A critical analysis of a taxpayer’s rights relating to a request by sars for relevant material in respect of an audit
- Authors: Luff, Stephen Gary
- Date: 2022-04
- Subjects: Taxpayers , Value-Added Tax , Tax administration and procedure -- South Africa
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10948/57711 , vital:58223
- Description: This treatise aimed to critically analyse a taxpayer’s rights relating to a request by SARS for relevant material, in respect of an audit (including information requested for the audit of prescribed tax periods). The study also considers whether such a request for relevant material infringes or threatens a taxpayer’s constitutional rights to privacy, information and just administrative action that is lawful, reasonable and procedurally fair. The research considered the information-gathering powers awarded to SARS in terms sections 3(2), 40 and 46 of the TAA versus a taxpayer’s rights to privacy, information and just administrative action in terms of the Constitution. The reasonable and justifiable limitation of taxpayers’ rights, in terms of the general limitation clause contained in section 36(1) of the Constitution, was also considered. The research method consisted of a literature review of various articles, journals, publications, books, statutes and related commentary, judicial decisions and comments of experts. The study revealed the following: • The definition of ‘relevant material’ allows SARS alone to subjectively determine what information is ‘foreseeably relevant’ for the ‘administration of a tax Act’, in respect of an audit. The threshold of what documentation is ‘foreseeably relevant’, is low, and the application of what is foreseeably relevant follows very broad grounds. • SARS’s discretion cannot be easily challenged as the provisions of section 46 of the TAA are peremptory and give rise to mandatory obligations, unless the taxpayer has ‘just cause’ for not providing the relevant material to SARS. • SARS must meet all the jurisdictional requirements of section 3(2) of the TAA to justify that the selection of a taxpayer for an audit or the request for relevant material is necessary for the purposes of the ‘administration of a tax Act’ and is not related to a ‘fishing expedition’ or some other ‘ulterior purpose’. • A taxpayer should evaluate the scope of the information requested to determine if it is ‘frivolous, over-zealous or patently irrelevant’ and falls outside the provisions of section 3(2). It is submitted that a taxpayer could resist such requests to information, to which SARS is not lawfully entitled, to ensure that its constitutional rights are not violated. • A taxpayer is not entitled to the information that SARS used to select it for an audit or SARS’s internal guidelines or policy manuals that are used by its assessors. The risk x indicators and red flags used by SARS to select a taxpayer for an audit constitute ‘SARS confidential information’ and a taxpayer does not have any legal right to specific reasons as to why his tax return has been selected for an audit. • SARS’s decision to request relevant material (or to conduct an audit) is a preliminary or initial step of a process and does not constitute ‘administrative action’ in terms of the PAJA, as it does not adversely affect a taxpayer’s rights nor have a direct external legal effect. A taxpayer therefore cannot rely on the PAJA to refuse such a request. • Even non-administrative action is subject to the broad constitutional ‘principle of legality’, which is an aspect of the rule of law implicit in the Constitution and provides a safety net when the PAJA does not apply. SARS must act within the scope of section 46 and the information requested must constitute ‘relevant material’ and must be ‘foreseeably relevant’ for the purposes of ‘administration of a tax Act’. SARS may not exercise its discretionary investigative powers in an arbitrary or irrational manner and its requests for information must be based on sound, rational decision-making. , Thesis (MA) -- Faculty of Business and Economic science, 2022
- Full Text:
- Date Issued: 2022-04
- Authors: Luff, Stephen Gary
- Date: 2022-04
- Subjects: Taxpayers , Value-Added Tax , Tax administration and procedure -- South Africa
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10948/57711 , vital:58223
- Description: This treatise aimed to critically analyse a taxpayer’s rights relating to a request by SARS for relevant material, in respect of an audit (including information requested for the audit of prescribed tax periods). The study also considers whether such a request for relevant material infringes or threatens a taxpayer’s constitutional rights to privacy, information and just administrative action that is lawful, reasonable and procedurally fair. The research considered the information-gathering powers awarded to SARS in terms sections 3(2), 40 and 46 of the TAA versus a taxpayer’s rights to privacy, information and just administrative action in terms of the Constitution. The reasonable and justifiable limitation of taxpayers’ rights, in terms of the general limitation clause contained in section 36(1) of the Constitution, was also considered. The research method consisted of a literature review of various articles, journals, publications, books, statutes and related commentary, judicial decisions and comments of experts. The study revealed the following: • The definition of ‘relevant material’ allows SARS alone to subjectively determine what information is ‘foreseeably relevant’ for the ‘administration of a tax Act’, in respect of an audit. The threshold of what documentation is ‘foreseeably relevant’, is low, and the application of what is foreseeably relevant follows very broad grounds. • SARS’s discretion cannot be easily challenged as the provisions of section 46 of the TAA are peremptory and give rise to mandatory obligations, unless the taxpayer has ‘just cause’ for not providing the relevant material to SARS. • SARS must meet all the jurisdictional requirements of section 3(2) of the TAA to justify that the selection of a taxpayer for an audit or the request for relevant material is necessary for the purposes of the ‘administration of a tax Act’ and is not related to a ‘fishing expedition’ or some other ‘ulterior purpose’. • A taxpayer should evaluate