Previewing the new Tax Administration Act : more muscle for SARS - taxpayers beware!

• Jurisdiction: South Africa
• Author: Milton Seligson
• DOI: 10.10520/EJC174305
• Published date: 01 September 2012
• Date: 01 September 2012
• Pages: 1-13
• Published By: Siber Ink

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© Siber ink

Previewing the New Tax

Administration Act:

MORE MUSCLE FOR SARS — TAXPAYERS

BEWARE!

MILTON SELIGSON SC1

ABSTRACT

The new Tax Administration Act 28 of 2011 (‘the TAA’) is a far-reaching piece

of legislation that will radically alter the tax administration landscape in South

Africa. The TAA was promulgated on 4 July 2012, but is not yet in operation.

It will come into force on a date to be proclaimed by the President in the

Gazette. This is likely to happen in the near future.

The TAA consolidates in one statute the generic provisions administered by

SARS and up to now separately contained in the various tax Acts that govern

liability for tax, including the Income Tax Act 58 of 1962, the Value-Added

Tax Act 89 of 1991, the Transfer Duty Act 40 of 1949, and the Estate Duty Act

45 of 1955, as well as a number of other tax statutes. Administrative provi-

sions that are specific to particular tax Acts do not appear in the TAA and are

retained in those Acts.

This article discusses the objectives of SARS in the enactment of the TAA

and indicates the significant departures from current legislation as intro-

duced in the new statute. The article presents an overview of the scope and

purpose of the new provisions and an assessment of their potential impact

on the powers and duties of SARS and the rights and obligations of affected

taxpayers. This is done with special reference to SARS’s explanation of and

justification for the contents of the TAA as contained in the SARS Legislative

Overview of the TAA and the SARS Short Guide to the TAA, both published on

the SARS website in August 2012.

The article gives a concise summary of each of the twenty chapters and

the schedule that comprise the TAA. In relation to SARS’s extended powers of

information gathering, inspection and search and seizure, the article discusses

the concept of ‘foreseeable relevance’ appearing in the wide-ranging defini-

tion of ‘relevant material’, which SARS is entitled under Chapter 5 of the TAA

to request from the taxpayer for the purposes of administration of the tax Act

in relation to the taxpayer, or to be produced in person during a proposed

interview by SARS.

SARS considers that as long as a reasonable possibility exists that the

requested material will be relevant for assessing or collecting tax, or showing

non-compliance with the requirements of a tax Act, this makes it ‘foreseeably

relevant’. The article suggests that this power has the potential for abuse, as

it may encourage ‘fishing expeditions’ by SARS, where no clear reason for

investigation exists.

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Member, Cape Bar.