Have you ever received a tax assessment (“Assessment”) from the South African Revenue Service (“SARS”) that did not align with your factual tax position or interpretation of the tax Acts? You are not alone. Many South Africans find themselves in this situation, facing what appears to be an impossible tax bill.

The Tax Administration Act No. 28 of 2011 (the "TAA") read together with the rules promulgated in terms section 103 thereto (the “Rules”), govern the administration of tax laws in South Africa.

The good news? You have options. If you disagree with a SARS Assessment, you have the right to challenge it. It is easy to forget that the tax Acts protect your rights as a taxpayer and SARS does not hold all the power. Here's how you dispute the Assessment:

Request a Suspension of Payment:

SARS has a “pay now, argue later” policy. This means SARS expects to be paid, notwithstanding that the tax liability is disputed. If you do not pay your tax liability, even if you are going to object to the Assessment, SARS can take judgment and start execution proceedings. The “pay now, argue later” policy stems from your statutory obligation to pay your tax.  In order to make sure that SARS does not take judgment and execute against your property, you need to request a suspension of payment. This request, if accepted by SARS, suspends your obligation to pay the Assessed tax until your dispute has been finalised.

SARS’ debt collection arm and its audit arm do not necessarily liaise with each other. It follows that the Suspension of Payment and the dispute steps set out below need to occur simultaneously.

Ask for an Explanation regarding the merits of your matter, if you are unsure how SARS came to its Assessment:

• You can request SARS to provide reasons for their Assessment before lodging your objection (dispute).
• You have 30 business days after receiving the assessment to request reasons from SARS.
• SARS must respond and provide reasons within 45 business days, unless an extension is granted due to exceptional circumstances

Object to the Assessment:

• After getting SARS's explanation (or if you didn't ask for one), you have 80 business days to object to the Assessment. The objection is the most important dispute document as it sets out the grounds on which a taxpayer disagrees with SARS and generally the grounds cannot be changed. We strongly urge taxpayers to approach tax practitioners to assist them in drafting the objection. The objection ought to be detailed, have evidence attached where applicable and set out the amounts which are in dispute. More importantly, it should also address penalties and interest, which in most cases is the biggest challenge.
• SARS must notify the taxpayer of an allowance (whether whole or partial) or a disallowance of the objection together with their reasons within 60 business days of the objection, unless they have asked for further information or documents. Should SARS not respond timeously, there are various avenues within which to finalise the matter at that stage.

Appeal the Decision:

• If SARS doesn't agree with your objection, you can appeal their decision. You must submit a notice of appeal within 30 business days of receiving the notice of disallowance of the objection.
• If you do want to appeal a disallowance, you first need to determine which forum you will be appealing to. If the amount in dispute does not exceed R1 million, then you may appeal to the tax board.  There is talk about increasing this amount to R5 million however, at present any amount in dispute which exceeds R1 million may be appealed to the tax court.
• In your notice of appeal you may indicate that you are willing to participate in alternative dispute resolution (“ADR”) proceedings. If SARS is of the view that the matter is capable of being resolved through ADR, the matter will be referred to ADR and the appeal process will be pended.
• If the matter is not resolved through ADR or not capable of being resolved through ADR, the matter will be referred to either the tax board or tax court, depending on the amount in dispute.
• If you are unhappy with the outcome of your appeal to the tax board or tax court, you may appeal to the full bench of the High Court, or you can appeal directly to the Supreme Court of Appeal.

What If You Miss a Deadline?

Life happens, and sometimes you might miss a deadline. Don't panic! In some cases, SARS may grant extensions if SARS is satisfied that there are reasonable grounds:

For requesting reasons: up to 45 business days. After that, a SARS official does not have a discretion to provide any

further extensions.

For filing an objection: up to 30 business days (or for a longer period in special cases where there are exceptional

circumstances which are beyond the control of the taxpayer). A SARS official cannot extend the objection period if three

years has elapsed since the date of the Assessment.

For appealing a decision: up to 21 business days or up to 45 business days in exceptional circumstances).

Remember, these extensions aren't guaranteed. It's always best to act within the original deadlines if possible.

Why This Matters

Understanding these timelines is crucial for protecting your rights as a taxpayer. By acting promptly and within these deadlines, you give yourself the best chance of resolving any disputes with SARS fairly.

Need Help?

Dealing with tax matters can be complicated. If you're unsure about any part of the process or need assistance in challenging a SARS assessment, don't hesitate to reach out to us at Shepstone & Wylie at Chrichan.delarey@wylie.co.za We can guide you through the process and help ensure that you are taking the right steps within the correct timeframes.