Authored by: Jean du Toit, Jean du Toit, Attorney and Head of Tax Technical at Tax Consulting South Africa
When engaging in disputes with the taxman, there are many rules you need to be aware of, but the decision in CSARS v The Executor of the Estate of Late Ndlovu (A395/2016) arguably tells the most important.
This decision by a full bench of the Pretoria High Court reveals how high the stakes are when you submit an objection against an assessment issued by SARS – because any items you omit at this point will be considered bygones.
The dispute between SARS and the taxpayer in this case revolved around the taxation of shares granted to the taxpayer by the Nedbank Group. Importantly, in addition to the tax levied, SARS imposed interest in terms of section 89quat(2)of the Income Tax Act.
In disputing the assessment in question, the taxpayer did not object or appeal against the imposition of the interest and this was only raised during an Alternative Dispute Resolution meeting that followed his notice of appeal.
The matter progressed to the Tax Court where, among others, it had to be decided whether the taxpayer may raise a new ground of dispute that was not included in his objection i.e. the imposition of the interest. The tax Court held there was no prejudice to SARS and the new ground may be introduced.
SARS took the matter on appeal to the High Court, where the full bench had to decide if the Tax Court’s decision ought to be upheld. On the question of raising new grounds not included in the objection, the court referred to the following principle established by the Supreme Court of Appeal in CSARS v Brummeria Renaissance (Pty) Ltd and Other 2007 (6) SA 601 (SCA):
“…But it is also in the public interest that disputes should come to an end… it would be unfair to an honest taxpayer if the Commissioner were to be allowed to continue to change the basis upon which the taxpayer were assessed until the Commissioner got it right…”
But what is good for the Commissioner is good for the taxpayer – the court overturned the Tax Court’s decision and held that taxpayers cannot change the basis of their dispute if this was not raised in their objection.
We are often approached by taxpayers only once their dispute with SARS has gone awry; often when it has progressed beyond the objection stage.
It soon becomes evident that the taxpayer or their representative failed to address certain pertinent aspects in the objection, which makes it very difficult to salvage what may have appeared to be a very simple matter.
Vague and ill-informed objections can result in very serious ramifications for the taxpayer, even where they may have been assessed incorrectly.
Practically, you should see your objection as your only shot to dispute an assessment and even in the most uncomplicated of disputes, taxpayers are advised to call on a professional who will make your shot count.
MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, email@example.com, www.atthatpoint.co.za
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