the scope of the information requested to determine if it is ‘frivolous, over-zealous or patently irrelevant’ and falls outside the provisions of section 3(2). It is submitted that a taxpayer could resist such requests to information, to which SARS is not lawfully entitled, to ensure that its constitutional rights are not violated. • A taxpayer is not entitled to the information that SARS used to select it for an audit or SARS’s internal guidelines or policy manuals that are used by its assessors. The risk x indicators and red flags used by SARS to select a taxpayer for an audit constitute ‘SARS confidential information’ and a taxpayer does not have any legal right to specific reasons as to why his tax return has been selected for an audit. • SARS’s decision to request relevant material (or to conduct an audit) is a preliminary or initial step of a process and does not constitute ‘administrative action’ in terms of the PAJA, as it does not adversely affect a taxpayer’s rights nor have a direct external legal effect. A taxpayer therefore cannot rely on the PAJA to refuse such a request. • Even non-administrative action is subject to the broad constitutional ‘principle of legality’, which is an aspect of the rule of law implicit in the Constitution and provides a safety net when the PAJA does not apply. SARS must act within the scope of section 46 and the information requested must constitute ‘relevant material’ and must be ‘foreseeably relevant’ for the purposes of ‘administration of a tax Act’. SARS may not exercise its discretionary investigative powers in an arbitrary or irrational manner and its requests for information must be based on sound, rational decision-making. , Thesis (MA) -- Faculty of Business and Economic science, 2022
- Full Text:
- Date Issued: 2022-04
An analysis of ways in which the South African tax system could be simplified
- Authors: Young, Gail Jeni
- Date: 2021-04
- Subjects: Taxation -- Law and legislation -- South Africa , Income tax -- Law and legislation -- South Africa , South African Revenue Service , Tax administration and procedure -- South Africa , Tax accounting -- South Africa
- Language: English
- Type: thesis , text , Masters , MCom
- Identifier: http://hdl.handle.net/10962/178235 , vital:42923
- Description: It has been said that the fundamental paradox of tax simplification is that, despite consensus, almost every year tax rules become more complex. This thesis considers tax simplification measures which have been implemented internationally, in order to provide a basis for an analysis of ways in which the South African tax system could be simplified. A doctrinal methodology is applied, and an analysis is carried out of possible tax simplification measures, based on the commentary of experts in the field of tax law. Simplification measures adopted in the United Kingdom, Australia, the United States of America, Egypt, and certain European countries are discussed, together with their possible adoption in South Africa. Tax simplification has a broad scope. This research identifies four areas in which the South African tax system could simplified: the simplification of tax legislation, addressing the role of accounting in the simplification process, reducing the number of taxes currently levied, and finally addressing the complexities evident in the SARS e-filing system. This thesis illustrates several measures which could be used to address the current areas of complexity. Re-writing tax legislation to assist the understanding of taxpayers is suggested. An increase in the inclusion rate for individuals of capital gains in taxable income from 40% to 60% is suggested, to compensate for the loss of revenue due to the recommended repeal of donations tax and estate duty. Aligning tax legislation with accounting standards is identified as a possible area for simplification, as there are many similarities between the two systems. To address the usability of SARS’ e-filing platform, suggestions are made regarding the further pre-population of returns, introducing e-invoicing and providing a “sandbox” function that taxpayers could use to familiarise themselves with how e-filing works. This research highlights tax simplification as a process that needs to be prioritized in order to achieve the associated benefits. , Thesis (MCom) -- Faculty of Commerce, Accounting, 2021
- Full Text:
- Date Issued: 2021-04
- Authors: Young, Gail Jeni
- Date: 2021-04
- Subjects: Taxation -- Law and legislation -- South Africa , Income tax -- Law and legislation -- South Africa , South African Revenue Service , Tax administration and procedure -- South Africa , Tax accounting -- South Africa
- Language: English
- Type: thesis , text , Masters , MCom
- Identifier: http://hdl.handle.net/10962/178235 , vital:42923
- Description: It has been said that the fundamental paradox of tax simplification is that, despite consensus, almost every year tax rules become more complex. This thesis considers tax simplification measures which have been implemented internationally, in order to provide a basis for an analysis of ways in which the South African tax system could be simplified. A doctrinal methodology is applied, and an analysis is carried out of possible tax simplification measures, based on the commentary of experts in the field of tax law. Simplification measures adopted in the United Kingdom, Australia, the United States of America, Egypt, and certain European countries are discussed, together with their possible adoption in South Africa. Tax simplification has a broad scope. This research identifies four areas in which the South African tax system could simplified: the simplification of tax legislation, addressing the role of accounting in the simplification process, reducing the number of taxes currently levied, and finally addressing the complexities evident in the SARS e-filing system. This thesis illustrates several measures which could be used to address the current areas of complexity. Re-writing tax legislation to assist the understanding of taxpayers is suggested. An increase in the inclusion rate for individuals of capital gains in taxable income from 40% to 60% is suggested, to compensate for the loss of revenue due to the recommended repeal of donations tax and estate duty. Aligning tax legislation with accounting standards is identified as a possible area for simplification, as there are many similarities between the two systems. To address the usability of SARS’ e-filing platform, suggestions are made regarding the further pre-population of returns, introducing e-invoicing and providing a “sandbox” function that taxpayers could use to familiarise themselves with how e-filing works. This research highlights tax simplification as a process that needs to be prioritized in order to achieve the associated benefits. , Thesis (MCom) -- Faculty of Commerce, Accounting, 2021
