In May 2014, the South African Revenue Service (“SARS”) audited a taxpayer (the appellant) and assessments were raised against the taxpayer in or during December 2014. The taxpayer lodged an objection against these assessments on 5 June 2015, despite the fact that the taxpayer was obliged to lodge said objection within 30 (Thirty) business days following the date of assessment; as provided for in terms of the Tax Administration Act 28 of 2011 (“the Act”).
It was common cause that the taxpayer should have objected to the assessments on or before 2 March 2015 and was consequently out of time to do so by 65 business days. As a result, SARS rejected the objection stating, “no exceptional reasons had been furnished” by the taxpayer. The taxpayer appealed against SARS’ ruling and brought the matter before the Tax Court.
In terms of section 104 of the Act, a taxpayer who is aggrieved by an assessment or decision rendered by SARS may object to the assessment or decision.
Such objection must be lodged within 30 business days from the date of the assessment and can be extended by a senior SARS official for a period not exceeding 21 business days unless said official is satisfied that “exceptional circumstances exist which gave rise to the delay in lodging the objection.”
In this case, the Court had to consider the meaning of “exceptional circumstances.” The onus rested upon the appellant to prove that such circumstances were present and furthermore had a causal link to the delay that resulted.
Subsequently, a variety of submissions were made by counsel for the taxpayer, the majority of which were extraneous and irrelevant to the enquiry into the existence of exceptional circumstances.
Other submissions made before (and refuted by) the Court were that:
- the assessments and the objections thereto involved complex issues of law, however, there was no indication given by the taxpayer within the papers before the court upon which the judge could make such a finding;
- over the December 2014/January 2015 period, the courts were closed for recess, however, the Court found that same had no bearing on the appellant’s ability to lodge an objection to the assessment before the expiration of the specified 30-day period;
- the taxpayer was negotiating with the SARS over the period of December 2014 to March 2015, however no detail of such consultations were presented to the Court, save for reference to a single visit by the taxpayer’s auditor to the SARS’ office;
- the taxpayer became dissatisfied with the capabilities of his auditor, alleging that said auditor was incompetent, whereafter the appellant terminated his services. As a result, there was a delay in obtaining further professional advice, however, the Court was of the view that the taxpayer was simply dissatisfied with the determination of SARS as opposed to the expertise of the auditor, and found no grounds upon which the allegations of incompetence could be substantiated; and
- new professional advice took time to obtain as the new practitioner was based in Florida whilst the taxpayer was based in Springs on the West Rand. The Court was however of the view that the taxpayer could have approached a multiplicity of firms stretching from the Witwatersrand region right up to Sandton.
The presiding officer in this case was of the view that a taxpayer – whose assessed liability ran into millions of Rands – should have been responsible enough to seek tax advice from a firm of attorneys specialising in such matters within the prescribed time frame. The submissions put forth by the appellant were not sufficient to discharge the onus of proving “exceptional circumstances.” As a result, the appeal was dismissed with costs.
Failure to demonstrate the existence of exceptional circumstances vindicating a taxpayer’s failure to object to a SARS’ assessment within the specified period may result in said taxpayer suffering significant penalties.
Written by Jayna Hira, Candidate Attorney and supervised by Jarryd Spargo, Candidate Attorney.