One of the risks of not using a tax professional to attend to one’s tax affairs arises when SARS assesses an individual’s income tax return. Quite often, a return submitted is assessed incorrectly, or on a basis in terms of which SARS is disputing certain submissions made by the taxpayer in filing his or her (or even a family trust or company’s) income tax return.
It is then important to have an experienced tax professional at your disposal who is aware of the specifically legislated and prescribed dispute resolution rules that are required to be followed in order to object to an assessment with which the taxpayer disagrees. The benefit of using a tax professional becomes even more pronounced when considering that individuals without tax experience and knowledge very often do not understand correspondence issued by SARS (and which would be informing the taxpayer of an adverse assessment for example being issued), and further that they can check assessments issued to ensure that these have indeed been issued on the basis on which the relevant return has been filed.
Various requirements exist for a valid objection to be lodged with SARS, and these are prescribed in terms of Rule 7(2) of the Rules published in terms of section 103 of the Tax Administration Act, 28 of 2011, which govern the dispute resolution process where SARS is concerned. The requirements for a valid objection include that the objection be lodged in the prescribed format and by using the correct form, and that the objection be lodged within 30 business days from the date of the assessment issued.
If a taxpayer is unsure of the basis on which SARS would have issued an assessment, the taxpayer is entitled to first request reasons from SARS for the assessment issued in order to allow them to consider whether lodging an objection would be necessary or not to dispute the assessment (Rule 6). These reasons, if requested, must be clear enough to allow the taxpayer to understand why SARS would have issued an adverse assessment and to then be able to lodge an objection against the assessment in question if required. A request for reasons too (as is the case for an objection) needs to be submitted to SARS within 30 business days from the date of the assessment, where after the objection must be lodged within 30 business days of these reasons being provided to the taxpayer (and which SARS is obliged to provide, if requested, within 45 business days from receipt of the request for reasons from the taxpayer).
The Rules further make provision for an unsuccessful objection to be appealed to the Tax Board or the Tax Court, or for the Taxpayer and SARS to enter into ADR (‘alternative dispute resolution’) to have the dispute resolved.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)