Information-gathering by SARS under the TAA : trumping the taxpayer's right to tax finality

• DOI: 10.10520/EJC186500
• Pages: 1-12
• Published date: 01 March 2016
• Date: 01 March 2016
• Author: Milton Seligson

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© SIBER INK

Information-gathering by

SARS under the TAA:

TRUMPING THE TAXPAYER’S RIGHT TO TAX

FINALITY

MILTON SELIGSON SC

ABSTRACT

Taxpayers or their tax administrators have increasingly to deal with requests

from SARS for tax information arising from their tax returns and from inves-

tigations or audits relating to their tax affairs. This may result in protracted

correspondence and prove frustratingly costly and time-consuming for

taxpayers.

The article explores the nature and extent of SARS’s powers to gather

relevant information from taxpayers under the provisions of the Tax

Administration Act 28 of 2011 (‘the TAA’) and the limitations on the exercise

of such powers. In addition, the article seeks to provide guidance to corpo-

rate tax administrators in dealing with specif‌ic practical issues that may arise

when SARS seeks to exercise its powers to gather tax information by way of

investigation or audit from the taxpayer concerned.

The article surveys in detail the powers conferred on SARS under the provi-

sions that comprise Parts A and B of Chapter 5 of the TAA. It analyses the

concept of ‘relevant material’ which is central to such powers and examines

the legislative background and the SARS Guide to the TAA for clarif‌ication and

context of the relevant statutory provisions. There is also a discussion of the

OECD Model Tax Convention provision from which the foreseeable relevance

test for relevant material is derived.

Finally, there is a discussion of a range of specif‌ic problems that may arise

in relation to SARS’s exercise of its information-gathering powers, and an

analysis of how these issues are likely to be resolved in the light of the relevant

statutory provisions.

The article concludes that while SARS’s powers under the TAA to extract

relevant tax information may impede the taxpayer’s right to f‌inality in its

tax affairs, and indeed in most cases trump any such right, there is room

for improvement in the manner and time-frames in which SARS exercises its

information-gathering powers vis-à-vis taxpayers. The article calls for SARS to

take into account the interests of taxpayers by adopting a more concerted,

systematic and less fragmented approach in its legitimate pursuit of relevant

tax material from taxpayers.

Introduction

It has become commonplace for taxpayers, particularly large corporates,

to have to engage over lengthy periods of time with off‌icials of the South

African Revenue Service (‘SARS’) concerning their tax affairs. In a complex