, e.g. Income Tax, PAYE, VAT etc. Reason(s) for the request. E.g. Details of the circumstance which prevented compliance Any supporting documents (relevant material) to support the request. 

Criteria for suspension s 164(3) Whether recovery of the disputed tax would be in jeopardy risk of dissipation of assets by the taxpayer compliance history of the taxpayer whether fraud is prima facie involved in the origin of the dispute whether payment would result in irreparable hardship to the taxpayer not justified by the risk to SARS whether the taxpayer is able to provide adequate security for the payment of the amount  involved

Withdrawal of a suspension of payment s 164(4) If - the objection isn’t lodged; or an objection is disallowed and no appeal is lodged; or an appeal to the Tax Board or Tax Court is unsuccessful the suspension is revoked with immediate effect

Tax liability & payment Security (TAA s 161) SARS may require security to safeguard collection of tax e.g. in case of withholding agent who repeatedly failed to withhold / pay tax due Security may also be required from any or all of members, shareholders or trustees who control / manage the taxpayer Preservation of assets order (TAA s 163) Common law remedy codified in TAA for tax administrative purposes

Appointed Oct 2013 and office is operating Tax Ombud TAA s 14 - 21 Appointed Oct 2013 and office is operating Independent and effective recourse for taxpayers in line with the objective of TAA to balance powers & rights Mechanism to address service failures & failures to respect taxpayer rights Tax Ombud’s office may access taxpayer’s information – bound by confidentiality provision Section 259(2) of the TAA “The first Tax Ombud appointed under this Act may not review a matter that arose more than one year before the day on which the Tax Ombud is appointed, unless the Minister requests the Tax Ombud to do so.”

Mandate of the tax ombud TAA s 16 The Tax Ombud must - Review and address a complaint laid by a taxpayer and, seek to resolve it through mediation or conciliation; Act independently in resolving a complaint; Follow informal, fair and cost-effective procedures in resolving a complaint; Provide information to a taxpayer about the mandate and the procedures to pursue a complaint; Facilitate access by taxpayers to complaint resolution mechanisms within SARS to address complaints; and Identify and review systemic and emerging issues related to service matters or the application of the provisions of this Act or procedural or administrative provisions of a tax Act that impact negatively on taxpayers.

The Tax Ombud may not - TAA s 17 review matters outside the mandate above, namely - Legislation or tax policy; SARS’ policy or practice generally prevailing, other than to the extent that it relates to a service matter or a procedural or administrative matter arising from the application of the provisions of a tax Act by SARS; A matter subject to objection and appeal under a tax Act, except for an administrative matter relating to such objection and appeal; or A decision of, proceeding in or matter before the tax court.

Process of lodging a complaint at the Tax Ombud SARS call centre Must provide feedback within 21 working days SARS branch office: tax practitioner consultant / team leader SARS branch manager SARS Service Monitoring Office (SMMO) Tax Ombud manual complaint form can be obtained from the office in Hatfield, Pretoria.

Tax Ombud contact details Phone: 0800 662 837 or (+27) 12 431-9105 Fax:  (+ 27) 12- 452-5013          Email: complaints@taxombud.gov.za Online complaint form http://www.taxombud.gov.za/docs/complaint-form.pdf Can visit the office for an interview or a consultation. It is better to write first and ask for an interview in the letter. Physical address: IParioli building, Block A3, Ground Floor; 1166 Park Street (Between Jan Shoba/old Duncan & Grosvenor Streets), Hatfield, Pretoria, 0157)  

Thank you!

Disclaimer Nothing in this presentation should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice taking into account specific facts and circumstances of any transaction entered into. Although great care has been taken to ensure the accuracy of the slides in this presentation, neither the presenter nor the University nor any other related party accepts any responsibility for any consequences of decisions taken based on the content of the presentation. It remains your own responsibility to consult the relevant legal resources prior to making a decision.