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When engaging in disputes with the tax collector, there are many rules you need to know about, but the decision in CSARS v The Executor of the Estate of Late Ndlovu (A395 / 2016) possibly says the most important, writes Jean du Toit, lawyer and chief as a fiscal technician at Tax Consulting South Africa.
This decision of a plenary session of the Pretoria High Court reveals how much is at stake when you file an objection against an assessment issued by SARS, because anything you omit at this point will be considered past.
The decision
The dispute between the SARS and the taxpayer in this case revolved around the taxation of the shares granted to the taxpayer by the Nedbank Group. It is important to note that, in addition to the tax collected, the SARS imposed interest in terms of section 89quat (2) of the Income Tax Law.
In challenging the settlement in question, the taxpayer neither objected nor appealed the imposition of interest and this was only raised during an Alternative Dispute Resolution meeting that followed his appeal notice.
The matter advanced to the Tax Court where, among others, it had to be decided whether the taxpayer can raise a new reason for controversy that was not included in his objection, that is, the imposition of interest. The Tax Court held that there was no harm to SARS and a new motive can be introduced.
SARS took the matter on appeal to the High Court, where the full court had to decide whether the decision of the Tax Court should be confirmed. On the issue of raising new grounds not included in the objection, the court referred to the following principle established by the Supreme Court of Appeals in CSARS v Brummeria Renaissance (Pty) Ltd and Others 2007 (6) SA 601 (SCA):
“… But it is also in the public interest that disputes come to an end … it would be unfair to an honest taxpayer if the Commissioner were allowed to continue to change the basis on which the taxpayer was assessed until the Commissioner got it right …”
But what is good for the Commissioner is good for the taxpayer: the court overturned the decision of the Tax Court and held that taxpayers cannot change the basis of their dispute if this was not raised in their objection.
To carry out
Often times, taxpayers approach us only after their dispute with SARS has gone wrong; often when it has progressed beyond the objection stage.
It soon becomes clear that the taxpayer or their representative did not address certain pertinent aspects in the objection, making it very difficult to salvage what may seem like a very simple matter.
Vague and misinformed objections can result in very serious ramifications for the taxpayer, even when they may have been incorrectly assessed.
In practice, you should see your objection as your only chance to dispute an appraisal and even in the simplest of disputes, taxpayers are encouraged to call in a professional who will make their opportunity count.
- By Jean du Toit, lawyer and tax technical director of Tax Consulting South Africa
Read: SARS will be tough on taxpayers, with stricter penalties on the way
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