“Let me tell you how it will be. There's one for you, nineteen for me 'cause I'm the taxman. Should five percent appear too small, be thankful, I don't take it all 'cause I'm the taxman” - Lyrics from a song by George Harrison, released by the Beatles in August 1966
Tax laws are complex, and disputing a decision by SARS can be a costly and time-consuming task.
Nina E. Olson, an American lawyer and Executive Director of the Center for Taxpayer Rights, once commented on how the [US Revenue] Service’s “drive to collect taxes and its failure to consider the facts and circumstances of individual taxpayers’ situations led to harmful overreach, especially for low- income and middle-class taxpayers who could not afford representation.”
Reporters have said, South Africa is no different.
For this reason, the recent proposed amendment to section 104 Tax Administration Act, 2011, dealing with disputes, is welcomed.
Alternative Dispute Resolution (ADR) for tax is to allow for the resolution of tax disputes outside the litigation arena and adjudication through the courts. In our experience, it is less formal, less cumbersome, a more cost-effective, and quicker process of resolving a dispute with SARS in a fair manner.
The current conventional dispute process, if you disagree with a decision by SARS, involves the following steps:
Submit an objection, which SARS may allow, in full or partially, or may disallow.
Appeal against SARS’s decision to disallow any part of the original objection.
At this stage, the taxpayer may request for the appeal to proceed via ADR, a hearing by the Tax Board, and/or a hearing by the Tax Court.
ADR proceedings can thus currently only be accessed at the appeal stage of a dispute, where they generally result in the resolution of most appeals.
To improve the efficiency of the dispute resolution process, the proposed amendment aims to also introduce ADR proceedings at the objection phase of the dispute.
This proposal will allow for earlier resolution of a tax dispute by way of improved engagement and exchange of documents at the objection stage of a dispute.
BH Groenewald
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