Prof Daniel N Erasmus “How to survive a tax audit” under the new Tax Administration Act, 2011

More Info – http://www. iitf More Info – http://www.iitf.net More notes & Advanced Diploma In Tax Procedural Law http://www.TaxRadar.net - client funding Prof D N Erasmus – daniel@TaxRiskManagement.com http://www.ErasmusOnTax.com List of cases

BALANCE BETWEEN SARS’ POWERS & TAXPAYER RIGHTS TAA seeks to achieve a balance between powers & duties of SARS and rights & obligations of taxpayers thereby enhancing equity and fairness of tax administration SARS TAXPAYERS Powers & Duties Rights & Obligations

General observations Introduction - survey An approach to Tax Risk Management SARS officials – Relationship Managers International Ethics Standards Board for Accountants Specific provisions in the TAA relevant to audits Audit Commencement & SARS response Key Constitution provisions S 1(c) Principle of Legality; S 2; S 33; S 35(3)(j); PAJA – “administrative action” & S6(2) ; S 195 S 172; S 237; S 4(2) of SARS Act Tax Court or High Court

DESIGN OF TAA: MAIN CHAPTERS - HIGHLIGHTS DESIGN OF TAB: MAIN CHAPTERS Chapter 1 Definitions Chapter 11 Recovery of Taxes Chapter 2 General Administration Chapter 12 Interest Chapter 3 Registration Chapter 13 Refunds Chapter 4 Returns and records Chapter Chapter 14 Write-off or Compromise of tax debt Chapter 5 Information Gathering Chapter 15 Non Compliance Chapter 6 Confidentiality of information Chapter 16 Understatement penalty Chapter 7 Advance Rulings Chapter 17 Criminal Offence Chapter 8 Assessment Chapter Chapter 18 Reporting of unprofessional conduct Chapter 9 Dispute Resolution Chapter 19 General Provisions Chapter 10 Tax Liability & Payment Chapter 20 Transitional Provisions

TAA: BALANCE BETWEEN POWERS & RIGHTS (1)

TAA: BALANCE BETWEEN POWERS & RIGHTS (2) INFORMATION GATHERING & ENFORCEMENT (cont.) SARS TAXPAYER RIGHTS POWERS   Audit Audit selection on rational basis (random or risk) Only authorised SARS officials may audit & must produce authorisation Audit reports on stage of completion to taxpayer Notice of inconclusive audit to taxpayer Letter of audit findings to taxpayer Taxpayer may respond to findings prior to assessment Criminal Separation between audit and criminal investigation Investigations Only authorised SARS officials may investigate Criminal investigation: Adherence to rights as suspect Taxpayer must be informed of inconclusive investigation Only senior SARS official may lay complaint with NPA Inquiry Authorised by Judge of High Court upon application Independent oversight of inquiry Confidential & protection against incriminating evidence Search & Warrant: Issued by Magistrate/Judge of High Court upon application seizure Warrantless: Narrow circumstances Carrying out: Decency & Order; Inventory; Copies/originals; Protection of privileged documents; Application for return/damages

TAA: BALANCE BETWEEN POWERS & RIGHTS (3) RECOVERY SARS POWERS TAXPAYER RIGHTS Recovery Statutory limitations (e.g. TAB; Insolvency Act; Companies Act)   Period of limitations reduced to 15 years Constitutional limitations (PAJA, property rights etc.) SARS Administrative Complaint Resolution / Tax Ombud / Public Protector / Court review Civil procedural rights (e.g. Rescission of judgments) Debt relief Deferment by instalment payment agreements Write off or compromise agreements Suspension pending outcome of dispute Remittance of penalties and interest Voluntary Disclosure Programme - penalty relief Personal liability Prescribed criteria in TAB before 3rd party will be held liable Normal court remedies during recovery Repatriation of Prescribed judicial procedure before Judge of High Court foreign assets Preservation of assets

QUESTIONS Address questions to: Prof D N Erasmus [daniel@TaxRiskManagement.com] 083 458 8422 www.ErasmusOnTax.com

Thank You

1.Republic of South Africa   The Republic of South Africa is one, sovereign, democratic state founded on the following values: (a)Human dignity, the achievement of equality and the advancement of human rights and freedoms. (b)Non-racialism and non-sexism. (c)Supremacy of the constitution and the rule of law. (d)Universal adult suffrage, a national common voters roll, regular elections and a multi-party system of democratic government, to ensure accountability, responsiveness and openness. 2.Supremacy of Constitution This Constitution is the supreme law of the Republic; law or conduct inconsistent with it is invalid, and the obligations imposed by it must be fulfilled.

237. Diligent performance of obligations   All constitutional obligations must be performed diligently and without delay.

195. Basic values and principles governing public administration   Public administration must be governed by the democratic values and principles enshrined in the Constitution, including the following principles: (a) A high standard of professional ethics must be promoted and maintained. (b) Efficient, economic and effective use of resources must be promoted. (c) Public administration must be development-oriented. (d) Services must be provided impartially, fairly, equitably and without bias. (e) People's needs must be responded to, and the public must be encouraged to participate in policy-making. (f) Public administration must be accountable. (g) Transparency must be fostered by providing the public with timely, accessible and accurate information…

1.Republic of South Africa   The Republic of South Africa is one, sovereign, democratic state founded on the following values: (a)Human dignity, the achievement of equality and the advancement of human rights and freedoms. (b)Non-racialism and non-sexism. (c)Supremacy of the constitution and the rule of law. (d)Universal adult suffrage, a national common voters roll, regular elections and a multi-party system of democratic government, to ensure accountability, responsiveness and openness. 2.Supremacy of Constitution This Constitution is the supreme law of the Republic; law or conduct inconsistent with it is invalid, and the obligations imposed by it must be fulfilled.

SARS Act 34 of 1997 4 (2) SARS must perform its functions in the most and effective manner and in accordance with the values and principles mentioned in section 195 of the Constitution.