Legal Privilege Under s 42A of the Tax Administration Act Analysed

Date01 March 2021
Published date01 March 2021
© Siber ink
Legal Privilege Under s 42A
of the Tax Administration Act
Section 42A of the Tax Administration Act 28 of 2011 recognises that
taxpayers have the right to claim legal professional privilege (such as legal
advice privilege and litigation privilege) during a search-and-seizure opera-
tion as well as during an inquiry. If privilege is claimed but disputed by SARS,
then section 42A regulates the procedure to be followed for such dispute to
be resolved. This article analyses its provisions by employing the trite princi-
ples of statutory interpretation emerging from case law. In terms of section
42A, a legal practitioner must be appointed to take possession of any material
over which privilege is claimed, and such person must adjudicate a dispute
related to that status in a manner that is fair and transparent. It is argued that
the relevant taxpayer claiming privilege must, in its founding papers, provide
a detailed explanation of the background of the allegedly privileged informa-
tion. Unless this is done, the taxpayer will unlikely discharge the burden of
proving that the information is privileged, nor will the taxpayer be able to
provide sufficient contextual justification for the protection thereof by non-
disclosure. With reference to the decision in A Company v C:SARS, this article
argues further that, when adjudicating a dispute contemplated by section
42A, a legal practitioner ought, in general, to be slow to undertake an inspec-
tion in private of the allegedly privileged material. An exception would be
where SARS is given access to the material so that it is equally placed, as the
taxpayer, to make informed submissions on the question of privilege.
1 Introduction
Section 7(2) of the Constitution of the Republic of South Africa, 1996
(Constitution) provides that ‘[t]he state must respect, protect, promote
and fulfil the rights in the Bill of Rights’1 (BoR). Section 7(2) operates in
tandem with section 8(1). The latter stipulates that the BoR ‘applies to all
law,2 and binds the legislature, the executive, the judiciary and all organs
of state’. Thus, the Tax Administration Act 28 of 2011 (TAA), South Africa’s
premier tax administration statute, operates subject to taxpayers’ funda-
* Associate Professor in the Department of Mercantile & Labour Law, University of
the Western Cape
In C:SARS v Sunflower Distributors CC 2015 JDR 2546 (GP) para 4, it was held that
the ‘very existence’ of the state depends on tax collection by SARS.
2 The Constitution does not define ‘law’ for its purposes. In the context of s 8(1), the
definition of ‘law’ in s 2 of the Interpretation Act 33 of 1957 ought to apply.

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