The South African Revenue Service.
resolution rules provide for, among others, 80 days to submit an objection
and more independence of an ADR facilitator, writes Joon Chong.
On 10 March 2023, the Minister of
Finance published new dispute resolution rules in the Government Gazette in
terms of the Tax Administration Act (TAA). These rules describe the procedures
for objections and appeals, for the alternative dispute resolution (ADR)
mechanism and for the conduct and hearing of appeals before a Tax Board or Tax
Court.
The rules came into effect on 10
March 2023 and will apply to matters already under way.
Requests for reasons,
objections, appeals to the Tax Board or Tax Court, ADR, settlement discussions,
or interlocutory applications that were instituted under the previous rules but
have not been completed, will have to be continued and concluded under the new
rules.
The notable changes in the new
rules are as follows.
Extension
of time periods: Parties can agree to shortened time periods for various
procedures if the timelines are not already regulated by the rules. The
2014 rules only allowed for parties to agree to extensions.
Objection
against assessment: A taxpayer objecting to an assessment must deliver a notice
of objection (NOO) within 80 days (2014 rules: 30 days) of the date of the
assessment.
If the taxpayer requested reasons, the NOO must be delivered
within 80 days of the delivery of (i) the SARS notice that adequate
reasons have been provided, or (ii) the SARS letter with the reasons
requested. The 80-day period excludes the 30-day extension where a
taxpayer may still request additional time on reasonable grounds, and up
to three years extension on exceptional grounds.
READ | EXPLAINER | New rules for resolving tax disputes with SARS
Appealing
on new grounds: A taxpayer may appeal on a new ground not raised in the NOO
unless the new ground is a new objection against a part of the assessment not
previously objected to. This rule has been the subject of a few court
decisions and is now couched in the positive.
ADR
facilitator appointment: One of the biggest issues with the
ADR process in the 2014 rules is the perceived lack of independence of the
facilitator as the facilitator is appointed by SARS and a SARS employee.
The requirement has been removed that a senior SARS
official must establish a list of facilitators.
The new rules also provide
that the facilitator must have appropriate tax experience and be
acceptable to both SARS and the taxpayer. Although the facilitator once
accepted by all parties, is still appointed by a senior SARS official
within 15 days of the ADR commencement date, rule 17(3) now expressly
provides that the facilitator must act independently and impartially. We
welcome these positive amendments.
Delivery
of facilitator’s report: The facilitator is required to deliver a
report within five days of a meeting, and a final report within 10 days
after the ADR process ends.
New
grounds in the SARS statement of grounds of assessment and opposing appeal: If an appeal
proceeds to the Tax Court, SARS is required to deliver a statement
setting out the grounds, and their facts and legal basis of the
assessment, and the facts and legal basis relied on by SARS in opposing
the appeal.
Rule 31(3) has been amended to provide for SARS to include a
new ground of assessment or basis for the partial or full disallowance of
the objection. A new ground is allowed unless (i) the new ground is a
novation of the whole of the factual or legal basis of the disputed
assessment; or (ii) the new ground requires SARS to issue a revised
assessment.
Subpoenas
of witnesses to the Tax Board and Tax Court: A person
may be subpoenaed by the Tax Board clerk or the Tax Court registrar to
attend the appeal and give evidence or provide documents on issues
relevant to the appeal. The new rules also provide that the subpoena must
also not be an abuse of process.
If a party is of the view that the
subpoena is not relevant or an abuse of process, the new rules provide for
them to request the withdrawal of the subpoena, and if not withdrawn to
apply to the Tax Board or Tax Court for the withdrawal of the subpoena.
The same where an issued subpoena was then withdrawn by the clerk or
registrar, the aggrieved party can also apply to the Tax Board or Tax
Court, as the case may be, for the issue of the subpoena.
SARS
to issue assessment within 45 days of a Tax Court decision: Where the Tax Court
confirms or alters the SARS decision or assessment, SARS must issue the
relevant assessment within 45 days of the registrar receiving the Tax
Court decision.
Applications
on notice: must be brought within 20 days of the cause of the application,
unless parties agree to a longer period, or the Tax Court grants an
extension on good cause shown.
The new rules are a positive step
forward in many ways. We would advise taxpayers and their advisers to be aware
of the new rules, particularly on the changes to timelines.
Joon Chong, Partner at Webber Wentzel. News24 encourages freedom of speech and the expression of diverse views. The views of columnists published on News24 are therefore their own and do not necessarily represent the views of News24.