A taxpayer who feels aggrieved about a tax assessment is allowed to lodge an objection with SARS. Section 104(3) of the Tax Administration Act, 2011 (TAA) requires a taxpayer to lodge his objection within the period prescribed in the rules.
The rules prescribe a period of 30 business days to lodge a notice of objection, which period commences from the date of assessment, or the date that SARS provides reasons for the assessment if such reasons were requested by the taxpayer.
In a recent judgment, ABC (Pty) Ltd v The Commissioner for SARS, the South Gauteng Tax Court had to consider a request by a taxpayer to extend the period allowed for lodging its objection. Section 104(5) of the TAA allows a senior SARS official to extend the date by –
- 21 business days if satisfied that reasonable grounds exist for the delay; and
- between 22 business days and 3 years if satisfied that there were exceptional circumstances which gave rise to the delay. No extension can be given after 3 years.
ABC (Pty) Ltd, having received an assessment in December 2014 only lodged its objection in June 2015 some 68 business days later, and thus had to show that there were exceptional circumstances which gave rise to the delay.
It was held by the Court that the provisions of section 104(5) are peremptory, in that the period for objection must not be extended unless exceptional circumstances exist. Furthermore, the onus is on the taxpayer to show the existence of such circumstances. This means that unusual facts must be proven which have a causal connection to the delay which resulted.
The taxpayer alleged a number of exceptional circumstances all of which were rejected by the Court because they were not substantiated by proof and documents. For example, it was alleged that the objection involved complex issues of law, but no indication as to the nature of such complexities were given. Also, the taxpayer’s auditor’s services were terminated due to his incompetency, but there were no facts provided to support this. Adequate reasons for the delay in getting new professional advice were also not given.
In dismissing the taxpayer’s appeal the Court concluded that where an assessed liability runs into millions of Rands the taxpayer should take its responsibilities seriously enough to seek advice from attorneys specialising in such matters as soon as the assessments are levied.
This article has been written by Graeme Palmer, a Director in the Commercial Department of Garlicke & Bousfield Inc
For more information contact Lizette Martins (Contact details below)
NOTE: This information should not be regarded as legal advice and is merely provided for information purposes on various aspects of tax law.