South Africa: SARS Incorrectly Treating Objections As Invalid

Table of Contents

South Africa: SARS Incorrectly Treating Objections As Invalid

Last Updated: 13 July 2015

Article by Mmangaliso Nzimande

In terms of section 104 of the Tax Administration Act No. 28 of 2011 (“the TAA”), a taxpayer who is aggrieved by an assessment made in respect of that taxpayer may object to the assessment. Furthermore, in terms of section 106 of the TAA, SARS must consider a valid objection in the manner and within the period prescribed under the TAA and the rules promulgated under section 103 of the TAA, prescribing the procedures to be followed in lodging an objection and appeal against an assessment or decision subject to objection and appeal (“the Rules”).

Under Rule 7(2) a taxpayer who  lodges an objection must complete the prescribed form in full and specify the grounds of objection in detail including the part or specific amount of the disputed assessment objected to, which grounds of assessment are disputed and the documents required to substantiate the grounds of objection that the taxpayer has not previously delivered to SARS for purposes of the disputed assessment.

If a taxpayer has delivered an objection which does not comply with the requirements of subrule (2), SARS may, in terms of Rule 7(4), regard the objection as invalid and must notify the taxpayer of the ground for invalidity within 30 days of the delivery of the invalid objection and the taxpayer may within 20 days following delivery of the notice submit a new objection.

It is therefore critical that taxpayers ensure that they complete the prescribed forms (namely form NOO or ADR1) in full and specify their grounds of objection in full as required under Rule 7(2) to avoid having their objections being regarded as being invalid by SARS, as this causes a delay in the dispute resolution process.

However, Rule 7 does not address the situation where the taxpayer may not be in agreement with the SARS notice of invalidity if the taxpayer is legitimately of the view that the requirements of subrule (2) have been complied with. It is submitted that the Rules are deficient in this regard, as they do not afford taxpayers the right to object where they are of the view that SARS’s decision to regard the objection as invalid is wrong.

Taxpayers therefore only have the option of making an application to the Tax Court under Rule 52(2)(b) of the Rules for an order that the objection is valid. In trying to avoid the route of having to make an application to Tax Court – which can lead to considerable delays in finalizing the main dispute – for an order that the objection is valid taxpayers have in some instances addressed correspondence providing reasons to SARS why they are of the view that their objection is valid but have failed to elicit a response from SARS as the Rules do not prescribe any period or obligation on SARS to respond to such correspondence.

What is also of major concern, is that SARS is issuing the notices of invalid objection even after the 30 day period prescribed in Rule 7(4) has passed. This causes unnecessary delays in finalizing the dispute and is very prejudicial to taxpayers as taxpayers have to resubmit their objections when they had a legitimate expectation that their objection is valid and is being dealt with accordingly by SARS.

It is therefore important that SARS exercises its discretionary powers to regard an objection as invalid very carefully, and likewise, taxpayers should be meticulous in preparing their objections so as to avoid unnecessary delays in the resolution of their disputes with SARS.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Shopping Cart
Scroll to Top

Compare Programmes

Choose the track that fits your practice focus. All programmes are practitioner-taught, cohort-based, and validated by Middlesex University.

Dimension Transfer Pricing International Taxation South African Tax Law
Jurisdictional audience Global audience, covers all jurisdictions Global audience, covers all jurisdictions South Africa specific, relevant to SADC region
Ideal for TP managers, advisors, in-house tax teams, analysts moving into TP Advisors and managers dealing with cross-border rules, treaties, planning Practitioners working with the SA Income Tax Act, cases, compliance
Core focus Methods, comparables, DEMPE, documentation, audits, dispute defence Treaties, source vs residence, anti-avoidance, PE, relief from double tax Statutory interpretation, case law, assessments, objections, local practice
Primary tools OECD TP Guidelines, UN Manual, BEPS Actions 8–10, 13, case law OECD and UN Models, MLI, BEPS 1.0 and 2.0, domestic rules, cases Income Tax Act, SARS practice notes, Tax Administration Act, SA cases
Assessment style Case-based assignments, file reviews, short written defences Problem questions, treaty interpretation, position papers Problem questions, statutory analysis, case commentary
Typical outcomes Build defensible TP files and strategies, improve audit readiness Design cross-border structures within rules, mitigate double tax Apply SA tax law accurately, manage reviews and disputes
Entry point Start with PG Certificate, progress to PG Diploma, then MSc, or enter later with suitable experience or credits.

Awards Ladder

Award Best for What you achieve Assessment highlights
PG Certificate Foundation to intermediate upskilling Core concepts, frameworks, and applied techniques Short case write ups, timed responses, applied tasks
PG Diploma Expanding technical depth and application Advanced analysis, risk management, documentation quality Integrated case assignments, policy memos, oral defence
MSc Leaders and specialists building authority Capstone project and research backed practice outcomes Research project, viva or presentation, publishable summary

IFF Certificate Courses

Practical, practitioner-led certificates designed for immediate on-the-job application. Each course can stand alone or act as a pathway into our postgraduate tracks.

Dimension Conducting a Transfer Pricing Trial Effectively Managing Tax Teams Indirect Taxation Tax Risk Management
Jurisdictional audience Global audience Global audience Global audience, with local adaptation Global audience
Ideal for In-house tax, TP managers, litigators, advisors preparing for audits, ADR, trial Heads of tax, managers, team leads, controllers, emerging leaders VAT, GST, customs, finance managers, AP, AR, compliance specialists Tax managers, risk officers, controllers, advisors building governance
Core focus Case theory, evidence files, expert reports, witness prep, courtroom strategy Operating models, KPIs, workflows, stakeholder management, coaching VAT design, place of supply, input credits, exemptions, WHT interactions Risk identification, controls, documentation, audit readiness, dispute playbooks
Delivery mode Online, live sessions plus guided self-study Online, live sessions plus guided self-study Online, live sessions plus guided self-study Online, live sessions plus guided self-study
Duration 16 weeks, part-time 16 weeks, part-time 16 weeks, part-time 16 weeks, part-time
Outcomes Confident litigation preparation and defence for TP disputes Stronger execution, clear roles, measurable team performance Reduced VAT errors, better cash flow, fewer surprises at audit Structured governance, fewer findings, faster dispute resolution
Prerequisites TP fundamentals recommended Supervisory experience helpful Basic VAT knowledge helpful General tax experience helpful
Pathway Progress to PG Certificate in Transfer Pricing Progress to Mechanics of Leading Tax Teams, PG Certificate (leadership) Progress to PG programmes, International Tax or SA Tax Law Progress to PG Certificate in International Taxation or Transfer Pricing
Assessment End of module progress assessment

5000-word assignment if PG-Cert option elected
End of module progress assessment

5000-word assignment if PG-Cert option elected
End of module progress assessment

5000-word assignment if PG-Cert option elected
End of module progress assessment

5000-word assignment if PG-Cert option elected