Assessments indicate the amount due to SARS or the refund to the taxpayer. But they are also important for other reasons.
Most crucially, the period allowed for lodging an objection or an appeal is measured from the date of issue of the assessment.
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The Tax Administration Act (TAA) has consolidated the way the various taxes are administered and serves to regulate the procedure that taxpayers must follow in dealing with SARS. However, it has not radically changed the principles involved. A taxpayer should still be mindful of the fact that an assessment should not be ignored. It must be compared to the tax return submitted and the financial history of the taxpayer for the year in question.
This should be done as soon as possible after the receipt of the assessment. To delay could result in the expiry of the period for lodging an objection, in which case the assessment becomes final, as per Section 100 of the TAA. Once an assessment is final, no objection and no appeal will be entertained. The amount indicated in the assessment becomes a liability owed by the taxpayer to the state and the taxpayer has no further recourse but to make payment.
Exceptions
Provision is made for condonation of a late objection under the TAA, but good reasons have to be furnished for this. In Section 104, Subsection 4, of the TAA, the words “reasonable grounds” are used. Perhaps the taxpayer was out of the country, or the return was posted to an incorrect address, or the taxpayer was very ill at the time. In my experience, reasons such as these have led to late objections being entertained.
Remember that the extension allowed under the TAA for late filings is 21 days unless the circumstances are “exceptional”. A senior SARS official may extend the period for objecting to an assessment in exceptional circumstances within three years from the issue of the assessment. Once this period is exceeded, the tax will be due.
It is best, however, to be on time with the objection. This removes complications and the tax practitioner or taxpayer who issues the objection can concentrate on the incorrect assessment without the added headache of applying for condonation.
Although an initial 30-day period is provided for in terms of the rules for dispute resolution under the TAA, this is in practice extended by virtue of the fact that the taxpayer has the right to call for written reasons in respect of the assessment. The periods for the lodging of an objection are contained in Rule 7.
Professional help
It is prudent, in my view, to engage the services of a tax practitioner to assist you and ensure that the rules governing the periods, the methodology of preparation and the issue of objections are adhered to properly. This cannot fail to impress a judge if the matter eventually comes before the High Court.
This article was originally published on 6 November 2015 in Farmer’s Weekly.
