New rules governing tax disputes – What has really changed?
17 March 2023
On 10 March 2023, the Minister of Finance promulgated new rules governing objections and appeals under the Tax Administration Act. These rules take effect from the date of publication and thus replace the “old rules” with immediate effect.
Taxpayers will be relieved to hear that the one major change contained in the new rules is the extension of the period to lodge an objection to 80 business days from the date of assessment or delivery of SARS’s reasons (previously taxpayers only had 30 business days within which to lodge an objection). This is a major relaxation of the previous time period and one wonders whether SARS will now be less inclined to grant condonation requests to taxpayers who find themselves out of time to object.
The rules provide transitional arrangements which result in the following:
- Taxpayers whose 30-day period to lodge an objection expired before 10 March 2023 will not have another 50 days and will need to request condonation for the late filing of an objection.
- Taxpayers whose 30-day period to lodge an objection had not yet expired by 10 March 2023 will automatically have another 50 days to lodge an objection without having to request condonation.
Perhaps more important than what has changed, is to bear in mind important aspects that remain the same:
- Taxpayers still only have 30 business days from the date of assessment to request reasons required to enable them to formulate an objection, which period is now no longer the same as the period for lodging an objection (the latter now being 80 days as opposed to 30).
- Taxpayers still only have 30 business days from delivery of SARS’s notice of disallowance of objection to lodge an appeal, which period is also no longer the same as the period for lodging an objection (the latter now being 80 days as opposed to 30).
- SARS’s “pay now argue later” rule still applies, in terms of which taxpayers need to request a senior SARS official to suspend the payment of tax or a portion thereof due under an assessment if the taxpayer intends to dispute or disputes the liability to pay that tax. This can be done on e-Filing, although SARS’s systems have long failed to comply with the provisions of the Tax Administration Act, for instance, by not allowing taxpayers to request a suspension of payment before lodging an objection (contrary to the relevant provision which also applies to taxpayers who intend to dispute the liability to pay tax).
Other changes to the rules include slight clarifications and the addition of a few new procedures, although no changes are as important as the above change in the time allowed to object to an assessment. The rules now also expressly require taxpayers who object to an assessment to submit (not just specify) the documents required to substantiate the grounds of objection along with their notice of objection. SARS may still request a taxpayer to produce additional substantiating documents within 30 business days after delivery of an objection, which (as under the old rules) the taxpayer must then submit within 30 business days after delivery of SARS’s request.
It would be a misconception to think that all the previous 30-day time periods have been replaced with the more generous 80-day period since this is only true in respect of the period to lodge an objection. Taxpayers aggrieved by an assessment should be mindful to still reach out to their tax advisors as soon as possible. Failure to do so may, for instance, lead to taxpayers losing out on the ability to request valuable reasons required to formulate an objection.
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