1. Dispute resolution process and Provisional tax
Prof Jackie Arendse
August 2015

2. Provisional tax

3. 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

4. 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

5. 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/R for 2015/6); or
taxable income from [interest, foreign dividends and rental from letting fixed property] will not exceed R (previously R20000) for the year.
Amended with effect from 1 March 2015

6. 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

7. Example: Person under 65 years of age:
Salary income R
Local Interest Income R
Less: Exempt portion R R
Total Taxable Income R
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.

8. 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

9. 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)

10. 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 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 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
IRP6 due 31/8/2015

11. Example 2 from SARS Guide to Provisional Tax (amended)
The notice of assessment for the 2012 tax year was issued on 30 June and reflected taxable income of R , which included a taxable gain of R and severance benefit of R20 000
The 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 provisional tax estimate was submitted and is therefore the latest preceding year for which an assessment has been issued
The 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)

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

13. 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

14. 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

15. 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

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

17. 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 R
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 R AND the taxable income exceeds the thresholds above

18. 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

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

20. 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

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

22. 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)

23. 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)

24. 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

25. Payment rules SARS
The following methods to effect payments to SARS are available:
at a SARS branch, Mondays to Fridays, 08: :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.

26. 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

27. Grounds for remittance (s 217)
Fixed amount penalties
SARS may remit up to R2 000 (R 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.

28. 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.

29. 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.

30. 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.

31. 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.

32. 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

33. Dispute resolution process

34. 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

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

36. 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

37. 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

38. 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 / letter)

39. 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.

40. 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

41. ‘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 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.

42. 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

43. 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)

44. 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.

45. 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.

46. 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

47. 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

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

49. 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)

50. 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. 

51. 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

52. 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

53. 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

54. Appointed Oct 2013 and office is operating
Tax Ombud TAA s
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.”

55. 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.

56. 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.

57. 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.

58. Tax Ombud contact details
Phone:  837 or (+27)
Fax:  (+ 27)          
Online complaint form
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)  

59. Thank you!

60. 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.