n Business Tax and Company Law Quarterly - Information-gathering by SARS under the TAA : trumping the taxpayer's right to tax finality

Volume 7 Number 1
  • ISSN : 2219-1585


Taxpayers or their tax administrators have increasingly to deal with requests from SARS for tax information arising from their tax returns and from investigations or audits relating to their tax affairs. This may result in protracted correspondence and prove frustratingly costly and time-consuming for taxpayers. The article explores the nature and extent of SARS's powers to gather relevant information from taxpayers under the provisions of the Tax Administration Act 28 of 2011 ('the TAA') and the limitations on the exercise of such powers. In addition, the article seeks to provide guidance to corporate tax administrators in dealing with specific practical issues that may arise when SARS seeks to exercise its powers to gather tax information by way of investigation or audit from the taxpayer concerned. The article surveys in detail the powers conferred on SARS under the provisions that comprise Parts A and B of Chapter 5 of the TAA. It analyses the concept of 'relevant material' which is central to such powers and examines the legislative background and the SARS Guide to the TAA for clarification and context of the relevant statutory provisions. There is also a discussion of the OECD Model Tax Convention provision from which the foreseeable relevance test for relevant material is derived. Finally, there is a discussion of a range of specific problems that may arise in relation to SARS's exercise of its information-gathering powers, and an analysis of how these issues are likely to be resolved in the light of the relevant statutory provisions.The article concludes that while SARS's powers under the TAA to extract relevant tax information may impede the taxpayer's right to finality in its tax affairs, and indeed in most cases trump any such right, there is room for improvement in the manner and time-frames in which SARS exercises its information-gathering powers vis-à-vis taxpayers. The article calls for SARS to take into account the interests of taxpayers by adopting a more concerted, systematic and less fragmented approach in its legitimate pursuit of relevant tax material from taxpayers.

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