- Full Text:
- Date Issued: 2021-04
An analysis, from a South African case law perspective, of the deductibility of losses due to embezzlement, fraud, theft, damages and compensation
- Authors: Jachi, Adelaide Gamuchirai
- Date: 2018
- Subjects: South Africa. Income Tax Act, 1962 , Tax deductions -- South Africa , Taxation -- Law and legislation -- South Africa , Tax courts -- South Africa , Tax administration and procedure -- South Africa , Tax accounting -- South Africa , Income tax deductions for losses -- South Africa
- Language: English
- Type: text , Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/60855 , vital:27846
- Description: When calculating the income tax payable for a year of assessment, a taxpayer deducts from his or her or its income, allowable deductions in terms of the preamble to section 11 and section 11(a) as read with section 23(g) of the Income Tax Act, 58 of 1962. Amongst the expenditure and losses incurred by a taxpayer during a year of assessment, a claim may be sought for the deduction of losses incurred due to embezzlement, fraud and theft as well as damages and compensation. The requirements of the preamble and section 11(a) include the requirement that expenditure and losses must be incurred “in the production of the income”. Losses incurred due to defalcations, as well as expenditure on damages and compensation must satisfy this requirement to be allowed as deductions. The objective of the research was to analyse the judicial decisions dealing with “in the production of the income” in granting a deduction for income tax purposes in cases dealing with embezzlement, fraud and theft, and damages and compensation, to establish why the courts grant or disallow the deduction of expenditure and losses. A doctrinal research methodology was applied to the research. The provisions of the Income Tax Act, relevant case law relating to embezzlement, fraud and theft, and damages and compensation, and the contributions of the revenue authority and tax experts in articles of accredited journals, textbooks and other writings were analysed. The major conclusions drawn from the research were that losses due to defalcations are regarded as having been incurred “in the production of the income” if the taxpayer discharges the onus of proof that the risk of the act leading to misappropriation is an incidental risk of the business. Expenditure on damages and compensation is deductible provided the expense is attached to the performance of a business operation bona fide performed for the purpose of earning income and the expense is so closely connected with the business operation as to be regarded as part of the cost of performing it. Where negligence is attached to an expense or loss, the South African courts have held that negligence does not increase the likelihood of disallowing an expense or loss as not having been incurred “in the production of the income”.
- Full Text:
- Date Issued: 2018
- Authors: Jachi, Adelaide Gamuchirai
- Date: 2018
- Subjects: South Africa. Income Tax Act, 1962 , Tax deductions -- South Africa , Taxation -- Law and legislation -- South Africa , Tax courts -- South Africa , Tax administration and procedure -- South Africa , Tax accounting -- South Africa , Income tax deductions for losses -- South Africa
- Language: English
- Type: text , Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/60855 , vital:27846
- Description: When calculating the income tax payable for a year of assessment, a taxpayer deducts from his or her or its income, allowable deductions in terms of the preamble to section 11 and section 11(a) as read with section 23(g) of the Income Tax Act, 58 of 1962. Amongst the expenditure and losses incurred by a taxpayer during a year of assessment, a claim may be sought for the deduction of losses incurred due to embezzlement, fraud and theft as well as damages and compensation. The requirements of the preamble and section 11(a) include the requirement that expenditure and losses must be incurred “in the production of the income”. Losses incurred due to defalcations, as well as expenditure on damages and compensation must satisfy this requirement to be allowed as deductions. The objective of the research was to analyse the judicial decisions dealing with “in the production of the income” in granting a deduction for income tax purposes in cases dealing with embezzlement, fraud and theft, and damages and compensation, to establish why the courts grant or disallow the deduction of expenditure and losses. A doctrinal research methodology was applied to the research. The provisions of the Income Tax Act, relevant case law relating to embezzlement, fraud and theft, and damages and compensation, and the contributions of the revenue authority and tax experts in articles of accredited journals, textbooks and other writings were analysed. The major conclusions drawn from the research were that losses due to defalcations are regarded as having been incurred “in the production of the income” if the taxpayer discharges the onus of proof that the risk of the act leading to misappropriation is an incidental risk of the business. Expenditure on damages and compensation is deductible provided the expense is attached to the performance of a business operation bona fide performed for the purpose of earning income and the expense is so closely connected with the business operation as to be regarded as part of the cost of performing it. Where negligence is attached to an expense or loss, the South African courts have held that negligence does not increase the likelihood of disallowing an expense or loss as not having been incurred “in the production of the income”.
- Full Text:
- Date Issued: 2018
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